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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[ x ] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 0-26692
MAIL-WELL, INC.
(Exact name of Registrant as specified in its charter.)
DELAWARE 84-1250533
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
23 INVERNESS WAY EAST, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
------------------- -----------------------------------------
Common Stock, $0.01 par value per share The New York
Stock Exchange
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports),and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
registered stock as of March 14, 1997 was $207,013,598.
As of March 14, 1997, the Registrant had 12,487,420 shares of Common Stock,
$0.01 par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this form (Items 10, 11, 12 and 13) is
incorporated by reference from the registrant's Proxy Statement to be filed
pursuant to Regulation 14A with respect to the registrant's Annual Meeting of
Stockholders to be held on or about May 7, 1997.
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TABLE OF CONTENTS
PART I
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Item 1. Business..................................................................... 1
The Company........................................................... 1
Products and Services................................................. 2
Markets............................................................... 6
Marketing and Distribution............................................ 8
Printing and Manufacturing............................................ 10
Materials and Supply Arrangements..................................... 12
Patents, Trademarks and Brand Names................................... 12
Competition........................................................... 12
Seasonality........................................................... 13
Backlog............................................................... 14
Employees............................................................. 14
Environmental......................................................... 14
Item 2. Properties................................................................... 16
Item 3. Legal Proceedings............................................................ 16
Item 4. Submission of Matters to a Vote of Security Holders.......................... 16
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholders Matters....... 17
Dividend Policy....................................................... 17
Item 6. Selected Financial Data...................................................... 18
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................................... 19
Overview.............................................................. 19
Results of Operations................................................. 21
Liquidity and Capital Resources....................................... 25
Item 8. Financial Statements and Supplementary Data.................................. 27
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure......................................................... 51
PART III
Item 10. Directors and Executive Officers of Registrant............................... 51
Item 11. Executive Compensation....................................................... 53
Item 12. Security Ownership of Certain Beneficial Owners and Management............... 53
Item 13. Certain Relationships and Related Transactions............................... 53
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.............. 54
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PART I
ITEM 1. BUSINESS
THE COMPANY
Mail-Well, Inc. (the "Company") is the largest printer and manufacturer
of envelopes in the United States and Canada and the leading high-impact color
printer in the United States. The Company and its subsidiaries operate 50
envelope and commercial printing facilities throughout many of the major
metropolitan areas of the United States and Canada.
Within the envelope printing industry the Company competes primarily in
the consumer direct segment of the market in which envelopes are designed,
printed and manufactured to customer specifications. The Company and its
Canadian subsidiary, Supremex, Inc. ("Supremex") focus their business on
customized conventional and specialty envelopes where envelopes generally
include unique features, such as vivid color graphics or action devices. The
Company purchased both Quality Park Products ("QPP") and Pac National Group
Products, Inc. ("PNG") this past year. QPP is a printer of a broad line of
custom envelopes and has expanded the Company's business into the fast-growing
office products market. PNG, a part of the Company's Supremex operations, is a
printer of custom designed envelopes and courier packaging. The addition of PNG
solidifies the Company's presence as the largest envelope printer in Canada,
with facilities in every province.
The Company's Graphic Arts Center, Inc. ("GAC") subsidiary is the leading
high impact color printer in the United States. GAC specializes in producing
advertising literature, high-end catalogs and annual reports and is recognized
as an innovative provider of quality printed products to leading companies
throughout the United States. GAC acquired Shepard Poorman Communications
Corporation ("SPCC") in December 1996. With the addition of SPCC, GAC also
prints calendars and four color computer books. GAC operates four state-of-the-
art commercial printing facilities, three on the west coast and one in
Indianapolis.
The envelope and commercial printing industries are highly fragmented,
with approximately 215 independent envelope companies in the United States and
Canada and approximately 37,000 commercial printing companies in the United
States. The Company's strategy is to grow both internally and externally.
Externally, the Company plans to grow by pursuing acquisition opportunities to
capitalize on the consolidation occurring within these industries. Management
believes that the fragmented nature of these and related industries,
characterized by a large number of small, locally-run and regional facilities,
provides the Company the opportunity to acquire local or regional companies that
cannot compete as effectively as larger and more efficient companies.
Management intends to continue to focus on the development of a network of
strategically located facilities to attract and retain national, regional and
local account business and to achieve greater operating efficiencies.
Internally, the Company plans to continue to develop and utilize its expansive
geographic presence to better serve its larger national accounts while at the
same time serving the local market. The Company also intends to cross-utilize
its facilities for customers who require both envelopes and commercial printing.
Management believes that its strategy of growth and market positioning
has created, and will continue to create, competitive advantages, including (i)
the ability to utilize the Company's network of strategically located plants and
sales offices to attract customers that require production from
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multiple locations, (ii) the ability to realize cost savings as a result of
volume related purchases of paper, ink and other raw materials, (iii) the
reduction of overhead expense through the consolidation of certain
administrative functions for insurance, employee health benefits and financial
management, (iv) the ability to increase profitability through the optimization
of equipment utilization among facilities, (v) the reduced risk of constraints
on paper allocation from suppliers during periods of tight supply due to the
significance of the Company's large volume purchases from its suppliers, (vi)
the ability to offer customers greater flexibility in meeting their needs due to
more available capacity and equipment capabilities and (vii) the ability to
combine the responsiveness of a local or regional facility with the advantages
of a large company.
The Company commenced operations in February 1994 with the acquisition of
the envelope businesses of Georgia-Pacific ("GP") and Pavey Envelope and Tag
Corp. ("Pavey"). In December 1994, the Company acquired the envelope business
of American Envelope Company ("American"). In July and August 1995,
respectively, the Company acquired Supremex, the largest Canadian printer and
manufacturer of envelopes, and GAC, one of the leading high impact color
printers in the United States. During 1996, the Company acquired three new
companies. In April 1996, the Company acquired QPP, an envelope manufacturer;
in November 1996 PNG, a Canadian envelope printer was acquired; and in December
1996 SPCC, a high-impact color printer was acquired.
PRODUCTS AND SERVICES
ENVELOPE PRINTING
The approximately $3 billion United States and Canadian envelope market
is divided into two primary market segments: (i) customized conventional and
specialty envelopes and packaging products sold directly to end users or to
independent distributors who sell to end users ("Consumer Direct") and (ii)
commodity-oriented products sold to wholesalers, paper merchants, printers,
brokers, office product establishments and superstores ("Wholesale"). The
Company competes in the Consumer Direct segment where the greatest growth in
recent years has been in printed customized conventional envelopes due primarily
to the continued growth of direct mail marketing. The Company has focused a
significant part of its marketing resources on the direct mail market and has
developed value added features including vivid graphics, multi-colored
envelopes, various closures, and interactive devices such as pull-tabs, scratch-
offs, perforations and three-dimensional viewing devices. Management believes
that many growth opportunities for the envelope industry will continue to be in
Consumer Direct specialty envelopes and packaging products. The Company also
competes in the Wholesale segment, particularly in the fast-growing office
products market. Through its QPP division, the Company manufactures and prints
a broad line of custom envelopes, many of which are featured in national
catalogs for the office products market.
Management believes that the Company's success is largely attributable to
an emphasis on customer responsiveness and service. The Company's 350 person
envelope sales force works closely with customers from product design to
delivery. Most of the Company's products are made to customer specifications.
In addition to high-quality customized products, the Company offers customers
related services, such as flexible "just-in-time" delivery programs,
warehousing, inventory management systems and electronic communications systems.
The Company has a large number of customers across diverse markets, including
the direct mail, commercial, financial services and insurance, forms,
government, distributors and resellers, photofinishing, packaging, medical,
office
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products and financial and legal markets. Many of the Company's customers have
been supplied by the Company or its predecessors for over ten years.
CUSTOMIZED CONVENTIONAL ENVELOPES. Customized conventional envelopes
range from commercial and mass billing envelopes to large-size proxy, catalog,
booklet and annual report envelopes. The Company customizes two general types
of conventional envelopes: open side envelopes, on which the flap opens along
the longer side of the envelope (such as standard correspondence) and open end
envelopes, on which the flap opens along the shorter side of the envelope (such
as an inter-office envelope). Custom features include special paper stock, non-
standard placement and sizing of windows, printed messages, non-standard sizes,
partial or full page graphics on both the exterior and interior of the envelope
and special closures, adhesives and perforations.
SPECIALTY ENVELOPES AND PACKAGING PRODUCTS. Specialty envelopes and
packaging products include direct mail advertising envelopes and inserts as well
as envelopes and other items used for purposes other than mailing, such as heavy
stock medical folders, packaging for CD ROM disks and computer cards, customized
tags (ranging from inventory tracking tags with attached multi-form carbons to
retail tags for consumer products), courier packaging envelopes, including those
made of Tyvek(R), currency and credit card holders, airline and car rental
ticket jackets, photofinishing packaging, expandable folders and innovative
inter-office envelopes. Management believes that the Company is among the
industry leaders in the manufacture of innovative specialty envelopes and
packaging products, with a diverse employee base able to adjust and adapt its
equipment to produce these products.
The Company serves the direct mail market by offering products which are
designed to entice consumers to open pieces of mail and hold their attention
while the marketing messages are delivered. Sample custom features contained in
the Company's direct mail products include vivid graphics and interactive
features such as pull-tabs, scratch-offs, perforations and three-dimensional
viewing devices.
The Company also serves the direct mail market with bind-ins, which are
envelopes included in mail order catalogs. A bind-in attaches along the center
seam of a mail order catalog, typically providing the consumer with an order
form and return envelope. Combination order blanks and envelopes are
increasingly used in catalogs. The Company has developed extensive
capabilities, enabling it to produce bind-in envelopes in a wide variety of
sizes and styles on coated and uncoated paper stocks, utilizing high-quality
lithography with options for complex four-color printing. The Company has
extended the bind-in format to include multi-page mini-catalogs. Demand for
Company products used in catalogs has experienced significant growth in recent
years.
COMMODITY ORIENTED PRODUCTS. Commodity oriented products include those
products sold to wholesalers, paper merchants, printers, brokers, office product
establishments and superstores. The Company provides both private label and QPP
brand products to customers.
Plain stock envelopes range from common products such as #10, #8, 9x12
and 10x13 envelopes to less common items such as jewelry repair envelopes and
envelopes using special paper and colors. The Company, through its Supremex
subsidiary and QPP division, manufactures and stocks for distribution
approximately 200 lines of plain stock envelopes.
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TWO-WAY ENVELOPES. Two-way envelopes are envelopes designed to be reused
by the recipient, usually to send correspondence or payment back to the original
sender. Due to the use of less paper, two-way envelopes are perceived as more
environmentally conscious than single-use envelopes. The Company markets two-
way envelopes through its Supremex subsidiary. Supremex manufactures the two-
way envelope and holds patents on the two-way envelope in both the United States
and Canada.
PREPRESS OPERATIONS. Prior to manufacturing envelopes to fill a specific
order, the Company finalizes the design graphics for the order. This design
phase traditionally requires a manufacturer to set type, incorporate customer-
submitted graphics, photograph the artwork, develop the negative and prepare a
plate that will serve to imprint the envelope. The electronic pre-press
operation is a fully-automated electronic process which allows the customer to
submit its design on a diskette or via modem. The Company can then edit the
design on a computer to create the negative from which the printing plate is
made. Alternatively, hard copy can be provided by the customer and computer-
scanned and edited by the Company to create the negative. This capability is
particularly well-suited to the customized and specialty envelope sectors in
which the Company has focused its efforts. Management believes that the Company
is a leader in the industry in moving toward fully-automated electronic prepress
operations. The electronic prepress system greatly reduces the time needed to
produce the plates and the number of people involved in the production, thereby
enhancing the Company's profitability and its level of customer service.
DELIVERY SYSTEMS. The Company currently maintains a flexible "just-in-
time" delivery program. This program allows customers to receive their products
just prior to when they are needed.
WAREHOUSING SERVICES. A customer will often place an order for
significantly more envelopes than it may need at the time. When this occurs,
the Company can store the finished product and drop-ship the envelopes on an
"as-needed" basis.
INVENTORY MANAGEMENT SYSTEMS. Inventory management systems are currently
being designed, primarily for large national organizations with centralized
purchasing and supply departments that service multiple locations. The system
will facilitate order processing by giving customers information on usage by
item and/or available supply in the Company's warehouses and provides for
summary billing.
EDI. The Company has installed an Electronic Data Communications
Interface ("EDI") at many of its facilities. EDI is a direct computer link
between customers and the Company which allows orders to be sent electronically.
This allows streamlining of the order process which in turn allows for quicker
order delivery and more efficient and accurate communications between customers
and the Company. EDI also allows customers to make payments electronically.
HIGH IMPACT COLOR PRINTING
Management estimates that the domestic commercial printing industry had
1995 sales of approximately $ 3.5 billion. The commercial printing industry in
the United States is highly fragmented, primarily comprised of relatively small,
local and regional firms. Management estimates that there are approximately
37,000 commercial printing companies in the United States, most of such
companies having fewer than 20 employees.
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The Company, through its GAC subsidiary, provides premium high impact
color printing services to customers in five main segments. The advertising
literature, catalogs, and annual reports, during the fiscal year ended December
31, 1996, accounted for approximately 35%, 20% and 13% of GAC's net sales,
respectively. With the addition of SPCC, GAC not only increased its sales, but
also added additional product segments, including the printing of calendars and
four color computer instruction books.
The levels of quality and customer service GAC provides are well-suited
for buyers whose marketing and promotional efforts require superior printed
materials to reflect the quality and features of their products, services and
corporate images. GAC serves a broad base of customers from across the United
States, including major manufacturers, retailers, service organizations and
advertising agencies.
The fine color commercial printing market requires superior quality
printing capabilities as well as high levels of customer service. GAC provides
its customers with comprehensive prepress, printing and fulfillment services
through four technologically advanced production facilities. GAC emphasizes
customer service through intensive interaction with customers, including
frequent sales calls and constant monitoring of customer satisfaction during the
prepress and printing process. Management believes that GAC distinguishes
itself from its competitors by the expertise and customer responsiveness
associated with GAC's production operations.
Management believes that the commercial printing industry is undergoing a
period of consolidation, driven in part by the rapid pace of technology change.
Recent advances in computer-based prepress equipment, for example, now enable
commercial printers to output plate-ready film directly from electronic files,
allowing for faster and more precise manipulation of images and text prior to
printing. Similarly, recent advances in photoimaging technology have greatly
increased the quality of the final image produced in the printing process.
These advances have increased the capital requirements for maintaining
technologically advanced equipment. Management believes that many local and
regional commercial printers lack adequate financial resources to remain
competitive in the segments of the fine color commercial printing market in
which the Company operates.
ADVERTISING LITERATURE. Advertising literature ranges from printed
brochures and leaflets to color folders, manuals and posters. GAC prints
promotional material for both the automotive industry and the high-tech industry
in this segment, as well as for a number of foreign companies selling goods in
the United States. Industry specific factors often drive demand for printed
advertising literature. The increase in competition and growth in sales in the
automotive industry in recent years has positively affected the level of
spending on automotive brochures.
CATALOGS. GAC prints both general catalogs and high-end catalogs for a
broad base of customers, including many major retailers. The high-end catalog
segment requires superior quality printing capability as well as intensive
customer service. Within this segment, GAC has printed catalogs for such
customers as FAO Schwarz, Neiman-Marcus, Nordstrom and Patagonia.
ANNUAL REPORTS AND RELATED PRODUCTS. GAC prints annual reports and
related products for a number of large public companies. These products often
integrate color reproductions and graphs with text and financial statements into
a high-quality product which requires extensive prepress and printing services.
GAC prints annual reports and related products for many leading companies and
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has printed annual reports for American Express, Apple Computer, Black & Decker,
General Electric, Intel, Monsanto, Starbucks and 3M.
CALENDARS. GAC prints all types of calendars for a variety of customers.
The types of calendars printed by the Company include box, wall, engagement,
wire-o and promotional calendars.
COMPUTER BOOKS. GAC manufactures and prints computer instruction text
books. The majority of these computer text books are general reference and "how
to" books about computer software. Most of the computer instruction books are
four color books.
QUALITY CUSTOMER SERVICE. GAC's goal is to offer the highest standards
in meeting its printing customers' needs with the Company's primary focus on
responding quickly and competitively to customer demands and requirements. Many
of GAC's production facilities are open 24 hours a day, seven days a week, to
allow for timely production of materials. GAC, at certain of its facilities,
also offers a number of unique services to its customers such as complimentary
transportation between the airport and its offices, in-plant overnight
accommodations, on-site meeting rooms and lounge, travel and hotel arrangements,
and computers for use by the customers when on-site. In addition, many of the
GAC's field representatives travel with the customer to the main facility in
Portland to facilitate the processing of the printing work.
MARKETS
ENVELOPE PRINTING
The Company seeks to efficiently serve large numbers of customers across
diverse markets and industries to provide a stable and diversified base for
ongoing sales of printed envelope products and services. In 1996, the Company
sold products to more than 40,000 customers. Products are specifically designed
and printed to serve various markets and industry segments.
DIRECT MAIL MARKET. This market comprises advertising and third-class
mail delivered directly to consumers through the postal system. The Company's
direct mail products consist of customized conventional envelopes which include
vivid graphics, action devices such as pull-tabs, scratch-offs, perforations and
three-dimensional viewing devices, and bar codes. Due primarily to increased
costs, the current trend in direct mail marketing is toward smaller, more
focused mailings that depend on the refinement of mailing lists and extensive
use of sophisticated database management tools to target specific markets
("database marketing"). Management believes that this trend represents a
favorable development for the Company. While database marketing means smaller
mailings, it also means more direct mailings overall, using envelopes with the
Company's value-added features. In addition, smaller companies which cannot
justify participating in mass mailings are able to use database marketing and
direct mail in a more cost-efficient manner. Envelopes that support database
marketing campaigns typically make extensive use of color, precision graphics
and personalized messages which are included in the graphics on the envelope.
The Company expects increased opportunities in the direct mail sector to arise
from improved means of printing high-quality graphics more quickly and cost
effectively.
COMMERCIAL MARKET. The commercial market consists of manufacturers,
professional organizations, utilities, educational institutions and others.
Changes in the volume of envelope usage in this market typically track changes
in the Gross Domestic Product. Most products sold by the
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Company to this market are customized conventional envelopes which are used for
such purposes as general correspondence, invoicing and remittance. Customized
conventional envelopes have features such as custom corner card imprints, inside
tints and custom graphics.
FINANCIAL SERVICES AND INSURANCE MARKETS. The financial services market
includes financial institutions, such as banks, savings and loans, credit
unions, mutual funds and others. The insurance market includes companies
primarily in the life, health, property and casualty insurance businesses. The
Company sells both customized conventional envelopes, specialty envelopes and
packaging products to these markets. The Company's products supplied to the
financial services market include statement envelopes, drive-through window
envelopes, teller helper envelopes, general correspondence envelopes and
envelopes used for business transactions, such as personal loans, mortgage loans
and inter-office envelopes. Products supplied to the insurance market include
envelopes used for premium notices, returns, checks, dividends, statements and
general correspondence. The financial services and insurance industries have
experienced consolidation over the past several years, and the Company's
national account effort was initiated to service the larger, centralized
purchasing and supply requirements resulting from consolidations in these
markets.
FORMS MARKET. The Company produces conventional envelopes with
customized printing for customers in the forms market. The forms market
consists primarily of independent forms distributors and major forms
manufacturers who typically do not produce their own envelopes but purchase
envelopes from the Company to resell to their customers.
GOVERNMENT MARKET. In the United States, this market includes the
Government Printing Office, the United States Postal Service, the General
Services Administration and state and local governments. The Company's
government contracts are awarded primarily through a competitive bid process.
Such contracts, which are usually of short duration, are primarily fixed price
contracts and generally do not contain quantity commitments. These contracts
typically contain customary provisions for termination at the convenience of the
government without cause and are subject to appropriation of funds. In Canada,
this market includes large orders from the federal government, ministries and
agencies, and from provincial governments, cities, school boards, universities
and hospitals.
DISTRIBUTORS AND RESELLERS MARKET. The Company has a substantial market
share in the distributors and resellers market in Canada and in the U.S. through
its QPP division. The Company sells both Consumer Direct and Wholesale products
to paper merchants, envelope jobbers and business forms manufacturers. Paper
merchants generally sell to printers that, in turn, print the envelopes with
letterhead and sell them to consumers. Envelope jobbers are printers who
specialize in printing envelopes but no other products. The business forms
manufacturers distribute special size envelopes to match their own custom
designed forms. To a lesser extent, the Company also sells to stationers, large
retailers and greeting card companies who sell the envelopes or distribute them
to retailers.
PHOTOFINISHING PACKAGING, TAGS AND CD ROM PACKAGING. Film processing
outlets comprise the photofinishing packaging market. Primary processing
outlets include mass merchandisers who have film developed at wholesale labs,
mini-labs operating as stand-alone operations and counter services as part of
camera shops, as well as drug stores that feature on-site processing of customer
film. The Company is a significant supplier of photofinishing packaging
products, which require extensive application of color graphics.
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The market for tags is diverse due to the wide range of applications. In
the manufacturing sector, tags are used for production tracking, shipping,
labeling, raw materials identification, inspection records and safety/hazard
warnings. Retail outlets use tags for product description, content
identification, care and use instructions, inventory control and promotions.
The Company also prints and produces bar-coded tags for inventory tracking in
warehouses and stores.
The Company is currently developing and selling packaging for CD ROM
disks, which management believes is an emerging market within the envelope
industry.
MEDICAL MARKET. The medical market consists of (i) diagnostic imaging
equipment and supplies manufacturers, (ii) medical forms companies, (iii)
regional independent dealers, and (iv) dealer buying groups, all of which sell
to hospitals and clinics across the country. The Company's medical market
products include diagnostic imaging or X-ray color coded jackets, category
insert jackets, negative preservers, film mailers, file pockets and color-coding
labels. These products are designed to provide easy, efficient and reliable
filing and mailing systems for doctors and hospitals. The Company has improved
its medical products line by utilizing high-quality materials, adding Mylar
color-coded labels to jacket edges and custom printing to place additional
information on jacket panels.
FINANCIAL AND LEGAL MARKETS. The legal and financial market consists of
legal, accounting and professional offices. The Company sells expanding
envelopes, pockets, pressboard folders, envelopes and other filing supplies to
these markets. These products are sold primarily through the Company's Kruysman
division which sells its products under its brand name Redweld(R) directly to
many major accounting firms and law firms.
OFFICE PRODUCTS MARKET. The office products market includes national
wholesale stationers, large national office products dealers and superstores.
These products are not generally sold to end users, but are sold in the resale
market. Many of the QPP"s office products are featured in national catalogs
published for the office products industry.
COURIER PACKAGING MARKET. The courier packaging market consists of large
international air couriers, as well as regional couriers and delivery companies.
The Company services a large part of the courier packaging market, primarily
through Supremex's PNG division, as well as Mail-Well's Cleveland facility.
These products include overnight letter envelopes, multi-walled polyethylene
pouches, security envelopes, diagnostic pouches and a broad range of stock and
custom corrugated shipping containers.
HIGH IMPACT COLOR PRINTING
GAC currently focuses on providing premium fine color printing services
to customers in five primary market areas: advertising literature, high-end
catalogs, annual reports, calendars and four color computer instruction books.
GAC sells many of its products to Fortune 500 Companies, leading edge graphic
designers, as well as advertising agencies. Calendars are custom printed for
publishers who market them through their own distribution channels. Computer
text books are primarily printed for publishers who generally sell to customers
through the retail market.
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Management believes that the levels of quality and customer service that
GAC provides is well-suited for buyers in these market segments whose marketing
efforts require superior printed materials to complement the quality and
features of their products, services and corporate images. GAC serves a broad
base of customers, including major manufacturers, retailers, service
organizations and advertising agencies. GAC draws its customers from across the
United States and additionally prints advertising literature for a number of
foreign companies selling goods in the United States. During the fiscal year
ended December 31, 1996, GAC served in excess of 650 customers, the top 10
customers of which accounted for approximately 27% of GAC's net sales. Due to
the project-oriented nature of the commercial printing industry, sales to
particular customers may vary significantly from year to year depending upon the
number and size of their projects. During the fiscal year ended December 31,
1996, GAC's largest customer accounted for approximately 5% of its net sales.
MARKETING AND DISTRIBUTION
ENVELOPE PRINTING
As a result of the wide array of applications, customer preferences and
order sizes, the Company's marketing and advertising efforts vary significantly
among markets and by region. Management believes that the Company's customer
responsiveness and service have resulted in the long-term retention of a
significant number of its customers. The Company continues to emphasize a more
focused national account program to attract customers whose needs are national
or cover multiple regions.
The Company markets the majority of its printed envelope products through
a sales force of approximately 350 people who generally work with customers from
the initial product design stage through product delivery to ensure that
finished products meet both customers' applications and marketing needs. The
Company's salespeople represent the primary points of contact for customers in
the Consumer Direct market segment. Accordingly, the Company attempts to
retain an experienced, well-qualified sales force by providing appropriate
training and competitive compensation. Compensation is typically either salary
plus commission or straight commission depending on several factors including
customer size and type, plant location and order size. Management believes that
the Company's sales force provides an important competitive advantage and the
Company has been successful in developing loyalty within this important employee
group. Many of the Company's salespeople have been employed by the Company for
ten years or longer. The Company's sales force is organized by manufacturing
facility with salespeople reporting to division managers supplemented by a
national accounts group. The Company plans to leverage its sales force by
increasing the utilization of plant capabilities as well as the cross-selling of
product lines to enhance the performance of each of the Company's regions.
Increased coordination among regions will help the Company to compete for
national account business, to enhance the internal dissemination of successful
new product ideas, to efficiently allocate its production equipment, to share
technical expertise and to increase Company-wide selling of specialty products
manufactured at selected facilities.
Products not marketed by the Company's sales force are sold through
distributors to better serve selected wholesale markets, geographic regions
without direct sales representation and certain specialty markets, including the
medical and photofinishing packaging markets. The Company's office products
sales staff attends trade shows to market products. These products are also
featured in national catalogs produced for the office products market.
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Most of the Company's envelope sales are pursuant to either contracts for
a specific number of envelopes or blanket purchase orders. Most blanket purchase
orders are for a term of one year or less and for a specified number of
envelopes, although there usually is no requirement that envelopes be ordered in
any set quantity. Blanket purchase orders may generally be renewed from year to
year. Each contract or order is tailored to the specifications of the desired
products and therefore there are no Company-wide pricing guidelines. Each plant
is responsible for negotiating its own contracts and purchase orders.
In most United States markets, the Company utilizes its own trucks to
make local deliveries. Generally, for shipments over 50 miles, the Company uses
common carriers to transport products to customers' locations. These shipments
are usually made on a less-than-truckload basis. United Parcel Service is used
primarily for low volume shipments (orders of less than 10,000 units).
Transportation expenses have been declining as more customers absorb these costs
directly. In most Canadian markets, Supremex employs a delivery service to
serve customers which has significantly increased Supremex's on-time delivery
rate.
HIGH IMPACT COLOR PRINTING
GAC markets primarily on a regional basis in the commercial printing
industry. GAC maintains a large national sales staff, consisting of
approximately 62 salespeople who work out of sales offices across the United
States. Management believes that GAC maintains the largest sales staff in the
high impact commercial printing industry. GAC's sales staff represents the
primary point of contact for many customers and reinforces its policy of
providing the highest level of customer service possible. With offices located
in many major metropolitan areas, GAC is able to offer greater personalized
customer attention, with frequent meetings and calls to existing and potential
customers.
PRINTING AND MANUFACTURING
ENVELOPE MANUFACTURING AND PRINTING
There are essentially two types of machines used in the envelope
manufacturing or "converting" process: (i) high-speed web converting machines,
capable of handling on-line large volume orders with multiple colors and
numerous features and (ii) die cutter/blanker machines, used primarily for
smaller orders to be customized off-line or for orders with certain limited
customized features. The manufacturing process used is dependent upon the size
of a particular order, custom features required, machine availability and
delivery requirements.
The Company purchases most of its paper in rolls. In the die
cutter/blanker process, typically used for small to medium-sized orders of
500,000 units or less, paper is cut into varying sizes by a sheeter. Stacks of
sheets are then cut into blanks using either manually-placed dies or by
computer-controlled die-cutting machines. In almost all cases, envelopes are
imprinted on one or both sides. An adhesive is typically applied to the blank,
which is then folded. Large volume envelope orders (generally over 500,000
units) can bypass the separate sheeting and cutting operations to be
manufactured directly from the paper roll using the web machine process. The
paper is fed as one continuous roll through the equipment where it is printed,
cut, folded and glued, emerging as finished envelopes ready for packing and
shipping.
<PAGE>
The Company is currently operating its high-speed web machines at levels
close to capacity. Accordingly, in order to expand its business efficiently,
the Company will require additional high-speed web machines. The availability
of web machine capacity not only allows the Company to attract high-volume work,
but it frees die cutter/blanker machines and related equipment for utilization
on higher-margin, typically smaller volume, specialty work. Management
estimates that, based on current utilization of its existing equipment and
expected demand, the Company will need approximately 6 to 7 additional high-
speed web machines over the next five years representing an aggregate projected
capital expenditure of approximately $4.5 million to $5.0 million. Management
believes that the Company has adequate manufacturing capacity on its die
cutter/blanker machines for current and foreseeable manufacturing requirements.
Envelope manufacturing equipment typically has a relatively long useful
life. The Company's plant engineers are skilled at maintaining and rebuilding
equipment, which requires limited capital expenditures and can convert existing
equipment to that needed for specialized products, such as those sold to the
medical, photofinishing packaging and diskette markets.
The Company also has established programs to implement new production
technologies related to flexographic printing, lithographic web printing and
variable imaging technology. Flexographic printing has long been the mainstay
of the envelope industry and the Company has flexographic printing capabilities
at virtually all of its facilities. The Company continues to implement
improvements to its flexographic printing processes which management believes
will provide higher-quality products. In addition, the Company also seeks to
combine lithographic technology with web converting capability, which will
improve the quality of the Company's graphics. The Company also has installed
at one manufacturing facility variable imaging process capabilities, which
create the flexibility to customize products during the manufacturing process.
Envelopes can be individually addressed, bar codes can be added and imprints can
be personalized. These technologies have allowed the Company to become a more
complete supplier to customers, particularly in the direct mail and
photofinishing markets.
Management believes the Company can enhance its competitive position in
the envelope industry through the implementation of improved management systems.
The management systems currently being implemented by the Company are designed
to improve order flow, improve turnaround capabilities and provide more
information with respect to equipment utilization, asset management, customer
requirements and product line profitability.
The process of manufacturing envelopes produces two types of waste.
Skeletal waste is the excess paper produced when a die punches the blanks from a
sheet. Process waste is generated in the process of setting up a machine to run
a job. The Company sells both skeletal and process waste and accounts for such
sales as a reduction to cost of sales. For the year ended December 31, 1996,
waste sales accounted for approximately $ 8.9 million (1.1% of net sales).
Waste paper prices generally follow the fluctuations in the price of paper. The
Company maximizes waste collection yield by using highly automated waste paper
segregation systems which utilize a centralized vacuum-driven separation process
on the Company's high-speed web systems.
HIGH IMPACT COLOR PRINTING
The process of manufacturing in the commercial printing industry combines
advanced prepress technology with high-quality color presses and extensive
binding and finishing operations.
<PAGE>
Many of GAC's facilities are open 7 days a week, 24 hours a day to meet customer
printing requirements.
PREPRESS SERVICES. GAC's prepress services include all the processes
necessary to prepare the media (art, photographs, typed copy), go to press,
photographically duplicate and/or digitally produce images, separate color
images into process colors, assemble films and burn film images onto plates.
GAC uses electronic technology to compose the elements of the individual pages
of the project and to create screen tints, produce color blends and retouch
photos. These images can then be reviewed for exact color and content. The
digital information is then processed to a film plotter for film output. GAC's
film plotters are capable of plotting 3600 dots per inch resolution, giving a
clean detail of the imagery. GAC has also developed GAC Color Plus(TM), an
advanced screening process which allows larger quantities of ink to be used in
the printing process, thereby producing a higher quality image than is available
using conventional techniques. GAC has capitalized on the market opportunities
in this area by building a state of the art electronic pre-press department.
PRINTING SERVICES. GAC currently operates heatset web presses, including
half-webs, full-webs and double-web presses, as well as sheet-fed presses at
four production facilities. GAC primarily uses sheet-fed presses for short to
medium run jobs. The sheet-fed presses are capable of printing up to two, four,
six or eight colors, running at standard press speeds of 6,000 to 10,000 sheets
per hour. The web presses are higher-production presses which start with a roll
of paper at one end, print on both sides and produce a product which may be
folded, glued and perforated on the press. The Company's web presses are
capable of simultaneously printing up to 16 colors at one time.
POSTPRESS AND FULFILLMENT SERVICES. GAC provides extensive postpress and
fulfillment services in the final stages of the production cycle. These
services include cutting, folding, binding, finishing and distribution of the
finished product. GAC also provides warehousing, packaging and distribution
services to customers, a critical element to quality service. In addition, GAC
maintains a catalog packaging assembly line which uses both computer-printed
mailing labels and ink-jet applied addresses to facilitate its customers' mass
mailings.
MATERIALS AND SUPPLY ARRANGEMENTS
ENVELOPE PRINTING
The primary material needed for the manufacture of envelopes is paper,
which in 1996 accounted for approximately 71.0% of the Company's cost of
envelope materials and represented approximately 33.1% of net sales related to
envelopes. Other materials include cartons/boxes, window film, adhesives and
ink. Except for a very small amount of coated paper, envelopes are made
primarily from the following major grades of uncoated free-sheet papers: white-
wove, unbleached kraft and semi-bleached and bleached kraft. Most of the
Company's products are made from white-wove grades.
Suppliers of white-wove or kraft paper include Georgia-Pacific, Champion
Paper, Boise Cascade, International Paper and Union Camp. The Company has an
oral agreement with Georgia-Pacific to purchase 45,000 tons of paper during the
year ending February 24, 1997.
Management believes that the Company's large volume paper purchases
should continue to ensure the receipt of adequate supplies in the future.
<PAGE>
HIGH IMPACT COLOR PRINTING
The primary materials used by GAC in the commercial printing industry are
paper, ink, film, offset plates, chemicals and solvents, with paper accounting
for approximately 87% of total material costs. GAC purchases these materials
from a number of suppliers and has not experienced any significant difficulties
in obtaining any raw materials necessary for operations. The principal raw
material used by GAC in printing operations is high quality heavy-stock paper.
GAC expended in excess of $46.7 million for paper supplies for its printing
operations for the year ended December 31, 1996. GAC implemented an inventory
management system in which a limited number of paper suppliers supply all its
paper needs at its Portland facility, while holding and managing paper inventory
for this facility. These suppliers are responsible for delivering paper on a
"just-in-time" basis directly to GAC's facilities. Management believes that
this system has allowed GAC to enhance the flexibility and speed with which it
can serve customers, improve pricing on paper purchases, eliminate a significant
amount of paper inventory and reduce costs by reducing warehousing capacity.
PATENTS, TRADEMARKS AND BRAND NAMES
The Company markets products under a number of trademarks and brand
names. Additionally, the Company currently owns 36 patents relating to its
envelope business, 29 in the United States and 7 in Canada. Two of the patents
consist of the United States and Canadian patents for two-way envelopes, which
the Company acquired in the Supremex acquisition. The Company's sales do not
depend to any significant extent upon any single or related group of patents.
The patents expire at various times through 2012.
COMPETITION
ENVELOPE PRINTING
The envelope printing and manufacturing industry is extremely fragmented
and highly competitive with a few multi-plant and many single-plant companies
that primarily service regional and local markets. Manufacturing requirements
and technologies do not present significant barriers to entry into the business.
The printing and manufacturing processes for most products are readily available
and capital outlays are relatively low, although high-speed envelope
manufacturing equipment requires significant capital outlays.
In marketing its products, the Company competes with a few multi-plant
and many single-plant companies servicing regional and local markets. The
Company also faces competition from alternative sources of communication and
information transfer such as facsimile machines, electronic mail, interactive
video disks, interactive television and electronic retailing. Although these
sources of communication and advertising may eliminate some domestic envelope
sales in the future, management believes that the Company will experience
continued demand for envelope products due to (i) the ability of the Company's
customers to obtain a relatively low-cost information delivery vehicle that may
be customized with text, color, graphics and action devices to achieve the
desired presentation effect, (ii) the ability of the Company's direct mail
customers to penetrate desired markets as a result of the widespread
deliverability of mail to residences and businesses through the United States
Postal Service, and (iii) the ability of the Company's direct mail customers to
include return materials in their mail-outs.
<PAGE>
Principal bases of competition are price, quality and service. Although
all three are equally important, various customers may emphasize one or more
over the others. For example, direct mail customers may consider service and
quality to be relatively more important than price. In contrast, an envelope
plant's proximity is very important to certain customers due to freight charges
and turnaround time.
HIGH IMPACT COLOR PRINTING
The commercial printing industry is highly competitive and fragmented.
GAC competes against a number of large, diversified and financially stronger
printing companies, as well as regional and local commercial printers, many of
which are capable of competing with GAC in both volume and production quality.
Although GAC believes customers are price sensitive, it also believes that
customer service and high-quality products are important competitive factors.
Management believes GAC provides premium quality and customer service while
maintaining competitive prices through stringent cost control efforts.
The main competitive factors in GAC's markets are customer service,
product quality, reliability, flexibility, technical capabilities and price.
Management believes GAC competes effectively in each of these areas.
SEASONALITY
Several Consumer Direct market segments served by the Company, such as
photofinishing packaging and certain segments of the direct mail market,
experience seasonality, with a higher percentage of the volume of products sold
to these markets occurring during the fourth quarter of the year. This
seasonality is due to the increase in sales to the direct mail market due to
holiday purchases. Seasonality is offset by the diversity of the Company's
other products and markets which are not materially affected by seasonal
conditions.
The commercial printing industry experiences seasonal variations. GAC's
revenues from annual reports are generally concentrated from February through
April. Revenues associated with holiday catalogs and automobile brochures tend
to be concentrated from July through October, and calendars from May to
September. As a result of these seasonal variations, GAC is at or near capacity
at certain times during these periods.
BACKLOG
The Company's envelope production backlog was $58.7 million as of
December 31, 1996, compared to $55.8 million at December 31, 1995. Backlog
consists only of purchase orders and short-term contracts that are typically
filled within three weeks to six months. Orders may generally be rescheduled or
canceled by the payment of cancellation charges and costs incurred until the
time of cancellation. Therefore, the Company's backlog does not necessarily
reflect future sales levels.
The Company's backlog in its commercial printing segment was $11.3
million as of December 31, 1996. Backlog consists of purchase orders and
contracts that are typically filled within 4 to 6 weeks. Backlog does not
necessarily reflect future sales levels.
<PAGE>
EMPLOYEES
As of December 31, 1996, the Company employed a total of 6,144 people,
including 1,071 classified as salaried, 4,665 as hourly and 408 as salespeople.
Approximately 2,046 people employed at the Company's facilities are represented
by unions affiliated with the AFL-CIO or Affiliated National Federation of
Independent Unions. These employees are governed by collective bargaining
agreements, each of which covers the workers at a particular facility, expires
from time to time and are negotiated separately. Accordingly, management
believes that no single collective bargaining agreement is material to the
operations of the Company as a whole.
Except for a five-week walk-out at the Cleveland plant in June 1988,
there have been no labor strikes during the last 10 years at any facility now
owned by the Company. The 1988 Cleveland strike was settled by reaching a new
three-year collective bargaining agreement. The Company considers relations
with employees in the United States and Canada to be good.
ENVIRONMENTAL
The Company's operations are subject to federal, state and local
environmental laws and regulations relating to air emissions, waste generation,
handling, management and disposal, and at certain facilities, wastewater
treatment and discharge. The Company has implemented environmental programs
designed to ensure that the Company operates in compliance with the applicable
laws and regulations governing environmental protection. The Company's policy is
that management at all levels be aware of the environmental impact of operations
and direct such operations in compliance with applicable standards. Management
believes the Company is in substantial compliance with applicable federal, state
and local laws and regulations relating to environmental protection.
Although the Company does not anticipate that material capital
expenditures will be required to achieve or maintain compliance with
environmental laws and regulations, changing environmental laws and regulations
might affect the printing industry as well as the manufacture or transportation
of envelopes and related packaging products. For example, the Company will be
subject to regulations being developed by the federal Environmental Protection
Agency ("EPA") and state environmental agencies to implement the Clean Air Act
Amendments of 1990. Accordingly, there can be no assurance that environmental
matters resulting in material liabilities or expenditures will not be discovered
or that, in the future, material expenditures for environmental matters will not
be required by changes in law or regulations.
The Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), as amended (also known as the "Superfund" legislation),
imposes joint and several liability, without regard to fault or the legality of
the original conduct, on certain classes of persons for the costs of
investigation and remediation of sites at which there have been releases or
threatened releases of hazardous substances. These persons, known as
potentially responsible parties ("PRPs"), include the owners and operators of
property and persons that generated, disposed of or arranged for the disposal of
hazardous substances found at a site. Many states have similar programs. The
Company has not been named as a PRP at any Superfund sites as a result of its
ongoing operations. Due to waste management and minimization programs
implemented by the Company and the Company's current use of permitted hazardous
waste disposal facilities, management does not believe that the Company's
current operations will give rise to future material liability under CERCLA.
<PAGE>
In the asset purchase agreement related to the Georgia Pacific
acquisition ("GP Acquisition"), GP Envelope agreed to retain all liabilities
arising from releases of hazardous substances at any off-site locations
occurring prior to the closing date of the GP Acquisition (other than the
migration of hazardous substances from adjacent locations to the plants or from
the plants to adjacent locations ("Migration")). Accordingly, except for
liability associated with Migration, if any, the GP Acquisition should not
expose the Company to liability under CERCLA for historical off-site disposal
practices.
Additionally, GP Envelope also agreed to indemnify and hold the Company
harmless from damages that relate to the use, condition, ownership or operation
of any purchased assets or the conduct of GP Envelope on or prior to the closing
date of the GP Acquisition, including environmental third party claims. Such
damages include on-site liabilities under CERCLA or corresponding state laws
attributable to operations prior to the closing date. GP Envelope's
indemnification obligation is subject to (i) a $35.0 million limitation and (ii)
a six-year term limit. This indemnity also is subject to contribution
arrangements with the Company, which begin with GP Envelope paying 90% of the
indemnifiable damages in the first two years and decreasing annually to 50% in
the sixth year. The indemnity for environmental third party claims is not
subject to any contribution arrangements. Conversely, the Company has agreed to
indemnify GP Envelope for (i) environmental liabilities incurred subsequent to
the closing date, (ii) environmental cleanup liabilities at the sites or related
to Migration to or from such sites incurred prior to the closing date, subject
to contribution arrangements with GP Envelope, which begin with the Company
paying 10% of the indemnifable damages in the first two years increasing
annually to 50% in the sixth year, and (iii) third party claims for pre-closing
events arising six years after the closing date. Georgia-Pacific guaranteed all
of GP Envelope's obligations under the asset purchase agreement related to the
GP Acquisition.
In the asset purchase agreement related to the American Envelope Company
acquisition ("American Acquisition"), American agreed to indemnify and hold
harmless the Company from certain liabilities and obligations. In addition to an
indemnification for certain retained liabilities, the indemnification provides
that (i) American's indemnification obligation for out of pocket costs arising
out of or related to certain disclosed environmental matters and the presence of
any hazardous materials on the purchased assets ("Costs of Remediation") is
subject to a $25.0 million limitation and a six year claims period, and (ii) to
the extent that a claim consists of costs and expenses related to any Costs of
Remediation as to which American is obligated to indemnify the Company, the
parties shall contribute and share in the items on a sliding scale, such that
American bears 90% of each item of Costs of Remediation for which a claim has
been made during the first two years after closing of the American Acquisition,
with American's share decreasing by 10% each year thereafter until the sixth
anniversary of such closing date, when American's indemnification obligations
related to unclaimed Cost of Remediation matters cease. These sharing
percentages are fixed based upon the date the claim is made with respect to any
claim for Costs of Remediation and the parties' relative obligations with
respect to any such claim do not change thereafter. The indemnity for
environmental third party claims is not subject to any contribution by the
Company.
In connection with the American Acquisition, American and the Company
applied to and/or filed notices with regulatory agencies for the transfer or
issuance of all material permits or authorizations relating to the operations of
its plants and related facilities, including but not limited to, wastewater
permits and air permits. All such permits and authorizations have been
transferred or issued, as applicable.
<PAGE>
Environmental claims relating to the properties acquired in the Supremex
Acquisition, the GAC Acquisition, the QPP Acquisition, the PNG Acquisition and
the SPCC Acquisition are not subject to separate indemnification provisions but
are subsumed under the general indemnification provisions of the applicable
purchase agreements.
ITEM 2. PROPERTIES
The Company occupies 52 envelope printing and commercial printing
facilities in the United States and Canada, 40 of which are leased. In
addition to on-site storage at each of the foregoing facilities, the Company
also stores products in one owned and three leased warehouses. Substantially
all of the printing and manufacturing facilities are pledged to secure
indebtedness under the bank credit agreements. The Company also leases 9,405
square feet of office space in Englewood, Colorado for its corporate
headquarters and 8,573 square feet of office space in Chicago, Illinois for
additional corporate headquarters support persons. The Company's Supremex, GAC,
PNG and QPP headquarters are each maintained in one of the Company's printing
and manufacturing facilities. Management believes that the Company has adequate
facilities for the conduct of current and future operations.
ITEM 3. LEGAL PROCEEDINGS
The Company and its subsidiaries may from time to time be involved in
claims or lawsuits that arise in the ordinary course of business. Accruals for
claims or lawsuits have been provided for to the extent that losses are deemed
probable and estimable. Although the ultimate outcome of these claims or
lawsuits cannot be ascertained, on the basis of present information and advice
received from counsel, it is the opinion of management that the disposition or
ultimate determination of such claims or lawsuits will not have a material
adverse effect on the Company. In the case of administrative proceedings
related to environmental matters involving governmental authorities, management
does not believe that any imposition of monetary damages or fines would be
material.
The Company settled the Skrudland v. Mail-Well Corporation d/b/a Mail-
---------------------------------------------
Well Envelope lawsuit in December 1996 for $300,000 plus attorney's fees. The
- -------------
settlement amount had already been reserved by the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock is currently traded on the New York Stock
Exchange under the symbol "MWL." Prior to December 19, 1996 the Company's
Common Stock was traded over-the-counter in the Nasdaq National Market System
under the symbol "MLWL." As of March 14, 1997, there were 369 shareholders of
record and, based on security position listings, the Company believes that it
has in excess of 1,500 beneficial owners.
<PAGE>
Following are the range of the high and low sales prices for the
Company's Common Stock as reported by the Nasdaq National Market System and New
York Stock Exchange during each fiscal quarter for the year ended December 31,
1996.
<TABLE>
<CAPTION>
QUARTER ENDING: HIGH LOW
--------------- ------- -------
<S> <C> <C>
September 30, 1995 (from 9/22/95) $ 13.50 $ 13.25
December 31, 1995 $ 13.50 $10.625
March 31, 1996 $ 12.75 $ 8.125
June 30, 1996 $ 9.75 $ 7.75
September 30, 1996 $10.375 $ 8.25
December 31, 1996 $16.375 $10.125
</TABLE>
DIVIDEND POLICY
The Company has not paid a dividend on Common Stock since its
incorporation. The Company does not anticipate paying any dividends on Common
Stock in the foreseeable future because it intends to retain earnings to finance
the expansion of its business, to repay indebtedness and for general corporate
purposes. Any payment of future dividends will be at the discretion of the
Board of Directors and will depend upon, among other things, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
relevant factors. The Company's bank credit agreements and senior subordinated
notes indenture limit the amount of dividends the Company could pay before
causing a default.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The summary of historical financial data presented below is derived from
the historical audited financial statements of the Company and its predecessors,
GP Envelope & Pavey, except for the data presented below as of December 31, 1992
and for GP Envelope which is derived from the unaudited financial statements
which, in the opinion of management, reflect all adjustments, consisting of only
normal, recurring adjustments, necessary for a fair presentation of such
information. The historical balance sheet data as of December 31, 1994 include
Pavey which was acquired on February 24, 1994 and American which was acquired on
December 19, 1994. The operations of Pavey, American, Supremex, GAC, QPP, PNG
and SPCC have been included in the historical income statement data of the
Company from their respective dates of acquisition. The data presented below
should be read in conjunction with the Management's Discussion and Analysis of
Financial Condition and Results of Operations, the historical financial
statements and the related notes thereto included elsewhere herein.
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Predecessor Companies
-----------------------------------------
Period from Period from
February 24, January 1,
1994 1994
Year Ended through through Year Ended
December 31, December 31, February 23, December 31,
1996 1995 1994 1994 1993 1992
------------ ------------ ------------ ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net sales $778.5 $596.8 $225.7 $36.6 $ 252.0 $262.7
Income (loss) before
extraordinary item 16.9 10.4 2.7 (1.3) 3.8 7.1
Net income (loss) 16.9 8.0 2.7 (1.3) 3.8 7.1
Income per share before
extraordinary item $ 1.42 $ 1.36 $ 0.47 (a) (a) (a)
Extraordinary item - 0.31 -
------ ------ ------
Net income per share $ 1.42 $ 1.05 $ 0.47 (a) (a) (a)
====== ====== ======
Total assets 470.9 500.4 307.7 n/a 136. 9 146.2
Total long term obligations 209.9 295.9 229.4 n/a 0.0 0.0
</TABLE>
(a) Earnings per share is not presented for these periods as operations were
those of predecessor companies.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
In addition to the historical information contained herein, this report contains
forward-looking statements. The reader of this information should understand
that all such forward-looking statements are subject to various uncertainties
and risks that could affect their outcome. The Company's actual results could
differ materially from those suggested by such forward-looking statements.
Factors which could cause or contribute to such differences include, but are not
limited to, product demand and sales, growth rate, ability to obtain assumed
productivity savings, quality control, availability of acquisition opportunities
and their related costs, cost savings due to integration and synergies
associated with acquisitions, ability to obtain additional financings and bank
restructuring, interest rates, foreign currency exchange rates, paper and raw
material costs, waste paper prices, ability to pass through paper costs to
customers, postage rates, changes in the direct mail industry, competition,
ability to develop new products, labor costs and advertising costs. This
entire report should be read to put such forward-looking statements in context
and to gain a more complete understanding of the uncertainties and risks
involved in the Company's business.
OVERVIEW - During the first half of 1996, Mail-Well, Inc. (the "Company")
encountered bad weather in the east and midwest, pricing pressures and lower
profit margins at Graphic Arts Center, Inc. ("GAC"), and weaker than expected
demand for envelope products in the U.S. due to lower demand in the direct mail
industry. The Company quickly reacted to these conditions as reflected in the
strong earnings performance for the year. Also during 1996, the Company
acquired two envelope companies and one printing company. In November 1996, the
bank credit agreement was amended, the Company refinanced certain equipment
under a sale/leaseback arrangement and a receivable securitization facility was
arranged.
ACQUISITIONS - The Company commenced operations in February 1994 with the
acquisition of the envelope businesses of Georgia-Pacific Corporation ("GP
Envelope") and Pavey Envelope and Tag Corp. ("Pavey"). In December 1994, the
Company acquired American Envelope Company ("American"), a manufacturer and
printer of envelopes. In July 1995, the Company acquired Supremex, Inc.
("Supremex"), a Canadian printer and manufacturer of envelopes. In August 1995,
the Company acquired GAC, one of the leading high impact color printers in the
United States. In April 1996, the Company acquired Quality Park Products, Inc.
("QPP"), a printer and manufacturer of envelopes. In November 1996, the Company
acquired Pac National Group Products, Inc. ("PNG"), a Canadian envelope printer
and manufacturer based in Ontario. In December 1996, the Company acquired
Shepard Poorman Communications Corporation ("SP"), a high impact color printer
located in Indianapolis, Indiana.
The following charts illustrate the historical and pro forma sales and operating
income of the U.S. Envelope, Canadian Envelope, High Impact Color Printing and
Corporate segments of the Company. Pro forma sales and operating income include
the operations of GP Envelope, Pavey, American, Supremex and GAC as if the
acquisitions occurred on January 1 of the year of acquisition, the acquisition
of QPP occurred on April 1, 1995 and the amended bank borrowings and leasing
transactions occurred on January 1, 1994.
The paper version of this document includes two charts: Sales by Segment and
Operating Income by Segment. The data included in these charts is as follows
(dollars in millions):
<PAGE>
Sales by Segment
<TABLE>
<CAPTION>
1996 1995 1995 Pro 1994 1994 Pro
Historical Historical Forma Historical Forma
<S> <C> <C> <C> <C> <C>
SALES
US Envelope $551,225 $510,660 $584,712 $225,678 $444,576
Canadian Envelope 86,928 38,759 87,167 - -
High Impact Color Printing 140,371 47,384 149,767 - -
--------------------------------------------------------------
Total $778,524 $596,803 $821,646 $225,678 $444,576
==============================================================
Operating Income by Segment
<CAPTION>
1996 1995 1995 Pro 1994 1994 Pro
Historical Historical Forma Historical Forma
<S> <C> <C> <C> <C> <C>
US Envelope $ 52,376 $ 50,995 $ 54,484 $ 24,408 $ 31,754
Canadian Envelope 13,784 5,797 11,986 - -
High Impact Color
Printing 6,010 993 6,046 - -
Corporate (11,308) (10,191) (14,132) (5,851) (11,983)
--------------------------------------------------------------
Total $ 60,862 $ 47,594 $ 58,384 $ 18,557 $ 19,771
==============================================================
</TABLE>
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
U.S. ENVELOPE
- -------------
The following table presents 1996 historical financial data for the U.S.
Envelope operations of the Company including the operations of QPP since the
date of acquisition. The 1995 data includes the historical operations of the
Company and the historical operations of QPP for the nine months ended December
31, 1995 which was included to provide comparability to the 1996 information.
Information for 1994 combines the information derived from the historical
financial statements of the Company with financial information of GP Envelope,
Pavey and American for the portion of 1994 prior to the acquisition of each of
the businesses by the Company.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------
1996 1995 1994
---- ---- ----
(dollars in thousands) $ % $ % $ %
--------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C>
Net sales $551,225 100.0 $584,712 100.0 $444,576 100.0
Cost of sales 434,392 78.8 469,544 80.3 354,922 79.8
Operating expenses 64,457 11.7 60,684 10.4 57,900 13.1
-------- ----- -------- ----- -------- -----
Operating income $ 52,376 9.5 $ 54,484 9.3 $ 31,754 7.1
======== ====== ======== ===== ======== =====
</TABLE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
OPERATIONS OF ACQUIRED BUSINESS - Included in the operations of U.S. Envelope
for the year ended 1996 are the operations of QPP since the date of acquisition
and the corresponding period in 1995. QPP's net sales of $61.2 million for the
period represents a $12.9 million decrease from the same period in 1995. This
decrease was due to the loss of a major customer (which occurred prior to the
acquisition of QPP by the Company) representing sales of $13.3 million offset by
sales increases to other customers of $0.4 million. The gross margins for QPP
have improved from the prior year due to the discontinuation of certain
discounted pricing programs and savings from plant restructuring.
The following discussion relates to the U.S. Envelope operations of the Company,
exclusive of QPP's operations which were discussed in the preceding paragraph.
NET SALES - Net sales decreased 4.0% for the year ended December 31, 1996
compared to the year ended December 31, 1995. The average selling price
increased by 1.1% from $19.19 per thousand units in 1995 to $19.40 per thousand
units in 1996. The increase was due to a higher margin, customized product mix
and managing selling prices relative to paper costs. Total volume for the U.S.
Envelope operations decreased 5.1% to 25.3 billion units in 1996 from 26.6
billion units in 1995. Volume in 1996 was negatively impacted by lower direct
mail volume, and a shift towards more complex, higher margin products for which
fewer units were sold.
COST OF SALES - Cost of sales, as a percentage of sales, decreased from 78.9% in
1995 to 77.9% in 1996. The Company believes that material gross margin per unit
(measured on a per thousand envelope basis) and volume of units sold are better
indicators of its trend in revenues than its net sales, since historically the
Company has passed on to its customers changes in its cost of paper. When
measured on a unit basis, material gross margin increased from $10.42 per
thousand units in the year ended December 31, 1995 to $11.03 per thousand units
for the year ended December 31, 1996. The
<PAGE>
increase in material gross margin on a unit basis was attributable to the
Company's ability to manage selling price relative to declining paper prices as
well as the Company's ability to negotiate paper costs. The favorable effect of
lower paper costs on gross margin was largely offset by decreased revenue from
the sale of waste paper and increases in other costs as a percentage of sales.
Material costs, exclusive of waste revenue, were 44.9% and 49.4% of net sales
for the years ended December 31, 1996 and 1995, respectively. Waste recovery
revenue declined from $0.71 per thousand units in 1995 to $0.33 per thousand
units in 1996 which resulted in a decline in waste recovery revenue from $18.9
million in 1995 to $8.3 million in 1996.
OPERATING EXPENSES - Operating expenses include selling and administrative
expenses. For the year ended December 31, 1996, selling and administrative
expenses, as a percentage of sales, increased to 12.4% from 11.1% in 1995.
Included in 1996 operating expenses was a $2.1 million loss on the disposal of
assets which represented equipment idled from consolidation activities, the
disposal of equipment, impairment of buildings and the write-off of capitalized
software no longer in use. Without this loss, operating expenses as a
percentage of sales would have been 11.9% for 1996. The increase from 1995 was
due to higher compensation and benefit costs in the administrative area. The
increase was offset by the reduction or elimination of redundant functions when
businesses were acquired, resulting in cost savings.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO THE YEAR ENDED DECEMBER 31, 1994
The U.S. Envelope table includes the operations of QPP for the nine months ended
December 31, 1995 for comparability with 1996 historical operations; QPP's
operations are excluded from the 1994 column of that table and from the
following discussion.
NET SALES - The 14.9% increase in net sales for the year ended December 31, 1995
compared to the year ended December 31, 1994 was due to price and volume
increases. Total volume for the U.S. Envelope operations increased 4.7% to 26.6
billion units for the year ended December 31, 1995 from 25.4 billion units for
the year ended December 31, 1994. The volume increase was due, in management's
opinion, to the integration of the GP Envelope, Pavey and American acquisitions
into one organization. This integration increased the Company's ability to
serve national clients and efficiently manage production. Prices increased by
9.7% from $17.49 per thousand units in 1994 to $19.19 per thousand units in
1995, as the Company adjusted its prices in response to the significant increase
in the cost of paper. Historical net sales for the period from February 24,
1994 to December 31, 1994 were $225.7 million. The American operations
contributed net sales of $182.3 million in 1994 and volume of 12.7 billion
units. The operations of the predecessor companies (GP Envelope and Pavey) for
the period ended February 23, 1994 contributed net sales of $36.6 million and
volume of 1.8 billion units.
COST OF SALES - Total cost of sales, as a percentage of sales, decreased from
1994 to 1995, largely due to the impact of the Company's ability to effectively
manage the increase in the cost of paper and the related increases in sales
prices. Generally, in periods of increasing paper costs, the Company's gross
profit percentage declines even in situations where the entire increase in cost
can be passed on to its customers. The Company believes that material gross
margin per unit and volume of units sold are better indicators of its trend in
revenues than its net sales, since historically the Company has passed on to its
customers changes in its cost of paper. On a unit basis, material gross margin
increased from $10.19 per thousand units in 1994 to $10.42 per thousand units in
1995. The increase in the material gross margin on a unit basis was
attributable to: (1) the Company's ability to pass on paper cost
<PAGE>
increases and (2) an increase in proceeds from the sale of waste paper as waste
paper prices increased concurrently with the cost of paper. The realization of
cost savings from combining American operations with GP Envelope and Pavey
operations in December 1994 was partially offset by increased labor costs due to
wage and salary increases and resulted in lower labor and manufacturing expenses
as a percentage of sales.
OPERATING EXPENSES - For the year ended December 31, 1995, operating expenses
of $56.7 million were $1.2 million less than operating expenses in 1994. As a
percentage of sales, operating expenses decreased compared to the same period in
1994. The dollar decrease in operating expenses was due to the realization of
cost savings from combining the sales and administrative functions of American,
partially offset by the increase in commissions paid. During 1995, the
administrative offices of American were closed and the functions performed at
that location were transferred to the corporate office of the Company.
Additionally, the sales force of the Company was consolidated and deployed to
new markets and segments of the industry.
CANADIAN ENVELOPE
- -----------------
The following table presents financial information with respect to the Canadian
Envelope operations for the years ended December 31, 1996 and 1995. The 1996
information includes the operations of PNG for the one month ended December 31,
1996. Information for 1995 was derived from historical financial statements
both prior to, and after, the acquisition of Supremex by the Company.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1996 1995
---- ----
(dollars in thousands) $ % $ %
-------- ----- -------- -----
<S> <C> <C> <C> <C>
Net sales $86,928 100.0 $87,167 100.0
Cost of sales 61,020 70.2 62,564 71.8
Operating expenses 12,124 13.9 12,617 14.5
------- ----- ------- -----
Operating income $13,784 15.9 $11,986 13.7
======= ===== ======= =====
</TABLE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
NET SALES - Net sales for the year ended December 31, 1996 decreased 0.3% as
compared to sales for the year ended December 31, 1995. The average selling
price increased by 1.3% and was due to a higher margin, customized product mix.
Total volume decreased 6.1% to 4.2 billion units from 4.5 billion units in 1995.
Volume in 1996 was negatively impacted by a decrease in the sale of commodity
envelopes which have a lower margin than customized products.
COST OF SALES - Cost of sales, as a percentage of sales, decreased from 1995 to
1996, largely due to the Company's ability to effectively manage fluctuations in
the cost of paper and related fluctuations in sales prices. Material gross
margin per unit (measured on a per thousand envelope basis) and volume of units
sold are better indicators of its trend in revenues than its net sales, since
historically changes in the cost of paper have been passed on to customers.
When measured on a unit basis, material gross margin per unit increased 9.5%
from $10.25 per unit in 1995 to $11.22 per unit in 1996. A favorable effect on
gross margins also occurred due to lower paper costs, which decreased 10% from
the 1995 average.
<PAGE>
OPERATING EXPENSES - Operating expenses include selling and administrative
expenses which declined both as a percentage of sales and in absolute dollars
when comparing 1996 to 1995. The closing of the Brantford facility and other
cost centers contributed to this decline. In addition, sales forces were reduced
and administrative responsibilities were combined with other regions.
<PAGE>
HIGH IMPACT COLOR PRINTING
- --------------------------
The following table presents financial information with respect to the High
Impact Color Printing operations for the years ended December 31, 1996 and 1995.
The 1996 information includes the operations of SP for the one month ended
December 31, 1996. Information for 1995 reflects the historical results of GAC
prior to, and after, the acquisition by the Company.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------
1996 1995
---- ----
(dollars in thousands) $ % $ %
-------- ----- --------- -----
<S> <C> <C> <C> <C>
Net sales $140,371 100.0 $149,767 100.0
Cost of sales 116,179 82.7 121,449 81.1
Operating expenses 18,182 13.0 22,272 14.9
-------- ----- -------- -----
Operating income $ 6,010 4.3 $ 6,046 4.0
======== ===== ======== =====
</TABLE>
YEAR ENDED DECEMBER 31, 1996 COMPARED TO THE YEAR ENDED DECEMBER 31, 1995
NET SALES - The high impact color printing market is highly competitive and GAC
has lowered prices to meet market expectations. This was a major cause of the
6.3% decline in sales dollars. In response to this decline in sales price, GAC
has targeted higher margin markets and is aggressively allocating sales
resources to these markets. Another factor affecting the decline in sales
dollars was the decrease in paper costs. Fluctuations in paper prices are
generally passed on to customers as an integral part of the price of the
product. As paper prices decreased in 1996, as compared to 1995, the sales
prices also decreased.
COST OF SALES - Gross margins decreased as a percentage of sales to 17.3% in
1996 from 18.9% in 1995 as a result of the competition in major markets.
Reductions in cost of sales were not large enough to offset the decline in
sales. GAC has lowered gross margins to meet the competition and, as stated
previously, it is concentrating its sales efforts on higher-margin product
markets.
OPERATING EXPENSES - Operating expenses as a percentage of sales have decreased
12.8% from 1995. Operating expenses include selling and administrative expenses
and the reduction in this category demonstrates GAC's ability to reduce these
expenses in a time of decreasing gross margins. Improvements were made in the
purchasing of supplies, employee headcounts, travel and entertainment expenses
and spoilage.
<PAGE>
CORPORATE EXPENSES
- ------------------
The following table presents historical financial information for the Company
and includes the operations of each acquired company from the date of its
acquisition. The percentage column presents the specific expense items as a
percentage of historical net sales for the year.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
1996 1995 1994
---- ---- ----
(dollars in thousands) $ % $ % $ %
------- ---- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Operating expenses $ 7,136 0.9 $ 7,334 1.2 $ 3,844 1.7
Amortization expense 4,172 0.5 2,857 0.5 2,007 0.9
Interest expense 26,936 3.5 27,043 4.5 12,861 5.7
Interest expense -
amortization of deferred
financing costs 3,556 0.5 2,291 0.4 1,027 0.4
Other expense (income) 454 0.1 668 0.1 (245) (0.1)
Income taxes 12,263 1.6 7,219 1.2 2,171 1.0
</TABLE>
OPERATING EXPENSES - Operating expenses, as a percentage of net sales and in
total dollars, continues to decline as acquisitions are absorbed without
significant increases in corporate headcount.
AMORTIZATION EXPENSE - Amortization expense increased due to the amortization of
the intangibles recorded in the acquisitions.
INTEREST EXPENSE - Interest expense decreased primarily as a result of a lower
average interest rate on the bank debt of 7.6% in 1996 as compared to 8.5% in
1995. This decrease more than offsets the higher average bank debt balance
which was $206.5 million in 1996 as compared to $187.7 million in 1995. The
bank debt restructuring, the cash proceeds from the sale/leaseback and the cash
proceeds from the accounts receivable securitization discussed in the notes to
the financial statements resulted in the reduction of outstanding bank debt
balances toward the end of 1996.
INTEREST EXPENSE - AMORTIZATION OF DEFERRED FINANCING COSTS - The amortization
of deferred financing costs increased due to the increase in deferred financing
costs capitalized pursuant to the 1995 acquisitions for which there was a full
year of amortization in 1996.
INCOME TAXES - The effective tax rate for the year ended December 31, 1996 was
42.0 % as compared to 41.0% for the year ended December 31, 1995. The effective
tax rate for both periods was higher than the federal statutory rate due to
state and provincial income taxes. Additionally, certain goodwill amortization
and a portion of the employee stock ownership contribution was not tax
deductible.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
HISTORICAL CASH FLOW - Net cash provided by operating activities was $141.4
million and $32.0 million for the years ended December 31, 1996 and 1995,
respectively, and $19.6 million for the period from February 24, 1994 to
December 31, 1994. The acquisitions of Quality, PNG and SP required cash
payments in the amounts of $27.8 million, $20.5 million and $14.9 million,
respectively, which was borrowed under the Company's bank credit agreement. In
November 1996, the Company
<PAGE>
entered into a five year agreement whereby it can sell, on a revolving basis, an
undivided percentage ownership interest in a designated pool of accounts
receivable up to a maximum of $100.0 million. At December 31, 1996, $68.4
million was sold under this agreement and the sale was reflected as a reduction
of accounts receivable in the Company's consolidated balance sheet. Other
investing activities include capital expenditures of $18.7 million, $13.8
million and $4.5 million in 1996, 1995 and 1994, respectively. The 1996
expenditures were offset by the proceeds of $33.6 million from the disposal of
assets including $30.0 million from the sale/leaseback.
DEBT OBLIGATIONS - In November 1996, the Company amended its bank credit
agreement which now includes a $30.0 million revolving credit facility, a C$10.0
million revolving credit facility, $135.0 million of term loans, a $30.0 million
acquisition loans facility, a $12.0 million letter of credit facility and an
C$8.0 million letter of credit facility. As of December 31, 1996, the Company
had borrowed $6.6 million (including $5.8 million in letters of credit) under
the revolving credit facility of the bank credit agreement and $135.0 million
under the term loans. Availability at December 31, 1996 included $36.6 million
under the revolving credit facilities and $30.0 million under the acquisition
loan facility. Interest rates on the Company's bank debt ranged from 5.25% to
8.75% as of December 31, 1996. The weighted average interest rate on bank debt
was 7.6%.
CAPITAL REQUIREMENTS - The Company estimates that, based on current utilization
of its existing equipment and expected demand, it will spend $20.0 to $23.0
million per year on capital expenditures, exclusive of acquisitions.
EFFECTS OF INFLATION - The effects of inflation have not been material to the
Company. However, due to the competitive nature of its business, it may not
always be able to pass on inflationary cost increases in the future.
Manufacturing costs may be affected by inflation and the effects of inflation
may be experienced by the Company in future periods.
EFFECTS OF FOREIGN CURRENCY - The effects of foreign currency exchange have not
been material to the Company to date. The Company recognized a net foreign
exchange loss of $0.3 million in 1996 which relates, primarily, to U.S. dollar
denominated debt borrowed by the Canadian subsidiary. Term loans with a face
value of $65.0 million were borrowed in U.S. dollars and are included in the
balance sheet of Supremex. Supremex entered into two foreign currency swap
contracts which involve the exchange of floating rate U.S. dollar denominated
debt for floating rate Canadian dollar denominated debt at a contracted exchange
rate. The swap agreements are intended to minimize the exchange rate risk to
the Company.
SEASONALITY AND ENVIRONMENTAL - The effects of seasonality and environmental
matters had no material financial impact on the historical operations of the
Company and are not expected to have an effect on the Company's liquidity and
capital resources.
<PAGE>
<TABLE>
<CAPTION>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<C> <S> <C>
Mail-Well, Inc. and Subsidiaries
Independent Auditors' Report.......................................... 28
Consolidated Balance Sheets as of December 31, 1996 and 1995.......... 29
Consolidated Statements of Operations for the Years Ended
December 31, 1996 and 1995 and for the period from February 24, 1994
through December 31, 1994............................................. 31
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995 and for the Period from February 24, 1994
through December 31, 1994............................................. 32
Consolidated Statements of Changes in Stockholders' Equity for
the Years Ended December 31, 1996 and 1995 and for the period from
February 24, 1994 through December 31, 1994........................... 33
Notes to Consolidated Financial Statements............................ 34
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Mail-Well, Inc.:
We have audited the accompanying consolidated balance sheets of Mail-Well, Inc.
and Subsidiaries (''Company,'' see Note 1) as of December 31, 1996 and 1995, and
the related consolidated statements of operations, changes in stockholders'
equity, and cash flows for the years ended December 31, 1996 and 1995 and for
the period from February 24, 1994 through December 31, 1994. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Mail-Well, Inc. and Subsidiaries as
of December 31, 1996 and 1995, and the results of their operations and their
cash flows for the years ended December 31, 1996 and 1995 and for the period
from February 24, 1994 through December 31, 1994 in conformity with generally
accepted accounting principles.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 10, 1997
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS DECEMBER 31,
1996 1995
CURRENT ASSETS
Cash and cash equivalents $ 9,656 $ -
Receivables (net of allowance for doubtful accounts of $3,002 and $1,965) 40,612 95,550
Accounts receivable-other 7,743 3,855
Income tax receivable 3,504 2,104
Inventories 68,275 67,598
Deferred tax asset 2,309 3,846
Other current assets 3,513 1,330
-------- --------
Total current assets 135,612 174,283
PROPERTY, PLANT AND EQUIPMENT 183,302 205,096
DEFERRED FINANCING COSTS (net of accumulated amortization of
$6,746 and $3,191) 14,497 15,897
GOODWILL (net of accumulated amortization of $5,408 and $2,506) 128,812 101,026
OTHER ASSETS (net of accumulated amortization of $3,578 and $2,307) 8,723 4,134
-------- --------
TOTAL $470,946 $500,436
======== ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY DECEMBER 31,
1996 1995
CURRENT LIABILITIES
Accounts payable $ 44,539 $ 31,764
Accrued compensation and vacation 23,312 20,216
Accrued interest 4,455 4,497
Other current liabilities 26,206 16,530
Current portion of long-term debt and capital leases 14,975 11,523
--------- ---------
Total current liabilities 113,487 84,530
ACCRUED PENSION 1,284 2,266
CAPITAL LEASES 2,958 3,399
BANK BORROWINGS 121,992 207,482
SENIOR SUBORDINATED NOTES 85,000 85,000
DEFERRED INCOME TAXES 23,153 14,853
OTHER LONG-TERM LIABILITIES 1,865 588
--------- ---------
Total liabilities 349,739 398,118
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 25,000 shares authorized, none issued and outstanding - -
Common stock, $0.01 par value; 15,000,000 shares authorized, 12,942,828 shares
and 12,928,060 shares issued and 12,487,420 shares and 12,472,652 shares (including
1,298,848 shares held by ESOP) outstanding at December 31, 1996 and
December 31, 1995, respectively 130 130
Non-voting convertible common stock; $0.01 par value; 35,000 shares authorized,
none issued and outstanding - -
Paid-in capital 98,280 96,958
Retained earnings 27,631 10,704
Unearned ESOP compensation (2,896) (3,530)
Cumulative foreign currency translation adjustment (115) (20)
Pension liability adjustment (110) (211)
Treasury stock-at cost; 455,408 shares (1,713) (1,713)
--------- ---------
Total stockholders' equity 121,207 102,318
--------- ---------
TOTAL $ 470,946 $ 500,436
========= =========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- -----------------------------------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 24, 1994
YEAR ENDED DECEMBER 31, THROUGH
1996 1995 DECEMBER 31, 1994
<S> <C> <C> <C>
NET SALES $ 778,524 $ 596,803 $ 225,678
COST OF SALES
Materials 350,425 291,441 101,770
Labor and other 212,841 165,670 65,668
Manufacturing 42,308 22,787 10,853
Depreciation 14,904 9,841 4,058
Waste recovery (8,887) (18,935) (5,644)
----------- ---------- ----------
Total cost of sales 611,591 470,804 176,705
----------- ---------- ----------
GROSS PROFIT 166,933 125,999 48,973
----------- ---------- ----------
OTHER OPERATING COSTS
Selling 55,314 40,444 14,504
Administrative 44,440 35,104 13,216
Amortization 4,172 2,857 2,007
Loss on disposal of assets 2,145 - 689
----------- ---------- ----------
Total other operating costs 106,071 78,405 30,416
----------- ---------- ----------
OPERATING INCOME 60,862 47,594 18,557
OTHER (INCOME) EXPENSE
Interest expense-debt 26,936 27,043 12,861
Interest expense-amortization of deferred financing costs 3,556 2,291 1,027
Discount on sale of accounts receivable 726 - -
Other (income) expense 454 668 (245)
----------- ---------- ----------
INCOME BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 29,190 17,592 4,914
PROVISION FOR INCOME TAXES
Current 3,270 6,007 415
Deferred 8,993 1,212 1,756
----------- ---------- ----------
INCOME BEFORE EXTRAORDINARY ITEM 16,927 10,373 2,743
EXTRAORDINARY ITEM, NET OF TAX
BENEFIT OF $1,608 - 2,412 -
----------- ---------- ----------
NET INCOME $ 16,927 $ 7,961 $ 2,743
=========== ========== ==========
INCOME PER SHARE BEFORE
EXTRAORDINARY ITEM $1.42 $1.36 $.47
EXTRAORDINARY ITEM - 0.31 -
----------- ---------- ----------
NET INCOME PER SHARE $1.42 $1.05 $.47
=========== ========== ==========
WEIGHTED AVERAGE SHARES 11,918,547 7,614,708 5,878,631
=========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
- ------------------------------------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 24, 1994
YEAR ENDED DECEMBER 31, THROUGH
1996 1995 DECEMBER 31, 1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income $ 16,927 $ 7,961 $ 2,743
Adjustments to reconcile net income to cash provided by
operations:
Depreciation 14,904 9,841 4,058
Amortization 7,728 5,148 3,034
Accretion of original issue discount - 1,650 1,717
(Gain) loss on repurchase of deferred coupon notes - pre-tax - 4,020 (17)
Deferred tax provision 8,993 1,212 1,756
ESOP compensation expense 1,973 1,612 752
Loss on disposal of assets 2,145 - 689
Other 393 208 284
Changes in operating assets and liabilities, net of effects
of acquired businesses:
Receivables 75,985 (3,634) (6,109)
Inventories 22,049 5,578 (3,269)
Accounts payable (1,236) (5,944) 4,723
Accrued interest (304) 722 3,522
Current income taxes 997 (1,269) -
Other working capital 1,340 3,031 5,734
Other assets and other long-term liabilities (10,452) 1,869 (35)
--------- --------- ---------
Net cash provided by operating activities 141,442 32,005 19,582
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisitions, net of cash acquired (63,179) (79,613) (253,061)
Capital expenditures (18,742) (13,766) (4,474)
Proceeds from sale of property, plant and equipment 33,594 2,440 -
Purchase of marketable securities - (62,750) -
Sale of marketable securities 250 62,500 -
--------- --------- ---------
Net cash used in investing activities (48,077) (91,189) (257,535)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash overdrafts 2,496 4,779 423
Net proceeds from common stock issuance 40 68,181 19,631
Proceeds from issuance of deferred coupon notes - - 17,883
Proceeds from long-term debt 319,486 236,269 302,164
Repayments of long-term debt and capital leases (403,649) (224,768) (81,745)
Debt issuance costs (1,800) (5,571) (14,090)
Repurchase of deferred coupon notes - (19,712) (4,607)
Repurchase of common stock - - (1,713)
--------- --------- ---------
Net cash provided by (used in) financing activities (83,427) 59,178 237,946
--------- --------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (282) 6 -
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 9,656 0 (7)
BALANCE AT BEGINNING OF PERIOD 0 0 7
--------- --------- ---------
BALANCE AT END OF PERIOD $ 9,656 $ 0 $ 0
========= ========= =========
Supplemental disclosure of cash paid for:
Interest $ 25,144 $ 24,177 $ 7,445
Income taxes 5,831 6,479 2,912
Stock issued for debt and equity issuance costs 0 430 1,254
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996 AND 1995 AND THE PERIOD FROM
FEBRUARY 24, 1994 TO DECEMBER 31, 1994
(Dollars in Thousands)
- -----------------------------------------------------------------------------------------------------------------------------------
UNEARNED TOTAL
COMMON PAID-IN RETAINED ESOP STOCKHOLDERS'
STOCK CAPITAL EARNINGS COMPENSATION OTHER EQUITY
<S> <C> <C> <C> <C> <C> <C>
Issuance of common stock:
For cash $ 50 $18,786 $18,836
In acquisition of Pavey 6 2,082 2,088
With units 6 2,111 2,117
Costs incurred from issuance of stock (173) (173)
Repurchase of common stock $(1,713) (1,713)
Purchase of shares by ESOP (1) (244) (245)
Net income $ 2,743 2,743
------- ------- ------- ---------- ------- -------
Balance at December 31, 1994 61 22,562 2,743 (1,713) 23,653
Issuance of common stock:
In initial public offering 50 69,950 70,000
Other 5 4,014 4,019
Costs incurred from issuance of stock (5,823) (5,823)
Transfer of ESOP accounts 13 5,196 $(3,674) 1,535
Exercise of stock options 1 414 415
Change in unearned ESOP 645 144 789
Translation adjustments (20) (20)
Pension liability adjustment (211) (211)
Net income 7,961 7,961
------- ------- ------- ---------- ------- -------
Balance at December 31, 1995 130 96,958 10,704 (3,530) (1,944) 102,318
Issuance of common stock 51 51
Exercise of stock options 40 40
Change in unearned ESOP 1,231 634 1,865
Translation adjustments (95) (95)
Pension liability adjustment 101 101
Net income 16,927 16,927
------- ------- ------- ---------- ------- -------
Balance at December 31, 1996 $ 130 $98,280 $27,631 $(2,896) $(1,938) $121,207
======= ======= ======= ========== ======= ========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - Mail-Well, Inc., headquartered in Englewood,
Colorado, is organized under Delaware law and its common stock is traded on
the New York Stock Exchange. Mail-Well I Corporation, a wholly-owned
subsidiary of Mail-Well, Inc. conducts most of the business of Mail-Well,
Inc. Mail-Well I Corporation, together with its subsidiaries, is the owner
of the operating assets and the borrower of debt. These financial
statements include the accounts of Mail-Well, Inc., Mail-Well I Corporation
and its subsidiaries (collectively referred to as the "Company"). All
significant intercompany accounts and transactions have been eliminated.
NATURE OF OPERATIONS - The Company is one of the largest printers in North
America, manufacturing both envelopes and high impact color commercial
work. Within envelope printing, the Company competes in the consumer direct
segment in which envelopes are designed and manufactured to customer
specifications. In addition, the Company manufactures envelopes sold into
the office products market. The Company is also a leading high impact
commercial printer specializing in printing advertising literature, high-
end catalogs, annual reports, calendars and computer instruction books and
is recognized as an innovative provider of quality printed products to
leading companies in the United States. The Company commenced operations on
February 24, 1994 with the acquisition of the envelope businesses of
Georgia-Pacific Corporation ("GP Envelope") and Pavey Envelope and Tag
Corp. ("Pavey").
INITIAL PUBLIC OFFERING - On September 21, 1995, the Company completed an
initial public offering of 5,000,000 shares of common stock at $14.00 per
share. The net proceeds of the offering, after underwriting commissions and
expenses, were approximately $64.4 million; the net proceeds were used to
repay bank indebtedness and repurchase the remaining Deferred Coupon Notes.
CASH AND CASH EQUIVALENTS - Cash and cash equivalents includes cash on
hand, demand deposits, and short-term investments with original maturities
of three months or less. The Company's domestic banking system provides for
the daily replenishment of major bank accounts for check clearing
requirements. Accordingly, outstanding checks that had not yet been paid by
the banks at year end are reflected in accounts payable in the consolidated
balance sheets.
INVENTORIES - Inventories are generally valued at the lower of first-in,
first-out ("FIFO") cost or market and include the cost of materials,
labor and manufacturing overhead.
PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are recorded
at cost. Replacements of major units of property are capitalized and the
replaced properties are retired. Replacements of minor units of property
and repair and maintenance costs are charged to expense as incurred.
Depreciation for financial reporting purposes is calculated using the
straight-line method based on the estimated useful lives of the respective
assets, as follows:
Land improvements 25 years
Buildings and building improvements 15-45 years
Leasehold improvements 15 years
Machinery and equipment 15 years
Furniture and fixtures 3-10 years
Automobiles and trucks 5 years
Computers and software 3-5 years
<PAGE>
Depreciation for tax purposes is calculated using accelerated methods. Upon
retirement or disposition of assets, cost and accumulated depreciation are
removed from the related accounts and any gain or loss is included in income.
INTANGIBLE ASSETS - In connection with the issuance of both bank debt and public
debt as well as in connection with acquisitions, the Company recorded certain
intangible assets. The following schedule summarizes the amortization periods
and amortization expense recorded in connection with the intangible assets (in
thousands):
USEFUL
LIFE 1996 1995 1994
Amortization of Deferred Financing Costs 5-6 years $3,556 $2,291 $1,027
Amortization of Goodwill 40 years 2,900 1,586 920
Amortization of Non-Competition Agreement 3 years 1,000 1,000 833
Amortization of Covenant Not to Complete 5 years 120 120 100
Amortization of Acquisition Costs 151 5-21 years 152 151 154
------ ------ ------
Total $7,728 $5,148 $3,034
====== ====== ======
IMPAIRMENT OF LONG-LIVED ASSETS - Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability is based on future net cash
flows from the use of the asset. The Company recorded no adjustment for
impairment of long-lived assets in 1995. In 1996, the Company wrote off certain
assets with a net book value of $1,014,000 which is included in the consolidated
statements of operations in the loss on disposal of assets.
NET INCOME PER SHARE - Net income per share is computed by dividing net income
by the weighted average number of outstanding common shares and common stock
equivalents. Common shares and common stock equivalents outstanding exclude
unallocated and uncommitted shares held by the Company's employee stock
ownership plan ("ESOP").
DECEMBER 31,
1996 1995 1994
Common shares 11,656,604 7,522,861 5,878,631
Common stock equivalents 261,943 91,847 0
---------- --------- ---------
Total 11,918,547 7,614,708 5,878,631
========== ========= =========
Supplementary pro forma net income per share data, assuming the initial public
offering and related repayment of debt had taken place at January 1, 1995, are
is follows (dollars in thousands, except per share amounts):
DECEMBER 31, 1995
Income before extraordinary item $13,201
Extraordinary item 2,412
-------
Net income $10,789
=======
Weighted average common shares
and equivalents 11,334
Per common share:
Income before extraordinary item $ 1.16
Extraordinary item (0.21)
-------
Net income $ 0.95
=======
<PAGE>
FOREIGN CURRENCY TRANSLATION - The financial statements include the results
of Canadian operations which are translated from Canadian dollars, their
functional currency, into U.S. dollars. The balance sheet is translated at
the year end rate of exchange. Results of operations are translated at
average rates prevailing during the year. The effects of translation at the
balance sheet date are accumulated as the cumulative foreign currency
translation adjustment in stockholders' equity.
ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the
date of the financial statements, and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
RECLASSIFICATION - Certain amounts in the 1994 and 1995 financial statements
have been reclassified to conform to 1996 presentation.
2. ACQUISITIONS
In December 1994, the Company acquired substantially all of the assets of
American Envelope Company ("American"), a manufacturer of envelopes and a
wholly-owned subsidiary of CC Industries. In July 1995, the Company acquired
all of the outstanding shares of common stock of Supremex Inc. ("Supremex"),
a Canadian manufacturer of envelopes. In August 1995, the Company acquired
all of the outstanding shares of common stock of Graphic Arts Centers, Inc.
("GAC"), one of the leading high impact commercial printers in the United
States. In April 1996, the Company acquired substantially all of the assets
of Quality Park Products, Inc. ("QPP"), a printer and manufacturer of
envelopes. In November 1996, the Company acquired substantially all of the
Canadian assets of Pac National Group ("PNG"), a Canadian envelope
manufacturer based in Ontario. In December 1996, the Company acquired all of
the outstanding shares of Shepard Poorman Communications Corporation ("SP"),
a high impact color printer located in Indianapolis, Indiana. The purchase
prices for PNG and SP are preliminary and adjustments may be recorded in
1997. These acquisitions were accounted for as purchases and, accordingly,
the net purchase price of each acquisition was allocated to the various
assets and liabilities according to their fair values as of the date of the
respective purchase. The presentation below summarizes the purchase price
including all adjustments made through December 31, 1996. The results of
operations of each of the acquisitions have been included in the accompanying
consolidated statements of operations from the date of the acquisition.
Cash Debt Total Purchase Goodwill
Paid Assumed Price Recorded
(in millions)
Predecessor Companies:
G-P Envelope $155.1 $0.0 $155.1 $44.7
Pavey 4.4 0.0 4.4 0.6
1994 Acquisition:
American 97.4 0.0 97.4 0.0
1995 Acquisitions:
Supremex 65.5 0.0 65.5 33.6
GAC 82.6 0.0 82.6 37.6
1996 Acquisitions:
QPP 27.6 0.7 28.3 3.4
PNG 20.2 0.0 20.2 6.4
SP 18.9 0.8 19.7 7.9
<PAGE>
The following table presents the unaudited pro forma results of operations as if
the GP Envelope, Pavey, American, Supremex and GAC acquisitions and the initial
public offering had occurred on January 1, 1994 and as if the QPP acquisition
had occurred on January 1, 1995. Due to the immateriality of the PNG and SP
acquisitions, their operations have not been included in the pro forma financial
information. The summary pro forma results are based on assumptions and are not
necessarily indicative of the actual results which would have occurred had these
acquisitions occurred on January 1 of the year preceding the acquisition date,
or of the future results of operations of the Company.
YEAR ENDED
DECEMBER 31,
1996 1995 1994
(IN MILLIONS,
EXCEPT PER SHARE)
Net sales $801.8 $846.1 $653.5
Net income 17.9 13.2 9.8
Net income per share $ 1.50 $ 1.13 $ 0.85
The following table presents the unaudited pro forma results of operations
including the assumptions used in the previous table and also including the
effect of the amended bank borrowings (see note 4) as if the amendment had
occurred on January 1, 1994 which would have had a significant effect on the
presentation of the financial statements. The summary pro forma results are
based on assumptions and are not necessarily indicative of the actual results
which would have occurred had these acquisitions and transactions occurred on
January 1 of the year preceding the acquisition date or of the future results of
operations of the Company.
YEAR ENDED
DECEMBER 31,
1996 1995 1994
(IN MILLIONS,
EXCEPT PER SHARE)
Net sales $801.8 $846.1 $653.5
Net income 18.4 13.9 10.3
Net income per share $ 1.55 $ 1.19 $ 0.90
<PAGE>
<TABLE>
<CAPTION>
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (IN THOUSANDS)
DECEMBER 31,
1996 1995
<S> <C> <C>
INVENTORIES:
Raw materials $25,953 $ 28,344
Work in process 7,549 11,544
Finished goods 37,385 29,851
-------- --------
70,887 69,739
Reserve for obsolescence, loss and other (2,612) (2,141)
-------- --------
Total $68,275 $ 67,598
======== ========
DECEMBER 31,
1996 1995
<S> <C> <C>
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements $ 11,429 $ 10,357
Buildings and building improvements 45,385 46,860
Leasehold improvements 3,627 2,177
Machinery and equipment 127,612 143,843
Furniture and fixtures 3,066 3,574
Automobiles and trucks 556 468
Computers and software 7,457 6,987
Construction in progress 6,576 4,503
-------- --------
205,708 218,769
Less accumulated depreciation (22,406) (13,673)
-------- --------
Total 183,302 $205,096
======== ========
</TABLE>
<PAGE>
4. LONG-TERM DEBT
Long term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
INTEREST RATE AT DECEMBER 31,
DECEMBER 31, 1996 1996 1995
<S> <C> <C> <C>
Bank Borrowings:
Revolving Credit Facility, due March 31, 2003
Mail-Well I Corporation $ - $ 52,000
Supremex 5.25% 768 6,159
Term Loans, due in quarterly installments
through March 31, 2003
Mail-Well I Corporation 7.375% 70,000 113,684
Supremex 7.375% - 8.75% 65,000 46,544
Acquisition Loans Facility, due in quarterly
installments through March 31, 2003
Mail-Well I Corporation - -
Senior Subordinated Notes, due 2004 10.5% 85,000 85,000
Other 651 -
---------- --------
221,419 303,387
Less current maturities (14,427) (10,905)
---------- --------
Long term debt $ 206,992 $292,482
========== ========
</TABLE>
In November 1996, Mail-Well I Corporation amended its bank credit agreement
which now includes a $30.0 million revolving credit facility, $70.0 million of
term loans, a $30.0 million acquisition loans facility and a $12.0 million
letter of credit facility. Mail-Well I Corporation's obligations under the bank
credit agreement are secured by substantially all of the assets of the domestic
subsidiaries of the Company and by 66% of the common stock of Supremex. In
November 1996, Supremex modified its bank credit agreement which now includes a
C$10.0 million revolving credit facility, $65.0 million of term loans and a
C$8.0 million letter of credit facility. Supremex's obligations under the bank
credit agreement are secured by substantially all of the assets of the Company.
Borrowings under the Mail-Well I Corporation bank credit agreement bear interest
at the bank's prime rate plus 0.5% per annum or at LIBOR plus 2.0% per annum, as
elected by the Company. Supremex borrowings under its bank credit agreement bear
interest at the bank's Canadian prime rate plus 0.5% per annum or at the
Canadian Banker's Acceptance discount rate plus 2.0% per annum, as elected by
Supremex. Outstanding letters of credit were $5.8 million at December 31, 1996.
Both of the bank credit agreements and the indenture to the Senior Subordinated
Notes contain certain restrictive covenants that, among other things and with
certain exceptions, limit the ability of the Company to incur additional
indebtedness, prepay subordinated debt, transfer assets outside of the Company,
pay dividends or repurchase shares of common stock. In addition to these
restrictions, the Company is required to satisfy certain financial covenants and
tests and to limit capital expenditures to amounts specified by the bank credit
agreements. The bank credit agreements also include mandatory prepayment
provisions in the event that the Company or Supremex realizes excess cash flow,
as defined in the agreements.
Interest rate cap agreements are used to reduce the potential impact of
increases in the rates on floating-rate long-term debt. At December 31, 1996 and
1995, the Company was party to two interest rate cap agreements. Agreements for
a notional value of $20.0 million provide an effective LIBOR interest rate cap
of 8.5% and expire May 16, 1997; agreements for a notional value of $35.0
million provide an effective LIBOR interest rate cap of 9.0% and expire March
31, 1997. The agreements entitle the Company to receive from counterparties the
amounts, if any, by which the Company's interest payments exceed the interest
rate caps.
<PAGE>
The Company entered into foreign currency swap contracts with a third
party to offset exposure to Canadian exchange rate fluctuations on its
U.S. dollar denominated term loans. The foreign currency swap
contracts provide that Supremex pay to the third party principal
payments denominated in fixed rate Canadian dollars and interest at
the Bankers Acceptance rate. The third party will pay the principal
payments on the U.S. dollar denominated term loans in U.S. dollars and
interest at LIBOR. At December 31, 1996, $45.0 million of the Supremex
term loans were hedged by a foreign currency swap contract. In January
1997, the remaining $20.0 million of Supremex term loans were hedged
by a foreign currency swap contract.
The interest rate cap agreements and foreign currency swap contracts
hedge transactions and balances for periods consistent with committed
exposures and do not constitute investments independent of these
exposures. The Company does not hold or issue financial instruments
for trading purposes. The interest rate differential on foreign
currency swap contracts used to hedge underlying debt obligations is
reflected as an adjustment to interest expense over the life of the
swaps.
In 1995, the Company repurchased all outstanding Deferred Coupon Notes
at a total cost of $19,712,000. The Deferred Coupon Notes had a yield
to maturity of 12.89% and were due February 15, 2006. In connection
with this debt extinguishment the Company recognized an extraordinary
loss of $2,412,000, net of taxes of $1,608,000.
The aggregate annual maturities for all long-term debt during the
fiscal years subsequent to December 31, 1996 are (in thousands):
<TABLE>
<S> <C>
1997 $ 14,427
1998 17,144
1999 18,037
2000 18,022
2001 18,012
2002 and thereafter 135,777
--------
$221,419
========
</TABLE>
5. COMMITMENTS AND CONTINGENCIES
In November 1996, the Company entered into a five year agreement
whereby it can sell, on a revolving basis, an undivided percentage
ownership interest in a designated pool of accounts receivable up to a
maximum of $100.0 million. At December 31, 1996, $68.4 million has
been sold under this agreement and the sale has been reflected as a
reduction of accounts receivable in the Company's consolidated balance
sheet. The receivables are sold at a discount of 0.60% above the
prevailing commercial paper rate plus certain other fees. The discount
expense of $0.7 million on the receivables sold has been recorded in
the Company's statement of operations for the year ended December 31,
1996.
In 1996, the Company refinanced certain equipment under a
sale/leaseback arrangement. The equipment was sold for $30.0 million.
The transaction was accounted for as a sale whereby the property was
removed from the Company's financial statements. The equipment was
then leased by the Company and is being accounted for as an operating
lease where the lease payments are based upon LIBOR plus 2.0%. The
total rent expense recorded in 1996 was $0.4 million. At the end of
the lease term, the Company has the option to repurchase the equipment
at the fair market value at that date or to pay to the purchaser $25.0
million. The Company records an additional rent expense that will
accrue to a total which will equal the estimated fair market value of
the equipment at the end of the lease term.
<PAGE>
The Company leases various office, warehouse and manufacturing facilities under
operating leases. Minimum annual lease commitments at December 31, 1996 were as
follows (in thousands):
<TABLE>
<S> <C>
1997 $ 8,532
1998 7,996
1999 7,074
2000 6,520
2001 5,521
2002 and thereafter 11,697
-------
Total $47,340
=======
</TABLE>
Lease expense for the years ended December 31, 1996 and 1995 and for the period
February 24, 1994 through December 31, 1994 was $6,531,000, $4,808,000 and
$1,267,000, respectively.
Property, plant and equipment under capital lease totals $3,584,000 at
December 31, 1996. Related accumulated depreciation at December 31, 1996 is
$966,000. Capital lease obligations as of December 31, 1996 are as follows (in
thousands):
<TABLE>
<S> <C>
Capital lease obligations $5,814
Less: interest 2,308
------
Total principal obligations 3,506
Less: current maturities 548
------
Long-term capital lease obligations $2,958
======
</TABLE>
Total capital lease obligations during the fiscal years subsequent to December
31, 1996 are as follows (in thousands):
<TABLE>
<S> <C>
1997 $ 843
1998 515
1999 353
2000 389
2001 387
2002 and thereafter 3,327
------
Total $5,814
======
</TABLE>
The Company is involved in various lawsuits incidental to its businesses. In
management's opinion, an adverse determination against the Company relating to
these suits would not be material to the consolidated financial statements. In
the case of administrative proceedings related to environmental matters
involving governmental authorities, management does not believe that any
imposition of monetary sanctions would be material.
<PAGE>
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following is a comparison of the fair value and carrying value at
December 31, 1996 and 1995 of the Company's financial instruments (in
thousands):
<TABLE>
<CAPTION>
1996 1995
FAIR CARRYING FAIR CARRYING
VALUE VALUE VALUE VALUE
<S> <C> <C> <C> <C>
Financial assets
Cash and cash equivalents $ 9,656 $ 9,656 $ - $ -
Receivables (trade) 40,612 40,612 95,550 95,550
Foreign currency swap contracts 161 161 - -
Financial liabilities
Revolving credit loans 768 768 58,159 58,159
Term loans 135,000 135,000 160,228 160,228
Capital leases 3,506 3,506 4,017 4,017
Senior subordinated notes 84,575 85,000 82,025 85,000
Interest rate cap agreements 0 0 0 0
</TABLE>
CASH AND CASH EQUIVALENTS AND RECEIVABLES - The carrying value of cash and
cash equivalents and receivables approximates fair value due to the short
term maturities of these investments.
LONG-TERM DEBT - The fair value of the Company's long term debt to banks is
based on quoted interest rates for borrowings of similar quality and terms.
The fair value of the senior subordinated notes is based upon quoted market
prices. The fair value of capital leases is based on lease arrangements with
similar terms.
INTEREST RATE CAP AGREEMENTS AND FOREIGN CURRENCY SWAP CONTRACTS - Fair
values reflect the estimated amounts that the Company would receive or pay to
terminate the contracts at the reporting date based on quoted market prices
of comparable contracts.
CONCENTRATIONS OF CREDIT RISK - Financial instruments which potentially
subject the Company to significant concentrations of credit risk consist
primarily of accounts receivable. Concentrations of credit risk with respect
to accounts receivable are limited due to the large number of entities
comprising the Company's customer base and their dispersion across many
different industries and geographic areas. As of December 31, 1996, the
Company had no significant concentrations of credit risk as the largest
customer's receivable balance was less than 5.1% of total receivables.
7. STOCKHOLDERS' EQUITY AND STOCK OPTION PLAN
PREFERRED STOCK - The Company authorized 25,000 shares of $0.01 par value
preferred stock. No shares have been issued at December 31, 1996 or 1995.
STOCK OPTION PLAN - During 1994, the board of directors approved the adoption
of a stock option plan which provided for the grant of options to purchase up
to 355,250 shares of Company common stock to directors and key employees
selected by the compensation committee. During 1995, the board of directors
increased the number of options under the stock option plan by 284,200 to
639,450. The stock options granted in 1995 and 146,500 of the stock options
granted in 1996 vest over a four year period and expire over a maximum period
of ten years from the grant date. The remaining stock options granted in 1996
were made to directors of the Company and vested immediately. They are
exercisable six months after the date of grant and expire ten years from the
grant date or upon termination of directorship. The stock options granted to
the directors are subject to shareholder approval at the Company's annual
meeting on May 7, 1997. The exercise price of
<PAGE>
all options granted equals or exceeds the fair market value of the Company's
common stock on the date of grant.
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED
REMAINING AVERAGE
EXERCISE CONTRACTUAL EXERCISE
OPTIONS PRICE LIFE PRICE
<S> <C> <C> <C> <C>
1995
Granted 333,858 $3.96 - $7.74 $ 4.58
Exercised (53,642) $ 7.74 $ 7.74
Canceled (2,558) $ 3.96 $ 3.96
-------
Outstanding, December 31, 1995 277,658 $ 3.96 - 4.28 8.8 years $ 3.98
1996
Granted 160,500 $9.03 - 11.20 $11.01
Exercised (10,086) $ 3.96 $ 3.96
Canceled (2,558) $ 3.96 $ 3.96
-------
Outstanding, December 31, 1996 425,514 $3.96 - 11.20 9.2 years $ 6.63
=======
Vested and exercisable at December 31, 1996 73,325 $3.96 - 11.20 $4.94
=======
</TABLE>
The Company applies APB Opinion No. 25, "Accounting for Stock Issued to
Employees" and related Interpretations in accounting for its stock option plan.
Accordingly, no compensation cost has been recognized. Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") was issued and, if fully adopted by the Company, would change the method
for recognition of cost. Under SFAS 123, cost is based upon the fair value of
each option at the date of grant using an option-pricing model that takes into
account as of the grant date the exercise price and expected life of the option,
the current price of the underlying stock and its expected volatility, expected
dividends on the stock and the risk-free interest rate for the expected term of
the option. Had compensation cost been determined based on the guidance in SFAS
123, the Company's net income and earnings per share would have been reduced to
the pro forma amounts indicated below. The weighted average fair values of
options granted in 1996 and 1995 were $5.15 and $1.74, respectively.
The fair value of each option grant is estimated on the date of grant using the
Black-Scholes option-pricing model with the following assumptions used for
grants on March 1, 1995, May 8, 1996 and October 1, 1996, respectively: dividend
yield of 0 percent for all grants; expected volatility of 33%, 38% and 44%;
risk-free interest rates of 7.2%, 6.2% and 6.7%; and expected lives of 5 and 6
years for the March 1, 1995 options, 4 years for the May 8, 1996 options and 5
and 6 years for the October 1, 1996 options.
<TABLE>
<CAPTION>
1996 1995
AS PRO AS PRO
REPORTED FORMA REPORTED FORMA
<S> <C> <C> <C> <C>
(in thousands, except per share amounts)
Income before extraordinary item $16,927 $16,725 $10,373 $10,309
Extraordinary item - - 2,412 2,412
Net income 16,927 16,725 7,961 7,897
Income per share before extraordinary item $ 1.42 $ 1.40 $ 1.36 $ 1.35
</TABLE>
<PAGE>
Net income per share $ 1.42 $ 1.40 $ 1.05 $ 1.04
The effects of applying SFAS 123 in this pro forma disclosure are not
indicative of future amounts. Additional awards in future years are anticipated.
exit
8. INCOME TAXES
Taxes are based on income before income taxes and extraordinary item as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Domestic $20,853 $14,412 $4,914
Foreign 8,337 3,180 -
------- ------- ------
$29,190 $17,592 $4,914
======= ======= ======
</TABLE>
The provision (benefit) for income taxes consists of the following (in
thousands):
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Current:
Federal $1,132 $ 4,158 $ 291
Foreign 2,138 1,563 -
State 0 286 124
------ ------- ------
$3,270 $ 6,007 $ 415
====== ======= ======
Deferred:
Federal $6,633 $ 848 $1,411
Foreign 1,475 (207) -
State 885 571 345
------ ------- ------
$8,993 $ 1,212 $1,756
====== ======= ======
</TABLE>
Components of the Company's deferred tax liabilities and assets at December 31
are as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Deferred tax assets:
Alternative minimum tax credit
carryforwards $ 5,633 $4,074
Net operating loss
carryforwards 4,377 2,996
Compensation related accruals 84 2,875
Intangibles 3,501 2,769
Miscellaneous accruals and
reserves 3,458 1,446
Accounts receivable and
inventories 1,370 1,336
Land basis differences 625 632
Pension liability adjustment 79 132
Valuation allowance (1,038) (527)
------- -------
Total deferred tax assets 18,089 15,733
------- -------
Deferred tax liabilities:
Property, plant and equipment 33,783 25,142
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Deferred financing costs $ 1,542 $ 0
Intangibles 3,022 1,388
Prepaids and inventories 586 210
------- -------
Total deferred tax
liabilities 38,933 26,740
------- -------
Deferred tax liability, net $20,844 $11,007
======= =======
</TABLE>
The change in the valuation allowance from the prior year is due to an AMT
carryforward purchased from SP for which the Company has recorded a
valuation allowance.
The difference between the statutory federal income tax rate and the
Company's effective income tax rate for the years ended December 31, 1996
and 1995 and the period ended December 31, 1994 is summarized as follows:
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Statutory federal income tax rate 34.0% 34.0% 34.0%
State income tax, net of federal benefit 3.8 5.0 8.3
Goodwill amortization 2.1 0.7 0.0
Employee stock ownership plan 1.6 2.1 0.0
Other 0.5 (0.8) 1.9
---- ---- ----
Effective income tax rate 42.0% 41.0% 44.2%
==== ==== ====
</TABLE>
At December 31, 1996, the following net federal operating loss and tax
credit carryforwards are available. The Company is limited in the amounts
of net operating loss carryforwards which may be used in any one year.
<TABLE>
<CAPTION>
OPERATING EXPIRATION TAX
LOSSES DATES CREDITS
<S> <C> <C> <C>
Consolidated Company $ 4,326 2009-2011 $3,764
Acquired from Pavey 571 2008 155
Acquired from GAC 6,698 2004-2008 1,203
Acquired from SP - 511
------- ------
Total $11,595 $5,633
======= ======
</TABLE>
9. BENEFIT PLANS
U.S. PENSION PLANS - The Company sponsors three noncontributory defined
benefit pension plans under collective bargaining agreements with unions
representing certain employees in the U.S. The Company also has obligations
under a noncontributory defined benefit plan, which was curtailed in 1994.
The continuing plans provide for benefits based on either a percentage of
pay or a dollar multiplier, and years of credited service. Pension costs
are funded so as to meet minimum funding requirements under the Employee
Retirement Income Security Act of 1974. Pension assets are invested
primarily in bank common trust funds.
<PAGE>
Accumulated plan benefits for all plans exceed plan assets. The following table
summarizes the funded status of the plans and the related amounts that are
recognized in the consolidated balance sheets at December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefit obligation $4,306 $3,868
Nonvested benefit obligation 617 638
------ ------
Accumulated benefit obligation 4,923 4,506
Effect of projected future compensation levels 267 375
------ ------
Projected benefit obligation for services rendered to date 5,190 4,881
Less plan assets at fair value 4,382 2,625
------ ------
Projected benefit obligation in excess of plan assets 808 2,256
Unrecognized prior service costs (161) (174)
Unrecognized net gain (loss) 3 (727)
Additional minimum liability 222 517
------ ------
Accrued pension cost $ 872 $1,872
====== ======
</TABLE>
The provisions of SFAS No. 87, "Employers' Accounting for Pensions," require the
recognition of an additional minimum liability for each defined benefit plan for
which the accumulated benefit obligation exceeds plan assets. This amount has
been recorded as a long-term liability with an offsetting intangible asset.
Because the asset recognized may not exceed the amount of unrecognized prior
service cost and transition obligation on an individual plan basis, the balance,
net of tax benefits, is reported as a separate reduction of stockholders' equity
at December 31, 1996 and 1995, as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Minimum liability adjustment $ 222 $ 517
Intangible asset 33 174
----- -----
189 343
Tax benefit 79 132
----- -----
Pension liability adjustment to
stockholders' equity $ 110 $ 211
===== =====
Net pension expense for the plans included the following components (in thousands):
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Service cost $ 792 $ 700 $ 308
Interest cost on projected benefit obligation 312 281 209
Actual return on plan assets (557) (426) (54)
Net amortization and deferral 359 305 (208)
----- ----- -----
Net periodic pension cost $ 906 $ 860 $ 255
===== ===== =====
</TABLE>
The significant assumptions used as of December 31 in computing the net pension
expense and funded status information shown above are as follows:
<PAGE>
<TABLE>
<CAPTION>
1996 1995 1994
<S> <C> <C> <C>
Weighted average discount rate 7.0% 7.0% 8.5%
Expected long term rate of return on assets 8.5% 8.5% 8.5%
Rate of compensation increase 4.0% 4.0% 4.0%
</TABLE>
Certain other U.S. employees covered by union agreements are included
in multi-employer pension plans to which the Company makes contributions in
accordance with the contractual union agreements. Such contributions are made
on a monthly basis in accordance with the requirements of the plans and the
actuarial computations and assumptions of the administrators of the plans.
Contributions to such multi-employer plans were $721,000, $151,000 and $0 for
1996, 1995 and 1994, respectively. Benefits and net asset data for these
multi-employer pension plans for union employees are not available.
CANADIAN PENSION PLANS - Supremex maintains five defined benefit
pension plans covering certain salaried and hourly employees who have bargained
for such benefits. Supremex's policy is to contribute annually at least the
minimum amount required by law. Pension funds are invested primarily in mutual
funds. The actuarial present value of accumulated benefits related to
Supremex's plans at December 31, 1996 and 1995 was $34,193,000 and $12,632,000,
respectively, compared with net assets available for benefits of $25,660,000 and
$13,952,000 at December 31, 1996 and 1995, respectively. Included in the
consolidated balance sheets at December 31, 1996 and 1995 are pension
liabilities for the Supremex plans of $412,000 and $394,000, respectively.
Net pension expense for the Supremex defined benefit pension plans
included the following components (in thousands):
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Service cost $ 321 $ 141
Interest cost on projected benefit obligation 867 334
Actual return on plan assets (1,014) (377)
Net amortization and deferral (93) (7)
------- -----
Net periodic pension cost $ 81 $ 91
======= =====
</TABLE>
The significant assumptions used as of December 31, 1996 and 1995 in computing
net periodic pension expense and funded status information shown above are as
follows:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Weighted average discount rate 8.5% 8.5%
Expected long term rate of return on assets 8.5% 8.5%
Rate of compensation increase 5.0% 5.0%
</TABLE>
<PAGE>
EMPLOYEE STOCK OWNERSHIP PLAN - In 1994, the Company established an ESOP for
certain U.S. employees. The ESOP borrowed monies from the Company to purchase
1,298,848 shares of Company common stock. These shares are held in trust and are
issued to employees' accounts in the ESOP as the loan is repaid. The loan
obligation of the ESOP is considered unearned employee benefit expense and, as
such, is recorded as a reduction of the Company's stockholders' equity. The
Company's contributions to the ESOP are used to repay the loan principal and
interest. Both the loan obligation and the unearned benefit expense are reduced
by the amount of loan principal repayments made by the ESOP. Amounts charged to
expense are based on the average market value of shares allocated to
participants and were $1,973,000 and $1,612,000 for the years ended December 31,
1996 and 1995 and $752,000 for the period from February 24, 1994 through
December 31, 1994.
At December 31, 1996 and 1995 the ESOP held the following shares of common
stock:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Shares allocated to participant accounts 412,116 194,708
Shares committed to be allocated to participant
accounts in connection with current year contribution 185,823 217,408
Unallocated shares held for future years contributions 700,909 886,732
--------- ---------
Total 1,298,848 1,298,848
========= =========
</TABLE>
The fair market value of the unallocated shares of common stock held for future
contributions was $11,477,000 and $10,565,000 at December 31, 1996 and 1995,
respectively.
401(K) PLANS - The Company has three employee savings plans which are designed
to qualify under Section 401(k) of the Internal Revenue Code. All U.S. salaried
and non-union hourly employees who meet the eligibility requirements are covered
under one of these plans. In addition, U.S. employees covered by union
agreements where these benefits have been collectively bargained are also
covered by one of these plans. Each of the plans allows eligible employees to
make salary reduction contributions. The provisions of certain plans include
mandatory or discretionary contributions by the Company. Amounts charged to
expense in connection with Company contributions were $1,620,000 and $1,656,000
for the years ended December 31, 1996 and 1995, respectively, and $694,000 for
the period from February 24, 1994 through December 31, 1994.
PROFIT DISTRIBUTION PLAN - The Company has established a Profit Distribution
Plan covering full time employees and executive officers of certain
subsidiaries. The Profit Distribution Plan is administered by the Compensation
Committee of the Board of Directors. Amounts paid under the Profit Distribution
Plan are based on the Company's financial performance. Distributions under the
Profit Distribution Plan of $1,268,000 and $1,312,000 were expensed for the
years ended December 31, 1996 and 1995, respectively, and $500,000 was expensed
for the period from February 24, 1994 through December 31, 1994.
<PAGE>
10. SEGMENT INFORMATION (IN THOUSANDS)
The Company's operations by business segment and geographic area were
as follows:
<TABLE>
<CAPTION>
CANADA UNITED STATES
-------- -----------------------------------
ENVELOPE ENVELOPE HIGH IMPACT
PRINTING PRINTING PRINTING CORPORATE TOTAL
-------- -------- ------------- ---------- --------
<S> <C> <C> <C> <C> <C>
Net sales:
1996 $ 86,928 $551,225 $140,371 $778,524
1995 38,759 510,660 47,384 596,803
1994 225,678 225,678
Operating income:
1996 13,784 52,376 6,010 $(11,308) 60,862
1995 5,797 50,995 993 (10,191) 47,594
1994 24,408 (5,851) 18,557
Identifiable assets:
1996 100,687 245,312 118,368 6,579 470,946
1995 79,501 306,187 112,407 2,341 500,436
1994 305,091 2,598 307,689
Depreciation and
amortization:
1996 2,527 6,076 4,792 5,681 19,076
1995 1,031 9,975 1,395 297 12,698
1994 5,988 77 6,065
Capital expenditures:
1996 1,711 11,431 5,600 18,742
1995 426 11,969 521 850 13,766
1994 4,307 167 4,474
</TABLE>
The corporate column includes expenses not allocated to the other segments. The
1996 amounts include corporate office administrative expenses of $7,136,000 and
amortization of intangibles of $4,172,000.
<PAGE>
11. SUMMARY QUARTERLY FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT PER SHARE
AMOUNTS) (UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED
1996 12/31/96 9/30/96 6/30/96 3/31/96
<S> <C> <C> <C> <C>
Net sales $ 199,202 $200,487 $185,110 $193,725
Gross profit 45,922 43,934 39,382 37,695
Net income 5,502 5,046 3,612 2,767
Net income per share $ 0.46 $ 0.42 $ 0.30 $ 0.23
<CAPTION>
QUARTERS ENDED
1995 12/31/95 9/30/95 6/30/95 3/31/95
<S> <C> <C> <C> <C>
Net sales $ 182,129 $160,836 $129,439 $124,399
Gross profit 37,996 30,815 28,328 28,860
Income before
extraordinary item 3,992 1,470 2,387 2,524
Extraordinary item 2,412
Net income 1,580 1,470 2,387 2,524
Income per share before
extraordinary item $ 0.34 $ 0.22 $ 0.37 $ 0.40
Net income per share $ 0.13 0.22 $ 0.37 $ 0.40
<CAPTION>
PERIOD FROM
QUARTERS ENDED 2/24/94 TO
1994 12/31/94 9/30/94 6/30/94 3/31/94
<S> <C> <C> <C> <C>
Net sales $ 71,428 $ 62,356 $ 66,076 $ 25,818
Gross profit 14,679 14,255 14,117 5,922
Net income 1,323 268 420 732
Net income per share $ 0.23 $ 0.05 $ 0.07 $ 0.12
</TABLE>
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ---- --- -----------
<C> <C> <S>
Gerald F. Mahoney 53 Director, Chairman of the Board
and Chief Executive
Officer
Robert J. Terry 56 Director, President and
Chief Operating
Officer
Paul V. Reilly 44 Vice President-Finance and
Chief Financial
Officer
Jana L. Brown 45 Vice President-Controller
Roger Wertheimer 38 Vice President-General Counsel and
Secretary
Frank J. Hevrdejs (2) 51 Director
Susan O. Rheney (1) 37 Director
Frank P. Diassi (2) 64 Director
J. Bruce Duty (1)(2) 45 Director
Jerome W. Pickholz (1) 64 Director
J. Virgil Waggoner 69 Director
</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. He was Chairman of the Board,
President and Chief Executive Officer of Pavey Envelope and Tag Corp. from
January 1991, until it became a subsidiary of the Company in February 1994.
From January 1990 to the present, he has also served as President of Saddle
River Capital, an investment banking firm. Mr. Mahoney devotes substantially
all of his time to the Company in his capacity as Chairman and CEO. From June
1987 to September 1989, Mr. Mahoney served as President of Transkrit Corp., a
business forms manufacturing company.
<PAGE>
ROBERT J. TERRY has been a director, President and Chief Operating Officer of
the Company since February 1994. 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. Mr. Terry has served on
the Board of the Envelope Manufacturers Association of America since 1992.
PAUL V. REILLY has been Vice-President-Finance and 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 more recently as Vice President with a direct marketer of
educational materials. Mr. Reilly is a Certified Public Accountant.
JANA L. BROWN has been Vice President-Controller of the Company since June 1995.
From February 1994 to June 1995, Ms. Brown served as Vice President of Finance
of the Company. She joined GP Envelope as Division Controller in December 1990.
Previously, she served as Controller for a Georgia-Pacific subsidiary, Hopper
Paper, from January 1988 to November 1990 and as a Controller for a Georgia-
Pacific container plant in West Monroe, Louisiana from May 1986 to December
1987.
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.
FRANK J. HEVRDEJS has been a director of the Company since its inception in
November 1993. In 1982, Mr. Hevrdejs and 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, Enduro 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.
SUSAN O. RHENEY has been a director since the inception of the Company in
November 1993. She is currently a principal of The Sterling Group, Inc. and has
been since 1992. Ms. Rheney worked as an independent financial consultant from
December 1990 to January 1992. Prior to that time, from June 1987 to November
1990, she was an associate with The Sterling Group, Inc. Ms. Rheney serves as
Chairwoman of the Audit Committee of the Board of Directors.
FRANK P. DIASSI has been a director of the Company since February 1994. He is
currently Managing General Partner of The Unicorn Group, an investment company.
He organized The Unicorn Group in 1982 and has originated investments in over 39
entrepreneurial companies. His primary area of interest is in chemical and
related industries. Since August 1996, Mr. Diassi has been Chairman of Sterling
Chemicals, Inc., a manufacturer of commodity petrochemicals and chemicals used
primarily in the pulp and paper industry. He was a founding director of
Arcadian Corporation, the largest nitrogen fertilizer company in North America.
Mr. Diassi was formerly a 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.
<PAGE>
J. BRUCE DUTY has been a director of the Company since February 1994. Since
July 1993 he has been Senior Vice President of Capital Southwest Corporation, a
venture capital investment firm. From July 1982 to June 1993, he was Vice
President of Capital Southwest Corporation. Mr. Duty serves as a member of the
Audit Committee and 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 where he is now
Chairman Emeritus. Since January 1, 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 of the Board of
Directors.
W. THOMAS STEPHENS has been a director of the Company since March 1996. Since
September 1996, Mr. Stephens has been retired from Schuller Corporation. From
1986 to September, 1996, he was Chairman, Chief Executive Officer and President
of Schuller Corporation (formerly known as Manville Corporation), a building
materials company. Mr. Stephens was Chief Executive Officer and President from
1986 to 1996 and Chairman from June 1990 to September 1996. He also served as
Executive Vice President and Chief Financial Officer from 1984 to 1986. Mr.
Stephens serves as a director on the boards of Ball Corporation, an aerospace
and glass and food packaging company, Public Service of Colorado and Stillwater
Mining Company.
J. VIRGIL WAGGONER has been a director of the Company since February 1994.
Since August 1996, Mr. Waggoner has been retired. From 1986 to August 1996 he
was President, Chief Executive Officer and a director of Sterling Chemicals,
Inc., a manufacturer of commodity petrochemicals and chemicals used primarily in
the pulp and paper industry. Mr. Waggoner serves as a director of Kirby
Corporation, a transport company.
ITEM 11. EXECUTIVE COMPENSATION
The sections labeled "Director Compensation", "Compensation Committee
Interlocks and Insider Participation", "Certain Relationships and Related
Transactions", "Executive Compensation", "Summary Compensation Table", "Option
Grants in the Last Fiscal Year", "Aggregated Option Exercises in the Last Fiscal
Year and Fiscal Year End Option Values", "Compensation Committee Report on
Executive Compensation" and "Stock Price Performance Graph" appearing on pages
nine through sixteen in the Company's Proxy Statement filed in connection with
the 1997 Annual Meeting of Stockholders are incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section labeled "Security Ownership of Certain Beneficial Owners
and Management" appearing on pages six through nine in the Company's Proxy
Statement filed in connection with the 1997 Annual Meeting of Stockholders is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sections labeled "Compensation Committee Interlocks and Insider
Participation" and "Certain Relationships and Related Transactions" appearing on
page six in the Company's Proxy Statement filed in connection with the 1997
Annual Meeting of Stockholder's is incorporated herein by reference.
PART IV
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) FINANCIAL STATEMENTS
Included in Part II, Item 8 of the Report:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Mail-Well, Inc. and Subsidiaries
Independent Auditors' Report........................................ 28
Consolidated Balance Sheets as of December 31, 1996 and 1995........ 29
Consolidated Statements of Operations for the Years Ended
December 31, 1996 and 1995 and for the period from February 24, 1994
through December 31, 1994........................................... 31
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996 and 1995 and for the Period from February 24, 1994
through December 31, 1994........................................... 32
Consolidated Statements of Changes in Stockholders' Equity for the
Years Ended December 31 , 1996 and 1995 and for the period from
February 24 , 1994 through December 31, 1994........................ 33
Notes to Consolidated Financial Statements.......................... 34
</TABLE>
(a)(2) FINANCIAL STATEMENT SCHEDULES
Included in Part IV of the Report:
<TABLE>
<CAPTION>
<S> <C>
Page
Schedule I Condensed Financial Statements of the Company and
Footnotes to Condensed Financial Statements for
the years ended December 31, 1996 and 1995 and for
the period from February 24, 1994 through December
31, 1994........................................... 60
Schedule II Valuation and qualifying accounts for the years
ended December 31, 1996 and 1995 and for the
period February 24, 1994 through December 31, 1994. 64
</TABLE>
(a)(3) EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit
- ------ ----------------------
<C> <S>
3.1 Certificate of Incorporation of the Company, as amended - incorporated
by reference from Exhibit 3.1 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
3.2 Certificate of Amendment of Certificate of Incorporation of the
Company dated December 8, 1994 -incorporated by reference from Exhibit
3.1 of the Company's Registration Statement on Form S-1 dated May 9,
1995.
3.3 Certificate of Amendment of Certificate of Incorporation of the
Company - incorporated by reference from Exhibit 3.3 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
3.4 Bylaws of the Company - incorporated by reference from Exhibit 3.4 of
the Company's Registration Statement on Form S-1 dated September 21,
1995.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
4.1 Form of Certificate representing the Common Stock, par value $0.01 per
share, of the Company -incorporated by reference from Exhibit 4.1 of
the Company's Registration Statement on Form S-1 dated March 25, 1994.
4.2 Indenture dated February 24, 1994 by and between the Company and
Shawmut Bank, National Association, as Trustee, with respect to the
$39,500,000 in aggregate principal amount of Original Senior Deferred
Coupon Notes and Exchange Senior Deferred Coupon Notes due 2006,
including the form of Deferred Coupon Note - incorporated by reference
from Exhibit 4.2 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
4.3 Indenture dated as of February 24, 1994 by and between M-W Corp. and
Shawmut Bank, National Association, as Trustee, with respect to the 10-
1/2% Original Senior Subordinated Notes and the 10-1/2% Exchange
Senior Subordinated Notes due 2004, including the form of Note and the
guarantees of the Company, Wisco and Pavey - incorporated by reference
from Exhibit 4.3 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
4.3.1 Supplemental Indenture dated July 31, 1995 to the Indenture identified
in Exhibit 4.3 - incorporated by reference from Exhibit 4.4.1 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.3.2 Form of Second Supplemental Indenture to the Indenture identified in
Exhibit 4.3 -incorporated by reference from Exhibit 4.4.2 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.4 Form of Stockholders Agreement among the Company and certain holders
of the Common Stock effective as of February 24, 1994 and Amendment
No. 1 thereto - incorporated by reference from Exhibit 4.4 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
4.5 Form of Employee Stockholders Agreement among the Company and certain
employee holders of the Common Stock effective as of February 24, 1994 -
incorporated by reference from Exhibit 4.5 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
4.6 Form of American Mail-Well Employee Stockholders Agreement among the
Company and certain holders of the Common Stock - incorporated by
reference from Exhibit 10.44 of the Company's Registration Statement
on Form S-1 dated May 9, 1995.
4.7 Form of Registration Rights Agreement among the Company and certain
holders of the Common Stock effective as of February 24, 1994 -
incorporated by reference from Exhibit 4.6 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
4.8 Form of Registration Rights Agreement among M-W Corp., the Company and
Merrill Lynch effective as of February 24, 1994 - incorporated by
reference from Exhibit 4.7 of the Company's Registration Statement on
Form S-1 dated March 25, 1994.
10.1 Asset Purchase Agreement dated December 7, 1993 by and among GP
Envelope, G-P, M- W Corp. and the Company, as amended - incorporated
by reference from Exhibit 10.1 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.2 Letter Agreement dated December 13, 1993 by and between Sterling, M-W
Corp. and the Company relating to compensation payable by M-W Corp.
and the Company to Sterling for services performed in connection with
the Acquisition and the financing thereof - incorporated by reference
from Exhibit 10.2 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
10.3 Letter Agreement dated December 13, 1993 by and between The Unicorn
Group and Sterling regarding engagement of The Unicorn Group by
Sterling -incorporated by
</TABLE>
<PAGE>
<TABLE>
<C> <S>
reference from Exhibit 10.3 of the Company's Registration Statement on
Form S-1 dated March 25, 1994.
10.4 Letter Agreement dated December 13, 1993 from Saddle River Capital to
Sterling regarding engagement of Saddle River Capital by Sterling -
incorporated by reference from Exhibit 10.4 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.5 Communications Paper Supply Agreement dated February 24, 1994 between
G-P and M-W Corp. -incorporated by reference from Exhibit 10.11 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.6 Computer Services Agreement dated February 24, 1994 between G-P and M-
W Corp. -incorporated by reference from exhibit 10.12 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.7 Trademark License Agreement dated February 24, 1994 by and among G-P,
Great Northern Nekoosa Corporation and M-W Corp. - incorporated by
reference from Exhibit 10.13 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.8 Securities Exchange Agreement dated February 22, 1994 by and among the
Company First Sterling, Unicorn, The Unicorn Group and Gerald F.
Mahoney, including the form of Escrow Agreement by and among the
parties to the Securities Exchange Agreement - incorporated by
reference from Exhibit 10.14 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.9 Tax Sharing Agreement dated February 24, 1994 among the Company, M-W
Corp., Wisco and Pavey - incorporated by reference from Exhibit 10.15
of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.10 General Indemnity Agreement between M-W Corp. and Amwest Surety
Insurance Company together with form of Letter of Credit -incorporated
by reference from Exhibit 10.16 of the Company's Registration
Statement on Form S-1 dated March 25, 1994.
10.11 Form of Indemnity Agreement between the Company and each of its
officers and directors -incorporated by reference from Exhibit 10.17
of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.12 Form of Indemnity Agreement between M-W Corp. and each of its officers
and directors -incorporated by reference from Exhibit 10.18 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.13 Form of M-W Corp. Employee Stock Ownership Plan effective as of
February 23, 1994 and related Employee Stock Ownership Plan Trust
Agreement -incorporated by reference from Exhibit 10.19 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.14 Form of M-W Corp. 401(k) Savings Retirement Plan - incorporated by
reference from Exhibit 10.20 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.15 Company 1994 Stock Option Plan, as amended - incorporated by reference
from Exhibit 10.15 of the Company's Registration Statement on Form S-1
dated September 21, 1995.
10.16 Form of the Company Incentive Stock Option Agreement - incorporated by
reference from Exhibit 10.22 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.17 Form of the Company Nonqualified Stock Option Agreement - incorporated
by from Exhibit 10.23 of the Company's Registration Statement on Form
S-1 dated March 25, 1994.
10.18 Asset Purchase Agreement dated October 31, 1994 by and between
American and M-W Corp., as amended - incorporated by reference from
Exhibit 10.30 of the Company's Registration Statement on Form S-1
dated May 9, 1995.
</TABLE>
<PAGE>
<TABLE>
<C> <S>
10.19 Transition Services Agreement dated December 19, 1994 by and among CC
Industries or American and M-W Corp. - incorporated by reference from
Exhibit 10.31 of the Company's Registration Statement on Form S-1
dated May 9, 1995.
10.20 Guaranty dated December 19, 1994, executed by CC Industries in favor
of M-W Corp. - incorporated by reference from Exhibit 10.33 of the
Company's Registration Statement on Form S-1 dated May 9, 1995.
10.21 Commitment Letter dated December 19, 1994, from Henry Crown & Company
to M-W Corp. -incorporated by reference from Exhibit 10.34 of the
Company's Registration Statement on Form S-1 dated May 9, 1995.
10.22 Second Amended and Restated Credit Agreement dated as of July 31, 1995
by and among M-W Corp., the banks parties thereto and Banque Paribas,
as Agent -incorporated by reference from Exhibit 10.22 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
10.23 Credit Agreement dated as of July 31, 1995 by and among Supremex, M-W
Corp., the banks parties thereto and Bank Paribas, as Agent -
incorporated by reference from Exhibit 10.23 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.24 Second Amended and Restated Guaranty Agreement dated as of July 31,
1995, executed by the Company in favor of Banque Paribas, as Agent -
incorporated by reference from Exhibit 10.24 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.25 Share Purchase Agreement dated July 20, 1995, by and among the
shareholders of Supremex, 3159051 Canada Inc. and Schroder Investment
Canada Limited and Schroder Venture Managers (North America) Inc. -
incorporated by reference from Exhibit 10.25 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.26 Indemnification Escrow Agent dated July 31, 1995, by and among 3159051
Canada Inc., Royal Trust Company of Canada and Schroder Investment
Canada Limited and Schroder Venture Mangers (North America) Inc. -
incorporated by reference from Exhibit 10.26 of the Company's'
Registration Statement on Form S-1 dated September 21, 1995.
10.27 Guaranty dated July 31, 1995, executed by M-W Corp. in favor of
Schroder Investment Canada Limited and Schroder Venture Mangers (North
America) Inc., as Agents - incorporated by reference from Exhibit
10.27 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.28 Securities Purchase Agreement dated as of August 2, 1995, as amended,
by and among GAC Acquisition Company, Inc., GAC and the
securityholders of GAC and McCown De Leeuw & Co., as Agents -
incorporated by reference from Exhibit 10.28 of the Company's
Registration Statement on Form S-1 dated September 21, 1995.
10.29 Escrow Agreement dated as of August 2, 1995, by and among GAC
Acquisition Company, Inc., GAC and securityholders of GAC and McCown
De Leeuw & Co., as Agents - incorporated by reference from Exhibit
10.29 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.30 Guaranty dated as of August 2, 1995, by M-W Corp. in favor of McCown
De Leeuw & Co., as Agents - incorporated by reference from Exhibit
10.30 of the Company's Registration Statement on Form S-1 dated
September 21, 1995.
10.31 Second Amendment to Second Amended and Restated Credit Agreement -
incorporated by reference from Exhibit 10.31 of the Company's Form 10-
Q dated March 31, 1996.
10.32 Asset Purchase Agreement dated April 26, 1996 by and between Quality
Park Products, Inc. and Mail-Well I Corporation - incorporated by
reference from Exhibit 1 of the Company's Form 8-K dated May 2, 1996.
</TABLE>
<PAGE>
<TABLE>
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10.33* Acquisition Agreement and Plan of Share Exchange by and among Graphic
Arts Center, Inc. and Shepard Poorman Communications Corporation dated
November 6, 1996.
10.34* Amendment No. 1 to Acquisition Agreement and Plan of Share Exchange by
and among Graphic Arts Center, Inc. and Shepard Poorman Communications
Corporation dated November 6, 1996.
10.35* Asset Purchase Agreement dated as of October 15, 1996 by and between
Supremex, Inc. and PNG Products, Inc. Pac National Group and PNG
Envelope Internationale, Inc.
10.36* Master Lease Agreement dated as of August 1, 1996 between General
Electric Capital Corporation and Mail-Well, Inc., Mail-Well I
Corporation, Graphic Arts Center, Inc., Mail-Well West, Pavey Envelope
and Tag Corp., Wisco II, L.L.C and Wisco Envelope Corp.
10.37* Third Amended and Restated Credit Agreement dated as of November 15,
1996, executed by Mail-Well I Corporation, as Borrower, and Wisco
Envelope Corp., Pavey Envelope and Tag Corp., Mail-Well West, Inc.,
Wisco II, L.L.C., Mail-Well Canada Holdings, Inc., Graphic Arts Center,
Inc. and Wisco III, L.L.C., as Guarantors, in favor of Banque Paribas,
as Agent, and the Lenders named herein.
10.38* Amended and Restated Credit Agreement dated as of November 15, 1996,
executed by Supremex, Inc., as borrower, and Mail-Well I Corporation
and Innova Envelope, Inc., as Guarantors, in favor of Banque Paribas,
as Agent, and the Lenders named herein.
10.39* Purchase and Contribution Agreement dated as of November 15, 1996
between Mail-Well I Corporation, Wisco Envelope Corp., Pavey Envelope
and Tag Corp., Mail-Well West, Inc., Graphic Arts Center, Inc., Wisco
III, L.L.C., Supremex, Inc., Innova Envelope, Inc., as Sellers, and
Mail-Well Trade Receivables Corp., as Purchaser.
10.40* Mail-Well Receivables Master Trust Pooling and Servicing Agreement
dated as of November 15, 199 by and between Mail-Well Trade Receivables
Corporation, Seller, Mail-Well I Corporation, Servicer, and Norwest
Bank Colorado, National Association, Trustee.
10.41* Series 1996-1 Supplement dated as of November 15, 1996 to Pooling and
Servicing Agreement, dated as of November 15, 1996, by and between Mail-
Well Trade Receivables Corporation, Seller, Mail-Well I Corporation,
Servicer, and Norwest Bank Colorado, National Association, as Trustee
on behalf of the Series 1996-1 Certificateholders.
10.42* Series 1996-1 Certificate Purchase Agreement dated as of November 15,
1996 among Mail-Well Trade Receivables Corporation, as Seller,
Corporate Receivables Corporation, as Purchaser, Norwest Bank Colorado,
National Association, as Trustee, and Mail-Well I Corporation, as
Servicer
10.43* Intercreditor Agreement dated as of November 15, 1996 by and among
Citicorp North America, Inc., as Securitization Company Agent, Banque
Paribas, New York Branch, as Liquidity Agent, Banque Paribas, as Credit
Lenders' Agent, Norwest Bank Colorado, National Association, as
Trustee, Mail-Well Trade Receivables Corporation, as Servicer,
originator and Mail-Well Credit Borrower, Supremex, Inc., as the
Supremex Credit Borrower and the other parties hereto.
10.44* Series 1996-1 Asset Purchase Agreement among Corporate Receivables
Corporation, the Liquidity Providers Parties hereto, Citicorp North
America, Inc., as Securitization Company Agent, Banque Paribas, New
York Branch, as Liquidity Agent, and Norwest Bank Colorado, National
Association, as trustee, dated as of November 15, 1996.
10.45* Participation Agreement dated as of November 15, 1996 among Mail-Well I
Corporation, as Lessee and Guarantor, Certain Subsidiaries of Mail-Well
I Corporation, as Subsidiary Guarantors, Paribas Properties, Inc., as
Lessor, Various Financial Institutions Identified
</TABLE>
<PAGE>
<TABLE>
<C> <S>
herein, as Equity Lenders, Various Financial Institutions Identified
herein, as Financing Lenders and Banque Paribas, as Agent for the
Financing Lenders and Equity Lenders.
10.46* Loan Agreement dated as of November 15, 1996 among Paribas Properties,
Inc., as Lessor, Various Financial Institutions Identified herein, as
Financing Lenders, Various Financial Institutions Identified herein, as
Equity Lenders, and Banque Paribas, as Agent for the Lenders.
10.47* Master Equipment Lease and Security Agreement dated November 15, 1996
between Mail-Well I Corporation, as the Lessee or Debtor and Paribas
Properties, Inc., as the Lessor or Secured Party.
10.48* Security Agreement (Second and Subordinated Security Interest) made and
entered into by Paribas Properties, Inc. and Mail-Well I Corporation,
as Debtors, and Banque Paribas, as Agent for Secured Party date
November 15, 1996.
10.49* Appendix A to Participation Agreement, Master Lease, and Loan
Agreement.
10.50* Lease Facility Guaranty dated as of November 15, 1996 made by Mail-Well
I Corporation, Mail-Well, Inc. and certain of their Subsidiaries, as
Guarantors, in favor of Various Financial Institutions, as the Lenders,
and Banque Paribas, as Agent for the Lenders.
10.51* Assignment of Lease and rent dated as of November 15, 1996 from Paribas
Properties, Inc., as Assignor to Banque Paribas, as Agent for the
Lenders, as Assignee.
10.52* Security Agreement (First and Prior Security Interest) made and entered
into by Paribas Properties, Inc. and Mail-Well I Corporation, as
Debtors, and Banque Paribas, as Agent for Secured Party dated November
15, 1996.
10.53* Bill of Sale and Assignment of Equipment made and entered into on this
15th day of November, 1996 by Mail-Well I Corporation to and for the
benefit of Paribas Properties, Inc.
21 * Subsidiaries of the Registrant
23.1 * Report of Deloitte & Touche LLP on Consolidated Financial Statements
Schedules.
23.2 * Consent of Deloitte & Touche LLP.
24 * Powers of Attorney.
</TABLE>
_____________
* Filed herewith.
(b) REPORTS ON FORM 8-K
A report on Form 8-K was filed on May 2, 1996 to provide information
under Item 2 of Form 8-K regarding the acquisition by Mail-Well I
Corporation of Quality Park Products, Inc.
A report on Form 8-K was filed on July 1, 1996 to provide information
under Item 7 of Form 8-K regarding the financial statements in regard to
the acquisition by Mail-Well I Corporation of Quality Park Products, Inc.
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. (PARENT-ONLY FINANCIAL STATEMENTS) SCHEDULE I
CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------
ASSETS DECEMBER 31,
1996 1995
<S> <C> <C>
CURRENT ASSETS
Cash $ 45 $ 19
Accounts receivable, other - 85
Income tax receivable - 2,772
Other current assets 172 66
-------- --------
Total current assets 217 2,942
INVESTMENT IN SUBSIDIARY 121,987 103,061
INTANGIBLE ASSETS (net of accumulated amortization of $53 and $34) 256 275
OTHER ASSETS 129 -
-------- --------
TOTAL $122,589 $106,278
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Payable to subsidiary $ 1,381 $ 3,933
Other - 27
-------- --------
Total current liabilities 1,381 3,960
DEFERRED INCOME TAXES 1 -
-------- --------
Total liabilities 1,382 3,960
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY 121,207 102,318
-------- --------
TOTAL $122,589 $106,278
======== ========
</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. (PARENT-ONLY FINANCIAL STATEMENTS) SCHEDULE I
CONDENSED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)
- -------------------------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 24, 1994
YEAR ENDED DECEMBER 31, THROUGH
1996 1995 DECEMBER 31, 1994
<S> <C> <C> <C>
NET SALES
COST OF SALES
Materials
Manufacturing
Depreciation
Waste recovery
Total cost of sales
GROSS PROFIT
OTHER OPERATING COSTS
Selling
Administrative $ 109 $ 64 $ -
Amortization 19 19 15
------- ------- -------
Total other operating costs 128 83 15
------- ------- -------
OPERATING INCOME (LOSS) (128) (83) (15)
OTHER (INCOME) EXPENSE
Interest expense-debt - 1,650 1,465
Interest expense-amortization of deferred
financing costs - 53 74
Other (income) expense (1) - (17)
------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (127) (1,786) (1,537)
PROVISION FOR (BENEFIT FROM) INCOME TAXES
Current - 11 (31)
Deferred 1 (554) (619)
------- ------- -------
INCOME (LOSS) BEFORE EQUITY IN
UNDISTRIBUTED EARNINGS OF SUBSIDIARY
AND EXTRAORDINARY ITEM (128) (1,243) (887)
Equity in undistributed earnings of subsidiary 17,055 11,616 3,630
------- ------- -------
INCOME BEFORE EXTRAORDINARY ITEM 16,927 10,373 2,743
EXTRAORDINARY ITEM, NET OF TAX
BENEFIT OF $1,608 - 2,412 -
------- ------- -------
NET INCOME $16,927 $ 7,961 $ 2,743
======= ======= =======
</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. (PARENT-ONLY FINANCIAL STATEMENTS) SCHEDULE I
CONDENSED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
- ---------------------------------------------------------------------------------------------------------------
PERIOD FROM
FEBRUARY 24, 1994
YEAR ENDED DECEMBER 31, THROUGH
1996 1995 DECEMBER 31,
1994
<S> <C> <C> <C>
CASH FLOWS FROM OPERATIONS
Net income $ 16,927 $ 7,961 $ 2,743
Adjustments to reconcile net income to cash provided by
operations:
Equity in undistributed earnings of subsidiaries (17,055) (11,616) (3,630)
Amortization 19 72 89
Accretion of original issue discount - 1,650 1,717
(Gain) loss on repurchase of deferred coupon notes - pre-tax - 4,020 (17)
Deferred tax provision (benefit) 1 (554) (619)
Changes in operating assets and liabilities, net of effects
of acquired businesses:
Other working capital 223 (3,822) 4,859
Other assets (129) - -
-------- -------- --------
Net cash provided by (used in) operating activities (14) (2,289) 5,142
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in subsidiaries 0 (46,161) (34,682)
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from common stock issuance 40 68,181 19,631
Proceeds from issuance of deferred coupon notes - - 17,883
Debt issuance costs - - (1,654)
Repurchase of deferred coupon notes - (19,712) (4,607)
Repurchase of common stock - (1,713)
-------- -------- --------
Net cash provided by financing activities 40 48,469 29,540
-------- -------- --------
INCREASE IN CASH 26 19 0
BALANCE AT BEGINNING OF PERIOD 19 0 0
-------- -------- --------
BALANCE AT END OF PERIOD $ 45 $ 19 $ 0
======== ======== ========
Stock issued for debt and equity issuance costs $ - $ 430 $ 1,254
</TABLE>
See notes to condensed financial statements.
<PAGE>
MAIL-WELL, INC. (PARENT-ONLY FINANCIAL STATEMENTS) SCHEDULE I
CONDENSED FINANCIAL INFORMATION OF THE REGISTRANT
NOTES TO CONDENSED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The financial statements of Mail-Well,
Inc. (the "Company") reflect the investment in Mail-Well I Corporation
("M-W Corp."), a wholly-owned subsidiary, using the equity method.
INCOME TAXES - The provision (benefit) for income taxes is based on
income recognized for financial statement purposes. Deferred income
taxes are recognized for the effects of temporary differences between
such income and that recognized for income tax purposes. The Company
files a consolidated U.S. income tax return with M-W Corp.
2. CONSOLIDATED FINANCIAL STATEMENTS
Reference is made to the Consolidated Financial Statements and related
Notes of Mail-Well, Inc. and Subsidiaries for additional information.
3. DEBT AND GUARANTEES
Information on the debt of the Company is disclosed in Note 4 of the
Notes to Consolidated Financial Statements of Mail-Well, Inc. and
Subsidiaries included elsewhere herein. The Company has guaranteed all
debt of M-W Corp. ($221 million outstanding at December 31, 1996,
including current maturities) and certain other obligations arising in
the ordinary course of business. The aggregate amounts of M-W Corp.'s
debt maturities for the five years following 1996 are: 1997 -
$14,427,000; 1998 - $17,144,000; 1999 - $18,037,000; 2000 -
$18,022,000; 2001 - $18,012,000 and $135,777,000 thereafter.
4. DIVIDENDS RECEIVED
No dividends have been received from M-W Corp. since the Company's
inception. M-W Corp.'s ability to declare dividends to the Company is
restricted by the terms of its bank credit agreements and the
indenture relating to M-W Corp.'s Senior Subordinated Notes.
5. EXTRAORDINARY ITEM
In 1995, the Company repurchased all outstanding Deferred Coupon Notes
at a total cost of $19,712,000. In connection with this debt
extinguishment, the Company recognized an extraordinary loss of
$2,412,000, net of taxes of $1,608,000.
* * * * *
<PAGE>
<TABLE>
<CAPTION>
MAIL-WELL, INC. AND SUBSIDIARIES SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995 AND
FOR THE PERIOD FROM FEBRUARY 24, 1994 THROUGH DECEMBER 31, 1994
(AMOUNTS IN THOUSANDS)
- ----------------------------------------------------------------------------------------------
FOR THE PERIOD FROM
FOR THE FEBRUARY 24, 1994
YEAR ENDED THROUGH
DECEMBER 31, DECEMBER 31,
1996 1995 1994
<S> <C> <C> <C>
Balance at beginning of period $ 1,965 $ 1,457 $ -
Charged to costs and expenses 2,057 923 1,513
Charged to other accounts (1) 1,160 (2) 775 (3) 65
Deductions (4) (2,180) (1,190) (121)
--------- ------- ------
Balance at end of period $ 3,002 $ 1,965 $1,457
========= ======= ======
</TABLE>
(1) Recoveries of accounts previously written off.
(2) Includes the beginning balances ($718) of the allowance for doubtful
accounts for Supremex, Inc. and Graphic Arts Center, Inc.
(3) Includes the beginning balances ($801) of the allowance for doubtful
accounts for Quality Park Products, Inc., Pac National Group (PNG). and
Shepard Poorman Communications Corporation.
(4) Accounts written off.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 and 15(d) of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated.
Signature Title
- --------- -----
/s/ Gerald F. Mahoney
_____________________
Gerald F. Mahoney Chairman of the Board, Chief Executive Officer and
Director
/s/ Robert J. Terry
_____________________
Robert J. Terry President, Chief Operating Officer and Director
______________________
Frank P. Diassi * Director
______________________
J. Bruce Duty * Director
______________________
Frank J. Hevrdejs * Director
______________________
Jerome W. Pickholz * Director
______________________
Susan O. Rheney * Director
______________________
W. Thomas Stephens * Director
______________________
J. Virgil Waggoner * Director
/s/ Roger Wertheimer
* By _______________________
Roger Wertheimer
(Attorney in fact for persons indicated)
<PAGE>
Exhibit 10.33
ACQUISITION AGREEMENT AND
PLAN OF SHARE EXCHANGE
by and among
GRAPHIC ARTS CENTER, INC.,
a Delaware corporation,
as Purchaser
and
SHEPARD POORMAN COMMUNICATIONS CORPORATION,
an Indiana corporation
and
CERTAIN SHAREHOLDERS OF SHEPARD POORMAN
November 6, 1996
<PAGE>
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE 1 SHARE EXCHANGE AND RELATED MATTERS.....................................................1
1.1 The Plan of Exchange..............................................................1
1.2 Purchase Price....................................................................2
1.3 Calculation of Stockholders Equity. ..............................................2
1.4 The Closing.......................................................................2
1.5 Closing Consideration Adjustment..................................................4
1.6 Transfer Taxes....................................................................5
1.7 Contingency of Consideration......................................................5
1.8 Dissenting Shareholders...........................................................6
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF PRIMARY
SHAREHOLDERS AND SHEPARD POORMAN.......................................................6
2.1 Organization, Standing, Corporate Authorization, and Enforceability...............6
2.2 Capitalization of Shepard Poorman.................................................7
2.3 Articles of Incorporation and Bylaws; Certain Records.............................8
2.4 Compliance with Other Instruments and Laws........................................9
2.5 Governmental Authorizations; Consents.............................................9
2.6 Litigation........................................................................9
2.7 Financial Statements; No Undisclosed Liabilities..................................9
2.8 Absence of Certain Changes or Events.............................................10
2.9 Title to Property, Absence of Liens and Encumbrances.............................11
2.10 Full Authority; Compliance with Laws............................................12
2.11 Benefit Plans...................................................................12
2.12 Claims..........................................................................15
2.13 Taxes...........................................................................15
2.14 Contracts.......................................................................17
2.15 Environmental Quality...........................................................19
2.16 Intellectual Property...........................................................20
2.17 Prepaid Expenses................................................................20
2.18 Affiliate Transactions..........................................................20
2.19 Labor Matters...................................................................20
2.20 Customers and Vendors...........................................................21
2.21 Other Disclosures...............................................................21
2.22 Parachute Payments..............................................................22
2.23 Acquisition of Capital Stock....................................................22
2.24 Accuracy........................................................................22
2.25 Brokers and Finders.............................................................22
2.26 Primary Shareholder Knowledge...................................................22
2.27 Day Dream, Inc..................................................................22
</TABLE>
-i-
<PAGE>
ARTICLE 3 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
PRIMARY SHAREHOLDERS..............................................23
3.1 Ownership of Purchase Shares..................................23
3.2 Title to Purchase Shares......................................23
3.3 Authorization.................................................23
3.4 Enforceability................................................23
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PURCHASER........................24
4.1 Organization and Standing of Purchaser........................24
4.2 Authorization.................................................24
4.3 Enforceability................................................24
4.4 Compliance with Other Instruments and Laws....................24
4.5 Governmental Authorizations, Consents.........................24
4.6 Litigation....................................................24
4.7 Securities Act of 1933........................................25
4.8 Employee Relations............................................25
4.9 Brokers and Finders...........................................25
4.10 Purchaser's Knowledge.........................................25
ARTICLE 5 COVENANTS OF SHEPARD POORMAN AND THE\
PRIMARY SHAREHOLDERS...............................................25
5.1 Directors; Shareholder Meeting................................25
5.2 Conduct of Business...........................................26
5.3 Access........................................................27
5.4 No Sale or Transfer of Purchase Shares........................27
5.5 No Solicitation or Negotiation................................27
5.6 Filings and Consents..........................................27
5.7 Assistance Regarding Financial Statements.....................28
5.8 Signing of Agency Agreement...................................28
5.9 Resale of SPG.................................................28
5.10 Day Dream Litigation..........................................28
5.11 Day Dream Note................................................29
ARTICLE 6 COVENANTS OF PURCHASER.............................................29
6.1 Confidentiality...............................................29
6.2 Officer and Director Indemnification..........................29
6.3 Filings and Consents..........................................30
6.4 Day Dream Litigation..........................................30
ARTICLE 7 COVENANTS OF ALL PARTIES...........................................31
7.1 Commercially Reasonable Efforts; Further Assurances...........31
7.2 Certain Filings, Etc..........................................31
7.3 Public Announcements..........................................31
-ii-
<PAGE>
ARTICLE 8 CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE.....................31
8.1 Accuracy of Representations and Warranties....................31
8.2 Performance...................................................32
8.3 Certificate...................................................32
8.4 Payoff Letters................................................32
8.5 Debt..........................................................32
8.6 No Injunction.................................................32
8.7 No Material Adverse Effect....................................32
8.8 HSR Act.......................................................32
8.9 Consents......................................................32
8.10 Redemption of Preferred Stock and Redeemed Shares.............32
8.11 SPG Shares....................................................33
8.12 Real Estate Option............................................33
8.13 Legal Opinions................................................33
8.14 Resignations..................................................33
8.15 Certificate of Secretary......................................33
8.16 Corporate Approval............................................33
8.17 Escrow Agreement..............................................33
8.18 Employment Agreements.........................................33
8.19 Completion of Due Diligence...................................34
8.20 Contract With Day Dream, Inc..................................34
8.21 Repayment of Shareholder Debt.................................34
8.22 Lease with U.S. Bancorp.......................................34
8.23 Guaranty Agreement............................................34
8.24 No Discovery..................................................34
8.25 Documentation.................................................34
8.26 Articles of Exchange..........................................34
8.27 Accrual.......................................................34
ARTICLE 9 CONDITIONS TO OBLIGATION OF SHEPARD POORMAN
TO CLOSE...........................................................35
9.1 Accuracy of Representations and Warranties....................35
9.2 Repayment of Debt.............................................35
9.3 Performance...................................................35
9.4 Certificate...................................................35
9.5 Corporate Approval............................................35
9.6 No Injunction.................................................35
9.7 HSR Act.......................................................35
9.8 Legal Opinion.................................................35
9.9 Employment Agreements.........................................35
9.10 Escrow Agreement..............................................35
9.11 No Discovery..................................................36
9.12 Documentation.................................................36
9.13 Articles of Exchange..........................................36
-iii-
<PAGE>
ARTICLE 10 TERMINATION OF AGREEMENT..........................................36
10.1 Right to Terminate Agreement................................36
10.2 Effect of Termination.......................................36
ARTICLE 11 CERTAIN REMEDIES AND LIMITATIONS..................................37
11.1 Survival of Representations, Warranties and Covenants.......37
11.2 Indemnification by Shareholders.............................37
11.3 Limitations on Representations, Warranties
and Liabilities of Primary Shareholders.....................39
11.4 Indemnification by Purchaser................................40
11.5 Limitations on Liability of Purchaser.......................40
11.6 Indemnification Claims......................................40
11.7 Defense of Third Party Actions..............................41
11.8 Subrogation.................................................42
11.9 Exclusivity.................................................43
11.10 Retention of Records........................................43
ARTICLE 12 MISCELLANEOUS.....................................................43
12.1 Materiality.................................................43
12.2 Expenses....................................................43
12.3 Notices; Etc................................................44
12.4 Assignment..................................................45
12.5 Entire Agreement; Amendment; Governing Law; Etc.............45
12.6 Counterparts................................................45
12.7 Third Party Rights..........................................45
12.8 Exhibits and Schedules......................................45
12.9 Pronouns....................................................46
12.10 Authority and Execution.....................................46
12.11 Severability................................................46
12.12 Time of Essense.............................................46
12.13 Interpretation..............................................46
-iv-
<PAGE>
INDEX
Accountant.....................................................................4
Act............................................................................2
Affiliate.....................................................................38
Agreement......................................................................1
Associates....................................................................29
Audited Financial Statements...................................................9
Audited Statements.............................................................4
Benefit Plan..................................................................13
CERCLA........................................................................19
Claim..........................................................................7
Claim Notice..................................................................40
Claimants.....................................................................40
Closing........................................................................2
Closing Consideration..........................................................2
Closing Date...................................................................2
COBRA.........................................................................14
Code..........................................................................13
Confidential Information......................................................29
Contingent Consideration.......................................................5
Day Dream Litigation..........................................................28
Day Dream Note................................................................22
Debt..........................................................................32
Disclosure Schedule............................................................6
Disputed Matter................................................................4
Disqualified Individuals......................................................22
Dissenting Shares..............................................................6
Effective Time.................................................................2
Employment Agreements.........................................................33
Environmental Laws............................................................19
Equity Interests...............................................................8
ERISA.........................................................................12
Escrow Agreement...............................................................3
Escrow Amount..................................................................3
Estimated Stockholders Equity..................................................3
Exchange.......................................................................1
Final Closing Statement........................................................5
Financial Statements...........................................................9
Guaranty Agreement............................................................29
Hazardous Materials...........................................................19
HSR Act.......................................................................32
Indemnified Parties...........................................................41
Indemnifying Parties..........................................................41
-V-
<PAGE>
Intellectual Property.........................................................20
Leased Property...............................................................12
Legal Requirement..............................................................8
Losses........................................................................37
Material Adverse Effect.......................................................43
Material Contracts............................................................17
Multiemployer Plans...........................................................14
Neutral Accountants............................................................4
Notice of Disagreement.........................................................4
Payoff Letters.................................................................3
PBGC..........................................................................14
Pension Plan..................................................................14
Permits.......................................................................12
Permitted Liens...............................................................12
Poorman........................................................................1
Preferred Stock................................................................7
Primary Shareholders...........................................................1
Pro Rata Share.................................................................2
Property......................................................................19
Purchase Price.................................................................2
Purchase Shares................................................................1
Purchaser......................................................................1
Purchaser Indemnified Obligation..............................................37
Purchaser Indemnified Parties.................................................37
Purchaser Related Agreements..................................................24
RCRA..........................................................................19
Real Estate Purchase Price....................................................49
Redeemed Shares................................................................3
Redemption.....................................................................1
Redemption Agreement...........................................................1
Related Agreements.............................................................7
Richey.........................................................................1
Secretary of State..........................................................2, 6
Securities Act................................................................25
Shareholder Indemnified Obligations...........................................40
Shareholder Indemnified Parties...............................................40
Shareholder Notes..............................................................3
Shareholder's Agent............................................................1
Shareholders...................................................................1
Shareholders' Closing Statement................................................4
Shareholders' Expenses........................................................43
Shepard........................................................................1
Shepard Poorman................................................................1
Shepard Poorman Common Stock...................................................1
-vi-
<PAGE>
SPG............................................................................3
SPG Common Stock...............................................................8
Stockholders Equity............................................................2
Tax...........................................................................15
Tax Returns...................................................................15
Taxes.........................................................................15
Tentative Closing Consideration................................................3
Title Notice..................................................................12
Unaudited Financial Statements.................................................9
Value Added....................................................................5
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<PAGE>
ACQUISITION AGREEMENT AND PLAN OF SHARE EXCHANGE
THIS ACQUISITION AGREEMENT AND PLAN OF SHARE EXCHANGE ("Agreement") is made
and entered into as of November 6, 1996, by and among GRAPHIC ARTS CENTER, INC.,
a Delaware corporation ("Purchaser"), SHEPARD POORMAN COMMUNICATIONS
CORPORATION, an Indiana corporation ("Shepard Poorman"), ROBERT E. SHEPARD
("Shepard"), ROBERT W. POORMAN, JR. ("Poorman") and DAVID E. RICHEY, JR.
("Richey") (collectively, the "Primary Shareholders").
WITNESSETH:
WHEREAS, Purchaser desires to purchase all of the issued and outstanding
common stock of Shepard Poorman (the "Shepard Poorman Common Stock"), which
shall represent 100% of the issued capital stock of Shepard Poorman (after
effect is given to that certain redemption agreement (the "Redemption
Agreement") between Shepard Poorman and several holders of shares of Shepard
Poorman Common Stock providing for the redemption of Shepard Poorman Common
Stock immediately prior to Closing (as defined herein) (the "Redemption")), from
the holders of such shares of Shepard Poorman Common Stock (the "Shareholders")
upon and subject to the terms and conditions set forth herein (such shares of
Shepard Poorman Common Stock to be acquired by Purchaser hereunder hereinafter
being referred to as the "Purchase Shares"); and
WHEREAS, the respective Boards of Directors of Purchaser and Shepard
Poorman have determined that it is in the best interest and welfare of said
corporations and their respective shareholders that Purchaser acquire 100% of
the capital stock of Shepard Poorman through an exchange of Shepard Poorman
Common Stock for such consideration and on such terms and conditions as
hereinafter set forth.
WHEREAS, Poorman has agreed to act as agent for the individual Shareholders
(the "Shareholder's Agent") for certain purposes relating to this Agreement,
pursuant to an Agency Agreement to be executed by all of the Shareholders in a
form and manner satisfactory to Purchaser.
WHEREAS, the estimated consolidated Stockholders Equity (as defined herein)
of Shepard Poorman at Closing (as defined herein) will be not more than $7.9
million dollars.
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein and of the mutual benefits to be derived herefrom,
the Primary Shareholders, Shepard Poorman, and Purchaser agree as follows:
ARTICLE 1
SHARE EXCHANGE AND RELATED MATTERS
1.1 THE PLAN OF EXCHANGE. Subject to the terms and conditions of this
Agreement, including the receipt of all requisite Shareholder approvals, the
acquisition of the Purchase Shares by Purchaser (the "Exchange") will be carried
out in the following manner:
<PAGE>
(a) Shepard Poorman shall call a meeting of the Shareholders to
approve the Exchange and shall solicit proxies in favor of the Exchange.
(b) Subject to the provisions of this Agreement, Articles of
Exchange consistent with this Agreement shall be duly executed and, on the
Closing Date (as defined in Section 1.4 hereof), or as soon thereafter as
reasonably practicable, filed with the Indiana Secretary of State (the
"Secretary of State") in accordance with the Indiana Business Corporation Law
(the "Act"). The Exchange shall become effective upon the filing of the Articles
of Exchange with the Secretary of State (the "Effective Time").
(c) At the Effective Time, Purchaser shall acquire all of the
issued and outstanding shares of Shepard Poorman Stock in exchange for the
consideration set forth in Section 1.2. After the Effective Time, each Share
shall be deemed for all purposes to represent only the right of the holder to
receive such consideration (subject to any Dissenters' Rights as provided in
Section 1.8), and after such time there shall be no further transfer of such
Purchase Shares on the books of Shepard Poorman.
1.2 PURCHASE PRICE. The total cash consideration to be paid to the
Shareholders by Purchaser for the Purchase Shares, subject to adjustment under
Section 8.10, shall be an amount equal to (i) the Stockholders Equity of Shepard
Poorman at Closing (as defined in Section 1.3) plus (x) an additional Nine
Hundred Thousand Dollars ($900,000) and (y) an amount, not to exceed $700,000,
equal to the tax accrued for on the books of Shepard Poorman in connection with
the Redemption in addition to the $369,000 already accrued for such purpose (the
"Closing Consideration"), and (ii) the Contingent Consideration payable by the
Purchaser to the Shareholders pursuant to Section 1.7 (collectively, the
"Purchase Price"). The Closing Consideration shall be paid to all Shareholders
in proportion to their relative ownership of the Purchase Shares (their "Pro
Rata Share").
1.3 CALCULATION OF STOCKHOLDERS EQUITY. The consolidated
stockholders equity of Shepard Poorman at Closing shall be as determined in
accordance with generally accepted accounting principles less any Shareholders'
Expenses (as defined in Section 12.2), including any prepayment fees and
penalties paid in connection with the discharge of the Debt, payable by the
Shareholders at the Closing ("Stockholders Equity"). The parties agree that such
Stockholders Equity calculation shall not include the net income effect of the
forgiveness of the Shareholder Notes in connection with the Redemption.
1.4 THE CLOSING. The closing of the transactions contemplated by
this Article 1 (the "Closing") shall be held at the offices of Rothgerber,
Appel, Powers & Johnson LLP in Denver, Colorado, at 10:00 a.m. (local time) on
November 22, 1996, or at such other place, time and date as may be jointly
designated by Purchaser, Shepard Poorman and the Primary Shareholders (the date
on which the Closing takes place, the "Closing Date"). At or before the Closing,
each of the following shall occur:
-2-
<PAGE>
(a) As soon as practicable but no later than four business
days before the scheduled Closing Date, Shepard Poorman shall deliver to
Purchaser (i) a certificate, executed by the Chairman and CEO of Shepard
Poorman, setting forth Shepard Poorman's reasonable, good faith estimate of
Stockholders Equity as of the Closing Date, (the "Estimated Stockholders
Equity"), (ii) a certificate in the form of a letter (the "Payoff Letters"),
executed by the Chairman and CEO of Shepard Poorman and the Chairman and CEO of
its subsidiary, Shepard Poorman Graphics, Inc. ("SPG") and an authorized
representative of each bank or other creditor of Shepard Poorman or SPG set
forth on Schedule 1.4 (the "Creditors") to whom long-term indebtedness is owed
------------
(the "Debt") setting forth the amount of such Debt, including the current
portion thereof, and the estimated amounts of principal, interest, prepayment
fees and penalties that will be due and payable by Shepard Poorman and SPG to
each of the Creditors as of the Closing Date; and (iii) a certificate executed
by the Chairman and CEO of Shepard Poorman setting forth the number of Redeemed
Shares acquired or to be acquired by Shepard Poorman in the Redemption from each
transferring Shareholder and the total number of Redeemed Shares so acquired by
Shepard Poorman from such Shareholders.
(b) Prior to Closing, Shepard Poorman shall enter into the
Redemption Agreement in such form as is mutually agreeable to the parties,
pursuant to which certain shares of Shepard Poorman Common Stock (the "Redeemed
Shares") shall be redeemed by Shepard Poorman from certain Shareholders in
exchange for notes previously given by such Shareholders in exchange for shares
in Day Dream, Inc. (the "Shareholder Notes"). The Redemption of each such
Redeemed Share shall be in exchange for that proportion of the face amount of
the Shareholder Notes represented by the amount of Closing Consideration as
would be payable to such Shareholders if the aggregate value of the Shareholder
Notes were added to the Closing Consideration and such Closing Consideration (as
adjusted) were distributed to all Shareholders pro rata.
(c) That portion of the Debt owed to each Creditor shall be paid
to such Creditor by wire transfer of immediately available funds to an account
or accounts designated and in the amounts specified in the Payoff Letter. The
"Tentative Closing Consideration" shall be calculated using the Estimated
Stockholders Equity.
(d) From the Tentative Closing Consideration, Purchaser shall
(i) pay any unpaid Shareholders' Expenses (as defined in Section 12.2), and (ii)
deposit Six-Hundred Fifty Thousand Dollars ($650,000) with the Escrow Agent
acting pursuant to the Escrow Agreement referred to below (such amount, together
with income thereon, additions thereto, and releases therefrom, as more
specifically set forth in such Escrow Agreement being referred to herein as the
"Escrow Amount"). The Escrow Amount shall be held and distributed by such Escrow
Agent in accordance with the terms of the Escrow Agreement, in a form mutually
acceptable to the parties (the "Escrow Agreement"), which shall be entered into
by the Escrow Agent named therein, Purchaser and the Shareholder's Agent prior
to or on the Closing Date.
(e) The remainder of the Tentative Closing Consideration shall
be distributed at Closing to the Shareholders according to their Pro Rata Shares
by certified or cashier's check or wire transfer, as Purchaser shall choose.
-3-
<PAGE>
1.5 CLOSING CONSIDERATION ADJUSTMENT. The Closing Consideration
shall be adjusted as follows:
(a) A complete physical inventory will be taken at the direction
of the Primary Shareholders and observed by Purchaser within two days following
Closing. Inventory will be valued at the lesser of cost or market using FIFO in
accordance with generally accepted accounting principles applied on a consistent
basis.
(b) As soon as practicable but no later than 30 days after the
Closing Date, the Shareholder's Agent at the Shareholders' expense shall prepare
and deliver to KPMG Peat Marwick LLP ("Accountant") a statement setting forth in
detail the Stockholders Equity as of the Closing Date (the "Shareholders'
Closing Statement").
(c) Accountant shall audit the Shareholders' Closing Statement
in accordance with instructions mutually agreed upon by Purchaser and Shepard
Poorman, and, within 45 days of receipt thereof, shall render a report thereon
including any adjustments thereto recommended by the Accountant. The
Shareholder's Agent shall, within 10 days after receipt of such report, prepare
a revised Shareholders' Closing Statement including all such adjustments (the
"Audited Statements") and shall deliver the Audited Statement to Purchaser.
Purchaser and its representatives shall be afforded the opportunity to review
and inspect all of the financial records, work papers, schedules and other
supporting papers relating to the preparation of the Shareholders' Closing
Statement and the Audited Statement and to consult with Shepard Poorman and
Accountant regarding the methods used in the preparation thereof.
(d) The Audited Statements shall become final and binding on
Shareholders and Purchaser unless Purchaser gives written notice to the
Shareholder's Agent of its disagreement with respect to any matter contained
therein ("Notice of Disagreement") within 45 days after the receipt thereof by
Purchaser. A Notice of Disagreement shall not be permitted unless the aggregate
amount in dispute exceeds Ten Thousand Dollars ($10,000). A Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. For a period of 30 days after the delivery of the Notice of
Disagreement, the Shareholders' Agent and Purchaser shall attempt to resolve in
writing all of their differences with respect to each matter specified in the
Notice of Disagreement, in which case any such resolution shall be final and
binding on the parties. If, at the end of such 30-day period, the Shareholders'
Agent and Purchaser have not resolved in writing all of their differences with
respect to any such matter, then each unresolved matter ("Disputed Matter")
shall be submitted to and reviewed by a neutral "big six" accounting firm
mutually agreeable to the parties ("Neutral Accountants"). The Neutral
Accountants shall consider only the Disputed Matters and shall act promptly to
resolve in writing all Disputed Matters, and its decisions with respect to the
Disputed Matters shall be final and binding on each of the Shareholders and
Purchaser; provided that, no such resolution of the Disputed Matter shall
require payment of an amount greater than the highest amount or less than the
lowest amount suggested for such resolution by either the Shareholders' Agent or
the Purchaser. The Neutral Accountants shall notify the Shareholders' Agent and
the Purchaser of its resolution of the Disputed Matters, and upon receipt
thereof by the Accountant, the Accountant shall promptly prepare final Audited
Statements reflecting the resolution
-4-
<PAGE>
of all Disputed Matters promptly after such resolution (the "Final Closing
Statement") and shall deliver it to Purchaser and the Shareholders' Agent.
(e) Shareholders and Purchaser shall each be responsible for and
shall each pay one-half of the fees and expenses incurred in connection with the
Neutral Accountants.
(f) Within 10 days after receipt of the Final Closing Statement
(i) if the Estimated Stockholders Equity is greater than
the Stockholders Equity as set forth in the Final Closing Statement,
Shareholders shall pay to Purchaser the difference, plus interest as
provided below, first by giving instructions to the Escrow Agent to
distribute from any remaining Escrow Amount and then any additional
amounts shall be paid by Shareholders to Purchaser on demand in
immediately available funds.
(ii) if the Stockholders Equity as set forth in the Final
Closing Statement is greater than the Estimated Stockholders Equity,
Purchaser shall pay to each of the Shareholders his or her pro rata
share of the difference plus interest as provided below in immediately
available funds.
Any payment required to be made pursuant to this Section
1.5(f) shall be made together with simple interest thereon from the Closing Date
to the date of payment at the annual rate (calculated on the basis of a 365-day
year) equal to the prime rate published by The Wall Street Journal on the
Closing Date.
1.6 TRANSFER TAXES. Any transfer taxes, stamp duties, filing fees,
registration fees, recordation expenses, or other similar taxes, fees, charges
or expenses incurred by any Shareholder, Shepard Poorman or any other party in
connection with the transfer of the Purchase Shares to Purchaser or in
connection with any of the other transactions contemplated by this Agreement
shall be borne and paid exclusively by Shareholders.
1.7 CONTINGENCY OF CONSIDERATION. In addition to the other
consideration provided for herein, the Shareholders of Shepard Poorman (other
than those Shareholders who exercise their Dissenter's Rights, as provided in
Section 1.8 below) shall be entitled to the following additional consideration
(the "Contingent Consideration") in the aggregate amount of $1,000,000, which
shall be payable by the Purchaser and contingent upon the future performance of
Shepard Poorman as follows:
(a) The aggregate sum of $250,000 would be paid to the
Shareholders (according to the pro rata allocation described on Schedule 1.7) in
------------
each year that the Value Added (as defined herein) of Shepard Poorman, excluding
SPG, grows by 5% over the previous year. "Value Added" shall be defined as net
sales minus all direct material costs and outside service costs, including all
costs categorized as such in the internal income statement prepared consistently
with the consolidating schedule statement in the audit report prepared in
connection with the regularly conducted audit of Shepard Poorman by its
independent auditors for the year ended February 29,
-5-
<PAGE>
1996. The base year for the initial actual Value Added calculation of Shepard
Poorman will be that amount reflected in the Financial Statements for the year
ended February 29, 1996, which is $29,447,355 calculated as provided on Schedule
--------
1.7(a) attached hereto. Thereafter, for the purpose of this calculation, the
- ------
calculation will be based upon Purchaser's fiscal years, i.e., Value Added for
fiscal year 1998 will be calculated based upon the results of the 1997 fiscal
year.
(b) If the growth in the Value Added of Shepard Poorman,
beginning on January 1, 1997, through December 31, 1997, excluding SPG, is more
than (5%) of the base year, the Shareholders will earn an additional aggregate
$50,000 for each percentage point of growth above (5%) for that year, i.e., if
the fiscal year ended December 31, 1997, growth in Value Added turns out to be
7% more than the base amount (in both cases excluding SPG), Purchaser will pay
the Shareholders an aggregate of $350,000.
(c) The period for this Contingent Consideration will be the
four (4) years ending December 31, 2000, unless the maximum aggregate Contingent
Consideration of $1,000,000 has been paid sooner as provided herein. The payment
of the Contingent Consideration shall be independent of the employment status of
any of the Shareholders.
1.8 DISSENTING SHAREHOLDERS. Any Purchase Shares held by
Shareholders who have satisfied the requirements of Chapter 44 of the Act
related to the rights of dissenting shareholders ("Dissenters' Rights"), and
have not effectively withdrawn or lost such Dissenters' Rights (such shares
being referred to as "Dissenting Shares"), shall not be converted pursuant to
this Agreement, but the holders thereof shall be entitled only to such
Dissenters' Rights. Each dissenting shareholder who is entitled to payment for
such Purchase Shares pursuant to such Dissenters' Rights shall receive payment
from Purchaser in an amount as determined pursuant to such Dissenters' Rights.
To the extent such payment for Dissenting Shares exceeds the amount of the
Closing Consideration otherwise payable by Purchaser for such Purchase Shares
under this Agreement, such amount shall be immediately payable in readily
available funds by the Primary Shareholders to the Purchaser.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PRIMARY SHAREHOLDERS
AND SHEPARD POORMAN
The Disclosure Schedules delivered to Purchaser by Shepard Poorman in
connection with its execution of this Agreement, is sometimes referred to herein
as the "Disclosure Schedule." The Disclosure Schedules will be delivered
within 5 business days of the date hereof and unless mutually agreed upon either
party may terminate this Agreement. Each of the Primary Shareholders and
Shepard Poorman represents and warrants to Purchaser that the following
statements are true as of the date of this Agreement and as of the Closing Date
(subject to any update of the Disclosure Schedules in accordance with Section
8.1):
-6-
<PAGE>
2.1 ORGANIZATION, STANDING, CORPORATE AUTHORIZATION, AND
ENFORCEABILITY.
(a) Shepard Poorman and SPG are corporations duly organized,
validly existing and operating under the laws of Indiana. Shepard Poorman and
SPG are in good standing under the laws of Indiana and have all requisite
corporate power and authority to carry on their respective businesses as
currently conducted and to own or lease and operate their properties. Shepard
Poorman and SPG are qualified to do business and are in good standing in each
jurisdiction in which the property owned, leased or operated by either, or the
nature of the business conducted by either makes such qualification necessary.
(b) This Agreement and all other agreements, documents and
instruments executed or to be executed by Shepard Poorman and/or SPG herewith
(the "Related Agreements") constitute or will upon due execution constitute the
valid and legally binding obligations of Shepard Poorman and/or SPG, enforceable
in accordance with their terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally. Shepard Poorman and SPG have the requisite corporate power
and authority to enter into this Agreement and the Related Agreements.
(c) Except for Board of Directors and Shareholder approval as
required under the Act, the execution and delivery of this Agreement, the
Related Agreements, and all other documents and instruments executed or to be
executed by Shepard Poorman pursuant to this Agreement, and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate and other action on the part of Shepard Poorman and SPG.
Upon receipt of such Shareholder approval, all such corporate authorization will
have been obtained. This Agreement and the Related Agreements have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Shepard Poorman and/or
SPG.
(d) Except for SPG, Shepard Poorman does not own, directly or
indirectly, the capital stock (or other similar equity interests) of any other
corporation, joint venture, partnership, limited liability company or other
similar entity. SPG does not own, directly or indirectly, the capital stock ( or
other similar equity interests) of any other corporation, joint venture,
partnership, limited liability company or similar entity. Except as listed on
Schedule 2.1(d) (which capital stock will be acquired prior to Closing and
- ---------------
subject to this representation and warranty), Shepard Poorman owns all of the
issued and outstanding capital stock of SPG free and clear of any lien, pledge,
charge, adverse claim, security interest, encumbrance (including any imposed by
law in any jurisdiction), title retention agreement, option or right to purchase
of any kind, proxy, voting agreement, voting trust, restriction on
transferability, preemptive right or other Claim of any kind.
As used in this Agreement, "Claim" means any and all claims,
liabilities, causes of action, arbitrations, audits, hearings, investigations,
litigation or suits, whether in contract, tort or otherwise, whether statutory
and common law, whether civil, criminal, administrative, investigative, formal
or informal, whether known or unknown, fixed or contingent.
-7-
<PAGE>
2.2 CAPITALIZATION OF SHEPARD POORMAN. As of the date of this
Agreement, the authorized capital stock of Shepard Poorman consists of 300,000
shares of Common Stock, no par value (the "Shepard Poorman Common Stock") of
which 178,095 shares are outstanding and 10,000 shares of Preferred Stock $100
par value (the "Preferred Stock") of which 1,700 shares are outstanding. As of
the date of this Agreement, the authorized capital stock of SPG consists of
100,000 shares of Common Stock, no par value ("SPG Common Stock") of which 8,628
is outstanding. Schedule 2.2 contains a list of all Shareholders of Shepard
------------
Poorman of record, and accurately sets forth the number of shares of Shepard
Poorman Common Stock held by each such Shareholder on the date hereof. All
prior issuance of securities by Shepard Poorman and SPG, and all prior
repurchases, redemptions or exchanges affecting the outstanding securities of
Shepard Poorman and SPG, including the Redemption, have complied with all
applicable Legal Requirements (as defined below) (including federal and state
securities laws), preemptive rights and contractual restrictions and there are
no further liabilities of Shepard Poorman, SPG or the Primary Shareholders due
to the former holders thereof. Each share of Shepard Poorman Common Stock,
Preferred Stock and SPG Common Stock has been duly authorized and validly issued
and is fully paid and nonassessable. Except as described above, Shepard Poorman
and SPG do not have shares of its capital stock issued or outstanding. Except
for the Redemption Agreement, there are no outstanding convertible or
exchangeable securities, subscriptions, calls, options, warrants, rights,
contractual or arising by operation of law (including, without limitation,
rights of first refusal and preemptive rights), or other agreements or
commitments of any character to which Shepard Poorman or SPG is a party or by
which either of them is bound, relating to the issuance, purchase, other
acquisition or voting of any shares of the capital stock of, or other equity or
ownership interest in (collectively, "Equity Interests") Shepard Poorman or SPG.
No bonds, debentures, notes or other indebtedness having the right to vote under
any circumstances (or convertible into securities having such right to vote) of
Shepard Poorman or SPG are issued and outstanding. There are no agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any person or entity is or may be entitled to receive any payment based
on the revenues or earnings, or calculated in accordance therewith, of Shepard
Poorman or SPG. Except as set forth on Schedule 2.2, there are no voting trusts,
------------
proxies or other agreements or understandings to which Shepard Poorman or SPG is
a party or by which Shepard Poorman or SPG is bound with respect to the voting
of any shares of capital stock or other Equity Interests of Shepard Poorman or
SPG.
For purposes of this Agreement, the term "Legal Requirement"
shall mean any federal, state or local law, statute, legislation, ordinance,
code, rule, regulation, decree, award, order, permit, franchise, consent or
authorization of, any federal, state, local or other governmental body or
agency, department, commission, bureau, board, council, court, magistrate, panel
or instrumentality of the United States, any political subdivision thereof or
any state or local governmental authority.
2.3 ARTICLES OF INCORPORATION AND BYLAWS; CERTAIN RECORDS. Copies of
the articles of incorporation, bylaws, minute books and stock records of each of
Shepard Poorman and SPG have been made available to Purchaser, and each such
copy is true, correct and complete. All material records of any type and
description in whatever form or medium that presently exist and that relate
-8-
<PAGE>
to the business or properties of Shepard Poorman and SPG are in the possession
or control of Shepard Poorman or SPG (or Shepard Poorman or SPG has the right to
possess or control such records) and are located at the offices of Shepard
Poorman and SPG, or of their counsel, independent auditors or other advisors,
and Shepard Poorman and SPG will have the right to possession of all such
records upon the consummation of the transactions contemplated by this
Agreement.
2.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of this Agreement and the Related Agreements and the consummation of
the transactions contemplated hereby and thereby will not conflict with or
result in any violation of or default under any provision of the articles of
incorporation or bylaws of Shepard Poorman or SPG, or, except as set forth on
Schedule 2.4, of any mortgage, indenture, trust, lease, partnership or other
- ------------
agreement or other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, or Legal Requirement applicable to Shepard Poorman,
SPG or the Shareholders or any of the respective properties of Shepard Poorman
or SPG, nor will it prevent or materially delay the consummation of the
transactions contemplated hereby.
2.5 GOVERNMENTAL AUTHORIZATIONS; CONSENTS. Except as set forth on
Schedule 2.5, no consents, licenses, approvals or authorizations of, or
- ------------
registrations or declarations with, any governmental authority, agency, bureau
or commission, or any third party, are required to be obtained or made by
Shepard Poorman, SPG or the Shareholders in connection with the execution,
delivery, performance, validity and enforceability of this Agreement or any
Related Agreement or the sale or transfer of the Purchase Shares.
2.6 LITIGATION. To the best of each Primary Shareholder's
knowledge, no action, suit, proceeding or governmental investigation is pending
or threatened, at law or in equity, which seeks to question, delay or prevent,
or could have the effect of delaying or preventing, the consummation of all or
any portion of the transactions contemplated hereby.
2.7 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES. Except as set
forth on Schedule 2.7:
------------
(a) Shepard Poorman has delivered to Purchaser (i) the
audited consolidated balance sheets of Shepard Poorman as of February 28, 1996,
and 1995 and the related consolidated statements of operations, common
stockholders' equity and cash flows for the fiscal years ended February 28,
1996, 1995 and 1994, accompanied in each case by the opinion thereon of KPMG
Peat Marwick LLP, independent public accountants, (such audited financial
statements, including the notes thereto, hereinafter being referred to as the
"Audited Financial Statements"), and (ii) the unaudited consolidated balance
sheet of Shepard Poorman as of August 31, 1996 and the related unaudited
consolidated statements of operations, common stockholders' equity and cash
flows for the six months ended August 31, 1996 set forth on Schedule 2.7(a) (the
---------------
"Unaudited Financial Statements"). (The Audited Financial Statements and the
Unaudited Financial Statements including the notes thereto together hereinafter
being referred to as the "Financial Statements"). All of the Financial
Statements have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as indicated therein)
throughout the periods indicated
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and present fairly in all material respects the consolidated financial position
of Shepard Poorman and SPG as of the dates thereof and the consolidated results
of its operations for the periods then ended subject, in the case of the
Unaudited Financial Statements, to normal recurring year-end adjustments,
adjustments specifically required by this Agreement, and the absence of notes.
(b) Neither Shepard Poorman nor SPG has any Claims, debts,
obligations, guaranties of the obligations of others or liabilities (whether
absolute or contingent, liquidated or unliquidated, due or to become due),
except for (i) Claims, debts, obligations, guaranties and liabilities to the
extent reflected or reserved against in the Financial Statements, (ii) debts,
obligations, guaranties and liabilities to the extent referred to in Schedule
--------
2.12, (iii) debts, obligations, guaranties and liabilities incurred or entered
- ----
into subsequent to August 31, 1996, in the ordinary course of business and
otherwise not in contravention of this Agreement, (iv) debts, obligations and
liabilities relating to this Agreement and the Related Agreements and
instruments being executed and delivered in connection herewith and the
transactions referred to herein and therein (including obligations to pay legal
fees, financial advisory fees, bank fees, accounting fees and other amounts in
connection therewith so long as such obligations are included in determining
Stockholders Equity in the Final Closing Statements).
2.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except for (i) matters
set forth on Schedule 2.8, (ii) matters disclosed in the Financial Statements
------------
and (iii) as contemplated by this Agreement, neither Shepard Poorman nor SPG
has, since February 28, 1996:
(a) undergone any change in its condition (financial or
otherwise), properties, assets, liabilities, business or operations, except for
changes in the ordinary course of business which have not either individually or
in the aggregate had a Material Adverse Effect, as defined in Section 12.1, on
Shepard Poorman or SPG;
(b) changed any of its methods of accounting or accounting
practices or classifications of assets or liabilities, or failed to maintain its
books of account in the usual, regular and ordinary manner in accordance with
generally accepted accounting principles and on a basis consistent with prior
periods unless required by regulation or generally accepted accounting
principles;
(c) modified the material terms of, or canceled or
terminated, any Material Contract (as defined below);
(d) terminated, discharged or received any written notice
regarding the resignation, discharge or termination of any officer;
(e) established or adopted any Benefit Plan, or increased the
amount of the wages, bonus, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees, except in any case in the ordinary course of business in accordance
with past practice and, in the case of senior management employees, in an amount
not exceeding 3% in any one case;
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(f) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or purchased or redeemed, directly
or indirectly, any shares of its capital stock, or split up, combined,
reclassified, redeemed, repurchased or otherwise reacquired any of their
respective capital stock, except in the case of Preferred Stock to be redeemed
in advance of the Closing Date or the shares of capital stock of SPG not owned
by Shepard Poorman;
(g) issued or sold any shares of its capital stock of any
class or any subscriptions, options, warrants, calls or other rights to purchase
directly or indirectly any such shares or any securities directly or indirectly
convertible into or exchangeable for such shares or made any other change in its
capital structure;
(h) incurred any direct or contingent liability for borrowed
money or guaranteed the monetary obligations of any other person or entity other
than indebtedness to be included in the Debt to be discharged at Closing, or
made any monetary investment in, advance to or loan to any person or entity
other than in the ordinary course of business;
(i) mortgaged, pledged or subjected to any material lien,
lease, security interest or other charge or encumbrance any of its properties or
assets, tangible or intangible, except those securing Debt to be discharged at
Closing;
(j) made any material change in its practices, operations or
policies with respect to the method for selling goods or services, or other
method for accounting for sales, the conduct of accounts receivable collection
or accounts payable payment activities;
(k) merged or consolidated with or into any other entity or
initiated or participated in negotiations with any person or entity with respect
to any of the foregoing;
(l) implemented or adopted any change in its tax methods,
principles or elections;
(m) acquired or disposed of any material assets or properties
or made any capital improvement other than in the ordinary course of business;
or
(n) suffered any damage, destruction or loss (not covered by
insurance) which has had or could reasonably be expected to have a Material
Adverse Effect on Shepard Poorman or SPG.
2.9 TITLE TO PROPERTY, ABSENCE OF LIENS AND ENCUMBRANCES:
(a) Shepard Poorman and SPG have good title to their owned
material assets, including the tangible assets reflected on the balance sheet
included in Shepard Poorman's most recent Financial Statements, other than
assets disposed of or used after the date thereof in the ordinary course of
business for fair value. Except as disclosed in Schedule 2.9, the tangible
------------
assets owned by Shepard Poorman and SPG are owned free and clear of all liens,
mortgages, pledges, charges, security interests or encumbrances, except for
Permitted Liens (as defined below). Each
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of Shepard Poorman and SPG owns, leases or licenses, and has adequate rights to
use all material property and other material assets necessary to conduct their
respective businesses as going concerns on a basis consistent with past
practices. The assets of Shepard Poorman and SPG are in operating condition and
repair (subject to normal wear and tear). Neither the whole nor any part of any
real property occupied by Shepard Poorman or SPG have been condemned by any
public authority, nor to the best of the Primary Shareholders' knowledge, is any
such condemnation or taking threatened or contemplated. There exists free and
uninterrupted egress and ingress over a public roadway to all operating
facilities.
For the purposes of this Agreement, the term "Permitted Liens" shall
mean liens for current taxes not yet due and imperfections of title, liens and
encumbrances, if any, which do not materially and adversely affect the use,
value or marketability of the property affected thereby and the liens,
mortgages, pledges, charges, security interests and encumbrances securing the
Debt as set forth on Schedule 2.9.
------------
(b) Shepard Poorman and SPG validly hold the leasehold created by
the leases (true, complete and correct copies of which have been provided to
Purchaser) as described on Schedule 2.9(b) (the "Leased Property") and such
---------------
leases are enforceable by Shepard Poorman or SPG as the lessee thereunder.
(c) Neither Shepard Poorman nor SPG is a party to any agreement
granting any third party the right or an option to purchase or lease all or any
portion of the real or personal property of Shepard Poorman or SPG.
(d) There is not pending nor have Shepard Poorman or SPG received
any written notice of (i) any claim or proceeding asserting or seeking to
establish a title interest in the real property of Shepard Poorman or SPG, or
any claim of default under any of the leases under which leaseholds have been
created ("Title Notice"), or (ii) the existence of any facts or proceedings
which may result in the issuance of such a Title Notice; and, there are not any
such proceedings nor is there any Title Notice.
2.10 FULL AUTHORITY; COMPLIANCE WITH LAWS. Except as set forth on
Schedule 2.10, Shepard Poorman and SPG are in compliance with all applicable
- -------------
Legal Requirements. Set forth on Schedule 2.10 is a list of any and all permits,
-------------
licenses, consents, orders, approvals, franchises, certificates or other
authorizations under any applicable Legal Requirement (collectively the
"Permits"), issued to Shepard Poorman and SPG in connection with the ownership,
operation and maintenance of their respective businesses or assets. Shepard
Poorman and SPG have obtained and maintained all Permits. Each of the Permits
is in full force and effect, and Shepard Poorman and SPG are in compliance in
all respects with all the provisions of such Permits.
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<PAGE>
2.11 BENEFIT PLANS.
(a) Except as set forth in Schedule 2.11, neither Shepard
-------------
Poorman nor SPG maintains, sponsors, participates in or contributes to, or is
required to contribute to, directly or indirectly, or has any obligation under:
(i) Any employee benefit plan, employee pension benefit
plan, employee welfare benefit plan (including any medical, dental,
disability, accident or sickness, salary continuation or life insurance
plan or arrangement), or multiemployer plan, all as defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
regardless of whether or not a plan is exempt from some or all of the
otherwise applicable requirements of ERISA; or
(ii) Any material bonus, commission, deferred
compensation, incentive compensation, restricted stock, stock purchase,
stock option, stock appreciation right, debenture, supplemental pension,
profit sharing, royalty pool, vacation, sick leave, severance or
termination pay policies, supplemental unemployment benefits plan, loan
guarantee, relocation assistance, employee loan or other extensions of
credit, or other similar material plan, program, agreement, policy,
commitment, arrangement or benefit currently in effect under which
current or former employees or their dependents, beneficiaries,
representatives or estates are currently or will in the future be
entitled to benefits.
(b) With respect to each plan, program, agreement, policy,
commitment, arrangement or benefit described on Schedule 2.11 (a "Benefit
-------------
Plan"), Shepard Poorman has furnished to the Purchaser true, correct and
complete copies of such Benefit Plan, including amendments, if applicable,
summary plan descriptions, if applicable, the Internal Revenue Service
determination letter, if applicable, and the two most recent Forms 5500, 5500-C
or 5500-R, as applicable, and has made available to the Purchaser the most
recent actuarial reports of or regarding such Benefit Plan. As to each Benefit
Plan not reduced to writing, Shepard Poorman has provided to the Purchaser a
description of all material elements of such Benefit Plan.
(c) Except as set forth in Schedule 2.11:
-------------
(i) Each Benefit Plan has been operated and administered in all
material respects in accordance with its terms and applicable laws,
including but not limited to ERISA and the Internal Revenue Code of 1986
as amended (the "Code") (as defined below). Each Benefit Plan that is
intended to be qualified under the Code either has received from the
Internal Revenue Service, or timely applied for, a determination letter
on such Benefit Plan's qualified status.
(ii) Neither Shepard Poorman nor SPG, or, to the best of the
Primary Shareholders' knowledge, any other party in interest (within the
meaning of ERISA) has engaged in any non-exempt prohibited transaction
with respect to any Benefit Plan under
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<PAGE>
ERISA, the Code and, to the best of Shareholders' knowledge, there is
no pending assertion of the occurrence of any such transaction.
(iii) All contributions required under applicable law or
the terms of any Benefit Plan, collective bargaining agreement or
other agreement relating to a Benefit Plan to be paid by Shepard
Poorman or SPG for all periods prior to the date of this Agreement
have been completely and timely made to each Benefit Plan when due,
and Shepard Poorman or SPG, as applicable, have established adequate
reserves on its books (which will be treated as a deduction from
current assets or as a current liability for purposes of the
determination of Actual Stockholders Equity) to meet liabilities for
contributions accrued but that have not been made because they are not
yet due and payable.
(iv) There is no current or pending investigation or
audit by the Internal Revenue Service, the Department of Labor or any
other governmental entity of any Benefit Plan, nor has Shepard Poorman
or SPG received notification from any such governmental entity of such
a pending audit or investigation, and there are no actions, suits or
Claims pending (other than routine claims for benefits) or threatened,
with respect to any Benefit Plan or against the assets of any such
Benefit Plan.
(v) Except as disclosed in Schedule 2.11(c)(v), no
-------------------
Benefit Plan is or ever has been a plan subject to Title IV of ERISA,
Part 3 of Subtitle B of Title I of ERISA or Section 412 of the Code
("Pension Plan"), or is or ever has been a multiemployer plan as
defined in Section 3(37) of ERISA or Section 414(f) of the Code
("Multiemployer Plans"). Neither Shepard Poorman nor SPG has incurred
any liability to the Pension Benefit Guaranty Corporation ("PBGC")
with respect to any Pension Plan, except for required premium
payments, which payments have been made when due. No accumulated
funding deficiency (within the meaning of Section 312 of the Code or
Section 302 of ERISA) or reportable event (as defined in Section 4043
of ERISA) has occurred with respect to any Pension Plan. No event has
occurred in connection with any Pension Plan which could subject
Shepard Poorman, SPG or any Pension Plan to liability under Section
4062, 4063 or 4064 of ERISA, and, to the best knowledge of the Primary
Shareholders, no event has occurred which might give rise to any
liability of Shepard Poorman, SPG or any Pension Plan to the PBGC
under Title IV of ERISA or which could reasonably be anticipated to
result in any claims being made against Shepard Poorman, SPG or any
Pension Plan by the PBGC. Neither Shepard Poorman nor SPG has incurred
or, as a result of the transactions contemplated by this Agreement,
will incur any withdrawal liability (including any contingent or
secondary withdrawal liability) within the meaning of Section 4201 and
4204 of ERISA to any Multiemployer Plan. Upon a complete withdrawal or
a partial withdrawal (as those terms are defined in Section 4203 and
4205, respectively, of ERISA) from a Multiemployer Plan occurring on
or before the close of the most recent fiscal year of each such
Multiemployer Plan ended prior to the Closing Date (April 30, 1995,
and June 23, 1995) neither Shepard Poorman nor SPG would have been
subject to withdrawal liability under Title IV, Subtitle E, Part 1 of
ERISA and, to the best of Shareholders' knowledge, there has been no
material change in the financial condition of any Multiemployer Plan
that would result in the
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<PAGE>
imposition of such liability due to such complete or partial withdrawal
on or before the Closing Date.
(vi) Shepard Poorman and SPG have complied in all material
respects with all notice and continuation coverage requirements
applicable to group health plans under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), with respect to all
medical and health benefits provided by Shepard Poorman or SPG that are
subject to COBRA.
(vii) No Benefit Plan amendments have been adopted nor will
any such amendments be adopted prior to the Closing Date except as may be
necessary for compliance purposes with the Code or ERISA and there is no
arrangement, commitment or understanding to create any additional plan
which would constitute a Benefit Plan or increase the rate of benefit
accrual or contribution requirement under any of the Benefit Plans or
modify, change or terminate any existing Benefit Plan.
(d) Neither Shepard Poorman nor SPG is a member of a "controlled
group" of organizations (as defined in Sections 414(b), (c), (m) or (o) of the
Code) that includes any organization other than Shepard Poorman and SPG which
sponsors or maintains any employee benefit plan within the meaning of Section
3(3) of ERISA which under Title IV of ERISA or any section of the Code or ERISA
would subject Purchaser, Shepard Poorman or SPG or any of their respective
employee benefit plans or the fiduciaries thereof or their respective assets to
any taxes, encumbrances, penalties or other liabilities.
2.12 CLAIMS. Except as set forth in Schedule 2.12, there are no
-------------
material Claims against or, to the knowledge of Shepard Poorman or the Primary
Shareholders, threatened against Shepard Poorman or SPG or their respective
properties, at law or in equity or before any court, governmental department,
commission, board, agency, authority, instrumentality, domestic or foreign, or
any Claims which have had or could be reasonably expected to have individually
or in the aggregate a Material Adverse Effect on Shepard Poorman or SPG before,
on or after the Closing Date. Neither Shepard Poorman nor SPG is subject to any
material judgment, stipulation, order or decree arising from any action, suit,
proceeding or investigation, or any such judgment, stipulation, order or decree
which individually or in the aggregate could reasonably be expected to have a
Material Adverse Effect on Shepard Poorman or SPG. To the best of the Primary
Shareholders' knowledge, no action, suit, proceeding or governmental
investigation is pending or threatened against Shepard Poorman or SPG which
seeks to question, delay or prevent the consummation of the transactions
contemplated hereby.
2.13 TAXES.
(a) For purposes of this Agreement, "Taxes" in the plural and
"Tax" in the singular shall refer to any and all taxes, charges, fees, levies,
or other assessments of whatever kind or nature, including, but not limited to,
any federal, state, local or foreign net income, gross income, gross receipts,
unitary, license, payroll, unemployment, excise, severance, stamp, occupation,
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premium, windfall profits, environmental (including, but not limited to, taxes
under section 59A of the Code), occupational, leasing, lease, fuel, customs,
duties, capital stock, franchise, profits, withholding, Social Security,
unemployment, disability, ad valorem, real property, personal property (tangible
and intangible), sales, use, transfer, registration, value added, alternative or
minimum, estimated, or any other kind of tax whatsoever, including the recapture
of any tax items, and including any interest, addition, penalty or other
associated charge thereto, whether disputed or not.
(b) Shepard Poorman and SPG have filed or will file or cause
to be filed, within the applicable period prescribed by law, (i) all federal,
state, local, foreign or other material Tax Returns, as that term is defined
below, required by such law to be filed by Shepard Poorman or SPG, respectively,
for all taxable periods ending on or prior to the Closing Date or (ii) valid
extensions of the time for filing such Tax Returns. For purposes of this
Agreement, "Tax Returns" shall mean any returns, reports or statements with
respect to Taxes which are required to be filed with any taxing authority.
(c) Except as set forth in Schedule 2.13(c), neither Shepard
----------------
Poorman nor SPG has obtained or will obtain prior to the Closing Date any
extensions of time in which to file any Tax Returns which have not as of yet
been filed for any taxable period ending on or prior to the Closing Date.
(d) Shepard Poorman and SPG have paid or shall pay, within
the time and in the manner prescribed by law, all Taxes shown as due on all such
Tax Returns filed or to be filed prior to the Closing Date.
(e) Except as set forth in Schedule 2.13(e), no Claim or
----------------
assertion has been made against Shepard Poorman or SPG by any Tax authority in
any jurisdiction in which no Tax Return has been filed by the Shepard Poorman or
SPG that either Shepard Poorman or SPG is or may be subject to taxation of any
sort in such jurisdiction or otherwise is required to file a Tax Return in such
jurisdiction.
(f) Except for Permitted Liens, there are no Tax liens or
other security interests or encumbrances of any type resulting from Tax
liabilities on any of the assets of either Shepard Poorman or SPG.
(g) There is no dispute, Claim or any other controversy
concerning any material Tax liability of either Shepard Poorman or SPG either
(i) raised or asserted by any Tax authority in writing; or (ii) whether or not
formally asserted or claimed, as to which the Shareholders or the Chief
Financial Officer or the Controller of Shepard Poorman with authority for Tax
matters has any knowledge.
(h) Except as set forth in Schedule 2.13(h), none of the
----------------
income Tax Returns for any open tax year that include Shepard Poorman or SPG has
been audited by any taxing authority. Each of Shepard Poorman and SPG has made
available to Purchaser a complete copy of each federal income Tax Return,
examination report, statement of deficiency, or any other administrative or
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<PAGE>
judicial assertion, assessment or determination of federal income Tax liability
with respect to Shepard Poorman or SPG.
(i) Since February 28, 1993, each of Shepard Poorman and SPG
has employed a permissable method of Tax accounting, validly elected for each
taxable period ending on or prior to the Closing Date. Neither Shepard Poorman
nor SPG have changed, or requested to be permitted to change, any material
method of Tax accounting.
(j) Neither Shepard Poorman nor SPG has waived any statute of
limitations with respect to any Taxes or has agreed to any extension of time
with respect to a Tax assessment or deficiency, except for such waivers or
extensions which, by their terms, have elapsed as of the date of this Agreement,
nor are any requests for such waivers or extensions pending.
(k) Neither Shepard Poorman nor SPG (i) has filed a consent
under Section 341(f) of the Code concerning collapsible corporations, (ii) has
made any payments, is obligated to make any payments, or is a party to any
agreement that will render it (or the payor of compensation under the agreement)
subject to the provision of section 280G of the Code regarding payments as a
result of a change in control, (iii) has been a United States real property
holding company within the meaning of section 897(c)(2) of the Code or (iv) is a
party to any Tax allocation or Tax sharing agreement.
(l) The unpaid Taxes of each of Shepard Poorman and SPG,
including Taxes attributable to all periods ending on or prior to the Closing
Date which are not yet due and payable, do not materially exceed the reserve on
the Unaudited Interim Balance Sheet for tax liability.
2.14 CONTRACTS. Except as set forth in this Agreement or on Schedule
--------
2.14 (the agreements listed thereon being referred to as the "Material
- ----
Contracts"), neither Shepard Poorman nor SPG are a party to, bound by or
obligated under any:
(a) collective bargaining agreement;
(b) mortgage, indenture, note or installment obligation or
other instrument or contract for or relating to any borrowing of an amount in
excess of $5,000 by Shepard Poorman or SPG (other than intercompany borrowings
between Shepard Poorman and SPG);
(c) guaranty by Shepard Poorman or SPG of any obligation in
excess of $5,000 (excluding any endorsement made in the ordinary course of
business for collection);
(d) license agreement involving the payment or receipt by
Shepard Poorman or SPG of $5,000 or more during any 12-month period during the
term thereof;
(e) lease of real or personal property under which Shepard
Poorman or SPG are lessors or lessees involving annual rentals in excess of
$5,000;
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<PAGE>
(f) agreement for the purchase by Shepard Poorman or SPG of
equipment involving outstanding commitments in excess of $5,000;
(g) agreement purporting to limit the right of Shepard
Poorman or SPG to compete in any line of business, with any person or other
entity or in any geographic area;
(h) agreement for the purchase or sale of raw materials,
products or goods or the provision of services involving payments in excess of
$5,000 at prices that vary from the prices therefor generally prevailing in
customary, arms-length transactions or that may not be terminated by Shepard
Poorman or SPG on not more than thirty (30) days' notice without penalty;
(i) contract with any governmental or quasi-governmental
authority involving payments in excess of $5,000;
(j) bond, deposit, financial assurance requirement or
insurance coverage in excess of $5,000 individually required to be submitted to
customers of Shepard Poorman or SPG, as the case may be, under any sale, lease
or service arrangement or to any governmental authority under any Permit or
Legal Requirement;
(k) agreement or instrument relating to the acquisition by
Shepard Poorman or SPG of any entity or all or substantially all of the assets
of any person or entity;
(l) other agreement, contract or obligation of Shepard
Poorman or SPG calling for or involving the payment, potential payment or
accrued obligation by or to Shepard Poorman or SPG, as the case may be, from the
date hereof through the earliest date such agreement, contract or obligation can
be terminated unilaterally without material penalty by Shepard Poorman or SPG,
as the case may be, of an amount in excess of $5,000;
(m) agreement or commitment relating to the borrowing of
money or the guaranty or indemnity (direct or indirect) in respect of or the
granting of security for any obligation for the borrowing of money, by Shepard
Poorman, SPG or any other person or entity, in excess of $5,000, including,
without limitation, guarantees, accommodation collateral, letters of credit,
mortgages, deeds of trust, indentures, loan agreements and credit agreements;
(n) agreement or commitment relating to clean-up or
remediation involving Hazardous Materials (as hereinafter defined);
(o) agreement that creates an encumbrance or any restriction
on the ability of Shepard Poorman or SPG to (i) pay dividends or make similar
distributions; (ii) make loans or advances to any person or entity, or (iii)
sell, lease or transfer any of their respective properties or assets, except (in
each case) for such restrictions or encumbrances existing under or by reason of
(1) applicable Legal Requirements, (2) customary non-assignment provisions in
leases and other contracts entered into in the ordinary course of business, or
(3) any instrument governing the Outstanding Debt;
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(p) indemnification obligations in favor of any person or
entity, and any escrow agreements related to any indemnification or obligation;
or
(q) confidentiality, secrecy, screening, development or
settlement agreement pertaining to any Intellectual Property.
(r) any printing contract or other contract with any customer
of Shepard Poorman or SPG.
Except as specifically set forth on Schedule 2.14 with respect thereto, all of
-------------
the Material Contracts are legal, valid, binding and in full force and effect,
no default exists thereunder on the part of Shepard Poorman or SPG, and the
consummation of the transactions contemplated by this Agreement will not cause
any default or condition in respect of any such Material Contracts, the effect
of which is to cause, permit, create or perfect the right in any party (a) to
repudiate or disavow its obligations to Shepard Poorman or SPG thereunder, (b)
to require or have the right to require Shepard Poorman or SPG to perform their
respective obligations thereunder (including obligations to pay indebtedness)
prior to such time on which, or on terms and conditions otherwise different from
those that, are provided therein or (c) to recover from Shepard Poorman or SPG
any damages or fines. No party (including Shepard Poorman and SPG) to any such
Material Contract is in default thereunder. True, correct and complete copies of
all the Material Contracts have been delivered to the Purchaser.
2.15 ENVIRONMENTAL QUALITY.
(a) Except as set forth on Schedule 2.15(a), neither Shepard
----------------
Poorman nor SPG nor, to the knowledge of the Primary Shareholders, any previous
owner, tenant, occupant, user or operator of any real property now or ever owned
or leased by Shepard Poorman or SPG (the "Property") released or disposed of any
"Hazardous Materials" (as defined below) on, under, in or about the site of the
Property, except in compliance in all material respects with applicable
Environmental Laws (as defined below). For the purposes of this Agreement, the
term "Hazardous Materials" shall mean any substance, material or waste which is
regulated by any local government authority, the State of Indiana, or other
state where applicable, or the United States Government, including, without
limitation, any material or substance which is (a) defined as a "hazardous
waste," "hazardous material," "hazardous substances, " "extremely hazardous
waste," "regulated substance" or "restricted hazardous waste" under any
provision of the laws of Indiana, or any other applicable law, including, but
not limited to, the Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901
et seq. ("RCRA"), and the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. (S) 9601 et seq. ("CERCLA") and (b) petroleum,
including crude oil and any fraction thereof and any refined petroleum products
and derivatives thereof.
(b) The Property complies in all respects with all applicable
Environmental Laws. For purposes of this Agreement, the term "Environmental
Laws" shall mean all federal, state and local laws, ordinances and regulations
pertaining to air and water quality, soils and subsurface strata,
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natural resources, Hazardous Materials, waste generation, management,
transportation and disposal or other environmental matters, including the Clean
Water Act, the Clean Air Act, the Federal Water Pollution Control Act, the Solid
Waste Disposal Act, RCRA, CERCLA, and the rules, regulations and ordinances of
the city and county in which the Property is located, the Environmental
Protection Agency and all other applicable federal, state, regional and local
agencies. Without limiting the generality of the foregoing, neither Shepard
Poorman nor SPG is liable or potentially liable for any response costs or
natural resource damages under Sections 107(a) or 113(f) of CERCLA, or under any
other so-called "superfund" or "superlien" law or similar Legal Requirement, at
or with respect to the Property and no circumstances exist, which with notice or
lapse of time or both could result in such liability.
(c) The conduct of the businesses of Shepard Poorman and SPG
complies in all respects with all applicable Environmental Laws.
(d) Neither Shepard Poorman nor SPG has sent any Hazardous
Material to a site that, pursuant to any applicable Environmental Laws, (i) has
been placed on the "National Priorities List" of hazardous waste sites or any
similar state list, (ii) is otherwise designated or identified as a potential
site for remediation, cleanup, closure or other environmental remedial activity,
or (iii) is subject to a claim, an administrative order or other request to take
"removal" or "remedial" action, as defined in any applicable Environmental Laws,
or to make payment for the costs of cleaning up the site.
(e) Neither Shepard Poorman nor SPG (i) is involved in any
suit or proceeding with respect to a release or threatened release of any
Hazardous Material or a violation or alleged violation of any applicable
Environmental Laws, nor, have Shepard Poorman or SPG received any notice of any
claims from any person or entity relating to property damage or to personal
injuries from exposure to any Hazardous Material, nor, have Shepard Poorman or
SPG received any notice or request for information from any governmental agency
or authority or other third party with respect to any of the foregoing, or (ii)
to the knowledge of the Primary Shareholders, has failed to timely file any
report required to be filed, failed to acquire all necessary certificates,
approvals and permits or failed to generate and maintain all required data,
documentation and records under all applicable Environmental Laws.
(f) Except as set forth in Schedule 2.15(f), there are
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currently no underground storage tanks in or under the Property, and no
underground storage tank was removed from the Property during the period that
Shareholders maintained an ownership in such property.
2.6 INTELLECTUAL PROPERTY. Shepard Poorman or SPG either owns or
has the right to use by license, sublicense, or other written agreement, all of
the inventions, improvements, domestic and foreign patents and applications
therefor, customer lists, copyrights, copyright- registrations and applications
therefor, trademarks, trade names, service marks, trade dress, logos, rights in
computer software, and all rights granted or retained in licenses under any of
the foregoing which are used in connection with the conduct of Shepard Poorman's
or SPG's business as presently conducted (collectively the "Intellectual
Property"). None of the Intellectual Property used in connection with
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the conduct of Shepard Poorman's or SPG's business is, or has been in the past
five years, involved in, or the subject of, any pending or threatened
infringement, interference, opposition or similar action, suit or proceeding.
The material license fees, royalties and other amounts payable by Shepard
Poorman and SPG in connection with the use of the Intellectual Property,
together with the terms and conditions on which, and periods for which such
amounts are payable, are set forth in Schedule 2.16.
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2.17 PREPAID EXPENSES. All prepaid expenses shown on the balance
sheet of the most recent Financial Statements or subsequently paid by Shepard
Poorman and SPG and shown on Shareholders' Closing Statement have been incurred
solely in connection with the businesses and assets of Shepard Poorman and SPG
or this Agreement.
2.18 AFFILIATE TRANSACTIONS. Set forth on Schedule 2.18 is a list of
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all transactions (including, without limitation, employment contracts, loans and
advances, accounts and notes payable or receivable and service agreements)
between Shepard Poorman or SPG and any current officer, director, shareholder or
affiliate of Shepard Poorman or of SPG (a) which are effective as of the date
hereof and at Closing or (b) constitutes a present or future liability or
obligation of Shepard Poorman or SPG to any officer, director, shareholder or
affiliate of Shepard Poorman or of SPG.
2.18 LABOR MATTERS. Except as set forth on Schedule 2.19, (a)
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neither Shepard Poorman nor SPG has entered into or is a party to any collective
bargaining agreement, memorandum of understanding or other written document
binding on Shepard Poorman or SPG respecting terms and conditions of employment
with respect to an identified group of employees with any labor union that would
cover any of their respective employees and (b) the employees of Shepard Poorman
and SPG are not subject to any collective bargaining agreement, memorandum of
understanding or other written document binding on Shepard Poorman or SPG
respecting terms and conditions of employment with respect to an identified
group of employees nor are any such employees, in their capacities as employees,
represented by any labor union. As to the collective bargaining agreements
disclosed on Schedule 2.19, neither Shepard Poorman nor SPG is in default
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thereunder. There are no Claims, controversies, labor disturbances,
investigations, proceedings or complaints pending, threatened, by any
governmental agency or any of Shepard Poorman's or SPG's employees or any party
or parties representing any of such employees against Shepard Poorman or SPG
before any court, arbitrator or other tribunal. To the best of the Primary
Shareholders' knowledge, there are no organizational efforts presently being
made or threatened by or on behalf of any labor union with respect to the
employees of Shepard Poorman or SPG, nor has there been in the last five (5)
years. Neither Shepard Poorman nor SPG has experienced a work stoppage,
strike, lock-out or other labor disturbance within the past five (5) years, and
there is no work stoppage, strike, lock-out or other labor disturbance presently
occurring, or, to the Primary Shareholders' best knowledge, threatened. To the
best of the Primary Shareholders' knowledge, Shepard Poorman and SPG have
complied with all Legal Requirements relating to their respective employees, the
employment of labor, and the safety and health of employees, including, without
limitation, all Legal Requirements relating to occupational health and safety,
discrimination, unemployment, wages, hours, the Family and Medical Leave Act,
collective bargaining, and the collection and payment of withholding taxes and
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similar taxes in respect of the businesses of Shepard Poorman and SPG. Except
as set forth in Schedule 2.19, there are no unfair labor practice charges or
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complaints pending against Shepard Poorman or SPG involving employees now or
previously employed by Shepard Poorman or SPG.
2.20 CUSTOMERS AND VENDORS. Schedule 2.20 hereto is a correct and
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current list of the 20 largest customers and the 10 largest vendors of Shepard
Poorman and SPG, respectively, during the 7-month period ended September 30,
1996, taken together, with the amount of sales made to each such customer or by
each such vendor, as the case may be, during such period as reasonably
ascertained from readily available information, such amounts being estimated in
good faith as being within ten percent (10%) of the actual sales made to or by
such customer or vendor, as the case may be. Except as set forth on Schedule
--------
2.20, the Primary Shareholders do not have any information indicating that any
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of these customers or vendors intends to cease doing business with Shepard
Poorman or SPG or materially alter the amount of the business that it is
presently doing with Shepard Poorman or SPG.
2.21 OTHER DISCLOSURES. In addition to the other disclosures
required hereby, the following documents and information pertaining to Shepard
Poorman and SPG have been made available to the Purchaser:
(a) true, correct and complete copies of each policy of
insurance maintained by Shepard Poorman or SPG, together with information on
premiums, coverage, insurers, expiration dates and deductibles; and
(b) the location and name of each bank or other financial
institution in which Shepard Poorman or SPG have an account or line of credit,
and the identity of each such account or line of credit, and each bank in which
Shepard Poorman or SPG have a safe deposit box, together with the names of all
persons authorized to draw upon or have access thereto.
2.22 PARACHUTE PAYMENTS. Any bonuses or other compensation or
amounts paid or payable by Shepard Poorman or SPG, including amounts payable as
a result of the transaction contemplated by the Agreement, has not resulted in
and will not result in payments to "Disqualified Individuals" (as defined in
Section 280G(c) of the Code) of Shepard Poorman or SPG which, individually or in
the aggregate, will constitute "excess parachute payments" (as defined in
Section 280G(b) of the Code) resulting in the imposition of the excise tax under
Section 4999 of the Code or the disallowance of deductions under Section 280G of
the Code.
2.23 ACQUISITION OF CAPITAL STOCK. The Preferred Stock, the Redeemed
Stock and the SPG Common Stock not owned at all times by Shepard Poorman that is
redeemed, reacquired or acquired by Shepard Poorman have been, or will be,
redeemed, reacquired or acquired from the former owners thereof in such a manner
as to not give rise to any Claims from such former owners including Claims under
federal or state securities laws.
2.24 ACCURACY. The representations and warranties made by Shepard
Poorman and the Primary Shareholders to Purchaser set forth in this Agreement,
the Schedules to this Agreement, and
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the written agreements, instruments and documents delivered and to be delivered
pursuant to or in connection with this Agreement and to which the Purchaser has
been afforded access, do not include an untrue statement of material fact or
omit to state any material fact necessary to make them, when taken together and
in light of the circumstances in which they were or are made, not misleading in
any material respect.
2.25 BROKERS AND FINDERS. Except for amounts due by the Shareholders
to Corporate Development Associates, Inc., which amount will be paid at Closing
by the Shareholders from the Closing Consideration, no person or entity is
entitled to any brokerage commission, finder's fee or like payment in connection
with the transactions contemplated in this Agreement.
2.26 PRIMARY SHAREHOLDER KNOWLEDGE. No Primary Shareholder and no
officer or director of Shepard Poorman and SPG has actual knowledge, as of the
date hereof, of any state of facts which will have a Material Adverse Effect on
Shepard Poorman or SPG or give rise to a Purchaser Indemnified Obligation (as
defined below), except for such matters as have been disclosed by Shareholders
to Purchaser or its representatives and are contained in the Disclosure
Schedule.
2.27 DAY DREAM, INC. Since February 28, 1996, there has been no
decrease in sales, margins or profits of Shepard Poorman's or SPG's business
with Day Dream, Inc. Neither Shepard Poorman nor any Primary Shareholder has any
information indicating that Day Dream, Inc. intends to cease to do business with
Shepard Poorman or SPG or materially affect the amount of business that Day
Dream, Inc. is presently doing with either or both of them. The receivable from
Day Dream appearing on the Financial Statements (the "Day Dream Note") is, to
Primary Shareholder's knowledge, a valid obligation of Day Dream, and represents
no more than the ordinary risk of collectibility to Shepard Poorman.
ARTICLE 3
ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF THE PRIMARY SHAREHOLDERS
Each Primary Shareholder represents and warrants to Purchaser as
follows:
3.1 OWNERSHIP OF PURCHASE SHARES. Such Primary Shareholder is now,
and (except as may be mutually agreed between such Primary Shareholder and
Purchaser) immediately prior to the Redemption such Primary Shareholder will be,
the owner of the number of shares of Shepard Poorman Common Stock, set forth
opposite the name of such Primary Shareholders on Schedule 3.1. Each of the
------------
Purchase Shares to be sold by such Primary Shareholder to Purchaser is now, and
(except as may be mutually agreed in writing between such Primary Shareholder
and Purchaser) immediately prior to the Closing, will be owned by such Primary
Shareholder free and clear of any lien, pledge, charge, adverse claim, security
interest, encumbrance (including any imposed by law in any jurisdiction), title
retention agreement, option or right to purchase of any kind.
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3.2 TITLE TO PURCHASE SHARES. Upon delivery of the Purchase Shares
being sold by such Primary Shareholder to Purchaser hereunder and payment and
delivery to such Primary Shareholder of the consideration specified herein,
Purchaser will acquire valid title thereto, free and clear of any lien, pledge,
charge, adverse claim, security interest, encumbrance (including any imposed by
law in any jurisdiction), title retention agreement, option or right to purchase
of any kind, other than (a) any restrictions imposed by applicable securities
laws, (b) any liens, pledges, charges, adverse claims, security interests,
encumbrances, title retention agreements, options, equities or rights to
purchase created by or through Purchaser or any of Purchaser's affiliates.
3.3 AUTHORIZATION. The execution and delivery of this Agreement and
all documents and instruments executed or to be executed by such Primary
Shareholder pursuant to this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by any necessary
action on the part of such Primary Shareholder and such Primary Shareholder has
full right, power and legal capacity to execute and deliver this Agreement and
perform such Primary Shareholder's obligations hereunder. This Agreement and all
other documents and instruments executed or to be executed by such Primary
Shareholder pursuant to this Agreement have been, or will have been, at the time
of their respective executions and deliveries, duly executed and delivered by
such Primary Shareholder.
3.4 ENFORCEABILITY. This Agreement constitutes the valid and
legally binding obligation of such Primary Shareholder, enforceable in
accordance with its terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Primary Shareholders and
Shepard Poorman as follows:
4.1 ORGANIZATION AND STANDING OF PURCHASER. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
enter into this Agreement, to carry out the transactions contemplated hereby and
to perform its obligations hereunder.
4.2 AUTHORIZATION. The execution and delivery of this Agreement,
and all other agreements, documents and instruments executed or to be executed
by Purchaser pursuant to this Agreement (the "Purchaser Related Agreements"),
and the consummation of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary corporate and other action on the part of
Purchaser. This Agreement, and the Purchaser Related Agreements have been, or
will have been, at the time of their respective executions and deliveries, duly
executed and delivered by a duly authorized officer of Purchaser.
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4.3 ENFORCEABILITY. This Agreement constitutes, and each of the
Purchaser Related Agreements when duly executed and delivered will constitute,
the valid and legally binding obligations of Purchaser, enforceable in
accordance with its terms, except as such enforceability may be limited by
equitable principles and by applicable bankruptcy, insolvency, reorganization,
arrangement, moratorium or similar laws relating to or affecting the rights of
creditors generally.
4.4 COMPLIANCE WITH OTHER INSTRUMENTS AND LAWS. The execution and
delivery of this Agreement, and the Purchaser Related Agreements, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in any violation or default under any provision of the
Certificate of Incorporation or Bylaws of Purchaser, or of any material
mortgage, indenture, trust, lease, agreement or other instrument, permit,
concession, grant, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Purchaser or any of its properties,
the result of which (either individually or in the aggregate) will prevent or
materially delay the consummation of the transactions contemplated hereby.
4.5 GOVERNMENTAL AUTHORIZATIONS, CONSENTS. No consents, licenses,
approvals or authorizations of, and registrations or declarations with, any
governmental authority, bureau, agency or commission, or any third party, are
required to be obtained or made by Purchaser in connection with the execution,
delivery, performance, validity and enforceability of this Agreement or the
Purchaser Related Agreements or Purchaser's purchase of the Purchase Shares
pursuant hereto, other than a filing with the Federal Trade Commission and the
Department of Justice under the HSR Act.
4.6 LITIGATION. To the best of Purchaser's knowledge, no action,
suit, proceeding or governmental investigation is pending or threatened, at law
or in equity, which seeks to question, delay or prevent the consummation of all
or any portion of the transactions contemplated hereby.
4.7 SECURITIES ACT OF 1933. Purchaser is an "accredited investor"
as defined under Rule 501 of Regulation D under the Securities Act of 1933, as
amended (the "Securities Act"), and is acquiring the Purchase Shares solely for
the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof. Purchaser acknowledges that the Purchase Shares
are not registered under the Securities Act and that such Purchase Shares may
not be transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
state securities laws and regulations, as applicable. Purchaser is also aware
that the certificate or certificates evidencing the Purchase Shares will bear a
legend or legends referring to the restrictions on the transferability thereof
and any other legends required by applicable law.
4.8 EMPLOYEE RELATIONS. Purchaser has no present intention to
layoff any significant number of the employees of Shepard Poorman or SPG or to
close any facility of Shepard Poorman or SPG.
4.9 BROKERS AND FINDERS. No person or entity is entitled to any
brokerage commission, finder's fee or like payment from Purchaser in connection
with the transactions contemplated in this Agreement.
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4.10 PURCHASER'S KNOWLEDGE. No officer or director of Purchaser has
actual knowledge, as of the date hereof, of any state of facts which, in the
judgment of Purchaser, will give rise to a Shareholder Indemnified Obligation
(as defined below), except for such matters as have been disclosed to Purchaser
by Shareholders, Shepard Poorman or their representatives and are contained in
the Disclosure Schedules.
ARTICLE 5
COVENANTS OF SHEPARD POORMAN
AND THE PRIMARY SHAREHOLDERS
5.1 DIRECTORS; SHAREHOLDER MEETING. Shepard Poorman and the Primary
Shareholders shall take all actions necessary in accordance with applicable law
and the articles of incorporation and bylaws of Shepard Poorman to present this
matter to the Board of Directors of Shepard Poorman, and upon approval of the
Board of Directors to convene a meeting of Shareholders to vote upon this
Agreement and the Exchange. At such meeting of the Board of Directors, the
Primary Shareholders who are Directors of Shepard Poorman shall vote in favor of
approval of this Agreement, the Redemption and the Exchange and shall recommend
such approval to the Board of Directors, and at such meeting of the Shareholders
the Primary Shareholders shall vote in favor of the approval of this Agreement,
the Redemption Agreement and the Exchange and will recommend that other
Shareholders do the same, and subject to applicable laws, Shepard Poorman and
the Primary Shareholders shall solicit from the Shareholders proxies in favor of
such adoption and approval and shall take all other action necessary or helpful
to secure a vote of the Shareholders in favor of this Agreement and the
Exchange.
5.2 CONDUCT OF BUSINESS. Shepard Poorman and the Primary
Shareholders agree that, between the date of this Agreement and the Closing
Date, except as contemplated by this Agreement as set forth on Schedule 5.2,
------------
neither Shepard Poorman nor SPG without Purchaser's written consent or except as
requested by Purchaser will:
(a) amend its articles of incorporation or bylaws;
(b) make any change in its practices, operations or policies
with respect to the selling goods or services, collecting accounts receivable
and/or paying accounts payable;
(c) conduct its business in a manner that departs from the
manner in which such business was being conducted prior to the date of this
Agreement;
(d) increase the rate or change the form of compensation
payable to any director, officer or employee of Shepard Poorman or SPG or
increase any employee benefits, except in the ordinary course of business in
accordance with past practice in an amount not to exceed 3% in any one case;
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(e) purchase or dispose of any properties or other assets,
except in the ordinary course of business;
(f) declare, set aside, pay or make any dividend or other
distribution in respect of any of Shepard Poorman's or SPG's outstanding shares
of capital stock;
(g) issue or sell any shares of Shepard Poorman's or SPG's
capital stock (whether or not from the treasury) or any other securities; grant
any options, convertibility rights, rights to subscribe for shares of capital
stock or securities convertible into or exchangeable for shares of capital
stock, warrants, calls or other agreements relating to Shepard Poorman's or
SPG's capital stock; split up, combine, reclassify, redeem, repurchase or
otherwise reacquire any of Shepard Poorman's or SPG's capital stock, except as
contemplated herein, or otherwise change its capitalization;
(h) except as required specifically by this Agreement or
generally by regulation or generally accepted accounting principles, maintain
its books of account other than in the usual, regular and ordinary manner in
accordance with generally accepted accounting principles and on a basis
consistent with prior periods, make any change in any of its books, accounting
methods or practices, or reclassify any assets or liabilities;
(i) cancel, terminate, renew or amend any Material Contract
or enter into any contract agreement, lease, license or commitment which would
be a Material Contract if such had existed on the date hereof;
(j) merge or consolidate with or into any other person or
entity or sell or dispose of all or substantially all of Shepard Poorman's or
SPG's assets to any person or entity, or initiate or participate in negotiations
with any person or entity with respect to any of the foregoing;
(k) invest in certificates of deposit in any one bank if such
investment in the aggregate exceed $100,000 at any time;
(l) incur any direct or contingent liability for borrowed
money or guarantee the monetary obligations of any other person or entity, other
than indebtedness to be included in the Debt, or make any monetary investment
in, advance to or loan to any person or entity other than in the ordinary course
of business;
(m) fail to make maintenance expenditures in the amounts and
at the times required to operate its business in the ordinary course consistent
with past practice;
(n) implement or adopt any change in their tax methods,
principles or elections;
(o) enter into any transaction outside the ordinary course of
business; or
(p) agree or commit to do any of the foregoing.
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5.3 ACCESS. The Primary Shareholders and Shepard Poorman agree
that, between the date of this Agreement and the Closing Date, Shepard Poorman
and SPG shall, after receiving reasonable advance notice from Purchaser, give
Purchaser and its Associates (as defined in Section 6.1) reasonable access
(during normal business hours) to the books, records, contracts and officers of
Shepard Poorman and SPG for the purpose of enabling such parties to further
investigate and inspect the business, operations and financial and legal affairs
of Shepard Poorman and SPG.
5.4 NO SALE OR TRANSFER OF PURCHASE SHARES. Each Primary
Shareholder agrees that, between the date of this Agreement and the Closing
Date, such Primary Shareholder shall not, without Purchaser's prior written
consent, directly or indirectly, sell or otherwise transfer, or agree or commit
to transfer, any of the Purchase Shares or any interest in or right relating to
any of such Primary Shareholder's Purchase Shares.
5.5 NO SOLICITATION OR NEGOTIATION. Shepard Poorman, and the
Primary Shareholders agree that between the date of this Agreement and the
Closing Date they will not, nor will they permit SPG or any officer, director or
agent of any Shareholder, Shepard Poorman or SPG nor any of the affiliates of
Shepard Poorman, SPG, any Shareholder or any of their respective officers or
directors to (i) solicit any proposal or offer from any person or entity (other
than Purchaser) relating to the sale of Shepard Poorman or SPG or any material
portion of its assets, (ii) provide any non-public information to any person or
entity (other than Purchaser) for use in preparing any proposal or offer
relating to the sale of Shepard Poorman or SPG or any material portion of its
assets, or (iii) respond to or enter into any negotiations regarding any
proposal or offer from any person or entity (other than Purchaser).
5.6 FILINGS AND CONSENTS. Shepard Poorman and the Primary
Shareholders shall use commercially reasonable efforts to do, and to cause SPG
to do, each of the following:
(a) as soon as possible after the date of this Agreement,
file with the appropriate governmental authority the notification form required
to be filed by Shepard Poorman under the HSR Act with respect to this Agreement
and the transactions contemplated hereby, together with a request for early
termination of the applicable waiting period;
(b) after consultation with Purchaser, make any additional
filing required to be made by Shepard Poorman under the HSR Act and promptly
furnish to the appropriate governmental authority such additional information as
may be requested under the HSR Act;
(c) make or give each other filing or notice required to be
made or given pursuant to any applicable Legal Requirement, Material Contract or
Permit by Shepard Poorman, SPG or any of the Shareholders in connection with the
execution and delivery of any of this Agreement or in connection with the
consummation or performance of any of the transactions contemplated hereby; and
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(d) obtain an agreement from each Creditor to terminate its
lien or liens and all lien filings upon payment of the amounts specified in such
Creditor's respective Payoff Letter and each consent required to be obtained
pursuant to any applicable Legal Requirement, Permit or Material Contract by
Shepard Poorman, SPG or any Shareholder in connection with the execution and
delivery of any of this Agreement or in connection with the consummation or
performance of the transactions contemplated hereby. Shareholders shall pay all
costs of obtaining such releases and consents.
5.7 ASSISTANCE REGARDING FINANCIAL STATEMENTS. Shepard Poorman and
the Primary Shareholders agree to, and to cause SPG to, render reasonable
assistance to Purchaser in order to permit Purchaser at its expense to prepare
such financial statements and consents, schedules, certificates and opinions as
may be required for inclusion by Purchaser or its ultimate parent corporation in
filings to be made under the HSR Act.
5.8 SIGNING OF AGENCY AGREEMENT. Shepard Poorman and the Primary
Shareholders agree to use their best efforts to cause all Shareholders to
execute and deliver counterparts of the Agency Agreement.
5.9 RESALE OF SPG. Shepard Poorman and the Primary Shareholders
agree to, and to cause SPG to, permit and use their best efforts to assist
Purchaser to sell SPG to its management or another interested party at an amount
approximately equal to that amount that Purchaser paid for SPG, which amount
shall include any payments of debt made by Purchaser on behalf of SPG at
Closing.
5.10 DAY DREAM LITIGATION. Shepard Poorman agrees to set aside a
reserve in the Financial Statements in the amount of $390,000 against possible
losses in connection with the pending litigation between Shepard Poorman and Day
Dream, Inc. (the "Day Dream Litigation"). Shepard Poorman and the Primary
Shareholders agree that such amount shall not constitute a limit on the amount
of liability that may result from the Day Dream Litigation, and no provision of
this Agreement shall be construed to prevent Purchaser from having
indemnification pursuant to Article 11 for such liability beyond such amount
reserved for on the Financial Statements.
5.11 DAY DREAM NOTE. The collectibility of the Day Dream Note shall
be further secured by the personal guarantee of Robert W. Poorman, Jr., in the
amount of $750,000, which shall be evidenced by a Guaranty Agreement mutually
acceptable to the Purchaser and Robert W. Poorman Jr., and which shall include
such standard provisions and negative covenants concerning fraudulent transfers
as is customary (the "Guaranty Agreement").
ARTICLE 6
COVENANTS OF PURCHASER
Purchaser agrees with the Primary Shareholders and Shepard Poorman
that:
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6.1 CONFIDENTIALITY. Purchaser shall hold in strict confidence, and
cause its stockholders, affiliates, directors, officers, employees, agents,
attorneys, accountants, financing sources and representatives and those of its
affiliates ("Associates") to hold in strict confidence, all documents and
information obtained with respect to Shepard Poorman, SPG and Shareholders
("Confidential Information"). Purchaser shall not permit any Confidential
Information to be improperly utilized or to be disclosed or conveyed to any
other person or entity other than its Associates in furtherance of this
Agreement. Without limiting the generality of the foregoing, and except as
required by law or as permitted by Section 7.3, (i) Purchaser shall not disclose
to any person or entity, and shall not permit any of its Associates to disclose
to any person or entity, the existence of this Agreement or any of the terms or
provisions hereof and (ii) Purchaser shall not contact any customers or
employees of Shepard Poorman or SPG, and Purchaser shall not permit any of its
Associates to contact any customers or employees of Shepard Poorman or SPG,
without the prior consent of an officer of Shepard Poorman. This Section 6.1
shall terminate if and when the Closing occurs in accordance with Article 1 of
this Agreement.
6.2 OFFICER AND DIRECTOR INDEMNIFICATION. Purchaser agrees to do,
or to cause Shepard Poorman to do, the following:
(a) Maintain and not amend or modify, except as required by
law, the provisions with respect to indemnification set forth in the respective
articles of incorporation and bylaws of Shepard Poorman and SPG on date of this
Agreement, for a period of two (2) years from the Closing Date in any manner
that would adversely affect the rights thereunder of individuals who at the
Closing Date were directors, officers, employees or agents of Shepard Poorman or
SPG.
(b) The provisions of this Section 6.2 shall survive the
Closing and are intended to be for the benefit of, and shall be enforceable by,
each officer, director, employee and agent of Shepard Poorman and SPG described
in this Section 6.2 and his or her heirs, representatives and assigns.
(c) Nothing in this Section 6.2 shall prevent the merger of
Shepard Poorman or SPG with or into another entity, the merger of Shepard
Poorman into SPG or the consolidation of Shepard Poorman or SPG with another
entity, so long as the surviving or resulting entity is bound by the covenants
in this Section 6.2.
(d) Effective upon the Closing, each Primary Shareholder
releases Shepard Poorman and SPG and their present and former officers,
directors, employees and agents from each and every Claim it may have in its
capacity as a security holder and/or employee of Shepard Poorman or SPG.
6.3 FILINGS AND CONSENTS. Purchaser shall use commercially
reasonable efforts to do each of the following:
(a) as soon as possible after the date of this Agreement,
file or cause its ultimate parent entity to file with the appropriate
governmental authority the notification form required to be
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filed by Purchaser or such ultimate parent entity under the HSR Act with respect
to this Agreement and the transactions contemplated hereby, together with a
request for early termination of the applicable waiting period;
(b) after consultation with the Primary Shareholders, make or
cause its ultimate parent entity to make any additional filing required to be
made by Purchaser or such ultimate parent entity under the HSR Act and promptly
furnishes to the appropriate governmental authority such additional information
as may be requested under the HSR Act;
(c) make or give each other filing or notice required to be
made or given pursuant to any applicable Legal Requirement by Purchaser in
connection with the execution and delivery of any of this Agreement or in
connection with the consummation or performance of any of the transactions
contemplated hereby; and
(d) obtain each consent required to be obtained by Purchaser
pursuant to any applicable Legal Requirement or material contract to which
Purchaser is a party or by which it is bound in connection with the execution
and delivery of any of this Agreement or in connection with the consummation or
performance of the transactions contemplated hereby.
6.4 DAY DREAM LITIGATION. In the event that the Day Dream
Litigation is resolved (either by final judgment or binding settlement between
the parties thereto) for an amount, including fees and expenses and net of any
recovery by Purchaser from third parties (including insurance proceeds), less
than the $390,000 reserved for on the Financial Statements in connection
therewith, then Purchaser promptly shall pay the amount of such difference up to
$390,000 to the Primary Shareholders, pro rata, in readily available funds.
ARTICLE 7
COVENANTS OF ALL PARTIES
The parties hereto agree that:
7.1 COMMERCIALLY REASONABLE EFFORTS; FURTHER ASSURANCES. Subject to
the terms and conditions of this Agreement, each party will use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable under applicable Legal
Requirements to consummate the transactions contemplated by this Agreement. The
Primary Shareholders, Shepard Poorman and Purchaser each agree to (and Shepard
Poorman and the Primary Shareholders agree to cause SPG to) execute and deliver
such other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate or
implement expeditiously the transactions contemplated by this Agreement.
7.2 CERTAIN FILINGS, ETC. Shepard Poorman, the Primary
Shareholders and Purchaser shall cooperate with one another (a) in determining
whether any action by or in respect of, or filing
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with, any governmental body, agency, official or authority is required, or any
actions, consents, approvals or waivers are required to be obtained from parties
to any material contracts, in connection with the consummation of the
transactions contemplated by this Agreement and (b) in taking such actions or
making any such filings, in furnishing such information as may be required in
connection therewith, including without limitation filings under the HSR Act,
and in seeking timely to obtain any such actions, consents, approvals or
waivers.
7.3 PUBLIC ANNOUNCEMENTS. The parties agree not to issue any press
release or make any public statement with respect to this Agreement or the
transactions contemplated hereby prior to the Closing without the prior consent
of Purchaser and Shepard Poorman (which consent shall not be unreasonably
withheld or delayed), except to the extent that any party hereto is required by
law to make any such disclosure and such party notifies the other parties hereto
a reasonable time before making such disclosure of the nature and content of the
intended disclosure, and consults with such other parties regarding the nature
and content of such disclosure.
ARTICLE 8
CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser to purchase the Purchase Shares, pay the
Purchase Price and discharge the Debt, and otherwise consummate the transactions
that are to be consummated at the Closing is subject to the satisfaction of, as
of the Closing Date, of the following conditions (any of which may be waived by
Purchaser in whole or in part):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Shepard Poorman and the Primary Shareholders set forth in
Articles 2 and 3 being true as of the date of this Agreement and being accurate
as of the Closing Date with the same effect as though made on and as of the
Closing Date, except to the extent that (a) any of such representations and
warranties refers specifically to a date other than the Closing Date, (b) the
accuracy of any of such representations and warranties is affected by any of the
transactions contemplated by this Agreement, and (c) as to the representations
and warranties in Article 2, a representation and warranty is modified in an
updated Disclosure Schedule as of the Closing Date (which updated Disclosure
Schedule shall be accurate as of the Closing Date) delivered to Purchaser at
least two business days prior to the Closing Date.
8.2 PERFORMANCE. The Primary Shareholders, Shepard Poorman and SPG
having performed, in all material respects, all obligations required by this
Agreement and the Redemption Agreement to be performed by the Primary
Shareholders, Shepard Poorman and SPG on or before the Closing Date including
without limitation the covenants set forth in Article 5.
8.3 CERTIFICATE. Purchaser having received from the Primary
Shareholders and officers of Shepard Poorman and SPG a certificate dated the
Closing Date confirming that the conditions in Sections 8.1, and 8.2 have been
met.
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8.4 PAYOFF LETTERS. Purchaser having received the Payoff Letters,
executed by the Chairman and CEO of Shepard Poorman and the Chairman and CEO of
SPG and an authorized representative of each Creditor, setting forth the
estimated amounts as of the Closing Date of the principal, interest, prepayment
fees and penalties that will be due and payable by Shepard Poorman and SPG to
each of the Creditors holding Debt.
8.5 DEBT. The amount of Debt due to Creditors exclusive of
intercompany debt, including the current portion thereof, not being in excess of
$18,170,000 for Shepard Poorman and $1,645,000 for SPG (except in the event and
to the extent that such excess is attributable solely to accounts receivable due
from MacMillan Publishing, Inc. greater than that ordinarily experienced by
Shepard Poorman as evidenced by its current aging reports).
8.6 NO INJUNCTION. There not being in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over Purchaser that prohibits the purchase of the Purchase Shares
by Purchaser.
8.7 NO MATERIAL ADVERSE EFFECT. There having been no Material
Adverse Effect on Shepard Poorman or SPG since February 28, 1996.
8.8 HSR ACT. All applicable waiting periods under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), relating
to the transactions contemplated hereby having expired or been terminated.
8.9 CONSENTS. All required consents, licenses, approvals, estoppel
certificates, releases of Encumbrances, acknowledgments of payment in full and
authorizations including those specified on Schedule 8.9 having been obtained
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and delivered to Purchaser.
8.10 REDEMPTION OF PREFERRED STOCK AND REDEEMED SHARES. Shepard
Poorman having redeemed and reacquired all of its outstanding Preferred Stock
and the Redeemed Shares and there being no further obligations or liabilities of
Purchaser, Shepard Poorman, SPG or the Primary Shareholders due the former
holders thereof.
8.11 SPG SHARES. All shares of capital stock of SPG not owned by
Shepard Poorman on the date hereof having been acquired by Shepard Poorman and
there being no further obligations or liabilities of Purchaser, Shepard Poorman,
SPG or the Primary Shareholders due the current or former holders thereof;
provided that, such condition will be waived by Purchaser upon Shepard Poorman
entering into an agreement to sell SPG acceptable to the Purchaser, in which
event the Closing Consideration shall be reduced by $239,316.
8.12 REAL ESTATE OPTION. Purchaser and the owner(s) of the parcels
of real property located in Indianapolis, Indiana at 7301 North Woodland Drive
and 5455 West 84th Street having entered into an option agreement pursuant to
which Purchaser shall have the option to purchase either of such parcels
(including the buildings and fixtures located thereon) at any time during the
current least terms or any renewals thereof on the terms and conditions set
forth in Exhibit C.
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8.13 LEGAL OPINIONS. Purchaser having received from counsel to
Shepard Poorman an opinion in a form reasonably satisfactory to Purchaser.
8.14 RESIGNATIONS. Except as otherwise contemplated by Schedule 8.14
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or provided by the express written consent of Purchaser, Shepard Poorman and SPG
having received the written resignation, effective as of the Closing Date, of
each director and officer of Shepard Poorman and SPG.
8.15 CERTIFICATE OF SECRETARY. Shepard Poorman and SPG having
delivered certificates, signed by the secretary of Shepard Poorman and SPG,
respectively, certifying (i) current copies, as amended, of the articles of
incorporation and bylaws of Shepard Poorman and SPG, and the resolutions of the
board of directors of Shepard Poorman and SPG authorizing this Agreement and the
transactions contemplated hereby.
8.16 CORPORATE APPROVAL. The Board of Directors of Shepard Poorman
having approved this Agreement, the Redemption and the Exchange within ten days
of execution of this Agreement, and this Agreement and the Exchange having been
approved by the holders of not less than a majority of the shares of Shepard
Poorman Common Stock outstanding.
8.17 ESCROW AGREEMENT. Shareholders, Shepard Poorman, Purchaser and
the Escrow Agent (as defined in the Escrow Agreement) having executed and
delivered the Escrow Agreement.
8.18 EMPLOYMENT AGREEMENTS. Purchaser and the Primary Shareholders
of Shepard Poorman having executed mutually agreeable employment agreements (the
"Employment Agreements") including, among other reasonable and customary terms,
an employment term of two years (with an option to extend by one year upon
satisfaction of certain conditions) and a covenant not to complete of one year.
8.19 COMPLETION OF DUE DILIGENCE. Purchaser having completed
customary due diligence review, including but not limited to review of Shepard
Poorman's and SPG's financial and operating records, assets and liabilities,
leases, permits, licenses, environmental reporting and status, contracts and
agreements, customer and supplier relationships, and continuity of key employees
after Closing and the results of such review shall be satisfactory to Purchaser
in its sole discretion.
8.20 CONTRACT WITH DAY DREAM, INC. Shepard Poorman's contract with
Day Dream, Inc. having been amended to eliminate an obligation by Shepard
Poorman to pay rebates on amounts paid by Day Dream, Inc., to discount in any
way the amounts billed to Day Dream, Inc. or to otherwise give Day Dream, Inc.
any preferential treatment.
8.21 REPAYMENT OF SHAREHOLDER DEBT. Each Shareholder having paid or
otherwise satisfied the amount of any debt, account payable or other liability
owed by such Shareholder to Shepard Poorman or SPG.
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8.22 LEASE WITH U.S. BANCORP. Shepard Poorman's equipment lease with
U.S. Bancorp, in the form of a Schedule to Master Lease Agreement No. 10699.002
dated December 13, 1995, to the extent pertaining to the Heidelberg 6-color
offset press, Serial No. 537635, shall be terminated or otherwise amended to the
satisfaction of Purchaser.
8.23 GUARANTY AGREEMENT. Robert W. Poorman, Jr. having executed and
delivered to the Purchaser the Guaranty Agreement in a form mutually acceptable
to the Purchaser and Shepard Poorman as provided in Section 5.11.
8.24 NO DISCOVERY. Purchasers not being informed of or otherwise
discovered any matter or matters which would constitute a Purchaser Indemnified
Obligation or which would represent a Material Adverse Effect on Shepard Poorman
and/or SPG.
8.25 DOCUMENTATION. All agreements, documents and instruments
incidental to the performance of the transactions contemplated by this Agreement
being in a form and substance reasonably satisfactory to Purchaser and its legal
counsel and Purchaser having received copies of all documents that it may have
reasonably requested in connection with such transactions.
8.26 ARTICLES OF EXCHANGE. The Articles of Exchange having been duly
executed and delivered by Shepard Poorman in a form mutually acceptable to the
parties and filed with the Indiana Secretary of State.
8.27 ACCRUAL. Shepard Poorman having accrued an additional $700,000
on its books on account of the amount of Taxes of Shepard Poorman or SPG arising
out of or relating to the Redemption or otherwise to the discharge of the debt
owed to Shepard Poorman by the Shareholders.
ARTICLE 9
CONDITIONS TO OBLIGATION OF SHEPARD POORMAN TO CLOSE
The obligation of Shepard Poorman to effect the Exchange and otherwise
consummate the transactions that are to be consummated at the Closing is subject
to the satisfaction, as of the Closing Date, of the following conditions (any of
which may be waived on behalf of Shepard Poorman by the Primary Shareholders in
whole or in part):
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Purchaser set forth in Article 4 being accurate in all
material respects as of the date of this Agreement and as of the Closing, as
though made on and as of the Closing Date.
9.2 REPAYMENT OF DEBT. Purchaser having discharged the Debt of
Shepard Poorman and SPG due to the Creditors, either by paying it or assuming
it, and having obtained releases of the Shareholders from any guaranties of any
such Debt assumed.
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9.3 PERFORMANCE. Purchaser having performed, in all material
respects, all obligations required by this Agreement to be performed by
Purchaser on or before the Closing Date.
9.4 CERTIFICATE. Shepard Poorman having received from a duly
authorized officer of Purchaser a certificate dated the Closing Date confirming,
to the best of such person's knowledge, that the conditions in Sections 9.1 and
9.2 have been met.
9.5 CORPORATE APPROVAL. Shepard Poorman having timely received the
approval of this Agreement and the Exchange by its Board of Directors and by the
holders of not less than a majority of the shares of Shepard Poorman Common
Stock outstanding. No Shareholder holding an aggregate of greater than five
percent (5%) of the Purchase Shares having exercised or being entitled to
exercise Dissenter's Rights.
9.6 NO INJUNCTION. There not being in effect, at the Closing, any
injunction or other binding order of any court or other tribunal having
jurisdiction over any Shareholder, Shepard Poorman or SPG that prohibits the
sale of the Purchase Shares to Purchaser.
9.7 HSR ACT. All applicable waiting periods under the HSR Act
relating to the transactions contemplated hereby having expired or been
terminated.
9.8 LEGAL OPINION. Shepard Poorman and the Primary Shareholders
having received from counsel to Purchaser an opinion in a form reasonably
satisfactory to Shepard Poorman.
9.9 EMPLOYMENT AGREEMENTS. The Employment Agreements having been
entered into by Purchaser and the Primary Shareholders.
9.10 ESCROW AGREEMENT. Purchaser and the Escrow Agent having executed
and delivered the Escrow Agreement.
9.11 NO DISCOVERY. Shepard Poorman not being informed of or otherwise
discovered any matter or matters which would constitute Shareholder Indemnified
Obligations which would represent a Material Adverse Effect on Shepard Poorman.
9.12 DOCUMENTATION. All agreements, documents and instruments
incidental to the performance of the transactions contemplated by this
Agreement, being in a form and substance reasonably satisfactory to Shepard
Poorman, the Primary Shareholders and their legal counsel and Shepard Poorman
and the Primary Shareholders having received copies of all documents that they
may have reasonably requested in connection with such transaction.
9.13 ARTICLES OF EXCHANGE. The Articles of Exchange having been duly
executed and delivered by Purchaser in a form mutually acceptable to the parties
and filed with the Indiana Secretary of State.
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ARTICLE 10
TERMINATION OF AGREEMENT
10.1 RIGHT TO TERMINATE AGREEMENT. This Agreement may be terminated
prior to the Closing:
(a) by the mutual agreement of Shepard Poorman and Purchaser;
(b) by Purchaser at any time after December 6, 1996, if any
condition set forth in Article 8 shall not have been satisfied or waived and
Purchaser is not in material breach of this Agreement; or
(c) by Shepard Poorman at any time after December 6, 1996, if any
condition set forth in Article 9 shall not have been satisfied or waived by
Shepard Poorman or the Primary Shareholders on behalf of Shepard Poorman and
Shepard Poorman and the Primary Shareholders are not in material breach of this
Agreement.
(d) by Purchaser if the results of its due diligence review of
Shepard Poorman and SPG are not satisfactory to it, in its sole discretion.
10.2 EFFECT OF TERMINATION. Upon the termination of this Agreement
pursuant to Section 10.1:
(a) Purchaser shall promptly cause to be returned to Shepard
Poorman or SPG (or destroy) all Confidential Information, including any copies
made by or supplied to Purchaser or any of Purchaser's Associates of any such
Confidential Information;
(b) In the event of termination under Section 10.1(c), Purchaser
shall pay reasonable and documented out-of-pocket costs and expenses of Shepard
Poorman plus $50,000;
(c) In the event of termination under Section 10.1(a), 10.1(b) or
10.1(d), each party shall pay its own costs and expenses; and
(d) No party hereto shall have any obligation or liability to the
other parties hereto; provided, however that (i) the parties hereto shall remain
bound by the provisions of this Section 10.2 and Sections 6.1 and 7.3 and
Article 12 and (ii) no party shall be relieved of any obligation or other
liability arising from any material breach by such party of any provision of
this Agreement.
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ARTICLE 11
CERTAIN REMEDIES AND LIMITATIONS
11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations and warranties made by Shareholders or Purchaser as to any fact
or condition existing on or before the Closing Date, in this Agreement, in any
Schedule or in any certificate delivered pursuant hereto, shall survive the
Closing for a period of three (3) years, except for those relating to Taxes
which shall survive for a period equal to the statute of limitations applicable
to any Claim arising in connection with such Taxes, provided that there shall
be no termination of any such representation or warranty as to which a Claim has
been asserted prior to the termination of any such survival period. All such
representations and warranties shall be unaffected by any investigation made by
or on behalf of Purchaser or Shareholders or by knowledge obtained as a result
thereof or otherwise. Except as otherwise expressly provided in this Agreement,
all covenants, agreements, undertakings and indemnities set forth in this
Agreement survive the Closing for a period of three (3) years, except for those
relating to Taxes which shall survive as provided above with respect to
representations and warranties; provided that there shall be no termination of
any such covenant, agreement, undertaking or indemnity as to which a Claim has
been asserted prior to the termination of any such survival period.
11.2 INDEMNIFICATION BY SHAREHOLDERS.
(a) Subject to the limitations and other provisions set forth herein
(including, without limitation, the provisions of Sections 11.3), each Primary
Shareholder will jointly and severally, or in the case of Richey, severally
defend, indemnify and hold harmless Purchaser, Shepard Poorman, SPG, each of
their respective Affiliates (as defined below) and their respective lenders, and
all of their respective officers, directors, stockholders (other than Primary
Shareholders), agents, representatives, consultants and employees, and all of
their respective heirs, successors and permitted assigns (collectively, the
"Purchaser Indemnified Parties") from, against and in respect of the amount of
any and all liabilities, obligations, losses, damages, Claims, actions, liens
and deficiencies of any kind or nature ("Losses") which exist, or which are
imposed on, incurred by or asserted against any one or more of the Purchaser
Indemnified Parties based upon, resulting from or arising out of any of the
following (each, a "Purchaser Indemnified Obligation"):
(i) any breach or inaccuracy of any representation, warranty,
statement, certification, agreement or covenant made by Shepard Poorman, the
Primary Shareholders or any Shareholder in this Agreement, any Related
Documents, any Disclosure Schedule hereto or thereto, or in any other written
document,
(ii) any Claim, litigation or proceeding brought by any third-
party against Shepard Poorman or SPG based upon, resulting from, arising out of
or concerning any event occurring, or fact or circumstance existing, prior to
the Closing,
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(iii) in an amount greater than $25,000, any Claim, litigation or
proceeding brought by The Nielsen Company against Purchaser based upon,
resulting from, arising out of or concerning, either directly or
indirectly, the events of which the Primary Shareholders are aware
surrounding the letter of intent dated September 18, 1996, between Shepard
Poorman, SPG and The Nielsen Company.
(iv) the cost of remediating under Environmental Laws any of the
properties now or previously owned, leased, or contaminated by Shepard
Poorman or SPG if the materials requiring such remediation existed as of
the Closing,
(v) except as specifically provided otherwise in paragraphs (vii)
and (viii) below, the net after-tax amount of any Taxes for periods ending
on or before the Closing Date for which either Shepard Poorman or SPG are
liable to the extent that (i) such Taxes are not reflected on the Financial
Statements and did not arise in the ordinary course of business after the
date thereof, (ii) such Taxes should have been but were not reflected in
any return filed by either Shepard Poorman or SPG prior to the Closing,
(iii) such Taxes were required to be paid prior to the Closing and were not
so paid, or (iv) such Taxes result from the failure by either Shepard
Poorman or SPG prior to the Closing to comply with any legal requirements
relating to information reporting or withholding and payment over of taxes
with respect to payments made to third parties;
(vi) the amount by which any Accounts Receivable existing at the
Closing exceeds the reserve therefore on the 120 days after the Closing
provided that such uncollected Accounts Receivable are transferred to the
Primary Shareholders after payment by the Primary Shareholders to
Purchaser, Shepard Poorman or SPG of such uncollected amount;
(vii) the amount of any Taxes of Shepard Poorman or SPG arising out
of or relating to the Redemption or otherwise to the discharge of the debt
owed to Shepard Poorman by the Shareholders to the extent such amount of
Taxes exceeds $1,069,000, the amount reserved for such purpose and
reflected on the books of Shepard Poorman at Closing; or
(viii) the amount of any other Taxes of Shepard Poorman or SPG arising
out of the transactions contemplated by this Agreement including those
relating to the sale of SPG by Shepard Poorman.
For purposes of this provision, an "Affiliate" of a party is a company or entity
that controls, is controlled by, or is under common control with, that party.
In addition, and without limiting the generality of the foregoing, all of
the Shareholders (other than those Shareholders exercising their Dissenters'
Rights) will jointly and severally defend, indemnify and hold harmless the
Purchaser Indemnified Parties, to the extent of the Escrow Amount as provided in
the Escrow Agreement, for such Purchaser Indemnified Obligations.
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(b) The amount of all such Losses shall be determined after deduction
of the amount of any insurance proceeds recovered by Purchaser Indemnified
Parties, and shall include any cost or expenses (including, without limitation,
settlement costs and reasonable attorneys', accountants' and experts' fees and
court costs) incurred by Purchaser Indemnified Parties in connection with any of
the foregoing Purchaser Indemnified Obligations (including, without limitation,
any reasonable cost or expense incurred by Purchaser Indemnified Parties in
enforcing their rights pursuant to this Section 11.2).
(c) Claims for indemnification under any Purchaser Indemnified
Obligation may be made regardless of whether or not the matter giving rise to
such claim would constitute a breach of a representation and warranty made in
this Agreement, any Related Agreement, any Disclosure Schedule hereto and
thereto or any other written document. No Purchaser Indemnified Party shall be
required to make any claim or demand against any particular Primary Shareholder
or any other person prior to the making of any claim or demand for
indemnification or at any other time. The Primary Shareholders agree that,
notwithstanding any other provision of this Agreement, any Related Agreement or
applicable Legal Requirements, Purchaser Indemnified Parties may offset all
valid claims for indemnification under this Section 11.2 against any payment to
be made to or for the account of any Primary Shareholder pursuant to this
Agreement or any Related Document.
11.3 LIMITATIONS ON REPRESENTATIONS, WARRANTIES AND LIABILITIES OF PRIMARY
SHAREHOLDERS.
(a) Without limiting the effect of any other limitations set forth
herein, and notwithstanding any inaccuracy or inaccuracies in any representation
and warranty made herein, the Primary Shareholders shall not be liable to the
Purchaser Indemnified Parties, except under the Escrow Agreement as provided
therein, unless and until the aggregate amount of Purchaser Indemnified
Obligations exceeds $45,000. Notwithstanding the foregoing, the indemnification
remedies provided in this Agreement shall be non-exclusive, and no provision of
this Agreement shall be construed to limit the liability of the Primary
Shareholders to the Purchaser Indemnified Parties to the Escrow Amount or to
require Purchaser to resort to the Escrow Amount to satisfy any Losses in lieu
of pursuing its other remedies against Shepard Poorman or the Primary
Shareholders.
(b) No payment shall be required to be made for a Purchaser
Indemnified Obligation unless a Claim Notice (as defined below) with respect
thereto has been delivered to the Primary Shareholders on or prior to the third
anniversary of the Closing.
(c) The thresholds and limitations contained in this Section 11.3 and
on the indemnity obligations of Primary Shareholders shall not apply to any
adjustments in the Purchase Price pursuant to Article 1.
(d) The total amount of the payments that the Primary Shareholders
can be required to make hereunder shall be limited in the aggregate to a maximum
of $2,500,000, and the Primary Shareholders' cumulative liability shall in no
event exceed such amount.
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(e) The total amount of the payment that Richey can be required to
make hereunder shall be limited to a maximum amount equal to his pro rata share
of the Purchase Price.
11.4 INDEMNIFICATION BY PURCHASER. Subject to the limitations and the
provisions set forth herein (including, without limitation, the provisions of
Section 11.5), Purchaser will indemnify and hold harmless the Primary
Shareholders and their respective affiliates, officers, directors, partners,
stockholders, agents, representatives, consultants and employees, and all of
their respective heirs, successors and permitted assigns (collectively, the
"Shareholder Indemnified Parties") from and against the net amount (determined
after deduction of the amount of any insurance proceeds recovered) any and all
Damages suffered or incurred by the Shareholder Indemnified Parties to the
extent resulting from: (a) the failure of any representation or warranty made by
Purchaser in Article 4 to have been true when made and at the Closing; (b) the
breach or nonfulfillment by Purchaser of any covenant or obligation of Purchaser
under this Agreement; (c) any Claim or any action arising out of or related to
the operation or ownership of Shepard Poorman or SPG arising out of the
operation of the business after the Closing (other than (i) the Purchaser
Indemnified Obligations and (ii) Damages for which a Purchaser Indemnified Party
is entitled to indemnification under this Article 11); and (e) the enforcement
of this Section 11.4 against Purchaser (the foregoing defined as "Shareholder
Indemnified Obligations").
11.5 LIMITATIONS ON LIABILITY OF PURCHASER.
(a) Without limiting the effect of any other limitations set forth
herein, Purchaser shall not be liable to the Shareholder Indemnified Parties
unless and until the amount of Shareholder Indemnified Obligations exceeds
$45,000.
(b) No payment shall be required to be made for Shareholder
Indemnified Obligations unless a Claim Notice with respect thereto has been
delivered to Purchaser on or prior to the third anniversary of the Closing.
(c) The total amount of the payments that Purchaser can be required
to make hereunder shall be limited in the aggregate to a maximum of $2,500,000,
and Purchaser's cumulative liability shall in no event exceed such amount.
11.6 INDEMNIFICATION CLAIMS.
(a) If either a Purchaser Indemnified Party, on the one hand, or a
Shareholder Indemnified Party, on the other hand, (the "Claimants") wishes to
assert an indemnification claim hereunder, the Claimant shall deliver to the
Primary Shareholders, if a Purchaser Indemnified Party, or to Purchaser, if the
Claimant is a Shareholder Indemnified Party, a written notice (a "Claim Notice")
setting forth:
(i) the matter giving rise to the claim for indemnification,
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(ii) a detailed description of all of the facts and
circumstances known to Claimant giving rise to the claim, and
(iii) a detailed description of, and a reasonable estimate of
the total amount of, the monetary amounts actually incurred or expected to
be incurred for which indemnification is sought;
(b) Purchaser Indemnified Parties and Shareholder Indemnified Parties
are referred to herein as "Indemnified Parties," and the persons from whom
indemnification may be sought pursuant to this Section 11.6 are referred to as
the "Indemnifying Parties." Within twenty (20) days after receipt of any Claim
Notice, the Indemnifying Parties will (i) acknowledge in writing their
responsibility for all or part of such matter for which indemnification is
sought under this Article 11, and will either (x) pay or otherwise satisfy the
portion of such matter as to which responsibility is acknowledged, or (y) take
such other action as is reasonably satisfactory to the Indemnified Party to
provide reasonable security or other assurances for the performance of their
obligations hereunder, and/or (ii) give written notice to the Indemnified Party
of their intention to dispute or contest all or part of such responsibility.
Upon delivery of such notice of intention to contest, the parties will negotiate
in good faith to resolve as promptly as possible any dispute as to
responsibility for, or the amount of, any such matter.
11.7 DEFENSE OF THIRD PARTY ACTIONS. If either Purchaser, on the one
hand, or the Primary Shareholders, on the other hand (the "Indemnified Party")
receives notice or otherwise obtains knowledge of any Claim or any threatened
Claim that may give rise to an indemnification claim against any Primary
Shareholder, on the one hand, or Purchaser, on the other hand (the "Indemnifying
Party"), then the Indemnified Party shall promptly deliver to the Indemnifying
Party a written notice describing such Claim in reasonable detail. The untimely
delivery of such written notice by the Indemnified Party to the Indemnifying
Party shall relieve the Indemnifying Party of liability with respect to such
claim to the extent it has been prejudiced by lack of timely notice under this
Article 11 with respect to such Claim. The Indemnifying Party shall have the
right, at its option to assume the defense of any such Claim with its own
counsel, reasonably satisfactory to the Indemnified Party, but only if the
Indemnifying Party simultaneously agrees to indemnify persons and entities
claiming indemnity from the Indemnified Party fully and completely (whether or
not, in the case of any Primary Shareholder, there are sufficient funds in the
Escrow Amount available for such purpose) for such Claim. If the Indemnifying
Party elects to assume the defense of and indemnification for any such Claim,
then:
(a) notwithstanding anything to the contrary contained in this
Agreement, the Indemnifying Party shall not be required to pay or otherwise
indemnify the Indemnified Party against any attorneys' fees or other expenses
incurred on behalf of the Indemnified Party in connection with such matter
following the Indemnifying Party's election to assume the defense of such matter
so long as the Indemnifying Party continues to diligently conduct such defense;
(b) the Indemnified Party shall make available to the Indemnifying
Party all books, records and other documents and materials that are under the
direct or indirect control of the
-42-
<PAGE>
Indemnified Party or any of the Indemnified Party's Associates and that the
Indemnifying Party considers necessary or desirable for the defense of such
matter at the expense of the Indemnifying Party;
(c) the Indemnified Party shall execute such documents and take such
other actions as the Indemnifying Party may reasonably request for the purpose
of facilitating the defense of, or any settlement, compromise or adjustment
relating to, such Claim (with the Indemnifying Party to reimburse Indemnified
Party for third-party, out-of-pocket expenses) and the Indemnified Party shall
not be required to take any such action or execute any document which imposes
any equitable or unindemnified liability remedy on any Indemnified Party or
would adversely affect the business or operations of Shepard Poorman or SPG;
(d) the Indemnified Party shall otherwise fully cooperate as
reasonably requested by the Indemnifying Party in the defense of such Claim
(with the Indemnifying Party to reimburse Indemnified Party for third-party,
out-of-pocket expenses); and
(e) the Indemnified Party shall not admit any liability with respect
to such Claim.
If the Indemnifying Party fails or refuses to assume the defense of and
indemnification for such Claim, then the Indemnified Party shall proceed
diligently to defend such Claim with the assistance of counsel; provided,
however, that the Indemnified Party shall not settle, adjust or compromise such
Claim, or admit any liability with respect to such Claim, without the prior
written consent of the Indemnifying Party, such consent not to be unreasonably
withheld or delayed; and provided further, that, in the event the Indemnifying
Party shall withhold consent, then the Indemnifying Party shall thereafter
reimburse Indemnified Party on a current basis as requested by Indemnified Party
for all costs and expenses of defense for which Indemnified Party are entitled
to indemnification; and provided however, that when indemnification by the
Indemnifying party is no longer required under this Section 11 by reason of any
of the limitations contained herein, the Indemnifying Party's consent to any
such settlement, adjustment or compromise shall no longer be required.
11.8 SUBROGATION. To the extent that the Indemnifying Party makes or is
required to make any indemnification payment to any Indemnified Party, the
Indemnifying Party shall be entitled to exercise, and shall be subrogated to,
any rights and remedies (including rights of indemnity, rights of contribution
and other rights of recovery) that the Indemnified Party or any of the
Indemnified Party affiliates may have against any other person (other than any
Purchaser Indemnified Party or Shareholder Indemnified Party) with respect to
any Damages, circumstances or matter to which such indemnification payment is
directly or indirectly related. The Indemnified Party shall permit the
Indemnifying Party to use the name of the Indemnified Party and the names of the
Indemnified Party's affiliates in any transaction or in any proceeding or other
matter involving any of such rights or remedies; and the Indemnified Party shall
take such actions as the Indemnifying Party may reasonably request for the
purpose of enabling the Indemnified Party to perfect or exercise the
Indemnifying Party's right of subrogation hereunder.
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<PAGE>
11.9 EXCLUSIVITY. The right of each party hereto to assert
indemnification claims and receive indemnification payments pursuant to this
Article 11 shall be the sole and exclusive right and remedy exercisable by any
person or entity entitled to indemnification hereunder with respect to any
breach by the other party hereto of any representation or warranty.
11.10 RETENTION OF RECORDS. From and after the date of this Agreement,
Purchaser shall preserve, and shall cause Shepard Poorman and SPG to preserve,
all books, records and other documents, materials and information relevant to
the representations, warranties and covenants set forth in this Agreement until
the later of three (3) years following the Closing Date or for such longer
period as the rights of the parties hereunder may exist. At all times after the
Closing Date, Purchaser, Shepard Poorman and SPG shall give the Primary
Shareholders and their Associates reasonable access to such books, records and
other documents, materials and information of the Company relating to the
operation of the business of Shepard Poorman or SPG up to and including the
Closing Date.
ARTICLE 12
MISCELLANEOUS
12.1 MATERIALITY. For purposes of this Agreement, a contract, obligation,
liability, transaction, change, breach, encumbrance, proceeding or other matter
or event shall not be deemed "material" if the monetary amount involved is less
than $10,000. A "Material Adverse Effect" is any adverse effect on the
business, operations, assets or financial condition or results of a company
unless the effect either can reasonably be expected to result in less than a
$100,000 effect on the financial condition or results of operation of such
company or the effect is due to general changes in the economy or the high
impact color commercial printing business generally.
12.2 EXPENSES. The term "Shareholders' Expenses" shall mean: (i) all
costs and expenses of Corporate Development Associates, Inc. and Shepard Poorman
and SPG in connection with the negotiation of this Agreement and the
consummation of the transactions contemplated hereby that are allocated to the
Shareholders under the terms of this Agreement; (ii) all prepayment fees and
penalties to be paid by any of Purchaser, Shepard Poorman or the Shareholders in
connection with the discharge of the Debt; (iii) all other costs and expenses
required to be borne by Shareholders under the terms of this Agreement including
the costs and expenses of Shareholders or Shepard Poorman incurred in acquiring
the SPG Common Stock not owned by Shepard Poorman at February 28, 1996; (iv) all
other fees and expenses of Shareholders incurred in connection with or on behalf
of Shepard Poorman or SPG and not previously paid or reimbursed by Shareholder;
in each case, only to the extent such costs, expenses, fees and/or penalties are
not accrued for or represented as a payable on the Financial Statements at
Closing. Shareholders and Purchaser shall pay their own respective fees and
expenses incidental to the preparation of this Agreement, the performance and
compliance with all agreements contained in this Agreement to be performed or
complied with by them and the consummation of the transactions contemplated
hereby, including the legal and accounting fees and expenses. Purchaser shall
be responsible for the fees and expenses associated with any Phase I
environmental assessment conducted in connection with this transaction.
-44-
<PAGE>
12.3 NOTICES; ETC. All notices, instructions and other communications
given hereunder or in connection herewith shall be in writing. Any such notice,
instruction or communication shall be sent either (i) by registered or certified
mail, return receipt requested, postage prepaid, or (ii) via a reputable
nationwide overnight courier service, in each case to the address set forth
below. Any such notice, instruction or communication shall be deemed to have
been delivered three business days after it is sent prepaid, or one business day
after it is sent via a reputable nationwide overnight courier service.
If to Purchaser, to:
Mail-Well, Inc.
23 Inverness Way East
Englewood, CO 80112
Attention: Gerald F. Mahoney, Chairman
Tel: (303) 397-7410
Fax: (303) 397-7400
with a copy to:
Mail-Well, Inc.
23 Inverness Way East
Englewood, CO 80112
Attention: Roger Wertheimer
Tel: (303) 397-7440
Fax: (303) 397-7400
If to any Primary Shareholder, to:
the address of such Primary Shareholder set forth under the name of such
Primary Shareholder on Exhibit A to this Agreement,
with a copy to:
Donald K. Densborn
Johnson, Smith, Pence, Densborn, Wright & Heath
One Indiana Square Suite 1800
Indianapolis, IN 46204
or, in each case, to such other address as may be specified in writing to the
other parties.
Any party may give any notice, instruction or communication in connection
with this Agreement using any other means (including personal delivery, telecopy
or ordinary mail), but no such notice, instruction or communication shall be
deemed to have been delivered unless and until
-45-
<PAGE>
it is actually received by the party to whom it was sent. Any party may change
the address to which notices, instructions or communications are to be delivered
by giving the other parties to this Agreement notice thereof in the manner set
forth in this Section 12.3.
12.4 ASSIGNMENT. Neither Shepard Poorman nor any Primary Shareholder may
assign or otherwise transfer this Agreement or any of his rights hereunder to
any person or entity, without the prior written consent of Purchaser. Subject to
the foregoing, this Agreement shall inure to the benefit of and be binding upon
the Primary Shareholders and their successors and permitted assigns.
Notwithstanding the foregoing, this Agreement shall not be terminated by the
death or incapacity of any Primary Shareholder, and if, after the execution
hereof, any Primary Shareholder shall die or become incapacitated, this
Agreement shall be binding upon the successors and assigns of any Primary
Shareholder as if such death or incapacity had not occurred and regardless of
notice thereof. Except as expressly permitted by this Section 12.4, Purchaser
shall not voluntarily or by operation of law assign or otherwise transfer this
Agreement or any of its rights or obligations hereunder except to any of its
parents, subsidiaries or affiliates, without the prior written consent of the
Primary Shareholders and provided that any permitted assignment or transfer
shall not relieve Purchaser of any of its obligations hereunder. Purchaser may
assign its rights under this Agreement and under other closing documents without
the consent of the Primary Shareholders to any financial institution(s) or their
affiliates as required pursuant to any existing or future financing
arrangements. In addition, upon foreclosure or sale in lieu of foreclosure or
deed by or to any such financial institutions or their affiliates, the
warranties, representations, obligations, agreements and indemnities of the
Primary Shareholders in this Agreement and in other documents contemplated by
this Agreement will inure to the benefit of such financial institutions (or
their affiliates) or any such purchaser or grantee. Subject to the foregoing,
this Agreement shall inure to the benefit of Purchaser and its permitted
successors and assigns.
12.6 ENTIRE AGREEMENT; AMENDMENT; GOVERNING LAW; ETC. This Agreement
(together with the Exhibits and Schedules hereto) embody the entire agreement
and understanding among the parties hereto with respect to the subject matter
hereof. This Agreement may be amended, modified, waived, discharged or
terminated only by (and any consent hereunder shall be effective only if
contained in) an instrument in writing signed by the party against which
enforcement of such amendment, modification, waiver, discharge, termination or
consent is sought. This Agreement shall be construed in accordance with and
governed by the laws of the State of Colorado as it applies to contracts to be
performed entirely within the State of Colorado. No representation or warranty
(either express, implied or otherwise) is being made by any party with respect
to the subject matter hereof other than as expressly set forth herein.
12.6 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which is an original, but all of which shall constitute
one instrument.
12.7 THIRD PARTY RIGHTS. The parties do not intend to confer any benefit
hereunder on any person or entity other than the parties hereto, the Purchaser
Indemnified Parties and their respective successors in interest.
-46-
<PAGE>
12.8 EXHIBITS AND SCHEDULES. Each of the Exhibits and Schedules referred
to herein and attached hereto is an integral part of this Agreement and is
incorporated herein by this reference.
12.9 PRONOUNS. All pronouns and any variations thereof used in this
Agreement shall be deemed to refer to the masculine, feminine or neuter,
singular or plural, as appropriate.
12.10 AUTHORITY AND EXECUTION. Each person executing this Agreement on
behalf of a party hereto represents and warrants that he is duly and validly
authorized to do so on behalf of such party, with full right and authority to
execute this Agreement and to bind such party with respect to all of its
obligations hereunder.
12.11 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction, as to such jurisdiction, shall be
ineffective to the extent of such invalidity or unenforceability, without
rendering invalid or unenforceable the retraining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
12.12 TIME OF ESSENCE. Time is of the essence of this Agreement.
12.13 INTERPRETATION. Each party acknowledges that such party, either
directly or through such party's representatives, has participated in the
drafting of this Agreement, and any applicable rule of constructions that
ambiguities are to be resolved against the drafting party should not be applied
in connection with the construction or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly caused this Agreement to
be executed as of the date first above written.
PURCHASER
GRAPHIC ARTS CENTER, INC.
a Delaware corporation
By: _______________________________________
Name: _____________________________________
Title: ____________________________________
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<PAGE>
PRIMARY SHAREHOLDERS
-------------------------------------------------
ROBERT W. POORMAN, JR.
-------------------------------------------------
ROBERT E. SHEPARD
-------------------------------------------------
DAVID E. RICHEY, JR.
SHEPARD POORMAN COMMUNICATIONS
CORPORATION
BY: _______________________________________
NAME: _____________________________________
TITLE: ____________________________________
-48-
<PAGE>
EXHIBIT A
Name of Stockholders Address # of Purchase Shares of Common Stock
- -------------------- ------- ------------------------------------
-49-
<PAGE>
EXHIBIT C
Real Estate Purchase Option. Purchaser shall have the option to purchase
either or both of the parcels of real estate (including the buildings and
fixtures thereon) currently owned by Shepard Poorman Investment, Inc., located
at 7301 North Woodland Drive and 5455 West 84th Street both in Indianapolis,
Indiana at any time during the current lease periods or any renewal period as
contained in said leases on the following terms and conditions:
(a) Notice of exercise of the purchase option shall be given by
Purchaser to the landlord at least three (3) months prior to any termination or
renewal option, subject to withdrawal as hereinafter provided.
(b) The real estate purchase price hereinafter called ("Real Estate
Purchase Price") to be paid by Purchaser for either or both parcels of real
estate shall be at the fair market value of the property, as agreed upon by the
parties, or in the event of their failure to agree, as determined by a neutral
appraisal conducted by a mutually agreeable professional appraiser of properties
of this type.
(c) Within thirty (30) days after receipt of the report of the neutral
appraiser who shall have furnished the parties with its determination of the
Fair Market Value, the Purchaser shall have the right to withdraw its notice of
exercise of option to purchase, in which event, said lease or leases shall
continue in full force and effect as though notice of exercise had never been
served; and this paragraph shall be of no further force or effect. If Tenant
elects to so withdraw, Tenant shall pay all appraisal fees connected with the
withdrawn exercise of option and reimburse landlord for all reasonable expenses.
(d) If the premises is destroyed by fire or other casualty, or
condemnation has occurred after Purchaser has exercised the option to purchase
the premises, but prior to the closing thereof, then Purchaser shall have the
right to rescind its notice of exercise, by notice to the landlord given within
thirty (30) days after such fire or other casualty or condemnation, and any
party shall bear its own expenses. The landlord shall pay the realty transfer
fee, if any, upon delivery of the deed to Purchaser. Landlord and Purchaser
shall apportion usual closing adjustments if any. Landlord and Purchaser's
obligation concerning Environmental Laws, shall be governed by the provisions of
this Agreement and shall survive Closing, as applicable.
-50-
<PAGE>
SCHEDULE 1
"Value Added"
February 29, 1996
YEAR TO
DATE ACTUAL
SALES $55,270,429.06
DISCOUNTS & ALLOWANCES (732,190.95)
--------------
NET SALES $54,536,238.11
PAPER PURCHASES 17,169,554.78
OTHER CHANGEABLE MATERIALS 3,970,014.82
SCRAPS SALES (808,075.34)
PURCHASE DISCOUNT'S EARNED (532,070.62)
PAPER USAGE VARIANCE (106,052.93)
INVENTORY CHANGE MATERIALS 207,629.31
--------------
DIRECT MATERIALS $19,901,000.02
JOB PRINTING 860,353.79
ART SERVICES 38,801.12
COMPOSITION SERVICES 59,290.52
BINDERY SERVICES 2,489,521.14
PREPRESS SERVICES 213,637.48
MAILING & LABELING 109,722.38
CHANGEABLE EXTERN DELIVERY 868,927.92
INTERCOMPANY PURCHASES 569,531.03
INVENTORY CHANGE - OS (19,902.53)
--------------
OUTSIDE SERVICES $ 5,189,882.85
==============
VALUE ADDED $29,447,355.24
<PAGE>
Exhibit 10.34
AMENDMENT NO. 1
TO
ACQUISITION AGREEMENT AND PLAN OF SHARE EXCHANGE
This is Amendment No. 1 to that certain Acquisition Agreement and Plan of
Share Exchange by and among GRAPHIC ARTS CENTER, INC. ("Purchaser"), SHEPARD
POORMAN COMMUNICATIONS CORPORATION ("Shepard Poorman"), ROBERT E. SHEPARD,
ROBERT W. POORMAN, JR. and DAVID E. RICHEY, JR. dated November 6, 1996 (the
"Agreement").
WHEREAS, the parties to the Agreement wish to amend certain provisions of
the Agreement.
NOW, THEREFORE, in consideration of the mutual benefits to be derived
herefrom, the parties agree as follows:
1. Section 1.1(b) of the Agreement is amended to change the Effective Time
to December 1, 1996.
2. Section 11.2(a)(vii) is hereby amended to increase the amount provided
for therein from $1,069,000.00 to $1,169,000.00.
3. Shepard Poorman agrees that $50,000 shall be accrued on its books as a
Shareholder's Expense pursuant to Section 12.2 relating to the prepayment of
Debt owed to CIT Group.
4. All other terms and provisions of the Agreement shall remain unchanged
and in full force and effect.
DATED this 2nd day of December, 1996.
PURCHASER
GRAPHIC ARTS CENTER, INC.,
a Delaware corporation
By: ____________________________
Name: __________________________
Title: _________________________
<PAGE>
PRIMARY SHAREHOLDERS
----------------------------------------
Robert W. Poorman, Jr.
----------------------------------------
Robert E. Shepard
----------------------------------------
David E. Richey, Jr.
SHEPARD POORMAN COMMUNICATIONS
CORPORATION
By: ____________________________________
Name: __________________________________
Title: _________________________________
<PAGE>
EXHIBIT 10.35
ASSET PURCHASE AGREEMENT
DATED AS OF OCTOBER 15, 1996
BY AND BETWEEN
SUPREMEX INC.
AND
PNG PRODUCTS INC. PAC NATIONAL GROUP,
AND
PNG ENVELOPPE INTERNATIONALE INC.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S> <C>
SECTION 1. ASSETS TO BE ACQUIRED
1.1 Description of Purchased Assets.................................... 2
1.2 Excluded Assets.................................................... 6
SECTION 2. THE PURCHASE PRICE AND RELATED MATTERS............................. 7
2.1 Purchase Price..................................................... 7
2.2 Final Determination of Net Working Capital And Payment Therefor.... 8
2.3 Adjustment of Purchase Price.......................................10
2.4 Allocation of Purchase Price.......................................12
2.5 Reporting of Income................................................13
2.6 Bankruptcy.........................................................13
SECTION 3. ASSUMPTION OF ENUMERATED LIABILITIES...............................13
3.1 Assumed Liabilities and Obligations................................14
3.2 Excluded Liabilities...............................................14
3.3 Employees..........................................................16
3.4 Consent of Third Parties...........................................18
SECTION 4. REPRESENTATIONS AND WARRANTIES OF SELLERS..........................19
4.1 Organization and Good Standing.....................................19
4.2 Corporate Authority................................................20
4.3 No Violation.......................................................20
4.4 Consents and Approvals of Governmental Authorities and Others......20
4.5 Financial Statements...............................................21
4.6 Claims; Compliance with Laws.......................................21
4.7 Intellectual Property..............................................21
4.8 No Prior Sale or Licensing of Purchased Assets.....................22
4.9 Certain Fees.......................................................22
4.10 Title to Purchased Assets..........................................22
4.11 Technical Information..............................................24
4.12 Inventory..........................................................24
4.13 Contracts..........................................................24
4.14 Open Orders........................................................25
4.15 Accounts Receivable................................................25
4.16 Equipment..........................................................25
4.17 Permits and Licenses...............................................25
4.18 Insurance..........................................................26
4.19 Claims.............................................................26
4.20 Absence of Sensitive Payments......................................26
4.21 Taxes..............................................................26
4.22 Environmental Issues...............................................27
4.23 Ownership and Location of Purchased Assets.........................29
4.24 Benefit Plans......................................................29
4.25 Trade Names........................................................31
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
4.26 Employees..........................................................32
4.27 Labour Matters.....................................................32
4.28 Registration.......................................................33
4.29 Residency..........................................................33
SECTION 5. REPRESENTATIONS AND WARRANTIES OF BUYER............................33
5.1 Organization, Good Standing and Corporate Authority................33
5.2 No Violation.......................................................34
5.3 Consents and Approvals of Governmental Authorities and Others......34
5.4 Certain Fees.......................................................34
5.5 Sales and Transfer Taxes...........................................35
SECTION 6. COVENANTS..........................................................35
6.1 Joint Elections....................................................35
6.2 Property Taxes.....................................................36
6.3 Approvals; Consents................................................36
6.4 Preservation of Business Organization..............................36
6.5 Approval of Certain Transactions...................................36
6.6 Exclusive Dealing..................................................38
6.7 Further Assurances.................................................38
6.8 Access to Offices, Officers, Accountants, Due Diligence, Etc.......38
6.9 Receivables........................................................39
6.10 Securities Filings.................................................39
6.11 Accountants' Consent...............................................39
6.12 Change of Name.....................................................40
6.13 Environmental Site Assessment......................................40
6.14 Preparation of Tax Returns.........................................40
6.15 Covenants of Sellers...............................................40
SECTION 7. THE CLOSING........................................................41
SECTION 8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER...................41
8.1 Corporate Action...................................................41
8.2 Representations and Warranties.....................................41
8.3 Performance of Obligations.........................................41
8.4 Instruments of Conveyance, Etc.....................................42
8.5 Short Term Liabilities.............................................42
8.6 Delivery...........................................................42
8.7 Opinion of Counsel.................................................42
8.8 Non-Competition....................................................42
8.9 Required Consents..................................................42
8.10 Litigation.........................................................43
8.11 Security...........................................................43
8.12 No Material Damage.................................................43
8.13 Resignations.......................................................43
8.14 Bulk Sales.........................................................43
8.15 Certificate of the Minister of Finance of Ontario..................43
8.16 Class B Common Shares..............................................44
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS.................44
9.1 Representations and Warranties.....................................44
9.2 Corporate Action...................................................44
9.3 Payment............................................................45
9.4 Documents..........................................................45
9.5 Required Consents..................................................45
9.6 Litigation.........................................................45
SECTION 10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS..............45
SECTION 11. INDEMNIFICATION....................................................46
11.1 Indemnity by Sellers...............................................46
11.2 Environmental......................................................47
11.3 Indemnity by Buyer.................................................47
11.4 Notice of Claim....................................................48
SECTION 12. COMPETITION........................................................49
12.1 Non-competition....................................................49
12.2 Remedies...........................................................50
SECTION 13. TERMINATION; MODIFICATION OR WAIVER................................50
13.1 Termination........................................................50
13.2 Modification.......................................................50
13.3 Waiver.............................................................50
SECTION 14. COSTS INCIDENT TO PREPARATION OF AGREEMENT.........................51
SECTION 15. RISK OF LOSS.......................................................51
SECTION 16. REASONABLE EFFORTS.................................................51
SECTION 17. GENERAL............................................................52
17.1 Parties in Interest; Assignment....................................52
17.2 Confidentiality....................................................53
17.3 Public Statements..................................................53
17.4 Approval...........................................................54
17.5 Choice of Law......................................................54
17.6 Notices............................................................54
17.7 Entire Agreement...................................................55
17.8 Remedies Cumulative................................................56
17.9 Severability.......................................................56
17.10 Interpretation.....................................................56
17.11 Dollars............................................................57
17.12 Counterparts.......................................................57
17.13 Facsimiles.........................................................57
</TABLE>
iii
<PAGE>
SCHEDULES
<TABLE>
<CAPTION>
INDEX
-----
<S> <C> <C>
(a) Intellectual Property 1
(c) Equipment 2
(f) Other Contracts Relating to Ownership of Assets and Operations of Business 3
(h) Acquired Permits 4
(i) Owned and Leased Real Property 5
(k) Computer Software Assets 6
(n) Memberships 7
(h) Excluded Assets 8
(g) Non-Represented Employees not Hired by Buyer 9
(a) Collective Bargaining Agreements and Represented Employees 10
(d) Not Actively Employed Employees 11
(g) Assigned Plans 12
(h) Benefit Plan of which Sponsorship is Assumed by Buyer 13
(j) Employment Agreements 14
Material Contracts Requiring Consent 15
Consents 16
Financial Statements and Cost Savings 17
Litigation 18
Intellectual Property Exceptions 19
Prior Sales or Licenses 20
(a) Lease Exceptions 21
(c) Liens to be Discharged and Permitted Liens 22
Matters Related to Acquired Permits 23
Insurance 24
Product Liability Claims 25
Contested Taxes 26
Environmental Matters 27
(a) Benefit Plans and Employment Arrangements 28
(b) Mercer Letter 29
(i) Method of Funding Used for the Benefit Plans 30
List of Employees 31
(a) Labour Matters 32
(b) Activities of Trade Unions 33
(c) Related Party Indebtedness 34
(f) Pay Equity Plan 35
Forms of Consents of Landlord 36
EXHIBIT A Escrow Agreement 37
EXHIBIT B Sellers' Counsel Opinion 38
EXHIBIT C Non-Competition 39
</TABLE>
<PAGE>
GLOSSARY OF TERMS
Defined Term Section
- ------------ -------
Accounts Receivable 1.1(g)
Acquired Permits 1.1(h)
Actively Employed 3.3(c)
Affiliate 1.1
Agreement Heading
Assigned Plans 3.3(g)
Assumed Liabilities 3.1
Benefit Plans 4.24
Books and Records 4.5
Business Recitals
Business Closing Balance Sheet 2.2(a)
Buyer Heading
Buyer Documents 5.1
Claims 3.1
Closing 7
Closing Date 7
Closing Financial Statements 2.2(a)
Computer Software Assets 1.1(k)
Confidential Information 17.2(b)
Contracts 1.1(f)
EBITDA 2.3(b)
Environmental Laws 4.22(a)
Environmental Permits 4.22(b)
Equipment 1.1(c)
Escrow Agent 2.1(c)
Escrow Amount 2.1(c)
Escrow Agreement 2.1(c)
Estimated Net Working Capital 2.1(b)
Excluded Assets 1.2
Excluded Liabilities 3.2
Final Determination of Net Working Capital 2.2(d)
GAAP 1.1(l)
Governmental Authority 4.22(d)
Hazardous Substances 4.22(c)
Income Taxes 1.2(e)
Indemnified Party 11.4
Indemnifying Party 11.4
Initial Purchase Price Payment 2.1(b)
Intellectual Property 1.1(a)
Interim Period 6.4
Inventory 1.1(d)
Laws 4.6
Leased Real Property 1.1(i)
Liens 4.10(c)
Losses 11.1(a)
Mail-Well 17.3
Material Adverse Change 4.1
Material Adverse Effect 4.1
<PAGE>
Glossary - page 2
Defined Term Section
- ------------ -------
Material Contracts Requiring Consent 3.4
Net Working Capital 2.1(a)
Neutral Accountants 2.2(a)
1995 Financial Statements 4.5
Non-Represented Employees 3.3(b)
Open Orders 1.1(e)
Outstanding Accounts Receivable 2.3(a)
Owned Real Property 1.1(i)
Permitted Liens 4.10(c)
Person 1.1
PNG Enveloppe Heading
PNG Products Heading
Purchase Price 2.1(a)
Purchased Asset Requiring Consent 3.4
Purchased Assets 1.1
Related Rights 1.1(a)
Represented Employees 3.3(a)
Sellers Heading
Sellers Documents 4.2
Short Term Liabilities 2.1(a)
Technical Information 1.1(b)
Tentative Purchase Price Payment 2.1(a)
Transferred Employees 3.3(e)
Working Capital Assets 2.1(a)
Working Capital Holdback 2.1(d)
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated this 15th day of October, 1996
("Agreement") by and between Supremex Inc. ("Buyer"), a corporation incorporated
--------- -----
under the Canada Business Corporations Act, PNG Products Inc. Pac National
Group, (hereinafter "PNG Products") and PNG Enveloppe Internationale Inc.,
------------
(hereinafter "PNG Enveloppe"), (PNG Products and PNG Enveloppe hereinafter
-------------
collectively referred to as "Sellers").
-------
RECITALS
Sellers are engaged in the business of manufacturing and distributing
envelope products throughout Canada as presently carried on by Sellers (the
"Business"). Sellers desire to sell, and Buyer desires to acquire,
--------
substantially all of the assets of the Business as a going concern, and to
assume certain specifically identified liabilities and obligations of Sellers
related to the Business, all upon the terms and conditions set forth herein.
In consideration of the mutual covenants, agreements, representations
and warranties contained herein, and in reliance thereon, Buyer and Sellers,
intending to be legally bound, agree as follows:
<PAGE>
1. ASSETS TO BE ACQUIRED.
1.1 Description of Purchased Assets. Subject to the terms and
-------------------------------
conditions of this Agreement, and in reliance on the representations, warranties
and covenants contained herein, on and as of the Closing Date (capitalized terms
shall be used as defined in the Sections mentioned in the Glossary of Terms to
this Agreement), Sellers will sell, convey, assign, transfer and deliver to
Buyer, and Buyer will purchase and acquire, the Business as a going concern and
all of Sellers' right, title and interest in and to the assets, properties and
rights of every kind and description, real, personal and mixed, tangible and
intangible, wherever situated in Canada constituting or used in the Business
(other than the Excluded Assets (collectively, the "Purchased Assets")),
including without limitation:
(a) Intellectual Property and Related Rights. All unpatented
----------------------------------------
inventions, invention disclosures, multinational invention registrations,
patents and patent applications (including, but not limited to, all reissues,
divisions, continuations, continuations-in-part, extensions and reexaminations)
and all rights therein provided by law, multinational treaties or conventions;
publications and copyrights; trade secrets, know-how and show-how; formulas; and
all common law and registered trademarks, trademark registrations, applications
for trademark registrations, tradenames, brand names, service marks and logos;
including in each case without limitation, those identified on Schedule 1.1(a),
---------------
together with the goodwill associated therewith and symbolized thereby
(collectively, the "Intellectual Property"); and an assignment of any licenses
---------------------
therefor to or from Sellers and all income, royalties, damages and payments due
or payable to Sellers with respect thereto at any time on or after the Closing
Date, including, without limitation, damages and payments payable to Sellers for
infringement or misappropriation of any thereof throughout the world after the
Closing Date; together with an assignment of all rights of Sellers in and to,
including rights to enforce the terms of, confidentiality agreements, non-
solicitation and non-competition agreements of, and any agreements relating to
the assignment of inventions made by, prior and present employees of Sellers and
any such agreements with any other Person with respect to the Intellectual
Property (collectively, the "Related Rights");
--------------
(b) Technical Information. All customer, dealer, supplier and
---------------------
installation lists; serial number records; engineering, manufacturing, design,
installation and other technical drawings and specifications, calculations and
manufacturing and production processes and techniques; research and
2
<PAGE>
development information; operating, maintenance and repair manuals and
instruction books; cost and estimating information, cost records, vendor data
and other business records, including without limitation, sales histories; sales
inquiries; consultant's reports; bills of material, test data and selected test
material samples; advertising and promotional literature, including reproducible
masters and all other commercial, sales, marketing and technical data relating
to the Business and the Purchased Assets as are in the possession or under the
control of Sellers, including, but not limited to, data stored electronically or
on other format (collectively, the "Technical Information");
---------------------
(c) Equipment. All machinery, equipment, leasehold
---------
improvements, trucks, automobiles, office furniture, office equipment, computing
and telecommunications equipment (including the software loaded on such
equipment, including leased equipment if the lease agreement relating thereto is
a Contract) and an assignment of all related manufacturer or fabricator
warranties, guaranties and indemnities; existing patterns, dies, jigs, fixtures,
tooling, test equipment and working models owned by Sellers, including that
identified on Schedule 1.1(c) constituting Purchased Assets (collectively, the
---------------
"Equipment");
- ----------
(d) Inventory. All raw materials inventory, work-in-process
---------
inventory and finished goods inventory pertaining to the Business, together with
all manufacturing supplies and boxing, labelling and other shipping materials
and an assignment of all related manufacturer or fabricator warranties,
guaranties and indemnities constituting Purchased Assets (collectively, the
"Inventory");
- ----------
(e) Open Orders. Open orders for goods and services with
-----------
customers of Sellers (the "Open Orders"), together with related purchase orders,
-----------
contracts, subcontracts and accounts receivable and credit support associated
with such Open Orders;
(f) Other Contracts. All contracts, orders for spare parts,
---------------
distribution agreements, service agreements, development agreements, consulting
agreements, leases of machinery, equipment and other personal property,
guarantees, commitments, instruments and other agreements relating to the
acquisition or ownership of any of the Purchased Assets and the operation of the
Business, including those listed on Schedule 1.1(f) (the "Contracts");
--------------- ---------
3
<PAGE>
(g) Accounts Receivable. All accounts and notes receivable of
-------------------
Sellers arising from the Business as at the Closing Date (collectively, the
"Accounts Receivable");
- --------------------
(h) Permits, Licenses. All permits, licenses, authorizations,
-----------------
certificates, registrations, orders, franchises and other approvals required to
carry on the Business to the extent such permits, licenses, authorizations,
certificates, registrations, orders and other approvals are transferable to
Buyer (collectively, the "Acquired Permits") all of which are listed on Schedule
----------------
1.1(h);
(i) Real Property. The building bearing civic address 400
-------------
Humberline Drive, Etobicoke, Ontario, the parcel of land upon which it is
situated, identified as Parcel 29-10, Section E-25, by PIN 07368-0028 (LT), and
the part of the road allowance between concessions III and IV, designated as
Part 1, Plan 64R-4374 and identified by PIN 07368-0070 (LT), together with all
rights, interests and appurtenances therein or thereto and the buildings,
structures, installations, fixtures and other improvements thereon (the "Owned
-----
Real Property"); Sellers' interest as lessee or sublessee, in the lease
- -------------
agreements described on Schedule 1.1(i) and the leasehold interests and
---------------
leasehold improvements leased pursuant thereto (the "Leased Real Property"); if
--------------------
any, all easements, privileges, rights-of-way, surface use rights, mineral
interests, real property leasehold interests, servitudes and other real property
interests with respect to the Owned Real Property and all rights to the present
and future use of water, wastewater, drainage and other utility facilities and
amenities covering any future use with respect to the Owned Real Property; and
all prepaid real property taxes or accruals on the Books and Records of Sellers
relating to real property taxes;
(j) Business Records. Subject to the Sellers' rights to retain
----------------
copies thereof where necessary for tax purposes, all records of Sellers relating
solely to the Business, including property records and copies of personnel
records of those employees who will become employees of Buyer pursuant to the
provisions of this Agreement, but excluding income tax records. Buyer agrees to
give Sellers access to such documents as reasonably requested by Sellers;
(k) Computer Software Assets. All computer software, data
------------------------
rights, documentation and associated license, escrow, support, development and
maintenance agreements, used in the conduct of the Business, including those
listed on Schedule 1.1(k) (the "Computer Software Assets");
--------------- ------------------------
4
<PAGE>
(l) Prepaid Expenses. All payments made by Sellers with respect
----------------
to the Business, which constitute prepaid expenses of the Business in accordance
with Canadian generally accepted accounting principles ("GAAP") consistently
----
applied, to the extent the benefits thereof are transferable to Buyer including,
without limitation, prepaid rent or prepaid lease payments, deposits other than
those mentioned in Section (b), taxes other than Income Taxes or accruals
related thereto, Canada and Quebec Pension Plan, employer health tax and
required provincial health insurance premiums, accrued wages, salaries and
commissions and employee benefit payments, payroll and employee withholding
taxes, unemployment insurance and/or employment insurance, transfer taxes,
workers' compensation, and other charges;
(m) Emission Offset Credits. All emission offset credits, if
-----------------------
any, arising from or attributable to the operation of the Business;
(n) Memberships. All memberships of Sellers in, and all rights
-----------
as a member of, industry, trade, civic, social and other associations,
organizations and clubs to the extent transferable to Buyer listed on Schedule
--------
1.1(n); and
- ------
(o) Other Intangible Assets. The goodwill of the Business and
-----------------------
all other intangible assets (including without limiting the generality of the
foregoing (i) the exclusive right to the Buyer to represent itself as carrying
on the Business in continuation of and in succession to Sellers and the right to
use any words indicating that the Business is so carried on including, without
limitation, the exclusive right to use the names "PNG Products", "PNG Enveloppe
Internationale" and "Globe Envelope" or derivations thereof; (ii) all records of
sales, customer lists and supplier lists of or used in connection with the
Business; and (iii) causes of action, rights of action, contract rights and
warranty and product liability claims against third parties relating to the
Purchased Assets or the Business.
As used in this Agreement, "Person" shall mean an individual,
------
partnership, corporation, business trust, joint stock company, trust,
unincorporated association, joint venture, limited liability company or any
other entity of whatever nature; and "Affiliate" shall mean any Person who
---------
controls, is
5
<PAGE>
controlled by or is under common control with the designated party,
and ownership, directly or indirectly, of 20% or more of the voting stock or
other equity interest shall be deemed to constitute control.
1.2 Excluded Assets. Notwithstanding Section , the following
---------------
assets (collectively, the "Excluded Assets") shall be excluded from this
---------------
Agreement and shall not be sold, assigned or transferred to Buyer and shall not
be included in the Purchased Assets or the Working Capital Assets as finally
determined pursuant to Section 2.2:
(a) Any intercompany deposits with any Affiliate of Sellers
and intercompany receivables from the other Seller or an Affiliate of Sellers,
except intercompany receivables for products shipped or sold by the Business to
an Affiliate of Sellers;
(b) Any deposits paid with respect to the purchase of any goods,
machinery or equipment;
(c) Corporate minute books and stock books;
(d) Any claims and rights against third parties (including,
without limitation, insurance carriers), to the extent they relate to
liabilities or obligations that are not assumed by Buyer;
(e) All payments made by Sellers with respect to the Business
which constitute prepaid income or profits taxes ("Income Taxes") (including,
but not limited to, federal income taxes and provincial income taxes) of the
Business, and all claims for refunds of Income Taxes and other governmental
charges to the extent such refunds relate to periods ending on or prior to the
Closing Date and all income tax records of Sellers and all payments made by
Sellers with respect to the Business, which constitute prepaid expenses of the
Business to the extent that the benefits thereof are not transferable to the
Buyer;
(f) All prepaid insurance premiums and proceeds of insurance
policies listed in Schedule 4.18.
6
<PAGE>
(g) All cash and cash equivalents, including any escrow
accounts, wherever located, including without limitation at any Owned Real
Property or any Leased Real Property or in lock boxes or accounts (whether
maintained at a bank, thrift, mutual fund or other similar financial
institution);
(h) Sellers licenses, permits and other governmental
authorizations and deposits that are not legally transferrable; and
(i) All assets listed on Schedule 1.2(h).
---------------
2. THE PURCHASE PRICE AND RELATED MATTERS.
2.1 Purchase Price .
---------------
(a) The purchase price payable in consideration for the
Purchased Assets shall be an amount equal to the sum of (i) $20,750,000, and
(ii) the amount of the Net Working Capital, up to a maximum amount of
$7,000,000, the whole subject to any adjustment as provided in Sections 2.2 and
2.3 (the "Purchase Price").
As used in this Agreement,"Net Working Capital" shall mean
the amount by which the amount of the Working Capital Assets exceeds the amount
of the Short Term Liabilities, all as determined as of the Closing Date in
accordance with this Agreement; "Working Capital Assets" shall mean the Accounts
Receivable, Inventory, Prepaid Expenses and other current Purchased Assets of
the Business as at the Closing Date; "Short Term Liabilities" shall mean the
indebtedness of Sellers under their accounts payable and accrued short term
liabilities pertaining to the Business as at the Closing Date and, for greater
certainty, shall exclude the indebtedness of Sellers under their operating
facilities.
(b) Buyer will pay to Sellers at Closing, by wire transfers or
immediately available funds to accounts (such accounts to be designated at least
three (3) days prior to the Closing Date by notice from Sellers to Buyer), (i)
an amount equal to $19,750,000, and (ii) Sellers' good faith Closing Date
estimate of Net Working Capital confirmed in writing to Buyer at least two
business days prior to the Closing Date ("Estimated Net Working Capital"), less
an amount of $375,000 on account of the Purchase Price.
7
<PAGE>
(c) Buyer shall deposit $1,000,000 on account of the Purchase
Price with the Escrow Agent acting pursuant to the Escrow Agreement referred to
below (such amount, together with any interest therein, additions thereto, and
releases therefrom, as more specifically described in such Escrow Agreement
being referred to herein as the "Escrow Amount") to guarantee the payment of any
-------------
amount that may become owing by Sellers to Buyer, as indemnity, adjustment or
otherwise pursuant to this Agreement. The Escrow Amount, together with interest
and other income thereon (which shall be for Sellers' account unless paid to
Buyer in accordance with the terms of the Escrow Agreement), shall be held for a
term of 24 months and released by such Escrow Agent to be released in accordance
with the terms of the Escrow Agreement, substantially in the form attached
hereto as Exhibit A (the "Escrow Agreement"), which shall be entered into by the
----------------
escrow agent named therein (the "Escrow Agent"), Buyer and Sellers prior to or
------------
on the Closing Date.
(d) In addition to the Purchase Price, Buyer will assume at
Closing the Short Term Liabilities as at the Closing Date.
(e) Buyer shall also deposit with the Escrow Agent pursuant to
the terms of the Escrow Agreement an amount equal to $375,000 (the "Working
-------
Capital Holdback") to be held, together with interest and other income thereon
- ----------------
(which shall be for Sellers' account unless paid to Buyer in accordance with the
terms of the Escrow Agreement) until the Net Working Capital pursuant to Section
2.2 and all adjustments pursuant to Section 2.3 are finally determined.
(f) Buyer and its representatives shall be afforded the
opportunity to review and inspect all of the financial records, work papers,
schedules and other supporting papers relating to the Estimated Net Working
Capital of the Business and to consult with Sellers and their representatives,
if necessary, regarding the methods used in the calculation of it.
8
<PAGE>
2.2 Final Determination of Net Working Capital And Payment Therefor.
---------------------------------------------------------------
(a) As promptly as practicable after the Closing Date, and in
any event no later than 60 days thereafter, Sellers shall prepare, at their own
expense, and deliver to Buyer, audited consolidated financial statements of the
Business for the period beginning on January 1, 1996 and ending on the Closing
Date, including an audited consolidated balance sheet of the Business as at the
Closing Date (the "Business Closing Balance Sheet"), showing Sellers'
-------------------------------
calculation of Net Working Capital determined in accordance with GAAP
consistently applied, an audited consolidated statement of operations and
deficit and statement of changes in financial position for the period beginning
January 1, 1996 and ending at the Closing Date and the notes thereto
(collectively, the "Closing Financial Statements").
(b) Buyer and its representatives shall be present at any
physical inventory counts with respect to the preparation of the Business
Closing Balance Sheet, and after delivery to Buyer of the Business Closing
Balance Sheet, Buyer and its representatives shall be afforded the opportunity
to review and inspect, at its own expense, all of the financial records, work
papers, schedules and other supporting papers relating to the preparation of it
and to consult with Sellers and their representatives, if necessary, regarding
the methods used in the preparation of the Business Closing Balance Sheet.
(c) The Business Closing Balance Sheet shall be final,
conclusive and binding for purposes of this Agreement, unless Buyer shall give
written notice of disagreement with any item or items thereon within 60 days
following receipt of Business Closing Balance Sheet, specifying in reasonable
detail the nature and extent of such disagreement. Buyer shall not be permitted
to give a notice of disagreement with respect to the Business Closing Balance
Sheet unless the aggregate amount in dispute exceeds $25,000.
(d) If within 5 business days following receipt by Sellers of a
notice of the type referred to in Section 2.2(c), Sellers and Buyer are unable
to resolve any disagreement with respect to the calculation of Net Working
Capital, the disagreement shall be submitted for arbitration pursuant to the
Arbitrations Act (Ontario) to one of the nationally recognized Big Six chartered
accounting firms mutually agreeable to Buyer and Sellers, which is independent
of Buyer and its Affiliates and Sellers and its Affiliates (the "Neutral
-------
Accountants"). The Neutral Accountants shall act as an arbitrator to determine
- -----------
9
<PAGE>
and resolve only those issues still in dispute. The Neutral Accountants'
resolution shall be made within 30 days of the submission of the dispute, shall
be in accordance with this Agreement, and in a manner which is in accordance
with GAAP, shall be set forth in a written statement delivered to Sellers and
Buyer, and shall be final, conclusive and binding on Sellers and Buyer (the
"Final Determination of Net Working Capital"). Subject to 2.2(f), Buyer and
------------------------------------------
Sellers shall instruct the Escrow Agent to pay to Sellers and/or Buyer, as the
case may be, the balance of the Working Capital Holdback in accordance with the
Final Determination of Net Working Capital, forthwith after receipt of the Final
Determination of Net Working Capital, together with all interest and other
income on the Working Capital Holdback.
(e) The fees and expenses of the Neutral Accountants in
connection with any such determination shall be paid one-half by Sellers and
one-half by Buyer. Otherwise, Buyer and Sellers shall each pay their own costs
incurred, including the fees and expenses of their respective accountants or
attorneys, if any.
(f) Buyer and Sellers shall instruct, promptly following the
determination of the Final Determination of the Net Working Capital, the Escrow
Agent to pay, and the Escrow Agent shall pay in accordance with such
instructions, the balance of the Working Capital Holdback calculated pursuant to
the Final Determination of Net Working Capital and any Adjustment of Purchase
Price pursuant to section 2.3, by certified cheque, upon the expiration of the
10-day period following receipt of such instructions. If the Working Capital
Holdback is not sufficient to cover payment to Buyer pursuant to sections 2.2
and 2.3, Sellers shall pay to Buyer within 10 days following such instructions
an amount equal to the balance due to Buyer. If payment to Buyer is unpaid
within 10 days following the expiration of the above mentioned delay, Buyer
shall be entitled to be paid by the Escrow Agent and Buyer and Sellers shall
instruct the Escrow Agent to pay, and the Escrow Agent shall pay by wire
transfer or certified cheque to the Buyer out of the Escrow Amount any amount
payable to Buyer in accordance with the Final Determination of the Net Working
Capital.
(g) All wire transfers, if any, shall be to such accounts as the
recipient thereof may designate (at least 3 days prior to the Closing Date) in
writing for that purpose.
10
<PAGE>
2.3 Adjustment of Purchase Price.
-----------------------------
(a) If, 120 days following the Closing Date, (i) after
reasonable efforts by Buyer (which shall mean exercising at least the diligence
generally exercised by Buyer in collecting its own accounts receivable) to
collect the Accounts Receivable, any portion thereof remaining outstanding (the
"Outstanding Accounts Receivable") or (ii) Buyer, with Sellers' written
-------------------------------
approval, has issued any credit notes after the Closing Date with respect to
sales made prior to the Closing Date the Purchase Price will, provided that the
Account Receivables have been assigned in accordance with the following
paragraph, be reduced by the aggregate of the amount under (i) and (ii) of this
Section 2.3(a) and Sellers shall pay to Buyer such amount.
Buyer shall not compromise, reduce or otherwise adjust any of
the Accounts Receivable or issue any credit notes with respect thereto without
either of Sellers' prior written approval. Buyer shall keep Sellers regularly
and fully informed concerning Buyer's collection of the Accounts Receivable.
Buyer will assign to Sellers the Outstanding Accounts Receivable in
consideration of $1.00, free and clear of Liens, and execute such documents and
do such things as may be reasonably required by Sellers in connection with such
assignment. Sellers, after such assignment, may take such proceedings as it
deems advisable to collect the Outstanding Accounts Receivable so assigned, but
Sellers will indemnify, defend and hold Buyer harmless from and against all
Claims incurred by Buyer directly, by reason of such proceedings.
(b) Within 60 days of the Closing Date, Sellers shall deliver to
Buyer valuations of Sellers' pension plans for salaried employees and for hourly
employees, dated as at the Closing Date and prepared by a recognized actuarial
firm and the actuarial evaluations of these pension plans will be determined
using the actuarial assumptions and funding method detailed in the actuarial
reports as at January 1, 1996;
(i) In the event that the pension plan for salaried employees
contains a surplus of less than $4,800,000 on a going concern basis, the
Purchase Price shall be reduced by an amount equal to the amount by which the
pension surplus is below $4,800,000, unless the right to such reduction is
waived in writing by Buyer. Such reduction shall reduce the Purchase Price;
11
<PAGE>
(ii) In the event that the pension plan for hourly employees
has a deficit of more than $300,000 on a going concern basis, the Purchase Price
will be reduced by the amount in excess of such deficit, if any, unless the
right to such adjustment is waived in writing by Buyer.
(c) Any adjustment of Purchase Price pursuant to Sections 2.3(a)
and (b) ("Adjustment of Purchase Price") and any payment pursuant thereto to
Buyer shall be made as follows: (i) first Buyer and Sellers shall instruct in
writing the Escrow Agent to pay out of the Working Capital Holdback to Buyer an
amount equal to the Adjustment of Purchase Price within 10 days following such
instructions, (ii) second, if the Working Capital Holdback is less than the
amount owed to Buyer, Sellers shall pay to Buyer an amount equal to all the
balance due to Buyer. If the amount under (ii) is unpaid within 10 days
following such instructions, Buyer shall be entitled to be paid by the Escrow
Amount and Buyer and Sellers shall instruct the Escrow Agent to pay, and the
Escrow Agent shall pay by wire transfer or certified cheque, to the Buyer out of
the Escrow Amount any amount payable to Buyer in accordance with the Adjustment
of Purchase Price.
(d) Reference to instructions to be given by Sellers or written
approval of Sellers in Section 2.3(a) only, shall refer to the written approval
of Steve Ruddy, Vice-President, Finance of PNG Products, shall be sufficient and
shall bind Sellers.
2.4 Allocation of Purchase Price. The Purchase Price shall be
----------------------------
allocated between Sellers and among the Purchased Assets and, in filing their
respective tax returns, Buyer and Sellers shall value the Purchased Assets in
the following manner:
(a) As to the Equipment and the Owned Real Property, their value
shall be an amount equal to the lower of their original cost or their fair
market value as at the Closing Date. The fair market value of the Owned Real
Property and the Equipment shall be determined by independent experts designated
jointly by Sellers and Buyer, being Royal Lepage for the Owned Real Property and
a professional to be designated by Buyer for the Equipment with Sellers' consent
that they may not reasonably withhold; Sellers shall bear the cost of the expert
valuation of the Owned Real Property and Buyer shall bear the cost of the expert
valuation of Equipment;
12
<PAGE>
(b) As to the Net Working Capital as finally agreed between the
parties or otherwise determined pursuant to Section 2.2; and
(c) The difference between the Purchase Price and the sum of the
amounts determined in Sections 2.4(a) and 2.4(b) above for the balance of all
Purchased Assets shall be allocated to goodwill.
(d) Sellers shall advise Buyer as to the estimated allocation of
the Purchase Price between Sellers, at least 3 days prior to the Closing Date. A
Schedule reflecting the final allocation will be executed by Buyer and Sellers
immediately following the Final Determination of Net Working Capital.
2.5 Reporting of Income. Sellers will include the income of the
--------------------
Business for financial reporting purposes and in Sellers federal, provincial,
local and foreign income tax returns for all periods through the Closing Date.
Buyer will include the income of the Business for financial reporting purposes
and in Buyer's federal, provincial, local and foreign income tax returns for all
periods on and after the Closing Date to the end of Buyer's fiscal year. Buyer
and Sellers each agree to provide the other with all information requested by
the other pertaining to the Business and to assist the other with such
reasonable information requests as may be necessary to properly and timely
prepare such returns.
2.6 Bankruptcy. The Buyer acknowledges that if PNG or any of the
-----------
corporations collectively defined herein as "Sellers" becomes bankrupt before
the Closing Date, the trustee to the bankruptcy of PNG Products or PNG Enveloppe
or of any of the said corporations will be entitled to the performance of all of
the Buyer's obligations under this Agreement, and that any such bankruptcy will
not constitute grounds for an adjustment of the Purchase Price or for non-
completion of this Agreement (except as otherwise mentioned in this Agreement),
provided that all obligations, undertakings, representations, warranties and
terms and conditions in favour of the Buyer are executed, maintained or
fulfilled as the case may be and provided that the Closing shall occur no later
than November 27, 1996. The trustee's liability under this Agreement shall be
solely in his capacity as trustee in bankruptcy and shall have no personal
liability hereunder.
13
<PAGE>
3. ASSUMPTION OF ENUMERATED LIABILITIES.
3.1 Assumed Liabilities and Obligations. On and subject to the
-----------------------------------
terms and conditions set forth in this Agreement, on the Closing Date, Buyer
shall undertake, assume, perform and otherwise pay, satisfy and discharge, and
hold Sellers harmless on and after the Closing Date from all Claims arising out
of or relating to the operation of the Business or ownership of the Purchased
Assets on and after the Closing Date but not before the Closing Date, other than
Excluded Liabilities (collectively, the "Assumed Liabilities"). As used in this
-------------------
Agreement, "Claims" means any and all claims, demands, liabilities, obligations,
------
causes of action, proceedings, losses, damages, expenses, fines, judgments,
costs (including legal fees and consultant fees), citations, summons, orders,
directives, notices, arbitrations, audits, hearings, investigations, litigation
or suits, whether in contract, tort or otherwise, whether statutory or at common
law (whether civil, criminal, administrative, investigative, formal or
informal), whether known or unknown, fixed or contingent. Notwithstanding the
foregoing, Assumed Liabilities include the following regardless of when the act,
omission, event, circumstance or condition that gives rise to such liability
exists or arises:
(a) Sellers' liabilities and obligations to the extent reflected
as a liability for purposes of the Net Working Capital amount, as finally
determined pursuant to Section 2.2;
(b) the liabilities and obligations of Sellers for performance of
obligations arising on and after the Closing Date pursuant to leases or
subleases for Leased Real Property and pursuant to Open Orders, Contracts,
Acquired Permits and Computer Software Assets to the extent assigned to Buyer or
held for the benefit of the Buyer pursuant to this Agreement; and
(c) the liabilities expressly assumed in Section 3.3.
3.2 Excluded Liabilities. Except as provided in Sections 3.1 and
--------------------
3.3, Buyer will not assume or in any way become liable for, and Sellers shall be
responsible for and hold Buyer harmless from all Claims against, or debts or
obligations of, Sellers (i) with respect to Excluded Assets and (ii) with
respect to the Business and the Purchased Assets to the extent they arise out of
or relate to the Business or the ownership of the Purchased Assets based on
acts, omissions, events, circumstances or conditions existing
14
<PAGE>
or arising prior to the Closing Date other than the express Assumed Liabilities
listed in Section 3.1(a) - (c) (collectively, the "Excluded Liabilities"),
--------------------
including without limitation the following:
(a) the liabilities or obligations of Sellers to its stockholders
respecting dividends, distributions to its stockholders in liquidation,
redemptions of stock, or otherwise;
(b) any obligations of Sellers for expenses, Income Taxes, or
fees incident to or arising out of the negotiation, preparation, approval or
authorization of this Agreement, or the consummation of the transactions
contemplated hereby, including, without limitation, all attorneys and
accountants fees and all brokers or finders fees or commissions payable by
Sellers and those related to Societe Immobiliere Axim Inc. and Whalen, Beliveau
& Associates Inc.;
(c) any liability or obligation of Sellers to Affiliates of
Sellers, except payables for products sold or shipped by an Affiliate of Sellers
to Sellers and included as liabilities in the final determination of Net Working
Capital as finally determined under Section 2;
(d) any obligations or liabilities of Sellers to indemnify its
officers, directors, agents or consultants;
(e) all taxes imposed on Sellers, including any tax of any other
corporation, which tax is assessed against Sellers by virtue of its status as a
member of any consolidated group of which such other corporation was also a
member; and
(f) all Claims, liabilities and obligations arising under or
imposed pursuant to Environmental Laws, which are attributable to actions or
failures to act by Sellers, with respect to the operation of or properties
utilized by Sellers prior to the Closing Date and those related to the leaking
storage tank located on the Laird Drive premises, City of Toronto, Ontario.
(g) any liabilities or obligations of Sellers related to those
employees listed in Schedule 3.2(g) who will continue to be employed by the
Sellers and if not, all costs of terminating the employment of those employees
will be to the account of Sellers.
15
<PAGE>
3.3 Employees.
---------
(a) Represented Employees. As of the Closing Date, Buyer shall
---------------------
assume the collective bargaining agreements listed on Schedule 3.3(a) to the
--------------
extent they are applicable to Sellers' employees represented by the unions also
listed in Schedule 3.3(a) (the "Represented Employees");
-------------- ---------------------
(b) Non-Represented Employees. As of the Closing Date,
-------------------------
Buyershall extend to all of Sellers' employees who are not Represented Employees
(the "Non-Represented Employees"), and who are Actively Employed, except for
-------------------------
those employees listed in Schedule 3.2(g), written offers of employment under
substantially the same terms and conditions as to salary, commission structure,
if any, benefits, duties and working conditions as those in force prior to the
Closing Date;
(c) Actively Employed. As used in this Agreement, the term
-----------------
"Actively Employed" means all full or part time employees of Sellers in the
-----------------
Business on the Closing Date, including employees on leave from employment with
Sellers on short term disability, pregnancy or parental leave, or temporary lay-
off, but excluding those employees on long term disability.
(d) Employees Not Actively Employed. Schedule 3.3(d) sets forth
-------------------------------
those employees of Sellers who are not expected to be Actively Employed by
Sellers on the Closing Date including those on Workers' Compensation. Buyer
agrees to extend written offers of employment under substantially the same terms
and conditions as to salary, commission structure, if any, benefits, duties and
working conditions as those in force prior to the Closing Date to any Non-
Represented Employee of Sellers who is not Actively Employed on the Closing Date
because such employee is on long term disability leave or on Workers'
Compensation, such offer to be made: (a) if and when such employee reports to
work with Buyer, as long as this occurs within six (6) months of the Closing
Date; and (b) as long as such employee is able to perform the essential
functions of the job employed for. Buyer shall have no obligation to offer to
hire any Non-Represented Employee who does not meet the foregoing conditions
described in (a) and (b). Any costs associated with any Non-Represented
Employees who are not Actively Employed and who are not offered employment by
the Buyer will be for the account of Sellers;
16
<PAGE>
(e) Transferred Employees. The term "Transferred Employees" shall
--------------------- ---------------------
refer to (i) all Represented Employees, (ii) all Non-Represented Employees who
are Actively Employed by Sellers and accept offers of employment from and
commence employment with Buyer and (iii) all Non-Represented Employees who are
Employees Not Actively Employed by Sellers, but who subsequently receive offers
of employment from Buyer, and do accept such offers and commence employment with
Buyer;
(f) Service Credit for Transferred Employees. For all Represented
----------------------------------------
Employees who become Transferred Employees, Buyer shall, as required by the
terms of any collective agreement applicable to Sellers' employees, give service
credit for time worked at Sellers for purposes of vesting, eligibility for
participation, eligibility for benefit commencement, pension, medical plans and
vacation entitlement, seniority, determining leave entitlement and for
termination/severance purposes. For all Non-Represented Employees who become
Transferred Employees, Buyer shall give service credit for time worked at
Sellers for purposes of vesting, eligibility for participation, eligibility for
benefit commencement, pension, medical plans and sick leave and vacation
entitlement and for termination/severance purposes. Without limiting the
generality of the foregoing, where a Non-Represented Employee becomes a
Transferred Employee pursuant to Section (d), credit shall be given for pension
purposes from the Closing Date;
(g) Pension Plans. On the Closing Date, Sellers shall assign and
-------------
Buyer shall assume sponsorship of the pension plans and funds listed on Schedule
3.3(g) (the "Assigned Plans"). Buyer shall assume the Sellers' rights and
obligations under the Assigned Plans and under all related agreements. Each of
the parties hereto shall do all things and execute all documents necessary to
give effect to the transfer of sponsorship of the Assigned Plans, including
obtaining any necessary third party consents and making all necessary filings
with any regulatory body. Sellers shall provide to Buyer such information in
respect of members (including both active and inactive members) of the Assigned
Plans as is reasonably required by Buyer or its agents to properly administer
the Assigned Plans;
(h) Other Employee Compensation and Benefit Programs. Sellers
------------------------------------------------
shall retain and be obligated to satisfy all liabilities under the benefit plans
listed on Schedule 3.3(h) (the "Assigned Benefit Plans") for benefits or
compensation to Sellers' employees incurred or arising with respect to the time
period ending on the day immediately preceding the Closing Date, regardless of
when such liabilities are
17
<PAGE>
asserted, and shall, at their own expense, pay or cause its insurance carriers
to pay such liabilities in accordance with the terms and conditions of the
Assigned Benefit Plans or applicable statutes. Buyer shall assume and be
obligated to satisfy all liabilities under the Assigned Benefit Plans for
benefits or compensation to any Transferred Employees or retired employees of
Sellers incurred or arising with respect to the time period commencing on the
Closing Date, or at such later time as the employee accepts employment with the
Buyer in the case of Non-Represented Employees not Actively Employed on the
Closing Date, regardless of when such liabilities are asserted, and shall, at
its own expense, pay or cause its insurance carriers to pay such liabilities in
accordance with the terms and conditions of the Assigned Benefit Plans or
applicable statutes;
(i) Accrued Vacation and Sick Pay. Sellers shall retain any
-----------------------------
obligation for accrued and unused vacation time or sick leave to which Sellers'
employees who do not become Transferred Employees have become entitled up to the
Closing Date. Buyer shall assume responsibility for any accrued and unused
vacation time or sick leave which shall become due and payable to Transferred
Employees as of the Closing Date to the extent reflected as a liability in the
determination of Net Working Capital;
(j) Employment Agreements. Buyer shall assume all obligations of
---------------------
Sellers under the employment and consulting agreements described on Schedule
--------
3.3(j), true copies of which have been provided to Buyer;
- ------
(k) Employee Rights. Nothing contained herein shall confer
---------------
upon any former, current or future employee of Sellers or Buyer or any legal
representative or beneficiary thereof any rights or remedies, including without
limitation, any right to employment or continued employment of any nature, for
any specified period.
3.4 Consent of Third Parties. Nothing in this Agreement shall be
------------------------
construed as an attempt by Sellers to assign to Buyer any Contract, agreement,
Permit, franchise, claim or asset included in the Purchased Assets (i) which is
by its terms or by law non-assignable without the consent of any other party or
parties, unless such consent or approval shall have been given on or prior to
the Closing Date, or (ii) as to which all the remedies for the enforcement
thereof available to Sellers would not by law pass to Buyer as an incident of
the assignments provided for by this Agreement (a "Purchased Asset Requiring
-------------------------
18
<PAGE>
Consent"). Prior to the Closing Date, Sellers shall use their best efforts to
- -------
obtain consents or approvals to the assignment of the Contracts, Open Orders,
Permits, Computer Software Assets and leases or subleases for Leased Real
Property described on Schedule 3.4 (collectively "Material Contracts Requiring
------------ ----------------------------
Consent"). To the extent that any such consent or approval in respect of, or a
- -------
novation of, a Purchased Asset Requiring Consent shall not have been obtained on
or before the Closing Date, the parties hereto shall use reasonable efforts and
shall cooperate in any reasonable arrangement to assure Buyer the benefits of
such Purchased Asset Requiring Consent to the extent permitted by law. To the
extent lawful, practicable and reasonable in the circumstances, including the
obtaining of any such necessary consent or approval after the Closing Date,
Sellers at the request and under the direction of Buyer shall take all
reasonable actions to assure that the rights of Sellers under the Purchased
Asset Requiring Consents shall be preserved for the benefit of Buyer to the
extent not involving any undue hardships upon Sellers or unreasonable time
constraints in the request or compliance with such instructions. Buyer and
Sellers shall jointly cooperate in attempting to obtain any consents required in
connection with the transactions contemplated by this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF SELLERS.
Sellers jointly and severally hereby represent and warrant to Buyer
that:
4.1 Organization and Good Standing. Sellers are corporations duly
------------------------------
organized, validly existing and in good standing under the Canada Business
Corporations Act, in the case of PNG Products and the laws of Quebec in the case
of PNG Enveloppe, with full corporate power and authority to carry on the
Business as presently conducted by it.
As used in this Agreement except as mentioned under Section
8.12, a "Material Adverse Change" shall mean any change that results in a
-----------------------
Material Adverse Effect, and a "Material Adverse Effect" shall mean, for the
- ----------------------- -----------------------
period from the date of this Agreement until the Closing Date, a decrease of
more than $100,000 in the book value of the Purchased Assets.
4.2 Corporate Authority. Sellers have full corporate power and
-------------------
authority to execute and deliver this Agreement and all documents to be executed
by Sellers contemplated herein or necessary to
19
<PAGE>
give effect to the transaction contemplated herein (the "Sellers Documents"),
-----------------
to perform all the terms and conditions hereof and thereof to be performed by it
and to consummate the transactions contemplated hereby and thereby. This
Agreement and the Sellers Documents have been duly authorized and approved by
all necessary and proper corporate action of Sellers (other than necessary
shareholder approval which shall be obtained after the execution of this
Agreement but prior to Closing) and constitute, or will upon execution thereof
constitute, the valid and binding obligations of Sellers enforceable in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws or equitable principles from time to time in effect relating to or
affecting the rights of creditors generally.
4.3 No Violation. Subject to the fulfilment of the conditions in
Section 9.5 hereof, neither the execution and delivery by Sellers of this
Agreement or the Sellers Documents and the performance by Sellers hereunder or
thereunder, nor the consummation of the transactions contemplated hereby or
thereby, will violate, conflict with, result in the breach of or accelerate the
performance required by any of the terms, conditions or provisions of the
Certificate of Incorporation or By-laws of Sellers or any material covenant,
agreement or understanding to which Sellers are a party or any order, ruling,
decree, judgment, arbitration award or stipulation to which Sellers are subject,
that would result in the creation or imposition of any Liens upon any of the
Purchased Assets or allow any Person to accelerate any debt secured by any
Purchased Assets except as reflected as a liability for purposes of determining
the Net Working Capital as finally determined pursuant to Section 2.2.
4.4 Consents and Approvals of Governmental Authorities and Others.
-------------------------------------------------------------
Except as disclosed on Schedule 4.4 and other than any filings or registrations
------------
to perfect or record the transfer of any Purchased Assets to Buyer, no approval
or authorization of, filing or registration with, or notification to, any
Governmental Authority other than the Competition Bureau (Canada) is required in
connection with the execution and delivery of this Agreement or the Sellers
Documents by Sellers or the performance of their obligations hereunder or
thereunder or the consummation of the transactions contemplated hereby or
thereby. Except for the approval of the Shareholders of PNG Products or as
disclosed on Schedule 4.4, no consent, approval or authorization of any Person
------------
is required in connection with the execution, delivery or performance of this
Agreement by Sellers, the transfer to Buyer of the tangible personal property
included in the Purchased Assets or the assignment of the Material Contracts
Requiring Consent or the performance by Sellers of its indemnification
obligations under Section 11 of this Agreement.
20
<PAGE>
4.5 Financial Statements. The audited financial statements of Sellers
--------------------
for the year ended December 31, 1995 ("1995 Financial Statements") and internal
unaudited financial statements for the 8-month period ending August 30, 1996 are
both attached as Schedule 4.5 have been prepared in accordance with GAAP
consistently applied throughout the period involved to the extent applicable,
and present fairly in all material respects the financial condition, results of
operations and cash flows of Sellers as at and for the period covered thereby,
subject only to normal year-end adjustments, in each case, except as may be
noted therein.
All books of account and other financial records of Sellers directly
relating to the Business (the "Books and Records") have been made available to
-----------------
Buyer.
4.6 Claims; Compliance with Laws. Except as disclosed on Schedule
---------------------------- --------
4.6 or with respect to Claims involving Environmental Laws which are covered in
- ---
Section 4.22, Sellers are not engaged in, or a party to, or threatened with, any
Claim relating to the Business or the Purchased Assets, and Sellers do not know
of any basis for any such Claim. There are no outstanding orders, rulings,
decrees, judgments or stipulations or proceedings relating to the Business or
the Purchased Assets to which Sellers are a party or by which Sellers are bound,
by or with any court, government, arbitrator or administrative agency. Except
with respect to Environmental Laws, which are addressed in Section 4.22, Sellers
have been and are operating the Business, and the Purchased Assets have been and
are in compliance with the requirements of all federal, provincial, municipal,
regional and local laws, statutes, regulations, charters, ordinances, by-laws,
rules, guidelines, directives, policies, judgments, injunctions, decrees, court
orders and administrative orders, in each case, of any Governmental Authority
("Laws").
4.7 Intellectual Property. The Intellectual Property, Related
---------------------
Rights, Technical Information and Computer Software Assets include all
intellectual property and proprietary rights that are necessary to operate the
Business as currently conducted by Sellers. Sellers own all Intellectual
Property, Related Rights, Technical Information and Computer Software Assets,
including the lawful right to use same, and no material rights under any patent,
trade secret or other proprietary information or computer software license known
to Sellers, is required in order to conduct the Business as currently conducted
or to manufacture and sell any product manufactured and sold by the Business.
Sellers neither own nor have rights in any patents. Except as described on
Schedule 4.7, all copyrights (where such registration is
- ------------
21
<PAGE>
permitted or required by applicable law), trademarks, tradenames and service
marks included in the Intellectual Property are registered to or owned by or
licensed to Sellers. There are no pending or, to the knowledge of Sellers,
threatened Claims against Sellers for infringement of any patents, copyrights,
trademarks, tradenames or service marks. All licenses permitting Sellers to use
any Intellectual Property, Related Rights, Technical Information or Computer
Software Assets are in full force and effect.
4.8 No Prior Sale or Licensing of Purchased Assets. Except as
----------------------------------------------
disclosed on Schedule 4.8, neither of the Sellers is a party to any license with
------------
respect to, and has not made any sale, pledge or other transfer of, and has not
granted any rights or options to purchase or acquire, all or any part of the
Purchased Assets, except to Buyer as contemplated by this Agreement.
4.9 Certain Fees. Neither of the Sellers nor any of its officers,
------------
directors, employees or other affiliates has agreed to pay or has incurred any
Claims for any brokerage fees, commissions or finders' fees in connection with
the transactions contemplated hereby. Sellers acknowledge that Buyer or any of
its officers, directors, employees or other affiliates are not responsible for
any and all Claims related to Societe Immobiliere Axim Inc, and Whalen, Beliveau
& Associates, Inc. and Sellers will indemnify, defend and hold Buyer harmless
for the Claims of either and related matters.
4.10 Title to Purchased Assets.
--------------------------
(a) The leases for the Leased Real Property and all leases of
personal property included in the Purchased Assets, assuming they are binding
and enforceable against the other parties thereto, are binding and enforceable
against Sellers in accordance with their respective terms. Except as set forth
on Schedule 4.10(a), there is not, under any such lease, any existing default
----------------
by Sellers, or a Claim made to Sellers by any other party to any such lease that
the lease is unenforceable. All commissions payable by Sellers under or with
respect to any such lease have been paid.
(b) The use to which the Owned Real Property is put is not
subject to any restriction or condition that could result in a Material Adverse
----------------
Effect and conforms to all zoning, subdivision and/or planning regulations, fire
- ------
and safety regulations, to the requirements of the relevant local authorities
and to all Laws governing such Owned Real Property or use thereof, the violation
of which could result in a
22
<PAGE>
Material Adverse Effect. Sellers have not received notice of any such
- -----------------------
violation from any court or Governmental Authority or of taking by eminent
domain or condemnation proceeding.
(c) Sellers have good and marketable title to the Owned Real
Property, and all right, title and interest in, all personal properties and
assets included in the Purchased Assets, and will transfer and convey the
Purchased Assets to Buyer, free and clear of all Liens referred to on Schedule
4.10(c) under "Liens to be Discharged", except for the following (all of which
are collectively called "Permitted Liens" and are also referred to on Schedule
---------------
4.10(c) under "Permitted Liens") (i) Liens for current taxes, rules, assessments
or similar governmental charges or levies not yet due and payable; (ii) with
respect to Owned Real Property, any of the following which are not substantial
in character, amount or extent and do not detract from the value or interfere
with the present use of the real properties subject thereto or affected thereby,
or otherwise impair the operation of the Business materially or from a material
point of view: matters disclosed on a survey (including, without limitation,
encroachments, easements and rights-of-way) utility easements, rights of way,
zoning restrictions and other imperfections of title, if any and any subsisting
provisos, restrictions, limitations, conditions, exceptions and reservations in
any original grants from the Crown and any statutory limitations, exceptions,
reservations and qualifications; and (iii) Liens which are Assumed Liabilities.
As used in this Agreement, "Liens" shall mean and include all mortgages, liens,
-----
pledges, charges, title retention or security agreements, claims, restrictions,
leases, options, rights of first offer or first refusal, confidentiality or
secrecy agreements, non-solicitation and non-competition agreements, defects of
title or other encumbrances or rights of others.
(d) All the tangible Purchased Assets and all tangible personal
property leased by Sellers under leases included in the Purchased Assets are
used and operated in conformity with all applicable laws and regulations, the
violation of which could have a Material Adverse Effect, and are in good
-----------------------
operating order and condition, subject to reasonable wear and tear.
(e) The Purchased Assets include all tangible and intangible
personal property which are necessary or related to the operation of the
Business as currently operated by Sellers, except the Excluded Assets.
4.11 Technical Information. On the Closing Date, Sellers will have
---------------------
delivered all patterns, manufacturer's manuals and copies of all other Technical
Information in its possession to Buyer.
23
<PAGE>
4.12 Inventory.
---------
(a) The Inventory (whether finished or unfinished, to which title
has not yet passed, or which has not been delivered, to a customer) consists of
items, which are of a quality and quantity useable or saleable in the normal
course of the Business, are (i) in the case of finished goods, valued at the
lower of cost on a first in, first out basis or net realizable value, and (ii)
in the case of raw materials, are valued at the lower of average cost on a first
in, first out basis or replacement value, both in accordance with GAAP
consistently applied;
(b) All items of Inventory which are (i) not in saleable
condition, obsolete or defective or (ii) have been in stock for more than twelve
(12) months, shall be valued at zero (0).
(c) all items of Inventory which are raw materials and have been
in stock for more than six (6) months and less than twelve (12) months shall be
valued at 50% of the amount set out in 4.12(a)(ii).
(d) all items of Inventory which are finished goods and have been
in stock for more than six (6) months and less than twelve (12) months shall be
presumed obsolete and valued at zero (0) unless there exists a sufficient
explanation for lack of movement of such items.
4.13 Contracts. A true and correct copy of each written material
---------
Contract has previously been made available to Buyer, except for sales
agreements which shall be provided to Buyer following execution hereof. All
Contracts, assuming they are binding and enforceable against the other parties
thereto, are binding and enforceable against Sellers, and neither Sellers nor,
to Sellers' knowledge, any other party to any such Contracts is in default
thereunder.
4.14 Open Orders. All Open Orders, assuming they are binding and
-----------
enforceable against the other parties thereto, and are binding and enforceable
against Sellers, and neither Sellers nor, to Sellers' knowledge, any other party
thereto is in default thereunder.
24
<PAGE>
4.15 Accounts Receivable. All of the Accounts Receivable arose in
-------------------
bona fide transactions in the ordinary course of the Business.
- ---- ----
4.16 Equipment. The Equipment listed in Schedule 1.1(c) represents
---------
all of the material Equipment pertaining to the Business and the Equipment
purchased pursuant hereto is all Equipment owned by Sellers, pertaining to the
Business wherever situated.
4.17 Permits and Licenses. Except as disclosed in Schedule 4.17:
--------------------
(a) The Acquired Permits, if any, are the only permits,
certificates, authorizations, franchises, licenses or registrations or other
approvals necessary for the operation of the Business with respect to the
Purchased Assets pursuant to applicable Laws;
(b) Sellers have no knowledge and have received no notice that
any other permit, certificate, authorization, franchise, license, registration
or other approval is required to be obtained to operate the Business with
respect to the Purchased Assets;
(c) All Acquired Permits, if any, are in full force and effect
and, to Sellers' knowledge, no suspension or cancellation of any have been
threatened;
(d) The Sellers are in compliance with all the material terms and
conditions of the Acquired Permits, if any, with respect to the Business and the
Purchased Assets;
(e) No Claims have been made in writing by any Governmental
Authority or other Person relating to the Acquired Permits, if any, and no such
Claim is contemplated by any Governmental Authority or other Person nor does any
basis therefor exist.
4.18 Insurance. Set forth on Schedule 4.18 is a list and
--------- -------------
description of all insurance policies held by or on behalf of Sellers as of the
date hereof covering the Business, and have not received any notice of actual or
proposed cancellation or of reduction in coverage of, or of any increase in
premium
25
<PAGE>
under, such policies of insurance. Sellers shall maintain in effect all such
insurance until the Closing Date.
4.19 Claims. Except as set forth on Schedule 4.19, there is not
------ -------------
presently any Claim pending, or to Sellers' knowledge, threatened, against
relating to the operation of the Business or the Purchased Assets up to and
including the Closing Date.
4.20 Absence of Sensitive Payments. Sellers have not made any
-----------------------------
contributions, payments or gifts to or for the private use of any governmental
official, governmental employee or governmental agent in any amount where either
the payment or the purpose in making such contribution, payment or gift is
illegal under the laws of Canada or any other jurisdiction; Sellers have not
established or maintained any unrecorded fund or asset for any purpose or made
any false or artificial entries on its books; and Sellers have not made any
payments to any Person with the intention or understanding that any part of such
payment was to be used for any purpose other than that described in the document
supporting the payment.
4.21 Taxes. Except as described on Schedule 4.21, each of the
----- -------------
Sellers has duly and timely filed all Income Tax returns required to be filed by
it or for which it may be held responsible, and has paid all Income Taxes and
other taxes, interest, penalties, duties, assessments and deficiencies due and
payable by it, in each case, which would if not so filed or paid have resulted
or would result in the imposition of a Lien on the Purchased Assets.
4.22 Environmental Issues. Except as set forth in Schedule 4.22:
-------------------- -------------
(a) the Business and the Purchased Assets have been and are in
compliance with all Laws in any way relating to the environment, the protection
of the environment and to occupational health and safety ("Environmental Laws")
(environment has the meaning ascribed to it by any Environmental Law);
(b) all permits, certificates, licences, authorizations,
registrations and other approvals, including the Acquired Permits, required
under applicable Environmental Laws for the operation of the Business and the
Purchased Assets ("Environmental Permits") have been obtained and are
---------------------
26
<PAGE>
presently held by Sellers. The Environmental Permits are listed in Schedule
--------
4.22. Sellers are in compliance with all the terms and conditions of the
- ----
Environmental Permits with respect to the Business and the Purchased Assets. All
Environmental Permits are in full force and effect and are not subject to any
appeals or further proceedings or to any unsatisfied conditions. No
modification, suspension, recision, relocation or cancellation of any
Environmental Permit is pending or threatened to the knowledge of the Sellers;
(c) No Hazardous Substances are present at, in or under the
Purchased Assets or any property currently owned, operated, occupied or leased
by the Sellers constituting part of the Business or the Purchased Assets, the
presence of which would constitute a violation of applicable Environmental Laws.
("Hazardous Substances" shall mean hazardous substances, pollutants,
--------------------
contaminants or other substances regulated under applicable Environmental Laws);
(d) Sellers have not received (a) a written request for
information, notice of Claim, demand or other written notification with respect
to the Purchased Assets or the Business from any Governmental Authority or
person that it is or may be potentially responsible with respect to any
environmental matter, including investigation or clean-up of any threatened or
actual release of any Hazardous Substance, with respect to the Purchased Assets
or the Business, or (b) any other written notice that it has been identified in
any litigation, administrative proceeding or investigation as a responsible
party or a potentially responsible party for any liability under any
Environmental Law with respect to the Purchased Assets or the Business. To the
best of Sellers' knowledge, there is no event or act based on which such request
for information, notice of Claim, demand, notification or other notice is
threatened or could be sent to Sellers with respect to the Purchased Assets or
the Business. ("Governmental Authority" shall mean any federal, provincial,
----------------------
municipal governmental authority in Canada, including any court, tribunal,
agency, bureau, committee, board, commission or instrumentality constituted or
appointed by any such authority);
(e) Sellers have never filed any notice under any Environmental Law
reporting a discharge, emission, spill, leak or any form of release of Hazardous
Substances with respect to the Purchased Assets or the Business;
27
<PAGE>
(f) Sellers have not entered into any negotiations or agreements
with any Governmental Authority or Person relating to any response action or
other cleanup or remediation of any Hazardous Substance with respect to the
Purchased Assets or the Business;
(g) There are no pending, nor have Sellers ever been the object
of or received written notice of any, Claims or investigations or inspections
affecting the Business or the Purchased Assets arising out of or related to
property damage or personal injury as a result of any alleged acts, omissions,
circumstances or conditions which would give rise to any liability under any
Environmental Law;
(h) Sellers are not subject to or affected by any administrative
or judicial judgments, consents, decrees or orders relating to any Environmental
Laws which affect the Business or the Purchased Assets.
(i) No PCB's, asbestos, radioactive materials or urea
formaldehyde insulation is present at, in or under the Purchased Assets or any
property currently owned, operated, occupied or leased by the Sellers with
respect to the Business, whether above ground, underground or within any
structure thereon or contained in any equipment currently owned, operated or
leased by the Sellers with respect to the Business; nor are there any
underground or above ground storage tanks, active or abandoned, at, in or under
the Purchased Assets or any property currently owned, operated, occupied or
leased by the Sellers with respect to the Business;
(j) All wastes, effluents and air emissions affecting the
Purchased Assets have been and are handled, stored, treated, transported and
eliminated in compliance with applicable Environmental Laws other than non-
compliance which does not have a Material Adverse Effect.
-----------------------
4.23 Ownership and Location of Purchased Assets. The Purchased
------------------------------------------
Assets are all the assets of Sellers pertaining to the Business and their
existence and location have been disclosed to Buyer in the Schedules to this
Agreement.
28
<PAGE>
4.24 Benefit Plans.
-------------
(a) All bonus, deferred compensation, incentive compensation,
share purchase, share option, stock appreciation, phantom stock, savings, profit
sharing, severance or termination pay, health or other medical, life, disability
or other insurance (whether insured or self-insured), supplementary unemployment
benefit, pension, retirement, supplementary retirement and every other benefit
plan, programme, agreement or arrangement including vacation, sick leave and
leave of absence policies (whether written or unwritten) maintained or
contributed to by Sellers for the benefit of any of their employees or their
dependants or beneficiaries (the "Benefit Plans") are listed in Schedule
4.24(a), Sellers have delivered to Buyer true, complete and up-to-date copies
thereof and all amendments thereto together with, as applicable, all funding
agreements, all summary descriptions of the Benefit Plans provided to past or
present participants therein, the most recent actuarial report, the financial
statements relating thereto, if any, and evidence of any registration in respect
thereof;
(b) Except as disclosed in a letter dated August 1, 1996 from
William M. Mercer Ltd., a copy of which has been provided to Buyer (the
"Mercer Letter") and is annexed hereto as Schedule 4.24(b), Sellers have no
-------------
knowledge of any fact, condition or circumstance since the date of the documents
provided in accordance with Section 4.24(a) above which would materially affect
the information contained therein and, in particular, and without limiting the
generality of the foregoing, no promises or commitments have been made by the
Sellers to amend any Benefit Plan or to provide increased benefits thereunder to
any of Sellers' employees except as required by law;
(c) All of the Benefit Plans are, and have been since their
establishment, duly registered where required by legislation (including
registration with the relevant tax authorities where such registration is
required to qualify for tax exemption or other beneficial tax status) and are in
good standing under, and in material compliance with, all applicable legislation
and administrative guidelines issued by the regulatory authorities;
(d) Any Benefit Plan that is a pension plan registered under the
Income Tax Act (Canada) which has been created as a result of the division of a
predecessor pension plan or the merger of one or more pension plans, has
received any approval which is required therefor from all appropriate regulatory
authorities;
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(e) No investment held in respect of a Benefit Plan is a
prohibited investment under the terms of the Benefit Plan and all supporting
documents, and each Benefit Plan has or had the power and authority to make each
investment and is permitted under the terms of the Benefit Plan and all
supporting documents to continue to hold such investments;
(f) Except as permitted by the Benefit Plans and applicable
legislation, there has been no withdrawal of surplus assets or any other amounts
from any of the Benefit Plans other than proper payments of benefits to eligible
beneficiaries, and refunds of over-contributions to plan members and Sellers;
(g) To the best of Sellers' knowledge, the past employer
contribution holidays have been permitted by the terms of the Benefit Plans and
have been in accordance with applicable legislation.
(h) There are no material outstanding defaults or violations by
Sellers of any obligation required to be performed by them in connection with
any Benefit Plan and, to the knowledge of Sellers, no order has been made or
notice given pursuant to any applicable legislation requiring (or proposing to
require) Sellers to take (or refrain from taking) any action in respect of any
Benefit Plan;
(i) All employer and, if applicable, employee contributions under
the Benefit Plans (including, without limitation, all current service costs and
any special payments required to be made) have been remitted in a timely manner
(other than current contributions not in arrears), and the Pension Plan for
Salaried Employees of PNG Products Inc. Pac National Group (amended and restated
as at January 1, 1992) has no past service funding liabilities and is fully
funded on both an ongoing and a solvency basis using the methods and assumptions
set out in the most recent actuarial report, which report shall be listed in
Schedule 4.24(i);
(j) All returns, filings, reports and disclosures relating to the
Benefit Plans required pursuant to the terms of the Benefit Plans, applicable
legislation or any regulatory authority, have been filed or distributed in
accordance with all requirements, and all filing fees and levies imposed on the
Benefit Plans by regulatory authorities or applicable legislation have been made
on a timely basis;
30
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(k) With respect to the Benefit Plans, there are no actions,
suits, claims, trials, demands, investigations, arbitrations or other
proceedings pending against Sellers, or to the knowledge of Sellers, against the
funding agent or the fund of such Benefit Plans, or, to the knowledge of
Sellers, threatened, other than claims for benefits in the ordinary course or as
disclosed in writing by Sellers to Buyer;
(l) To the knowledge of Sellers, no step has been taken, no event
has occurred and no condition or circumstance exists that has resulted or could
reasonably result in any Benefit Plan being ordered or required to be terminated
or wound-up in whole or in part or having its registration under any applicable
legislation being refused or revoked or being placed under the administration of
any trustee or receiver or any regulatory authority or being required to pay any
material taxes or penalties under any applicable legislation;
(m) None of the Assigned Plans is a multiemployer pension plan;
(n) The consummation of the transaction contemplated by this
Agreement shall not constitute an event under any Benefit Plan that shall or may
result in any acceleration, vesting or increase in benefits with respect any
employee or in the funding requirements of any Benefit Plan.
4.25 Trade Names. Sellers do not conduct the Business under any
-----------
name other than "PNG Products", "PNG Enveloppe Internationale" and "Globe
Envelope".
4.26 Employees. Schedule 4.26 contains a complete list of all
--------- -------------
Represented Employees and all Non-Represented Employees to be offered employment
by Buyer setting out each employee's title, age, length of service, salary,
bonus or commission and any Benefits Plans to which such employee is entitled
and indicating whether such employee is covered by a collective agreement.
4.27 Labour Matters.
--------------
(a) Except as disclosed in Schedule 4.27(a), no trade union,
counsel of trade unions, employee bargaining agency or affiliated bargaining
agent:
31
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(i) holds bargaining rights with respect to the Purchased
Assets by way of certification, interim certification,
voluntary recognition, designation or successor rights;
(ii) has, to the best of the Sellers' knowledge, applied to
be certified as the bargaining agent of any of the Non-
Represented Employees; or
(iii) has, to the best of the Sellers' knowledge, applied to
have Sellers declared a related employer or a successor
employer pursuant to any labour or employment
legislation;
(b) Except as disclosed in Schedule 4.27(b), there are, to the
best of the Sellers' knowledge, no actual, threatened or pending organizing
activities of any trade union, counsel of trade unions, employee bargaining
agency, affiliated bargaining agent or employee association or any actual,
threatened or pending unfair labour practice complaints pertaining to the
Purchased Assets, nor have there been any such activities or complaints within
the last three years;
(c) Except for such indebtedness as is disclosed in Schedule
4.27(c), no director, officer, shareholder or employee, past or present, holding
office or shares of or employed in connection with the Purchased Assets or of
any person not dealing at arm's length within the meaning of the Income Tax Act
(Canada) with any such person is indebted to the Sellers;
(d) All vacation pay for Represented Employees and Non-
Represented Employees is properly reflected and accrued in the books and
accounts of the Sellers.
(e) Sellers have provided to Buyer all up-to-date documents
pertaining to compensation practices, benefits and other terms and conditions of
employment of all Represented Employees and Non-Represented Employees and have
fully disclosed to the Buyer the terms pertaining thereto;
32
<PAGE>
(f) Sellers have prepared and posted a Pay Equity Plan for all
Represented Employees and Non-Represented Employees in Ontario as required by
the Pay Equity Act (Ontario), which Pay Equity Plan is attached hereto as
Schedule 4.27(f).
4.28 Registration. Sellers are registered under Part IX of the
-----------
Excise Tax Act and hold respectively registration numbers 129406526 for PNG
Products and R101487791 for PNG Enveloppe; PNG Products is registered in Ontario
under PST 1479-2052 and PNG Enveloppe in Quebec under QST 1001049409.
4.29 Residency. None of the Sellers is a non-resident of Canada for
---------
the purposes of section 116 of the Income Tax (Canada) or section 1097 of the
Taxation Act (Quebec) and none of the proceeds of the sale will be received for
or on behalf of any person who is a non-resident of Canada for the purposes of
such legislation.
5. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Sellers as follows:
5.1 Organization, Good Standing and Corporate Authority. Buyer is a
---------------------------------------------------
corporation duly incorporated, validly existing and in good standing under the
Canada Business Corporations Act, has full corporate power and authority to
execute and deliver this Agreement and all documents to be executed by Buyer
contemplated herein or necessary to give effect to the transaction contemplated
herein (the "Buyer Documents"), to perform all the terms and conditions hereof
and thereof to be performed by it and to consummate the transactions
contemplated hereby and thereby. This Agreement and the Buyer Documents have
been duly authorized and approved by all necessary and proper corporate action
of Buyer and constitute, or will upon execution thereof constitute, the valid
and binding obligations of Buyer, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws or equitable
principles from time to time in effect relating to or affecting the rights of
creditors generally.
33
<PAGE>
5.2 No Violation. Except for consents required under Buyer's senior
------------
loan agreements (which consents will be obtained prior to Closing) neither the
execution and delivery by Buyer of this Agreement or the instruments of transfer
and other documents delivered or to be delivered pursuant hereto by Buyer and
the performance by Buyer hereunder or thereunder, nor the consummation of the
transactions contemplated hereby or thereby, will violate, conflict with, result
in the breach of or accelerate the performance required by any of the terms,
conditions or provisions of the Certificate of Incorporation or By-laws of Buyer
or any covenant, agreement or understanding to which Buyer is a party or any
order, ruling, decree, judgment, arbitration award or stipulation to which Buyer
is subject, or constitute a default thereunder.
5.3 Consents and Approvals of Governmental Authorities and Others.
-------------------------------------------------------------
Other than has been obtained, no approval or authorization of, filing or
registration with, or notification to, any Governmental Authority is required in
connection with the execution and delivery of this Agreement or the other
documents delivered or to be delivered pursuant hereto by Buyer or the
performance of its obligations hereunder or thereunder or the consummation of
the transactions contemplated hereby or thereby.
5.4 Certain Fees. Neither Buyer nor any of its officers, directors,
------------
employees or other affiliates has agreed to pay or has incurred any Claims for
any brokerage fees, commissions or finders' fees in connection with the
transactions contemplated hereby, including any fees or commissions to Societe
Immobiliere Axim Inc. or Whalen, Beliveau & Associates.
5.5 Sales and Transfer Taxes. The Buyer is registered under Part IX
------------------------
of the Excise Tax Act (Canada) and holds registration number 140852179RT and is
registered under the Act respecting the Quebec Sales Tax and holds registration
number 1018155482TQ0001.
34
<PAGE>
6. COVENANTS.
6.1 Joint Elections.
---------------
(a) The Sellers and the Buyer will, as at the Closing Date,
jointly execute elections, in prescribed form and containing the prescribed
information, to have subsection 167(1.1) of the Excise Tax Act (Canada) and
section 75.1 of the Act respecting the Quebec Sales Tax apply to the sale and
purchase of the Purchased Assets hereunder so that no tax is payable in respect
of such sale and purchase under Part IX of the Excise Tax Act (Canada) or
section 16 of the Act respecting the Quebec Sales Tax. The Buyer will file such
elections with the Minister of National Revenue and the Quebec Ministry of
Revenue within the times prescribed by the Excise Tax Act (Canada) and The Act
respecting the Quebec Sales Tax, respectively;
(b) the Sellers and the Buyer will, within six months of the
Closing Date, jointly execute elections under subsection 22(1) of the Income Tax
Act (Canada) and section 184 of the Taxation Act (Quebec) in the form prescribed
for such purpose in respect of all Accounts Receivable sold by the Sellers
pursuant to this Agreement. Such election will designate the portion of the
Purchase Price, as adjusted pursuant to this Agreement, allocated to such
Accounts Receivable as the consideration paid by the Buyer therefor.
(c) Buyer shall pay, in addition to the Purchase Price, all
applicable consumption, sales or transfer taxes arising from the purchase and
sale of the Purchased Assets, including, without limitation, goods and services
tax, provincial sales tax and land transfer tax.
6.2 Property Taxes. All applicable real and personal property taxes
--------------
levied or assessed against the Purchased Assets for the period up to and
including midnight preceding the Closing Date shall be either paid by Sellers or
accruals of any material amount therefor shall exist on Sellers' books and
records. The land transfer tax shall be payable by Buyer on registration of the
deed in respect of the conveyance of the Owned Real Property from PNG Products
to Buyer.
35
<PAGE>
6.3 Approvals; Consents.
-------------------
(a) Subject to Section 3.4, Sellers shall use their reasonable
efforts to obtain the consents of all other parties to all leases of Leased Real
Property in a form similar to the two specimens of the Consent of Landlord and
Estoppel Certificate annexed as Schedule 6.3, to which form Buyer may consider
reasonable modifications, and to all Contracts, Open Orders, Permits and rights
of Sellers, which require the consent of such parties for the consummation of
the transactions contemplated hereby. Sellers agree to assist Buyer with filing
all necessary applications and transferring or obtaining all Acquired Permits
and to execute such further documents or other statements or provide such
further information to Buyer, Persons or Governmental Authority as may be
required.
(b) Buyer will promptly file and use their reasonable efforts to
have issued to it, and shall make such filings as may be required in connection
with the transfer to Buyer by Sellers of, all Acquired Permits including
Environmental Permits, if any, relating to the Business that are currently
maintained by Sellers and which are required to be obtained by an owner or
operator of the Business.
6.4 Preservation of Business Organization. From the date of
-------------------------------------
execution of the Agreement and until Closing (the "Interim Period"), Sellers
--------------
will conduct the Business in the ordinary course, in compliance with all
applicable laws, rules and regulations, the noncompliance with which could have
a Material Adverse Effect, and will use its best efforts to preserve Sellers'
-----------------------
business relationships intact and to preserve the goodwill of the Business with
its employees, suppliers, customers and others having business relations with
it.
6.5 Approval of Certain Transactions. Except as specifically
--------------------------------
contemplated by this Agreement, without the prior written consent of Buyer,
Sellers will not, during the Interim Period, in the conduct of the Business:
(a) incur or agree to incur any liability or obligation or enter
into any agreement or transaction which cannot be cancelled upon sixty days (60)
notice, or which contains indemnity obligations of any kind by either Seller;
36
<PAGE>
(b) incur any additional indebtedness for capital or operating
lease obligations or incur or agree to incur any other liability or obligation
which would constitute an Assumed Liability;
(c) fail to manage the Business' operations in a prudent,
businesslike manner.
(d) mortgage, pledge, sell, lease, distribute, dispose of or
otherwise encumber or convey any interest in any Purchased Assets other than
sales of Inventory in the ordinary course of business;
(e) enter into any contract or commitment which includes
obligations or disbursements of greater than $100,000 in connection with the
Business or the Purchased Assets;
(f) waive or release any material rights with respect to the
Purchased Assets or the Business;
(g) change its methods of accounting in respect of the Business;
(h) except as required by an employment agreement listed in
Schedule 3.3(j) or a collective agreement listed in Schedule 3.3(a) or by
applicable law, adopt or modify any bonus, pension, profit sharing or other
compensation or employee benefit plan or enter into or modify any Contract or
terms and conditions of employment, in each case with respect to any Transferred
Employees; or
(i) take any other action (i) which would result in a Material
--------
Adverse Change or (ii) which if taken prior to the date hereof would constitute
- --------------
a breach of any representation or warranty in any material respect contained in
Section 4 of this Agreement.
6.6 Exclusive Dealing. After the date of this Agreement and until
-----------------
November 27, 1996, Sellers will not:
(a) solicit or initiate discussions or engage in negotiations
with any Person other than Buyer (whether or not such discussions are initiated
by Sellers), with respect to the possible acquisition of
37
<PAGE>
Sellers or the Purchased Assets by such Person (whether by merger, purchase of
capital stock, purchase of assets or otherwise);
(b) provide any information with respect to Sellers, the Business
or the Purchased Assets to any Person other than Buyer relating to the possible
acquisition of Sellers, the Business or the Purchased Assets by such Person
(whether by merger, purchase of capital stock, purchase of assets or otherwise);
or
(c) enter into a transaction with any Person other than Buyer
concerning the possible acquisition of Sellers, the Business or the Purchased
Assets by such Person (whether by merger, purchase of capital stock, purchase of
assets or otherwise).
6.7 Further Assurances. From time to time after the Closing, at
------------------
Buyer's request and without further consideration, Sellers will, consistent with
Section 3.4, execute and deliver such other and further instruments of
conveyance, assignment and transfer, and take such other action, as Buyer may
reasonably request for the more effective conveyance and transfer of the
Purchased Assets to Buyer. To the extent that the assignment of confidentiality,
non-solicitation and non-competition agreements to Buyer is not enforceable
against the other parties to such agreements, Sellers shall use their best
efforts, consistent with Section 3.4, to enforce such agreements with respect to
the Business.
6.8 Access to Offices, Officers, Accountants, Due Diligence, Etc.
-------------------------------------------------------------
Sellers will afford to the officers and authorized representatives of Buyer
(including without limitation, attorneys, accountants, surveyors, building
inspectors, engineers, environmental consultants, insurance brokers, financial
advisors and bankers) access to the offices, officers, properties, books and
records of Sellers and the Business, including contact with attorneys,
accountants and other representatives of Sellers, and will furnish Buyer with
such additional financial and operating data and other information as to the
Business and Purchased Assets, including all information regarding employees and
independent workers, as Buyer may from time to time reasonably request.
Investigations conducted by Buyer and its agents shall be conducted in such a
manner as to minimize, to the extent reasonably practicable, the disruption of
orderly business operations of Sellers and properties examined shall be returned
to their preexamination condition by Buyer.
38
<PAGE>
6.9 Receivables. If, after the Closing, any monies or other assets
-----------
are received by Buyer to which Sellers are entitled, Buyer shall hold such
monies and assets in trust for Sellers and shall account for and pay the same to
Sellers within 20 days after receipt. If, after the Closing, any monies or other
assets are received by Sellers to which Buyer is entitled (including without
limitation, monies or assets resulting from collection of Accounts Receivable
and the sale of Inventory), Sellers shall hold such monies and assets in trust
for Buyer and shall account for and pay the same to Buyer within 20 days after
receipt.
6.10 Securities Filings. Sellers acknowledge that Buyer or one or more
------------------
of its Affiliates is required to file reports and other documents in the United
States under the American federal and various state securities laws, rules and
regulations to which they are subject. Upon request of Buyer and at Buyer's
expense, Sellers shall cooperate with Buyer or any such Affiliate in any
reasonable manner to assist Buyer in obtaining any and all audited and unaudited
financial statements and other information (including, without limitation, any
opinions, certificates, consents or schedules related thereto) relating to the
Purchased Assets, the Business or the Assumed Liabilities which may be required
in connection with such filings, and Sellers shall permit, and use their
reasonable efforts to cause their accountants subject to receipt by them, of all
required releases, to give to Buyer and its auditors access to their working
papers for purposes hereof. Sellers shall cooperate with Buyer in permitting
Buyer or its representatives to take such physical inventories as Buyer may
require, shall make Sellers' personnel available to assist Buyer or such
representatives with respect thereto, and shall give Buyer and its
representatives access to the locations of such inventories for such purpose.
6.11 Accountants' Consent. Upon request in writing by Buyer, Sellers
--------------------
shall cooperate with Buyer at Buyer's expense in obtaining the assistance of
their accountants with respect to the filing of any or all financial information
respecting the Business with the United States Securities and Exchange
Commission.
6.12 Change of Name. No more than 30 days following the Closing Date,
--------------
Sellers shall change their corporate names to ones not including the words "PNG
Enveloppe", "PNG Products", "PAC National Group" or words similar thereto.
6.13 Environmental Site Assessment. Sellers shall bear the cost of a
-----------------------------
Phase I environmental site assessment to be completed by Pilko & Associates Inc.
at the Owned Real Property and each of the
39
<PAGE>
Leased Real Properties designated by Buyer and its lenders, up to a maximum of
$50,000 payable as at the Closing Date.
6.14 Preparation of Tax Returns. Buyer and Sellers shall cooperate
--------------------------
fully in connection with the preparation and filing of the tax returns pursuant
to Section 2.4 and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and the provision of any
records and information which are relevant to any such filings, audit,
litigation, or other proceeding and making employees available to provide
additional information and explanation of any material provided hereunder. Buyer
agrees (a) to retain all books and records relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations, including any extensions thereof, of the respective taxable
periods, and to abide by all record retention agreements entered into with any
taxing authority, (b) to give Sellers written notice prior to transferring,
destroying or discarding any such books and records and, if to be destroyed or
discarded, to allow Sellers to take possession of such books and records, and
(c) to provide access to and copies of such books and records as required by
Sellers.
6.15 Covenants of Sellers. The covenants of Sellers contained in this
--------------------
Section shall be joint and several obligations of Sellers.
7. THE CLOSING.
The closing of the sale and purchase of the Purchased Assets (the
"Closing") shall take place at 10:00 a.m., local time, on November 27, 1996, at
-------
the offices of McCarthy & Tetrault at "Le Windsor", 1170 Peel, Montreal, Quebec
H3B 4S8, or at Goodman, Phillips & Vineberg, 250 Yonge Street, Suite 2400,
Toronto, Ontario M5B 2M6 as shall be mutually agreed (such date being herein
sometimes referred to as the "Closing Date"). A physical count of Inventory
------------
shall be jointly conducted by Buyer and Sellers within 2 days of the Closing
Date.
40
<PAGE>
8. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligation of Buyer to acquire the Purchased Assets, pay the
Purchase Price and assume the Assumed Liabilities is subject to the
satisfaction, or waiver in writing by Buyer, on or prior to the Closing Date of
each of the following conditions:
8.1 Corporate Action. All corporate and other actions necessary to
----------------
authorize and effectuate the consummation of the transactions contemplated
hereby by Sellers, including shareholder approval, shall have been duly taken or
obtained prior to the Closing, and Sellers on behalf of Sellers shall have
delivered to Buyer a certificate of duly authorized officers or employees of
Sellers to that effect, together with certified copies of resolutions of the
Board of Directors and shareholders of Sellers authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
8.2 Representations and Warranties. The representations and
------------------------------
warranties of Sellers set forth in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same effect as
though all such representations and warranties had been made on and as of such
date and there shall have been delivered to Buyer a certificate to that effect,
dated the Closing Date, signed by a duly authorized officer of Sellers on behalf
of Sellers.
8.3 Performance of Obligations. Each and all of the covenants and
--------------------------
agreements of Sellers to be performed or complied with pursuant to this
Agreement on or prior to the Closing Date shall have been duly performed and
complied with or duly waived and there shall have been delivered to Buyer a
certificate to that effect, dated the Closing Date, signed by a duly authorized
officer of Sellers on behalf of Sellers.
8.4 Instruments of Conveyance, Etc. Sellers shall have executed and
-------------------------------
delivered to Buyer special warranty deeds conveying good and marketable fee
simple title to the Owned Real Property, evidence satisfactory to Buyer that the
sale and purchase of the Owned Real Property shall be in compliance with the
provisions of the Planning Act (Ontario) and such bills of sale, assignments and
instruments of transfer and conveyance and certificates of title as shall be
reasonably required by Buyer for the transfer to Buyer of all of Sellers' right,
title and interest to and in the Purchased Assets free and clear of Liens,
except Liens which are Permitted Liens or Assumed Liabilities. Sellers shall
have also
41
<PAGE>
delivered to Buyer a title report and opinion respecting the Owned Real Property
which shall be to the satisfaction of Buyer acting reasonably, incorporating
such qualifications and assumptions as are reasonable and customary in
transactions of this nature.
8.5 Short Term Liabilities. Sellers shall have delivered to Buyer a
----------------------
list of Accounts receivable and Short Term Liabilities as at the Closing Date.
8.6 Delivery. On the Closing Date, Sellers shall deliver or give up
--------
physical possession of all Equipment, Inventory, Technical Information and
tangible property included in the Purchased Assets and any tangible evidence of
all Intellectual Property, Open Orders and Accounts Receivable to Buyer.
8.7 Opinion of Counsel. Buyer shall have been provided with an
------------------
opinion of Sellers' counsel addressed to Buyer and to its lenders substantially
in form attached as Exhibit B.
8.8 Non-Competition. Sellers shall have delivered to Buyer non-
---------------
competition undertakings having a term of one year, substantially in the form
attached as Exhibit C, executed by each holder of Class B Common Shares of the
capital stock of PNG Products receiving consideration greater than $105,000 for
the sale of such shares pursuant to section 8.16.
8.9 Required Consents. Sellers shall have obtained consents and
-----------------
approvals with respect to the assignment of all Material Contracts Requiring
Consent (or made reasonable arrangements, in accordance with section 3.4, to
assure Buyer the benefits thereof) and of all Governmental Authorities required
for the transactions contemplated hereby and all waiting periods specified by
law the passing of which is necessary for the consummation of such transactions
shall have passed or been terminated.
8.10 Litigation. Except as set out in Schedule 4.6, no order of any
---------- ------------
court or administrative agency shall be in effect which restrains or prohibits
(or attempts to do either) the transactions contemplated hereby and there shall
not have been threatened, nor shall there be pending, any action or proceeding
by or before any court or governmental agency or other regulatory or
administrative agency or commission, challenging any of the transactions
contemplated by this Agreement or seeking monetary relief by reason of the
consummation of such transactions.
42
<PAGE>
8.11 Security. Sellers shall have obtained the release and discharge
--------
from their lenders with respect to any security interests in, or mortgages or
deeds of trust encumbering, the Purchased Assets delivered upon payment of the
Purchase Price pursuant to Section 2.
8.12 No Material Damage. Since the date of this Agreement, there shall
------------------
not have occurred any material damage to the Purchased Assets by fire or other
---------------
hazard which would result in a material damage to the Business.
8.13 Resignations. Each Transferred Employee who has accepted Buyer's
------------
offer of employment and who is a director or officer of Sellers or any of its
Affiliates shall have resigned such directorship or office.
8.14 Bulk Sales. Sellers shall ensure that the sale of the Purchased
----------
Assets of Sellers as contemplated herein shall comply with the provisions of
Articles 1767 and following of the Civil Code of Quebec concerning sale of an
enterprise to the extent applicable and shall comply with or be exempted from
the requirements of the Bulk Sales Act (Ontario), and any similar bulk sale
legislation in force in any applicable jurisdiction.
8.15 Certificate of the Minister of Finance of Ontario. Sellers shall
-------------------------------------------------
have delivered to Buyer a certificate issued by the Minister of Finance of
Ontario pursuant to Section 6 of the Retail Sales Act (Ontario) which shall
indicate that Sellers have paid all taxes, collectable or payable under such Act
in connection with the Business up to the Closing Date or have entered into an
arrangement satisfactory to the Minister of Revenue of Ontario for the payment
of such taxes.
8.16 Class B Common Shares. An offer will have been made to all of the
---------------------
holders of the outstanding Class B common shares of PNG Products to purchase all
such Shares at a price equal to the original cost ($4.45 per share) (excluding
the 101,131 shares formerly held by P. Boshaw) and subject to compliance by the
holders of Class B common shares as to the delivery with good and marketable
title of certificates representing such shares, payment for the shares shall be
made within 10 days after the Closing Date.
43
<PAGE>
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS
The obligation of Sellers to sell or otherwise transfer the benefits of
the Purchased Assets hereunder is subject to the satisfaction, or waiver in
writing by Sellers, on or prior to the Closing Date of each of the following
conditions:
9.1 Representations and Warranties. The representations and
------------------------------
warranties of Buyer set forth in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same effect as though
all such representations and warranties had been made on and as of such date and
there shall have been delivered to Sellers a certificate to that effect, dated
the Closing Date, signed by a duly authorized officer of Buyer.
9.2 Corporate Action. The execution and delivery of this Agreement by
----------------
Buyer and consummation by Buyer of the transactions contemplated hereby shall
have been duly authorized by all necessary corporate action of Buyer and there
shall have been delivered to Sellers a certificate of duly authorized officers
or employees of Buyer to that effect, together with certified copies of
resolutions of the Board of Directors of Buyer authorizing the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby.
9.3 Payment. Buyer shall pay the Purchase Price to Sellers according
-------
to Section 2.
9.4 Documents. Buyer shall have executed and delivered such
---------
agreements including, without limitation, assumption agreements pursuant to bulk
sales legislation and assumption/transfer agreements for Accounts Receivable
which the Sellers re-acquire as Sellers shall reasonably request.
9.5 Required Consents. The transactions contemplated by this
-----------------
Agreement shall have been approved by Sellers' shareholders. Sellers shall have
obtained all consents and approvals of all third parties with respect to the
assignment of all Material Contracts Requiring Consent (or made reasonable
arrangements, in accordance with Section 3.4, to assure Buyer the benefits
thereof) and all Governmental Authorities required for the transactions
contemplated hereby and the consent of Bank of Montreal, and all
44
<PAGE>
waiting periods specified by law the passing of which is necessary for the
consummation of such transactions shall have passed or been terminated.
9.6 Litigation. No order of any court or administrative agency shall
----------
be in effect which restrains or prohibits (or attempts to do either) the
transactions contemplated hereby and there shall not have been threatened, nor
shall there be pending, any action or proceeding by or before any court or
governmental agency or other regulatory or administrative agency or commission,
challenging any of the transactions contemplated by this Agreement or seeking
monetary relief by reason of the consummation of such transactions, except for
any proceeding by Societe Immobiliere Axim Inc. or Whalen, Beliveau & Associates
Inc.
10. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
All representations and warranties made by Sellers or Buyer as to any
fact or condition existing on or before the Closing Date in this Agreement, in
any Schedule or in any certificate delivered pursuant hereto, shall survive the
Closing for a period of four (4) years; provided that there shall be no
termination of any such representation or warranty as to which a Claim has been
asserted prior to the termination of any such survival period. All such
representations and warranties shall be unaffected by any investigation made by
or on behalf of Buyer or by knowledge obtained as a result thereof or otherwise.
Except as otherwise expressly provided in this Agreement, all covenants,
agreements, undertakings and indemnities set forth in this Agreement shall
survive for a period of four (4) years provided that there shall be no
termination of any such covenants, agreements, undertakings and indemnities as
to which a Claim has been asserted prior to the termination of any such survival
period.
45
<PAGE>
11. INDEMNIFICATION.
11.1 Indemnity by Sellers.
--------------------
(a) Buyer shall assume no liability of or relating to the
Business other than those expressly assumed by Buyer. Sellers shall, jointly and
severally, defend, hold harmless and indemnify Buyer from any Claims, or
Liabilities originating from Excluded Liabilities. Buyer shall defend, hold
harmless and indemnify Sellers from any Claims or Liabilities originating from
Assumed Liabilities.
(b) Except for Losses, if any, arising under Environmental Laws
or with respect to Section 4.22, which are addressed in Section 11.2, Sellers,
following the Closing Date, shall defend, indemnify and hold Buyer, its
officers, directors, employees, subsidiaries and Affiliates harmless from and
against all Claims, damages, losses, liabilities, costs and expenses (including
attorneys' fees and disbursements and any other legal costs) (collectively,
"Losses") arising out of or resulting from:
------
(i) Sellers' operation or ownership of the Business or the
Purchased Assets before the Closing Date;
(ii) the Excluded Liabilities;
(iii) the breach by Sellers of any covenant contained herein
or in any Sellers Document requiring performance after the Closing Date; and
(iv) the failure of any representation or warranty of
Sellers contained herein, in any Sellers' Document, in any Schedule or in any
certificate delivered on the Closing Date pursuant hereto to be true and correct
in any material respect.
(c) Except for Claims by Stanley Kiyon or Claims arising under
Sections 4.6 and 4.9 which Sellers shall assume in full, Sellers shall not have
any liability under Section 11.1(b)(iv) until the aggregate amount of all such
Losses exceeds $50,000, and then only to the extent that such aggregate Losses
exceed $50,000.
46
<PAGE>
(d) Sellers shall indemnify and hold Buyer harmless for any and
all expenses, liabilities or Claims that any employee shall have against Buyer
arising out of the pre-Closing operation of the Business or by those employees
listed in Schedule 3.2(g).
11.2 Environmental. Sellers shall defend, indemnify and hold Buyer
-------------
harmless from and against all Losses arising under any Environmental Law and
arising out of or resulting from activities occurring or conditions originating
prior to Closing which activities or conditions are included in the information
provided in Schedule 4.22, or which are asserted against Buyer in respect of the
Purchased Assets and the Business on or prior to December 31, 2002.
11.3 Indemnity by Buyer.
-------------------
(a) Buyer shall defend, hold harmless and indemnify Sellers from
any Claims with respect to liabilities assumed by Buyer hereunder.
(b) Buyer, following the Closing Date, shall indemnify and hold
Sellers, its officers, directors, employees, subsidiaries and Affiliates
harmless from and against all Losses arising out of or resulting from:
(i) Buyer's operation or ownership of the Business or the
Purchased Assets on and after the Closing Date, except as expressly provided in
Sections 11.1 and 11.2;
(ii) the Assumed Liabilities;
(iii) the breach by Buyer of any covenant contained herein
or in any agreement entered into by Buyer pursuant to this Agreement requiring
performance after the Closing Date; and
(iv) the failure of any representation or warranty of Buyer
contained herein, in any Schedule or in any certificate delivered on the Closing
Date pursuant hereto to be true and correct in any material respect.
47
<PAGE>
(c) Buyer shall indemnify and hold Sellers harmless for any and
all expenses, liabilities and Claims that any employee shall have against
Sellers related to matters arising out of Buyer's operation of the Business of
the Purchased Assets after the Closing Date.
(d) Buyer shall not have any liability under Section 11.3(b)(iv)
until the aggregate amount of all such Losses exceeds $50,000, and then only to
the extent that such aggregate Losses exceed $50,000.
11.4 Notice of Claim. Promptly after service of notice of any Claim or
---------------
of process on a party entitled to indemnification under this Agreement
(hereinafter in this Section 11.4, the "Indemnified Party") by any third party,
-----------------
or promptly after obtaining actual knowledge by the Indemnified Party of any
other Claim, in any matter in respect of which indemnity may be sought pursuant
to this Section 11, the Indemnified Party shall promptly notify Buyer or
Sellers, whichever is or may be responsible for indemnification hereunder
(hereinafter in this Section 11.4, the "Indemnifying Party") of the receipt
------------------
thereof. In the case of any action or proceeding by a third party, the
Indemnifying Party shall have the right to participate in, or assume, at its own
expense, the defense of any such Claim or process or settlement thereof. After
notice from the Indemnifying Party of its election so to assume the defense
thereof, the Indemnified Party shall not be liable to the Indemnifying Party for
any legal or other expense in connection with such defense. Such defense shall
be conducted expeditiously (but with due regard for obtaining the most
favourable outcome reasonably likely under the circumstances, taking into
account costs and expenditures) and the Indemnified Party shall be advised of
all significant developments. With respect to any matter which is the subject of
any such Claim and as to which the Indemnified Party fails to give the
Indemnifying Party such notice as aforesaid, and such failure adversely affects
the ability of the Indemnifying Party to defend such Claim or materially
increases the amount of indemnification which the Indemnifying Party is
obligated to pay hereunder, the amount of indemnification which the Indemnified
Party shall be entitled to receive shall be reduced to an amount which the
Indemnified Party would have been entitled to receive had such notice been
timely given. The Indemnifying Party shall not settle or compromise any such
Claim or other proceeding without the Indemnified Party's prior written consent,
unless the terms of such settlement or compromise, discharge and release the
Indemnified Party from any and all liabilities and obligations thereunder
provided, however, that such consent shall be given reasonably and if the
Indemnified Party does not agree to give any consent in respect of a settlement
which the Indemnifying Party wishes to accept, the Indemnified Party will not be
entitled to any indemnity
48
<PAGE>
in respect of the excess of the final settlement amount over the original amount
at which the Indemnifying Party wished to settle. Notwithstanding the foregoing,
(a) the Indemnified Party at all times shall have the right, at its option and
expense, to participate fully in the defense or settlement of such Claim or
other proceeding; and (b) if the Indemnifying Party does not proceed diligently
to defend or settle such Claim or other proceeding within 20 days after its
receipt of notice of the assertion or commencement of such Claim or proceeding,
the Indemnified Party shall have the right, but not the obligation, to undertake
the defense or settlement of such Claim or other proceeding at the expense of
the Indemnifying Party. Sellers and Buyer agree that, for the purpose of
enforcing any right of indemnity hereunder, the Indemnified Party may join the
Indemnifying Party in any third party Claim or other proceeding as to which such
right of indemnity would apply. Sellers and Buyer shall cooperate fully in
defending or settling any third party Claim or other proceeding, and the
defending party shall have reasonable access to the books and records and
personnel of the other party that are relevant to such Claim or proceeding,
except to the extent any disclosure would constitute a waiver of attorney/client
or attorney work product privilege or would violate any third party contractual
agreement or constitute a violation of any law or court order. Such books and
records shall be subject to the confidentiality provisions of Section 17.2
except to the extent necessary to disclose information contained therein in the
course of the proceedings resolving such Claim or as otherwise required to be
disclosed by applicable law.
12. COMPETITION.
12.1 Non-competition. For a period of five (5) years following the
---------------
Closing Date, neither Sellers nor any successor, assign or any of its Affiliates
shall engage, directly or indirectly, in any business that manufactures, sells
or distributes envelopes in Canada or the United States without the prior
written consent of Buyer.
12.2 Remedies. Sellers agree that if they or any of their successors,
--------
assigns or Affiliates commit or threaten to commit a breach of any of the
covenants and agreements contained in Section 12.1, Buyer shall have the right
to seek and obtain appropriate injunctive and other equitable remedies therefor,
in addition to any other rights and remedies that may be available at law, it
being acknowledged and agreed that any such breach would cause irreparable
injury to Buyer and that money damages would not provide an adequate remedy
therefor.
49
<PAGE>
13. TERMINATION; MODIFICATION OR WAIVER.
13.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) by mutual written agreement of Buyer and Sellers;
(b) by either party if a banking moratorium has been declared;
(c) by Buyer, if all of the conditions precedent to Buyer's
obligations set forth in Section hereof have not been satisfied by Sellers or by
a trustee to the bankruptcy of any of the Sellers, as provided in Section 2.6,
through no fault or failure of Buyer, on or before the Closing Date; or
(d) by Sellers, if all of the conditions precedent of Sellers'
obligations set forth in Section hereof have not been satisfied, through no
fault of Sellers, on or before the Closing Date.
13.2 Modification. This Agreement may be amended, modified and
------------
supplemented only by written agreement of the parties hereto.
13.3 Waiver. Any failure of Sellers or Buyer to comply with any
------
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by Buyer in the case of any such failure by Sellers or by
Sellers in the case of any such failure by Buyer, but such waiver or failure to
insist upon strict compliance shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires
or permits consent by or on behalf of any party hereto, such consent shall be
given in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 13.3. No delay or failure on the part of
any party in exercising any rights hereunder, and no partial or single exercise
thereof, will constitute a waiver of such rights or of any other rights
hereunder.
50
<PAGE>
14. COSTS INCIDENT TO PREPARATION OF AGREEMENT.
Each of the parties hereto shall pay, without right of reimbursement
from the other, all costs incurred by it incident to the preparation, execution
and delivery of this Agreement and the performance of its obligations hereunder,
whether or not the transactions contemplated by this Agreement shall be
consummated, including without limitation fees and disbursements of legal
counsel, accountants and consultants employed by the respective parties hereto
in connection with the transactions contemplated by this Agreement.
15. RISK OF LOSS.
All risk of damage or loss of any sort from any cause with respect to
the operation of the Business or the Purchased Assets shall remain with Sellers
until the Closing.
16. REASONABLE EFFORTS.
Each of the parties covenants to use its reasonable efforts to cause
the satisfaction of all conditions to Closing to be performed by it or satisfied
on its part at or prior to Closing.
51
<PAGE>
17. GENERAL.
17.1 Parties in Interest; Assignment.
-------------------------------
(a) This Agreement shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and permitted
assigns. Except as otherwise expressly provided in this Agreement, this
Agreement is not made for the benefit of any Person not a party hereto, and
nothing in this Agreement will be construed as giving any Person, other than the
parties hereto and their respective successors and permitted assigns, any right,
remedy or claim under or in respect of this Agreement, or any provision hereof.
(b) Buyer may assign its rights under this Agreement and the
Sellers Documents for collateral security purposes to the lenders providing
financing for the transactions contemplated hereby and all extensions, renewals,
replacements, refinancings and refundings thereof in whole or in part; provided,
that upon the foreclosure, sale in lieu of foreclosure, deed in lieu of
foreclosure, or deed of the Purchased Assets or a substantial portion thereof by
and to any such lender or any of its Affiliates, or the Buyer or grantee from
any of such parties, the representations, warranties and covenants of Sellers
contained herein and in the Sellers Documents shall inure to the benefit of, and
shall be enforceable by, any such lender, Affiliate or person.
(c) Without limiting any of its rights or obligations under this
Agreement, Buyer may direct Sellers to assign, transfer, convey and deliver any
of the Purchased Assets to any direct or indirect wholly owned subsidiary of
Buyer, or otherwise in connection with Buyer's financing of this transaction
provided such assignee is a Canadian resident under the Income Tax Act (Canada).
(d) Except as expressly provided in this Section 17.1, neither
Buyer nor Sellers shall assign its rights and obligations under this Agreement
without the prior written consent of the other.
(e) Notwithstanding any provision of the Section 17.1 to the
contrary, Sellers shall remain liable for and with respect to all obligations of
Sellers hereunder after any assignment by Sellers or any permitted assign of all
or any portion of Sellers' interest in this Agreement or its rights and
obligations
52
<PAGE>
hereunder, and Buyer shall remain liable for and with respect to all obligations
of Buyer hereunder after any assignment by Buyer or any permitted assign of all
or any portion of Buyer's interest in this Agreement or its rights and
obligations hereunder.
17.2 Confidentiality.
---------------
(a) In the event of termination of this Agreement prior to
Closing, Buyer shall promptly return or destroy all documents, records or other
information concerning Sellers and/or the Business and shall not retain any
copies of same.
(b) From and after the Closing Date, Sellers shall not make or
permit the making of, and shall cause its Affiliates not to make or permit the
making of, any disclosure, publication or use of any non-public, confidential
and/or proprietary information relating to the Purchased Assets or the Business
that is not generally known by or available to the public (the "Confidential
------------
Information"). Notwithstanding the foregoing, Sellers and its Affiliates may
- ------------
disclose, publish or use, and may permit the disclosure, publication or use of,
any Confidential Information if, but only to the extent that, such disclosure,
publication or use is previously authorized in writing by Buyer or is required
by law. In the latter case, Sellers or its Affiliates shall notify Buyer as far
in advance of the disclosure, publication or use as possible.
17.3 Public Statements. Other than announcements and disclosure to
-----------------
Sellers' employees and shareholders, neither party to this Agreement shall,
without the prior written consent of the other party hereto, make or cause to be
made any press release or other public statement or announcement that directly
or indirectly discloses the transactions contemplated by this Agreement;
provided that either party may make such press release, public statement or
announcement if such disclosure is required by law. If a party determines that
it is required to make any such press release, public statement or announcement,
it will give the other party advance notice thereof, including the text of such
press release, public statement or announcement. Notwithstanding the foregoing,
Mail-Well, Inc. ("Mail-Well") the ultimate parent of Buyer, may make any press
release, public statement or announcement if such disclosure is, in the opinion
of Mail-Well's legal counsel, required by law, or otherwise prudent by virtue of
its status as a publicly traded company in the United States.
53
<PAGE>
17.4 Approval. Except as mentioned in Section 3.2(d), for the purposes
--------
of any written approval which may be required of Sellers under this Agreement,
the written approval of Dick Schroeder and either Steve Ruddy or Ron Burns shall
be sufficient and shall bind Sellers.
17.5 Choice of Law. This Agreement shall be governed by, construed,
-------------
interpreted and the rights of the parties determined in accordance with the
laws, including equitable principles but without regard to principles of
conflict of laws of the province of Ontario and the laws of Canada applicable
therein. For the purposes of all legal proceedings, this Agreement shall be
deemed to have been performed in the Province of Ontario and the Courts of
Ontario shall have exclusive jurisdiction to entertain any action arising under
this Agreement. The Sellers and Buyer each hereby attorns to the jurisdiction
of the Courts of the Province of Ontario.
17.6 Notices. Any notice, request, consent, waiver or other
-------
communication required or permitted to be given hereunder shall be effective
only if in writing and shall be deemed sufficiently given only if delivered in
person or sent by telecopy, telegram, cable or by certified or registered mail,
postage prepaid, return receipt requested, addressed as follows:
If to Buyer:
------------
Supremex Inc.
345 Montee de Liesse
St. Laurent, Quebec H4T 1P7
Attention: Luc Desjardins
--------- President and Chief Executive Officer
Fax no.: (514) 738-6657
with a copy to:
Mail-Well, Inc.
23 Inverness Way, Suite 160
Englewood, Colorado 80112
Attention: Roger Wertheimer
--------- Vice President, General Counsel and Secretary
Fax no.: (303) 397-7400
54
<PAGE>
If to Sellers:
-------------
PNG Products Inc. Pac National Group/
PNG Enveloppe Internationale Inc.
400 Humberline Drive
Etobicoke, Ontario
M9W 5T3
Attention: Stephen M. Ruddy
---------
Fax no.: (416) 675-5764
with copies to:
Goodman Phillips & Vineberg
250 Yonge Street, Suite 2400
Toronto, Ontario
M5B 2M6
Attention: Stephen N. Pincus
---------
Fax no.: (416) 979-1234
and
Blake Cassels & Graydon
P.O. Box 25,
Commerce Court West
Toronto, Ontario
M5L 1A9
Attention: Alan Bell
---------
Fax no.: (416) 863-2653
or to such other Person or address as either such party may have specified in a
notice duly given by the sender as provided herein. Such notice or
communication shall be deemed to have been given as of the date so delivered,
telegraphed, cabled or mailed.
17.7 Entire Agreement. This Agreement (including the schedules and
----------------
exhibits attached hereto) constitutes the entire agreement and understanding of
the parties relating to the subject matter hereof and supersedes all prior and
contemporaneous agreements and understandings, representations and warranties,
55
<PAGE>
whether oral or written, relating to the subject matter hereof including the
Letter of Offer dated June 14, 1996. The terms of this Agreement cannot be
changed, modified, released or discharged orally.
17.8 Remedies Cumulative. The rights and remedies provided in this
-------------------
Agreement are cumulative and are not exclusive of any rights or remedies a party
may otherwise have at law or in equity.
17.9 Severability. The unenforceability or invalidity of any Section
------------
or subsection or provision of this Agreement shall not affect the enforceability
or validity of the balance of this Agreement. If any provision of this Agreement
is so broad as to be unenforceable, such provision shall be interpreted to be
only as broad as is enforceable.
17.10 Interpretation. In this Agreement, unless the context otherwise
--------------
requires:
(a) Any reference to any Section, Schedule or Exhibit contained
in this Agreement shall refer to such Section, Schedule or Exhibit as set forth
in or attached to this Agreement, notwithstanding use of or failure to use the
term "hereof," "hereto" or "herein" in connection with such reference.
(b) Words shall apply equally to both singular and plural forms
of the terms defined, and words importing gender shall include all genders.
(c) The Schedules attached to this Agreement shall be considered
to be incorporated for all purposes of this Agreement, whether or not reference
thereto is made in each case.
(d) The Exhibits attached to this Agreement shall be considered
to be incorporated within any Section of this Agreement solely by reference
thereto.
(e) Unless expressly limited, all references to agreements are
references to agreements as the provisions thereof may be amended, modified or
waived from time to time.
56
<PAGE>
(f) The word "including" when following any general statement,
term or matter shall not be construed to limit such general statement, term or
matter to the specific items or matters set forth immediately following such
word, whether or not non-limiting language (such as "without limitation" or "but
not limited to" or words of similar import) is used with reference thereto, but
rather shall be deemed to refer to all other items or matters that could
reasonably fall within the broadest possible scope of such general statement,
term or matter.
(g) All accounting terms used herein and not otherwise defined
shall have the meanings assigned to them in accordance with GAAP.
17.11 Dollars. The symbol "$" when used herein represents Canadian
-------
dollars.
17.12 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which so executed will be deemed to be an original, but
all of which together will constitute one and the same agreement.
17.13 Facsimiles. Any facsimile signature of any party hereto shall
----------
constitute a legal, valid and binding execution hereof by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
By:______________________________________
Title:___________________________________
By:______________________________________
Title:___________________________________
57
<PAGE>
PNG ENVELOPPE INTERNATIONALE INC.
By:________________________________________
Title:_____________________________________
58
<PAGE>
Exhibit 10.36
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of ___________, 1996 ("Agreement"),
between GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS, with an office at 303 International Circle, Suite 300,
Hunt Valley, Maryland 21031 (hereinafter called, together with its successors
and assigns, if any, "Lessor"), and MAIL-WELL, INC., MAIL WELL I CORPORATION,
GRAPHIC ARTS CENTER, INC., MAIL-WELL WEST, PAVEY ENVELOPE & TAG CORP., WISCO II
LLC AND WISCO ENVELOPE CORP., all corporations with mailing addresses and chief
place of business as listed on the signature page (hereinafter called
individually and collectively "Lessee").
WITNESSETH:
I. LEASING:
(a) This Agreement shall be effective from and after the date of execution
hereof. Subject to the terms and conditions set forth below, Lessor agrees to
lease to Lessee, and Lessee agrees to lease from Lessor, the equipment
("Equipment") described in Annex A to any schedule hereto ("Schedule"). Terms
defined in a Schedule and not otherwise defined herein shall have the meanings
ascribed to them in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the manufacturer or
supplier thereof ("Supplier") and to lease the same to Lessee under any Schedule
shall be subject to receipt by Lessor, prior to the Lease Commencement Date
(with respect to such Equipment), of each of the following documents in form and
substance satisfactory to Lessor: (i) a Schedule relating to the Equipment then
to be leased hereunder, (ii) a Purchase Order Assignment and Consent in the form
of Annex B to the applicable Schedule, unless Lessor shall have delivered its
purchase order for such Equipment, (iii) evidence of insurance which complies
with the requirements of Section IX, and (iv) such other documents as Lessor may
reasonably request. As a further condition to such obligations of Lessor, Lessee
shall, upon delivery of such Equipment (but not later than the Last Delivery
Date specified in the applicable Schedule) execute and deliver to Lessor a
Certificate of Acceptance (in the form of Annex C to the applicable Schedule)
covering such Equipment, and deliver to Lessor a bill of sale therefor from
Supplier and (only if requested by Lessor) Lessee (each in form and substance
satisfactory to Lessor). Lessor hereby appoints Lessee its agent for inspection
and acceptance of the Equipment from the Supplier. Upon execution by Lessee of
any Certificate of Acceptance, the Equipment described thereon shall be deemed
to have been delivered to, and irrevocably accepted by, Lessee for lease
hereunder.
II. TERM, RENT AND PAYMENT:
(a) The rent payable hereunder (the "Rent") and Lessee's right to use the
Equipment shall commence on the date of execution by Lessee of the Certificate
of Acceptance for such Equipment ("Lease Commencement Date"). The Term of this
Agreement (the "Term") shall be the period specified in the applicable Schedule.
If any Term is extended, the word "Term" shall be deemed to refer to all
extended terms, and all provisions of this Agreement shall apply during any
extended terms, except as may be otherwise specifically provided in writing.
(b) Rent shall be paid to Lessor by wire transfer of immediately available
funds to: Bankers Trust New York, New York, New York 10006, Account No.
50-202-962, ABA No. 021-001-033, or to such other account as Lessor may direct
in writing; and shall be effective upon receipt. Payments of Rent shall be in
the amount set forth in, and due in accordance with, the provisions of the
applicable Schedule. If one or more Advance Rentals are payable, such Advance
Rental shall be (i) set forth on the applicable Schedule, (ii) due upon
acceptance by Lessor of such Schedule, and (iii) when received by Lessor,
applied to the first rent payment and the balance, if any, to the final rental
payment(s) under such Schedule. In no event shall any Advance Rental or any
other Rent payments be refunded to Lessee. If Rent is not paid
<PAGE>
within ten days of its due date, Lessee agrees to pay a late charge of Five
Cents (($0.05)) per dollar on, and in addition to, the amount of such Rent but
not exceeding the lawful maximum, if any.
III. TAXES:
Lessee shall have no liability for taxes imposed by the United States of
America or any State or political subdivision thereof which are on or measured
by the net income of Lessor. Lessee shall report (to the extent that it is
legally permissible) and pay promptly all other taxes, fees and assessments due,
imposed, assessed or levied against any Equipment (or the purchase, ownership,
delivery, leasing, possession, use or operation thereof), this Agreement (or any
rentals or receipts hereunder), any Schedule, Lessor or Lessee by any foreign,
Federal, state or local government or taxing authority during or related to the
term of this Agreement, including, without limitation, all license and
registration fees, and all sales, use, personal property, excise, gross
receipts, franchise, stamp or other taxes, imposts, duties and charges, together
with any penalties, fines or interest thereon (all hereinafter called "Taxes").
Lessee shall (i) reimburse Lessor upon receipt of written request for
reimbursement for any Taxes charged to or assessed against Lessor, (ii) on
request of Lessor, submit to Lessor written evidence of Lessee's payment of
Taxes, (iii) on all reports or returns show the ownership of the Equipment by
Lessee, and (iv) send a copy thereof to Lessor.
IV. REPORTS:
(a) Lessee will notify Lessor in writing, within fifteen (15) days after
any tax or other lien shall attach to any Equipment, of the full particulars
thereof and of the location of such Equipment on the date of such notification.
(b) Annual Financial Statements. Lessee shall provide to Lessor, as soon
---------------------------
as available, and in any event within 90 days after the end of each fiscal year
of Mail-Well, Inc. ("Mail-Well"), beginning with the fiscal year ending
December 31, 1996, (i) a copy of the annual audit report of the Mail-Well and
its consolidated Subsidiaries as of the end of and for such fiscal year then
ended containing, on a consolidated basis and with unaudited consolidating
schedules attached, balance sheets and statements of income, retained earnings
and cash flow, in each case setting forth in comparative form the figures for
the preceding fiscal year, all in reasonable detail and audited and certified by
Deloitte & Touche or other independent certified public accountants of
recognized standing acceptable to the Lessor and containing no qualification
thereto except as may be reasonably acceptable to the Lessor, to the effect that
such report has been prepared in accordance with GAAP and (ii) a certificate of
such independent certified public accountants to the Lessor (A) stating that to
their knowledge no Default has occurred and is continuing or, if in their
opinion a Default has occurred and is continuing, stating the nature thereof,
and (B) confirming the calculations set forth in the officer's certificate
delivered concurrently therewith;
(c) Quarterly Financial Statements. Lessee shall provide to Lessor, as
------------------------------
soon as available, and in any event within 45 days after the end of each of the
quarters of each fiscal year of Mail-Well, beginning with the fiscal quarter
ending September 30, 1996, a copy of (i) an unaudited financial report of Mail-
Well and its consolidated Subsidiaries as of the end of such fiscal quarter and
for the portion of the fiscal year then ended containing, on a consolidated and
consolidating basis, balance sheets and statements of income, retained earnings
and cash flow, in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in reasonable detail
certified by the Chief Financial Officer of Mail-Well to have been prepared in
accordance with GAAP and to fairly and accurately present (subject to year-end
audit adjustments) the financial condition and results of operations of Mail-
Well and its consolidated Subsidiaries, on a consolidated and consolidating
basis, at the date and for the periods indicated therein and (ii) management's
financial reports comparing actual financial results for the period to the
current budget for the period;
(d) Monthly Financial Statements. Lessee shall provide to Lessor, as soon
----------------------------
as available, and in any event within 30 days after the end of each calendar
month, beginning with the calendar month ending August 31, 1996, a copy of (i)
an unaudited financial report of Mail-Well and its consolidated Subsidiaries
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as of the end of such calendar month and for the portion of the fiscal year then
ended containing, on a consolidated and consolidating basis, balance sheets and
statements of income, retained earnings and cash flow, in each case setting
forth in comparative form the figures for the corresponding period of the
preceding fiscal year, all in reasonable detail certified by the Chief Financial
Officer of Mail-Well to have been prepared in accordance with GAAP and to fairly
and accurately present (subject to year-end audit adjustments) the financial
condition and results of operations of the Lessee and its consolidated
Subsidiaries, on a consolidated and consolidating basis, at the date and for the
periods indicated therein and (ii) management's financial reports comparing
actual financial results for the period to the current budget for the period;
(e) Certificate of No Default. Lessee shall provide to Lessor,
-------------------------
concurrently with the delivery of each of the financial statements referred to
in Subsection (c) above, a certificate of the Chief Financial Officer of Mail-
----------------
Well (i) stating that, to the best of such officer's knowledge, no Default has
occurred and is continuing or, if a Default has occurred and is continuing,
stating the nature thereof and the action that has been taken and is proposed to
be taken with respect thereto, and (h) showing (with respect to each certificate
delivered concurrently with the delivery of each of the financial statements
referred to in Subsection (b) or (c) above in reasonable detail the calculations
-----------------
demonstrating compliance with Section XX;
(f) Budget. Lessee shall provide to Lessor, as soon as available and in
------
any event before the beginning of each fiscal year of the Lessee, a copy of the
budget of the Lessee and its Subsidiaries for such fiscal year (segregated by
entity and quarter and setting forth all material assumptions);
(g) Notice of Litigation. Lessee shall provide to Lessor, promptly after
--------------------
the commencement thereof, notice of all actions, suits and proceedings before
any governmental authority or arbitrator affecting the Lessee which, if
determined adversely, could result in a material adverse change to the Lessee's
business of financial condition;
(h) Notice of Material Adverse Change. Lessee shall provide to Lessor,
---------------------------------
within five Business Days after the Lessee becomes aware thereof, written notice
of any matter that could be a material adverse change in the Lessee's business
or financial condition;
(i) General Information. Lessee shall provide to Lessor, promptly, such
-------------------
other information concerning the Loan Parties and their respective Subsidiaries
as the Lessor may from time to time reasonably request; and
(j) Lessee will permit Lessor to inspect any Equipment during normal
business hours upon reasonable notice.
(k) Lessee will keep the Equipment at the Equipment Location (specified in
the applicable Schedule within the Continental United States and will promptly
notify Lessor of any relocation of Equipment. Upon the written request of
Lessor, Lessee will notify Lessor forthwith in writing of the location of any
Equipment as of the date of such notification.
(l) Lessee will promptly and fully report to Lessor in writing if any
Equipment is lost or damaged (where the estimated repair costs would exceed ten
percent (10%) of its then fair market value), or is otherwise involved in an
accident causing personal injury or property damage.
(f) Within thirty (30) days after any request by Lessor, Lessee will
furnish a certificate of an authorized officer of Lessee stating that he has
reviewed the activities of Lessee and that, to the best of his knowledge, there
exists no Default (as hereinafter defined) or event which, with the giving of
notice or the lapse of time (or both), would become such a Default.
V. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the Supplier to Lessee.
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(b) Lessee agrees that the Equipment will be used by Lessee solely in the
conduct of its business and in a manner complying with all applicable Federal,
state, and local laws and regulations, and any applicable insurance policies,
and Lessee shall not discontinue use of the Equipment.
(c) Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor.
VI. SERVICE:
(a) Lessee will, at its sole expense, maintain each unit of Equipment in
good operating order, repair, condition and appearance in accordance with
manufacturer's recommendations, normal wear and tear excepted. Lessee shall, if
at any time reasonably requested by Lessor, affix in a prominent position on
each unit of Equipment plates, tags or other identifying labels showing the
interest therein of Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix or install
any accessory, equipment or device on any Equipment if such addition will impair
the value, originally intended function or use of such Equipment. All additions,
repairs, parts, supplies, accessories, equipment, and devices furnished,
attached or affixed to any Equipment which are not readily removable shall be
made only in compliance with applicable law, shall be free and clear of all
liens, encumbrances or rights of others, and shall become the property of
Lessor. Lessee will not, without the prior written consent of Lessor, which
consent will not be unreasonably withheld, and subject to such conditions as
Lessor may impose for its protection, affix or install any Equipment to or in
any other personal or real property.
(c) Any alterations or modifications to the Equipment that may, at any
time during the term of this Agreement, be required to comply with any
applicable law, rule or regulation shall be made at the expense of Lessee.
VII. STIPULATED LOSS VALUE:
Lessee shall promptly and fully notify Lessor in writing if any unit of
Equipment shall be or become worn out, lost, stolen, destroyed, irreparably
damaged in the reasonable determination of Lessee, or permanently rendered unfit
for use from any cause whatsoever (such occurrences being hereinafter called
"Casualty Occurrences"). On the Rental Payment Date next succeeding a Casualty
Occurrence (the "Payment Date"), Lessee shall either (as selected by Lessee):
(a) replace the unit of Equipment having suffered the Casualty Occurrence
with equipment of comparable make and model, having an equal or greater value
and utility, free and clear of all liens and encumbrances, and shall deliver to
Lessor a bill of sale, an Equipment Schedule, such Uniform Commercial Code
financing statements or statements of amendment and such other documents,
instruments, filings and/or certificates as reasonably may be required by Lessor
with respect to such replacement Equipment; or
(b) pay Lessor the sum of (x) the Stipulated Loss Value of such unit
calculated in accordance with Annex D as of the Rent Payment Date next preceding
such Casualty Occurrence ("Calculation Date"); and (y) all rental and other
amounts which are due hereunder as of the Payment Date. Upon payment of all sums
due hereunder, the term of this lease as to such unit shall terminate and
(except in the case of the loss, theft or complete destruction of such unit)
Lessor shall be entitled to recover possession of such unit.
VIII. LOSS OR DAMAGE:
Lessee hereby assumes and shall bear the entire risk of any loss, theft,
damage to, or destruction of, any unit of Equipment from any cause whatsoever
from the time the Equipment is shipped to Lessee.
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IX. INSURANCE:
Lessee agrees, at its own expense, to keep all Equipment insured for such
amounts as specified in Paragraph D of the Equipment Schedule and against such
hazards as Lessor may require, including, but not limited to, insurance for
damage to or loss of such Equipment and liability coverage for personal
injuries, death or property damage, with Lessor named as additional insured and
with a loss payable clause in favor of Lessor, as its interest may appear,
irrespective of any breach of warranty or other act or omission of Lessee. All
such policies shall be with companies, and on terms, reasonably satisfactory to
Lessor. Lessee agrees to deliver to Lessor evidence of insurance reasonably
satisfactory to Lessor. No insurance shall be subject to any co-insurance
clause. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to make proof
of loss and claim for insurance, and to make adjustments with insurers and to
receive payment of and execute or endorse all documents, checks or drafts in
connection with payments made as a result of such insurance policies. Any
expense of Lessor in adjusting or collecting insurance shall be borne by Lessee.
With respect to claims, Lessee will not make adjustments with insurers except
(i) with respect to claims, for damage to any unit of Equipment where the repair
costs do not exceed ten (10%) of such unit's fair market value, or (ii) with
Lessor's written consent. Said policies shall provide that the insurance may not
be altered or canceled by the insurer until after thirty (30) days written
notice to Lessor. Lessor may, at its option, apply proceeds of insurance, in
whole or in part, to (i) repair or replace Equipment or any portion thereof, or
(ii) satisfy any obligation of Lessee to Lessor hereunder.
X. RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any Schedule,
unless Lessee shall have exercised its extension option pursuant to Section
XVIII(a) hereof, or its renewal option pursuant to Section XVIII(b) hereof, or
its purchase option pursuant to Section XVIII(d) hereof, Lessee shall promptly,
at its own cost and expense: (i) perform any testing and repairs required to
place the affected units of Equipment in the same condition and appearance as
when received by Lessee (reasonable wear and tear excepted) and in good working
order for their originally intended purpose; (ii) if deinstallation, disassembly
or crating is required, cause such units, to be deinstalled, disassembled and
crated by an authorized manufacturer's, representative or such other service
person as is satisfactory to Lessor; (iii) return such units, free and clear of
all liens and encumbrances, to a location within the continental United States,
as Lessor shall direct; and (iv) comply with the provisions of Annex F to the
Schedule.
(b) Until Lessee has fully complied with the requirements of Paragraph (a)
above, Lessee's Rent payment obligation and all other obligations under this
Agreement shall continue from month to month notwithstanding any expiration or
termination of the Term. Lessor may terminate such continued Leasehold interest
upon ten (10) days' notice to Lessee. In addition to these Rents, Lessor shall
have all of its other rights, and remedies, available as a result of this
nonperformance.
XI. DEFAULT:
(a) Lessor may in writing declare this, Agreement in default ("Default")
if: (1) Lessee breaches its obligation to pay Rent or any other sum when due and
fails to cure the breach within ten (10) days; (2) Lessee fails to obtain and
maintain the insurance coverages at all times during the Term in accordance
with Section IX hereof; (3) Lessee breaches any of its other obligations
hereunder and fails to cure that breach within thirty (30) days after written
notice thereof; (4) any material representation or material warranty made by
Lessee in connection with this Agreement shall be false or misleading in any
material respect; (5) Lessee becomes insolvent or ceases to do business as a
going concern; (6) any Equipment is illegally used and fails to cure the breach
within ten (10) days of written notice by Lessor; (7) a petition is filed by or
against Lessee under any bankruptcy or insolvency laws,; (8) Lessee shall have
terminated its corporate existence, consolidated with, merged into, or conveyed
or leased substantially all of its assets as an entirety to any person (such
actions being referred to as an "Event"), unless, not less than sixty (60) days,
prior to such Event: (x) such person is organized and existing under the laws of
the United States or any state, and executes and delivers to Lessor an agreement
containing an effective assumption by such person of the due and punctual
performance of this Lease; and (y) Lessor is reasonably satisfied as to the
creditworthiness of such person; (9) there occurs a default under any guaranty
executed in connection with
5
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this Agreement; or (10) Lessee shall be in default under any obligation which
is in excess of $10,000,000.00 for (i) borrowed money, (ii) the deferred
purchase price of property or (iii) any lease agreement, and the occurrence of
such default entitles the obligee thereof to exercise remedies with respect
thereto. Such declaration shall apply to all Schedules except as specifically
excepted by Lessor.
(b) After Default, Lessee shall, without further demand, forthwith pay to
Lessor (i) as liquidated damages for loss of a bargain and not as a penalty, the
Stipulated Loss Value of the Equipment (calculated in accordance with Annex D as
of the Rent Payment Date next preceding the declaration of default), and (ii)
all Rents and other sums then due hereunder. If Lessee fails to pay the amounts
specified in the preceding sentence, then, at the request of Lessor, Lessee
shall comply with the provisions of Section X(a) hereof. Lessee hereby
authorizes Lessor to enter, with legal process, but without a breach of the
peace, any premises where any Equipment is located and take possession
thereof. Lessor may, but shall not be required to, sell Equipment at private or
public sale, in bulk or in parcels, with or without notice (if no notice is
required by law; but if notice is required by law, the parties agree that ten
(10) days advance notice is deemed sufficient), and without having the Equipment
present at the place of sale; or Lessor may, but shall not be required to,
lease, otherwise dispose of or keep idle all or part of the Equipment; and
Lessor may use Lessee's premises for any or all of the foregoing without
liability for rent, costs, damages or otherwise. The proceeds of sale, lease or
other disposition, if any, shall be applied in the following order of
priorities: (1) to pay all of Lessor's costs, charges and expenses incurred in
taking, removing, holding, repairing and selling, leasing or otherwise disposing
of Equipment; then, (2) to the extent not previously paid by Lessee, to pay
Lessor all sums due from Lessee hereunder; then (3) to reimburse to Lessee any
sums previously paid by Lessee as Liquidated damages; and (4) any surplus shall
be paid to Lessee. Lessee shall pay any deficiency in clauses (1) and (2)
forthwith.
(c) In addition to the foregoing rights, Lessor may terminate the lease as
to any or all of the Equipment.
(d) The foregoing remedies are cumulative, and any or all thereof may be
exercised in lieu of or in addition to each other or any remedies at law, in
equity, or under statute. Lessee waives notice of sale or other disposition (and
the time and place thereof), and the manner and place of any advertising. If
permitted by law, Lessee shall pay reasonable attorney's fees actually incurred
by Lessor in enforcing the provisions of this Lease and any ancillary documents.
Waiver of any default shall not be a waiver of any other or subsequent default.
(e) Any default under the terms of this or any other agreement between
Lessor and Lessee may be declared by Lessor a default under this and any such
other agreement.
XII. ASSIGNMENT:
(a) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY EQUIPMENT
OR THE INTEREST OF LESSEE HEREUNDER WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR,
WHICH CONSENT SHALL NOT BE UNREASONABLY WITHHELD.
(b) Lessor may, without the consent of Lessee, assign this Agreement or any
Schedule, or the right to enter into any Schedule. Lessor shall provide Lessee
with ten (10) days prior notice of any assignment. Lessee agrees that it will
pay all Rent and other amounts payable under each Schedule to the Lessor named
therein; provided, however, if Lessee receives written notice of an assignment
from Lessor, Lessee will pay all Rent and other amounts payable under any
assigned Schedule to such assignee or as instructed by Lessor. Each Schedule,
incorporating by reference the terms and conditions of this Agreement,
constitutes a separate instrument of lease, and the Lessor named therein or its
assignee shall have all rights as "Lessor" thereunder separately exercisable by
such named Lessor or assignee as the case may be, exclusively and independently
of Lessor or any assignee with respect to other Schedules executed pursuant
hereto. Without limiting the generality of the foregoing, the grant of security
interest in Section XVII(b) hereof shall, as it relates to the Equipment leased
under each Schedule (and to the proceeds and other collateral referred to in
Section XVII(b)), be deemed to have been granted solely to the Lessor named
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therein, or to its assignee, as applicable and such Equipment (and other related
collateral) shall not be deemed to collateralize Lessee's obligations, under any
of the Schedules to which such named Lessor or assignee, as the case may be, is
not a party. Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by assignee. Lessee hereby waives and
agrees, not to assert against any such assignee any defense, set-off, recoupment
claim or counterclaim which Lessee has or may at any time have against Lessor or
any other person for any reason whatsoever.
(c) Lessee acknowledges that it has been advised that General Electric
Capital Corporation is acting hereunder for itself and as agent for certain
third parties (each being herein referred to as a "Participant" and,
collectively, as the "Participants"); that the interest of the Lessor in this
Agreement, the Equipment Schedules, related instruments, and documents and/or
the Equipment may be conveyed to, in whole or in part, and may be used as
security for financing obtained from, one or more third parties, without the
consent of Lessee (the "Syndication"). Lessee agrees reasonably to cooperate
with Lessor in connection with the Syndication, including the execution and
delivery of such other documents, instruments, notices, opinions, certificates
and acknowledgments, as reasonably may be required by Lessor or such
Participant; provided, however in any event shall Lessee be required to consent
to any change that would adversely affect any of the economic terms of the
transactions contemplated herein.
(d) Subject always to the foregoing, this Agreement inures to the benefit
of, and is binding upon, the successors and assigns of the parties hereto.
XIII. NET LEASE; NO SET-OFF, ETC.:
This, Agreement is a net lease. Lessee's obligation to pay Rent and other
amounts due hereunder shall be absolute and unconditional. Lessee shall not be
entitled to any abatement or reductions, of, or set-offs against, said Rent or
other amounts, including, without limitation, those arising or allegedly arising
out of claims, (present or future, alleged or actual, and including claims
arising out of strict liability in tort or negligence of Lessor) of Lessee
against Lessor under this Agreement or otherwise. This Agreement shall not
terminate and the obligations of Lessee shall not be affected by reason of any
defect in or damage to, or loss of possession, use or destruction of, any
Equipment from whatsoever cause. It is, the intention of the parties, that Rents
and other amounts due hereunder shall continue to be payable in all events in
the manner and at the times set forth herein unless the obligation to do so
shall have been terminated pursuant to the express terms hereof.
XIV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless Lessor, the
Participants, their agents, employees, successors and assigns, from and against
any and all losses, damages, penalties, injuries, claims, actions and suits,
including legal expenses, of whatsoever kind and nature, in contract or tort,
and including, but not limited to, Lessor's, strict liability in tort, arising
out of (i) the selection, manufacture, purchase, acceptance or rejection of
Equipment, the ownership of Equipment during the Term, and the delivery, lease,
possession, maintenance, uses, condition, return or operation of the Equipment
(including, without limitation, latent and other defects, whether or not
discoverable by Lessor or Lessee and any claim for patent, trademark or
copyright infringement or environmental damage), or (ii) the condition of
Equipment sold or disposed of after use by Lessee, any subleases or employees of
Lessee. Lessee shall, upon request, defend any actions based on, or arising out
of, any of the foregoing.
(b) All of Lessor's rights, privileges and indemnities contained in this
Section shall survive the expiration or other termination of this Agreement and
the rights, privileges and indemnities contained herein are expressly made for
the benefit of, and shall be enforceable by Lessor, its successors and assigns.
XV. DISCLAIMER:
LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY
ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT
MADE, NOR SHALL
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BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS
OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE EQUIPMENT LEASED HEREUNDER OR
ANY COMPONENT THEREOF. INCLUDING, WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN,
COMPLIANCE WITH SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP,
MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION, SAFETY, PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All such risks, as between Lessor
and Lessee, are to be borne by Lessee. Without limiting the foregoing, Lessor
shall have no responsibility or liability to Lessee or any other person with
respect to any of the following (i) any liability, loss or damage caused or
alleged to be caused directly or indirectly by any Equipment, any inadequacy
thereof, any deficiency or defect (latent or otherwise) therein, or any other
circumstance in connection therewith; (ii) the use, operation or performance of
any Equipment or any risks relating thereto; (iii) any interruption of service,
loss of business or anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement or replacement
of any Equipment. If, and so long as, no default exists under this Lease, Lessee
shall be, and hereby is, authorized during the term of this Lease to assert and
enforce, at Lessee's sole cost and expense, from time to time, in the name of
and for the account of Lessor and/or Lessee, as their interests may appear,
whatever claims and rights Lessor may have against any Supplier of the
Equipment.
XVI. REPRESENTATIONS AND WARRANTIES OF LESSEE:
Lessee hereby represents and warrants to Lessor that on the date hereof
and on the date of execution of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and perform
under, this Agreement and all related documents (together, the "Documents") and
is duly qualified to do business wherever necessary to carry on its present
business and operations, including the jurisdiction(s) where the Equipment is or
is to be located.
(b) The Documents have been duly authorized, executed and delivered by
Lessee and constitute valid, legal and binding agreements, enforceable in
accordance with their terms, except to the extent that the enforcement of
remedies therein provided may be limited under applicable bankruptcy and
insolvency laws.
(c) No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into or
performance by Lessee of the Documents except such as have already been
obtained.
(d) The entry into and performance by Lessee of the Documents will not:
(i) violate any judgment, order, law or regulation applicable to Lessee or any
provision of Lessee's articles of incorporation, charter or by-laws; or (ii)
result in any breach of, constitute a default under or result in the creation of
any lien, charge, security interest or other encumbrance upon any Equipment
pursuant to any indenture, mortgage, deed of trust, bank loan or credit
agreement or other instrument (other than this Agreement) to which Lessee is a
party.
(e) There are no suits or proceedings pending or threatened in court or
before any commission, board or other administrative agency against or affecting
Lessee, which will have a material adverse effect on the ability of Lessee to
fulfill its obligations under this Agreement.
(f) The Equipment accepted under any Certificate of Acceptance is and will
remain tangible personal property.
(g) Each financial statement delivered to Lessor has been prepared in
accordance with GAAP, and since the date of the most recent such financial
statement, there has been no material adverse change.
8
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(h) Lessee is duly incorporated and will be at all times validly existing
and in good standing under the laws of the state of its incorporation (specified
in the first sentence of this Agreement).
(i) The Equipment will at all times be used for commercial or business
purposes.
XVII. OWNERSHIP FOR TAX PURPOSES; GRANT OF SECURITY' INTEREST; USURY SAVINGS:
(a) For income tax purposes, Lessor will treat Lessee as the owner of the
Equipment. Accordingly, Lessor agrees (i) to treat Lessee as the owner of the
Equipment on its federal income tax return, (ii) not to take actions or
positions, inconsistent with such treatment on or with respect to its federal
income tax return, and (iii) not to claim any tax benefits available to an owner
of the Equipment on or with respect to its federal income tax return. The
foregoing undertakings by Lessor shall not be violated by Lessor's taking a tax
position inconsistent with the foregoing sentence to the extent such position is
required by law or is taken through inadvertence so long as such inadvertent tax
position is reversed by Lessor promptly upon its discovery. Lessor shall in no
event be liable to lessee if Lessee fails to secure any of the tax benefits
available to the owner of the Equipment.
(b) In order to secure the prompt payment of the Rent and all of the other
amounts from time to time outstanding under and with respect to the Schedules,
and the performance and observance by Lessee of all the agreements, covenants
and provisions thereof (including, without limitation, all of the agreements,
covenants and provisions of the Lease that are incorporated therein), Lessee
hereby Grants to Lessor a first priority security interest in the Equipment
leased under the Schedules, together with all additions, attachments,
accessions, accessories and accessions thereto whether or not furnished by the
supplier of the Equipment and any and all substitutions, replacements or
exchanges therefor, in each such case in which Lessee shall from time to time
acquire an interest, and any and all insurance and/or other proceeds (but
without power of sale) of the property in and against which a security interest
is granted hereunder.
(c) It is the intention of the parties hereto to comply with any
applicable usury laws to the extent that any Schedule is determined to be
subject to such laws; accordingly, it is agreed that, notwithstanding any
provision to the contrary in any Schedule or the Lease, in no event shall any
Schedule require the payment or permit the collection of interest in excess of
the maximum amount permitted by applicable law. If any such excess interest is
contracted for, charged or received under any Schedule or the Lease, or in the
event that all of the principal balance shall be prepaid, so that under any of
such circumstances the amount of interest contracted for, charged or received
under any Schedule or the Lease shall exceed the maximum amount of interest
permitted by applicable law, then in such event (1) the provisions of this
paragraph shall govern and control, (2) neither Lessee nor any other person or
entity now or hereafter liable for the payment hereof shall be obligated to pay
the amount of such interest to the extent that it is in excess of the maximum
amount of interest permitted by applicable law, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal balance or refunded to Lessee, at the option of the Lessor, and (4)
the effective rate of interest shall be automatically reduced to the maximum
lawful contract rate allowed under applicable law as now or hereafter construed
by the courts having jurisdiction thereof. It is further agreed that without
limitation of the foregoing, all calculations of the rate of interest contracted
for, charged or received under any Schedule or the Lease which are made for the
purpose of determining whether such rate exceeds the maximum lawful contract
rate, shall be made, to the extent permitted by applicable law, by amortizing,
prorating, allocating and spreading in equal parts during the period of the full
stated term of the indebtedness, evidenced hereby, all interest at any time
contracted for, charged or received from Lessee or otherwise by Lessor in
connection with such indebtedness; provided, however, that if any applicable
state law is amended or the law of the United States of America preempts any
applicable state law, so that it becomes lawful for Lessor to receive a greater
interest per annum rate than is presently allowed, the Lessee agrees that, on
the effective date of such amendment or preemption, as the case may be, the
lawful maximum hereunder shall be increased to the maximum interest per annum
rate allowed by the amended state law or the law of the United States of America
(but not in excess of the interest rate contemplated hereunder).
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XVIII. END OF LEASE OPTIONS.
Provided that Lessee is not then in default under this Agreement or
any other agreement between Lessor and Lessee, Lessee shall only have the
option, upon the expiration of the term of the first Schedule to expire, to
return, or to purchase all (but not less than all) of the Equipment leased
under all Schedules executed hereunder upon the following terms and conditions.
The option exercised for the first Schedule to expire shall be the option
exercised automatically under all other Schedules hereunder.
(a) Return. So long as Lessee shall not have exercised its purchase
------
option pursuant to this Section, Lessee shall have the option, upon the
expiration of the term of each Schedule, to return all (but not Less than All)
of the Equipment described on all Schedules executed hereunder, to Lessor upon
the following terms and conditions: If Lessee desires to exercise this option,
Lessee shall (i) pay to Lessor on the last day of the term of this Agreement
with respect to each individual Schedule, in addition to the scheduled Rent
then due on such date and all other sums then due hereunder, a terminal rental
adjustment amount equal to the Fixed Purchase Price of such Equipment, and (ii)
return the Equipment to Lessor in accordance with Section X hereof. Thereafter,
upon return of all of the Equipment described on all Schedules executed
hereunder, Lessor and Lessee shall arrange for the commercially reasonable
sale, scrap or other disposition of the Equipment. Upon satisfaction of the
conditions specified in this Paragraph (a), Lessor will transfer, on an AS IS,
WHERE IS BASIS, without recourse or warranty, express or implied, of any kind
whatsoever, all of Lessor's interest in and to the Equipment. Lessor shall not
be required to make and may specifically disclaim any representation or
warranty as the condition of such Equipment and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it received in the
Equipment free and clear of any liens or encumbrances created by, through or
under Lessor). Lessor shall execute and deliver to Lessee such Uniform
Commercial Code Statements of Termination as reasonably may be required in
order to terminate any interest of Lessor in and to the Equipment. Upon the
sale, scrap or other disposition of the Equipment the net sales proceeds with
respect to the Equipment sold will be paid to, and held and applied by, Lessor
as follows: Lessor shall promptly thereafter pay to Lessee an amount equal to
the Residual Risk Amount (as specified in the Schedule) of the Equipment (less
all reasonable costs, expenses and fees, including storage, reasonable and
necessary maintenance and other remarketing fees incurred in connection with
the sale, scrap, or disposition of such Equipment) plus all net proceeds, if
any, of such sale in excess of the Residual Risk Amount of the Equipment and
applicable taxes, if any.
(b) Purchase. So long as Lessee shall not have exercised its option
--------
to return the Equipment pursuant to this Section, Lessee shall have the option,
upon the expiration of the term of each Schedule, to purchase all (but not less
than all) of the Equipment described on all Schedules executed hereunder upon
the following terms and conditions: If Lessee desires to exercise this option
with respect to the Equipment, Lessee shall pay to Lessor on the last day of
the Term with respect to each individual Schedule, in addition to the scheduled
Rent (if any) then due on such date and all other sums then due hereunder, in
cash the purchase price for the Equipment so purchased, determined as
hereinafter provided. The purchase price of the Equipment shall be an amount
equal to the Fixed Purchase Price of such Equipment (as specified on the
Schedule), plus all taxes and charges upon sale and all other reasonable and
documented expenses incurred by Lessor in connection with such sale, including,
without limitation, any such expenses incurred based on a notice from Lessee to
Lessor that Lessee intended to return any such items of Equipment. Upon
satisfaction of the conditions specified in this Paragraph, Lessor will
transfer, on an AS IS, WHERE IS BASIS, without recourse or warranty, express or
implied, of any kind whatsoever, all of Lessor's interest in and to the
Equipment. Lessor shall not be required to make and may specifically disclaim
any representation or warranty as to the condition of such Equipment and other
matters (except that Lessor shall warrant that it has conveyed whatever
interest it received in the Equipment free and clear of any lien or encumbrance
created by, through or under Lessor). Lessor shall execute and deliver to
Leasee such Uniform Commercial Code Statements of Termination as reasonably may
be required in order to terminate any interest of Lessor in and to the
Equipment.
(c) Notice of Election. Lessee shall give Lessor written notice of
------------------
its election of the options specified in this Section not less than one
hundred eighty (180) days nor more than three hundred sixty-five (365) days
before the expiration of the Basic Term of the first Schedule to be executed
under this Agreement (such expiration date, the "Expiration Date"); provided,
--------
however, Lessor agrees that (i) it will give Lessee notice at least 210 days
-------
prior to the Expiration Date that the notice of election is required
10
<PAGE>
to be delivered on or before the 180th day prior to the Expiration Date (such
notice by Lessor, the "Lessor's Notice"), and (ii) in the event Lessor fails
to deliver the Lessor's Notice to Lessee on or prior to such 210th day, Lessee
may (as its sole remedy with respect thereto) delay its delivery of its notice
of election until the 30th day after receiving Lessor's Notice. Such election
shall be effective with respect to all Equipment described on all Schedules
executed hereunder. If Lessee fails timely to provide such notice, without
further action Lessee automatically shall be deemed to have elected to purchase
the Equipment pursuant to Paragraph (b).
XIX. EARLY TERMINATION
(a) On or after the First Termination Date (specified in the applicable
Schedule), Lessee may, so long as no default exists hereunder, terminate this
Agreement as to all (but not less than all) of the Equipment on such Schedule as
of a rent payment date ("Termination Date") upon at least ninety (90) days prior
written notice to Lessor.
(b) Lessee shall, and Lessor may, solicit cash bids for the Equipment
on an AS IS, WHERE IS BASIS without recourse to or warranty from Lessor, express
or implied ("AS IS BASIS"). Prior to the Termination Date, Lessee shall (i)
certify to Lessor any bids received by Lessee and (ii) pay to Lessor (A) the
Termination Value (calculated as of the rental due on the Termination Date)
for the Equipment, and (B) all rent and other sums due and unpaid as of the
Termination Date.
(c) Provided that all amounts due hereunder have been paid on the
Termination Date, Lessor shall (i) sell the Equipment on an AS IS BASIS for cash
to the highest bidder and (ii) refund the proceeds of such sale (net of any
related expenses) to Lessee up to the amount of the Termination Value. If such
sale is not consummated, no termination shall occur and Lessor shall refund the
Termination Value (less any expenses incurred by Lessor) to Lessee.
(d) Notwithstanding the foregoing, Lessor may elect by written notice,
at any time prior to the Termination Date, not to sell the Equipment. In that
event, on the Termination Date Lessee shall (i) return the Equipment (in
accordance with Section XI) and (ii) pay to Lessor all amounts required under
Section XVIII(b) less the amount of the highest bid certified by Lessee to
Lessor.
XX. FINANCIAL COVENANTS
The Lessee covenants and agrees that, as long as there is any
obligation outstanding hereunder, the Lessee (which term, for the purpose of
this Section XX only, shall mean Mail-Well I Corporation and its Subsidiaries)
will perform and observe the following covenants:
(a) Consolidated Current Ratio. The Lessee will at all times maintain a
--------------------------
Consolidated Current Ratio of not less than 1.00 to 1.00.
(b) Consolidated Net Worth. The Lessee will at all times maintain
----------------------
Consolidated Net Worth in an amount not less than the sum of (a) $50,000,000,
plus (b) 75 % of cumulative Consolidated Net Income, if positive for any fiscal
- ----
quarter, i.e., exclusive of negative Consolidated Net Income for any fiscal
quarter, after July 31, 1995, plus (c) all Net Proceeds of each Equity Issuance
----
after July 31, 1995 up to $50,000,000.
(c) Ratio of Total Debt to EBITDA. The Lessee will not permit the
-----------------------------
ratio, calculated as of the end of each fiscal quarter of the Lessee commencing
with the fiscal quarter ended September 30, 1996, of (i) Total Debt to (ii)
EBITDA for the four fiscal quarters of the Lessee then ended, to exceed the
ratio set forth below for the period during which such fiscal quarter end
occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From January 1, 1996, through December 31, 1996 4.75 to 1.00
From January 1, 1997, through December 31, 1997 4.25 to 1.00
From January 1, 1998, through December 31, 1998 3.75 to 1.00
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
From January 1, 1999, through December 31, 1999 3.25 to 1.00
From January 1, 2000, and at all times thereafter 2.75 to 1.00
</TABLE>
(d) Ratio of Total Debt to Total Capitalization. The Lessee will
-------------------------------------------
not permit the ratio, calculated as of the end of each fiscal quarter of the
Lessee, of Total Debt to Total Capitalization to exceed the ratio set forth
below for the period during which such fiscal quarter end occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From December 31, 1995 through December 31, 1996 0.900 to 1.00
From January 1, 1997, through December 31, 1997 0.850 to 1.00
From January 1, 1998, through December 31, 1998 0.775 to 1.00
From January 1, 1999, through December 31, 1999 0.725 to 1.00
From January 1, 2000, and at all times there-after 0.675 to 1.00
</TABLE>
(e) Consolidated Fixed Charge Coverage Ratio. The Lessee will not
----------------------------------------
permit the Consolidated Fixed Charge Coverage Ratio, calculated as of the end of
each fiscal quarter of the Lessee commencing with the fiscal quarter ended
September 30, 1996, for the four fiscal quarters of the Lessee then ended, to be
less than the ratio set forth below for the period during which such fiscal
quarter end occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From January 1, 1996, through December 31, 1997 1.05 to 1.00
From January 1, 1998, and at all times thereafter 1.10 to 1.00
</TABLE>
(f) Consolidated Interest Coverage Ratio. The Lessee will not permit
------------------------------------
the Consolidated Interest Coverage Ratio, calculated as of the end of each
fiscal quarter of the Lessee commencing with the fiscal quarter ended September
30, 1996, for the four fiscal quarters of the Lessee then ended, to be less than
the ratio set forth below for the period during which such fiscal quarter end
occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From January 1, 1996, through December 31, 1996 2.25 to 1.00
From January 1, 1997, through December 31, 1997 2.50 to 1.00
From January 1, 1998, through December 31, 1998 2.75 to 1.00
From January 1, 1999, through December 31, 1999 3.25 to 1.00
From January 1, 2000, and at all times thereafter 3.75 to 1.00
</TABLE>
(g) Financial Covenants and Reporting. The financial covenants
---------------------------------
contained in Article 10 shall be calculated as follows: (i) all such covenants
shall be calculated on a consolidated basis for the Lessee and its Subsidiaries
(including, without limitation, Supremex and its Subsidiaries), (ii) EBITDA as a
component used in calculating the financial covenant contained herein shall be
calculated based on the four fiscal quarters of the Lessee then most recently
ended, (iii) EBITDA, Capital Expenditures and Consolidated Interest Expense, as
a component used in calculating the financial covenants contained in Section XX
shall be calculated based on the four fiscal quarters of the Lessee then most
recently ended, and (iv) taxes paid or payable in cash as a component used in
calculating the financial covenant contained in Section XX shall be calculated
based on the four fiscal quarters of the Lessee then most recently ended.
Notwithstanding anything to the contrary contained in this Agreement, any
reference in Section XX of this Agreement to the first, second or third fiscal
quarter of the Lessee ending on March 31, June 30 or September 30, respectively,
or to any such date, shall mean and refer to such first, second or third fiscal
quarter of the Lessee ending on or about March 31, June 30 or September 30,
respectively, or to the date on or about such date when the applicable fiscal
quarter of the Lessee
12
<PAGE>
actually ends, respectively, until the Lessee has modified its accounting
procedures to fix the last day of its first three fiscal quarters at March 31,
June 30 and September 30, respectively.
(h) As used herein the following terms shall have the following
meanings:
"Capital Expenditures" means, for any period, expenditures (including
--------------------
the aggregate amount of Capital Lease Obligations incurred during such period)
made by the Lessee or any of its Subsidiaries to acquire or construct fixed
assets, plant or equipment (including renewals, improvements or replacements,
but excluding repairs) during such period and which, in accordance with GAAP,
are classified as capital expenditures, exclusive of any expenditures for Future
Acquisitions.
"Capital Lease Obligations" means, as to any Person, the obligations
-------------------------
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal Property, which obligations are
classified as a capital lease on a balance sheet of such Person under GAAP. For
purposes of this Agreement, the amount of such Capital Lease Obligations shall
be the capitalized amount thereof, determined in accordance with GAAP.
"Consolidated Current Assets" means, at any particular time, all
---------------------------
amounts which, in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Lessee and its Subsidiaries.
"Consolidated Current Liabilities" means, at any particular time, all
--------------------------------
amounts which, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Lessee and its Subsidiaries, less, in
connection with any calculation of Consolidated Current Liabilities during the
12-month period immediately preceding the Revolving Credit Loans Maturity Date,
the outstanding principal amount of the Revolving Credit Loans and the Supremex
Revolving Credit Loans.
"Consolidated Current Ratio" means, at any particular time, the ratio
--------------------------
of Consolidated Current Assets to Consolidated Current Liabilities.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
----------------------------------------
ratio of (a) (i) EBITDA of the Lessee and its Subsidiaries for such period minus
-----
(ii) taxes of the Lessee and its Subsidiaries paid or payable in cash during
such period, to (b) the Fixed Charges of the Lessee and its Subsidiaries for
such period.
"Consolidated Funded Debt" means, at any particular time, (a) all
------------------------
Debt of the Lessee and its Subsidiaries which matures by its terms, or is
renewable at the option of the Lessee or any of its Subsidiaries, to a date more
than one year after the original creation of such Debt and (b) all other Debt
which would be classified as "funded indebtedness" or "long-term indebtedness"
on a consolidated balance sheet of the Lessee and its Subsidiaries as of such
date in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, for any period, the
------------------------------------
ratio of (a) EBITDA of the Lessee and its Subsidiaries for such period to (b)
Consolidated Interest Expense for such period.
"Consolidated Interest Expense" means, for any period, all interest
-----------------------------
on Debt of the Lessee and its Subsidiaries paid or accrued during such period,
including the interest portion of payments under Capital Lease Obligations.
"Consolidated Net Worth" means, at any particular time, all amounts
----------------------
which, in conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of the Lessee and its Subsidiaries plus any
deductions made for currency translation adjustments and minus any additions
made for currency translation adjustments; provided, however, that, for purposes
-----------------
of the calculation of "Consolidated Net Worth" and notwithstanding any change in
GAAP that may occur after the Closing Date, stockholders' equity shall include
an amount equal to the remainder (calculated at such time) of (a) the equity
contributed by Holdings to the Lessee from proceeds of the issuance of common
stock
13
<PAGE>
by Holdings to the Mail-Well ESOP minus (b) the outstanding principal balance of
the Mail-Well ESOP Loans.
"Debt" means as to any Person at any time (without duplication): (a)
----
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of Property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than 90 days, (d) all Capital
Lease Obligations of such Person, (e) all Debt of others Guaranteed by such
Person, (f) all obligations secured by a Lien existing on Property owned by such
Person, whether or not the obligations secured thereby have been assumed by such
Person or are non-recourse to such Person, (g) all reimbursement obligations of
such Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds and similar instruments, (h) all
obligations of such Person to redeem or retire shares of Capital Stock of such
Person, (i) all obligations and liabilities of such Person under Interest Rate
Protection Agreements, and (j) all liabilities of such Person in respect of
unfunded vested benefits under any Plan.
"EBITDA" means, for any period, without duplication, the sum of the
------
following for the Lessee and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP: (a) Consolidated Net Income, plus
----
(b) Consolidated Interest Expense, plus (c) income and franchise taxes to the
----
extent deducted in determining Consolidated Net Income, plus (d) depreciation
----
and amortization expense and other non-cash items to the extent deducted in
determining Consolidated Net Income, minus (e) non-cash income to the extent
-----
included in determining Consolidated Net Income.
"First Mail-Well ESOP Loan" means the loan made by the Lessee to the
-------------------------
Mail-Well ESOP on the Closing Date in the aggregate principal amount of
$2,999,991 .10 with proceeds of the ESOP Loans funded on the Closing Date to
allow the Mail-Well ESOP to purchase 280,373 shares of Holdings Common Stock.
"Fixed Charges" means, for any period, the sum of (a) Consolidated
-------------
Interest Expense of the Lessee and its Subsidiaries during such period, plus (b)
----
all scheduled payments (as such scheduled payments are reduced by application of
any prepayments) of principal with respect to the Term Loans A, the Term Loans B
and the Supremex Terms Loans during such period, plus (c) the lesser of (i)
----
actual Capital Expenditures or (ii) Permitted Capital Expenditures of the Lessee
and its Subsidiaries during such period.
"Fourth Mail-Well ESOP Loan" means the loan to be made by the Lessee
--------------------------
to the Mail-Well ESOP on or before the Additional Term Loans Funding Date in the
principal amount of $450,000 with proceeds of the Additional ESOP Loans to allow
the Mail-Well ESOP to purchase shares of Holdings Common Stock.
"Future Acquisitions" means any transaction or series of related
-------------------
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition by the Lessee or any of its Subsidiaries of all or substantially all
of the assets of a Person or of any business or division of a Person, (b) the
acquisition by the Lessee or any of its Subsidiaries of in excess of 50% of the
Capital Stock of any Person or otherwise causing any Person to become a
Subsidiary, or (c) a merger, consolidation, amalgamation or any other
combination with another Person (other than a Person that is a Subsidiary of the
Lessee) if the Lessee or a Subsidiary of the Lessee is the surviving entity.
"GAAP" means generally accepted accounting principles, applied on a
----
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period
"Mail-W ESOP Loans", means the First Mail-Well ESOP Loan, the Second
-----------------
Mail-Well ESOP Loan, the Third Mail-Well ESOP Loan and the Fourth Mail-Well ESOP
Loan.
14
<PAGE>
"Second Mail-Well ESOP Loan" means the loan made by the Lessee to the
--------------------------
Mail-Well ESOP on or about September 13, 1994 in the principal amount of
$244,580.60 to allow the Mail-Well ESOP to purchase 22,858 shares of Holdings
Common Stock.
"Subsidiary" means, with respect to any person, any corporation or
----------
other entity of which at least a majority of the outstanding shares of stock or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors (or persons performing similar
functions) of such corporation or entity (irrespective of whether or not at the
time, in the case of a corporation, stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such person or one or more of its Subsidiaries or by such person and one or more
of its Subsidiaries
"Supremix Credit Agreement" means that certain Credit Agreement dated
-------------------------
as of the Second Restatement Date by and among the Lessee, Supremex, Banque
Paribas as agent for the Supremex Lenders and the Supremex Lenders and any and
all amendments, modifications, supplements, renewals, extensions or restatements
thereof.
"Supremex Loans" means the "Loans" as such term is defined in the
--------------
Supremex Credit Agreement.
"Third Mail-Well ESOP Loan" means the loan made by the Lessee to the
-------------------------
Mail-Well ESOP on the First Restatement Date in the aggregate principal amount
of $1,499,996.25 with proceeds of the ESOP Loans funded on the First Restatement
Date to allow the Mail-Well ESOP to purchase an additional 133,333 shares of
Holdings Common Stock.
"Total Capitalization" means, at any particular time, an amount equal
--------------------
to the sum of (a) Consolidated Funded Debt plus (b) Consolidated Net Worth.
----
"Total Debt" means, at any particular time, the aggregate principal
----------
amount of all Debt of the Lessee and its Subsidiaries outstanding, determined on
a consolidated basis.
Capitalized Terms not defined herein or in any Schedule hereto shall
have the meaning ascribed to them in the Second Amended and Restated Credit
Agreement with Mail-Well and Banque Paribas as agent dated July 31, 1995, as
such agreement shall have been or shall hereafter be amended, supplemented,
restated and/or replaced from time to time (the "Credit Agreement").
(i) Lessee hereby agrees that (i) Lessee shall have the right et
its sole election, to amend the provisions of this Section XX so as to cause
them to be consistent with the financial covenants that are then contained in
the Credit Agreement, and (ii) such amendments, if any, shall be valid and
binding and enforceable against Lessee whether or not the same are acknowledged
or consented to by Lessee, by written amendment or otherwise.
XXI. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN
LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
LESSEE AND LESSOR. The scope of this waiver is intended to be all encompassing
of any and all disputes that may be filed in any court (including, without
limitation, contract claims, tort claims, breach of duty claims, and all other
common law and statutory claims). THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY
NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, ANY
RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS
TRANSACTION OR ANY RELATED TRANSACTION. In the event of litigation, this
Agreement may be filed as a written consent to a trial by the court.
15
<PAGE>
(b) Any cancellation or termination by Lessor, pursuant to the
provision of this Agreement, any Schedule, supplement or amendment hereto, or
the lease of any Equipment hereunder, shall not release Lessee from any then
outstanding obligations to Lessor hereunder.
(c) All Equipment shall at all times remain personal property of
Lessor regardless of the degree of its annexation to any real property and shall
not by reason of any installation in, or affixation to, real or personal
property become a part thereof.
(d) Time is of the essence of this Agreement. Lessor's failure at any
time to require strict performance by Lessee of any of the provisions hereof
shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith.
(e) Lessee agrees, upon Lessor's request, to execute any instrument
necessary or expedient for filing, recording or perfecting the interest of
Lessor.
(f) All notices required to be given hereunder shall be in writing,
personally delivered, delivered by overnight courier service, sent by facsimile
transmission (with confirmation of receipt), or sent by certified mail, return
receipt requested, addressed to the other party at its respective address stated
above or at such other address as such party shall from time to time designate
in writing to the other party; and shall be effective from the date of receipt.
(g) This Agreement and any Schedule and Annexes thereto constitute
the entire agreement of the parties with respect to the subject matter hereof.
NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF ANY OF ITS
PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED BY AN
AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
(h) The representations, warranties and covenants of Lessee herein
shall be deemed to survive the closing hereunder. Lessor's obligations to
acquire and lease specific items of Equipment shall be conditioned upon Lessee
providing to Lessor such information with respect to Lessee's financial
condition as Lessor may require, and Lessor being satisfied that there shall
have been no material adverse change in the business or financial condition of
Lessee from the date of execution hereof. The obligations of Lessee under
Sections III, X, and XIV which accrue during the term of this Agreement and
obligations which by their express terms survive the termination of this
Agreement, shall survive the termination of this Agreement.
(i) In case of a failure of Lessee to comply with any provision of
this Agreement, Lessor shall have the right, but shall not be obligated, to
effect such compliance, in whole or in part; and all moneys reasonably spent and
expenses and obligations incurred or assumed by Lessor in effecting such
compliance (together with interest thereon at the rate specified in Paragraph
(j) of this Section) shall constitute additional Rent due to Lessor within five
(5) days after the date Lessor sends notice to Lessee requesting payment.
Lessor's effecting such compliance shall not be a waiver of Lessee's default.
(j) Any Rent or other amount not paid to Lessor when due hereunder
after three (3) days notice by Lessor to Lessee shall bear interest, both before
and after any judgment or termination hereof from the original due date, at the
lesser of the Interest Rate (as defined on the applicable Schedule(s)) plus two
and one half percent (2.5%) per annum or the maximum rate allowed by law.
(k) Any provisions in this Agreement and any Schedule which are in
conflict with any statute, law or applicable rule shall be deemed omitted,
modified or altered to conform thereto.
XXII: CHOICE OF LAW; JURISDICTION: THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND
16
<PAGE>
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF
THE EQUIPMENT. The parties agree that any action or proceeding arising out of or
relating to this Agreement may be commenced in the United States District Court
for the Southern District of New York.
XXIII: CHATTEL PAPER: To the extent that any Equipment Schedule would
constitute chattel paper, as such term is defined in the Uniform Commercial Code
as in effect in any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Lease in and of itself
without the transfer or possession of the original of an Equipment Schedule
executed pursuant to this Lease and incorporating the Lease by reference; and no
security interest in this Lease and an Equipment Schedule may be created by the
transfer or possession of any counterpart of the Equipment Schedule other than
the original thereof, which shall be identified as the document marked
"Original" and all other counterparts shall be marked "Duplicate".
XXIV. JOINT AND SEVERAL OBLIGATIONS. The obligations of Mail Well I
Corporation, Graphic Arts Center, Inc. Mail-Well, Inc., Mail-West, Pavey
Envelope & Tag Corp., Wisco II LLC, and Wisco Envelope Corp. are joint and
several, Each reference to the term "Lessee" shall be deemed to refer to each of
Mail Well I Corporation, Graphic Arts Center, Inc. Mail-West, Pavey Envelope &
Tag Corp., Wisco II LLC, and Wisco Envelope Corp.; each representation and
warranty made by Lessee shall be deemed to have been made by each such party;
each covenant and undertaking on the part of Lessee shall be deemed individually
applicable with respect to each such party; and each event constituting a
Default under this Lease shall be determined with respect to each such party. A
separate action or actions may be brought and prosecuted against any such party
whether an action is brought against any other party or whether any other party
is joined in any such action or actions. Each such party waives any right to
require Lessor to: (a) proceed against any other party; (b) proceed against or
exhaust any security held from any other party; or (c) pursue any other remedy
in Lessor's power whatsoever. Notices hereunder required to be provided to
Lessee shall be effective if provided to any Paul V. Reilly, Mail-Well, Inc., 23
Inverness Way East, Englewood, CO 80112, with a copy to the Secretary. Any
consent on the pair of Lessee hereunder shall be effective when provided by any
such party and Lessor shall be entitled to rely upon any notice or consent given
by any such party as being notice or consent given by Lessee hereunder.
In the event any obligation of Lessee under this Lease is deemed to
be an agreement by any individual Lessee to answer for the debt or default of
another individual Lessee (including each other) or as a hypothecation of
property as security therefor, each Lessee represents and warrants that: (x) no
representation has been made to it as to the creditworthiness of any other
obligor, and (y) it has established adequate means of obtaining from each other
obligor on a continuing basis, financial or other information pertaining to each
other obligor's financial condition. Each Lessee expressly (i) waives diligence,
demand, presentment, protest and notice of every kind and nature whatsoever,
(ii) consents to (and waives any defense, counterclaim, offset, recoupment or
other action that might otherwise be deemed to arise absent such consent) the
taking by Lessor of any additional security for the obligations securely hereby,
or the alteration or release in any manner of, and any other action or inaction
of any kind whatsoever with respect to, any security now or hereafter held in
connection with any obligations now or hereafter secured by this Lease
(including without limitation, any such action or inaction, that constitutes or
relates to the existence, value, condition, loss, subordination or other
disposition (with or without substitution) or failure to have title to or
perfect and maintain a security interest in, or the time, place and manner of
any sale or other disposition of, any Equipment leased under, or collateral or
security given in connection with, this Agreement, or any other impairment
(whether intentional or negligent, by operation of Law or otherwise) of the
rights of any Lessee), and (iii) consents (and waives any defense, counterclaim,
offset, recoupment or other action that might otherwise be deemed to arise
absent such consent) that Lessor and each other Lessee may deal with each other
in connection with their respective obligations hereunder or otherwise, or altar
any contracts now or hereafter existing between them, in any manner whatsoever,
including without limitation the renewal extension, acceleration, changes in
time for payment, and increases or
17
<PAGE>
decreases in any rent, rate of interest or other amounts owing, all without in
any way altering the liability of each Lessee, or affecting any security for
such obligations. Should any default be made in the payment of any such
obligations or in the terms or conditions of any security held, Lessor is hereby
expressly given the right, at its option, to proceed in the enforcement of this
Lease independently of any other remedy or security it may at any time hold in
connection with such obligations secured and it shall not be necessary for
Lessor to proceed upon or against and/or exhaust any other security or remedy
before proceeding to enforce its rights against any Lessee. Each Lessee further
(x) waives any right of subrogation, reimbursement, exoneration, contribution,
indemnification, setoff or other recourse in respect of sums paid to Lessor by
any Lessee; and (y) subordinates in right of payment to the indefeasible payment
in full to Lessor of all obligations owed to Lessor under this Agreement and
each Equipment Schedule, payment of all amounts now or hereafter owed to such
Lessee by any other Lessee, and hereby assigns the same to Lessor as security
for all obligations to be paid or otherwise performed by Lessee under the
Agreement and each Equipment Schedule. Without limiting the generality of any of
the foregoing or any other provision of this Agreement, each Lessee hereby
agrees that its obligations under this Lease and any Equipment Schedule shall be
primary, absolute, continuing and unconditional, irrespective of and unaffected
by (A) any action or circumstance referenced in this Section XXIV, (B) any other
Lessee's voluntary or involuntary bankruptcy, assignment for the benefit of
creditors, reorganization, or similar proceedings affecting such Lessee or any
of its assets; or (C) any other action or circumstance which might otherwise
constitute a legal or equitable discharge or defense of a co-party, surety or
guarantor, in each such case, regardless of any notice to or consent of such
Lessee.
LESSOR LESSEE
GENERAL ELECTRIC CAPITAL CORPORATION, MAIL WELL I CORPORATION
FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS -----------------------------
-----------------------------
-----------------------------
By: By:
------------------------------------ --------------------------
Name: Name:
---------------------------------- ------------------------
Title: Title:
--------------------------------- -----------------------
GRAPHIC ARTS CENTER, INC.
-----------------------------
-----------------------------
-----------------------------
By:
--------------------------
Name:
------------------------
Title:
-----------------------
18
<PAGE>
WISCO ENVELOPE CORP.
------------------------------------
------------------------------------
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
MAIL-WELL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
MAIL-WELL WEST
------------------------------------
------------------------------------
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
PAVEY ENVELOPE AND TAG CORP.
------------------------------------
------------------------------------
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
WISCO II LLC
------------------------------------
------------------------------------
------------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
19
<PAGE>
EQUIPMENT SCHEDULE
SCHEDULE NO. ______
DATED THIS ______ DAY OF ____________________, 199_
TO MASTER LEASE AGREEMENT
DATED AS OF ________________________
Lessor & Mailing Address: Lessee & Mailing Address:
GENERAL ELECTRIC CAPITAL CORPORATION, MAIL WELL I CORPORATION
FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS
303 International Circle, Suite 300
Hunt Valley, Maryland 21031 GRAPHIC ARTS CENTER, INC.
WISCO ENVELOPE CORP.
MAIL-WELL, INC.
MAIL-WELL WEST
PAVEY ENVELOPE AND TAG CORP.
WISCO II LLC
This Equipment Schedule is executed Pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement;" said Agreement and this Schedule being collectively referred to as
"Lease"). This Equipment Schedule, incorporating by reference the Agreement,
constitutes a separate instrument of lease.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire lease to Lessee the
Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $______________.
2. Basic Term Lease Rate Factor: ____________.
3. Daily Lease Rate Factor: _________________.
4. Basic Term: ______________________________.
5. Basic Term Commencement Date: January 1, 19__.
6. Equipment Location: ______________________.
7. Lessee Federal Tax ID No.: _______________.
1
<PAGE>
8. Supplier: ________________________________________.
9. Last Delivery Date: ________________________.
10. Lessee agrees and acknowledges that the Capitalized Lessor's Cost of the
Equipment as stated on the Schedule is equal to the acquisition cost of
the Equipment on the date hereof.
14. First Termination Date: One (1) year after the Basic Term Commencement
Date.
15. Fixed Purchase Price: _____________% (as a percent of the Capitalized
Lessor's Cost of the Equipment).
16. Residual Risk Amount: _____________% (as a percent of the Capitalized
Lessor's Cost of the Equipment).
C. Term and Rent.
-------------
1. Basic Term Rent. Commencing on January 1, 1997, and on the same day of
each quarter thereafter (each, a "Rent Payment Date") during the Initial Term
("Initial Term Rent"), Lessee shall pay as Rent quarterly installments of
principal and interest, in arrears, each installment in the principal amount
specified on the attached Amortization Schedule together with interest on the
Unamortized Principal Balance as of the immediately preceding Rent Payment Date
(after application of the Rent paid on such date) at the Interest Rate for the
Interest Period following such immediately preceding Rent Payment Date. Interest
shall be calculated on the basis of a 360 day year for the actual number of days
elapsed. Said Rent consists of principal and interest components, such principal
components being as provided in the Amortization Schedule attached hereto.
As used herein, the following terms shall have the following meanings:
"Interest Period" shall mean the period beginning on the Lease
---------------
Commencement Date and ending on the next Rent Payment Date, and each subsequent
quarterly period.
"Interest Rate" shall mean that percentage per annum calculated as the
-------------
sum of (a) the LIBOR Rate redetermined quarterly, plus (b) two hundred (200)
basis points.
"LIBOR Rate" shall mean, with respect to any Interest Period occurring
----------
during the term of the Lease, an interest rate per annum equal at all times
during such Interest Period to the quotient of (1) the rate per annum as
determined by Lessor at which deposits of U.S. Dollars in immediately available
and freely transferable funds are offered at 1 1:00 a.m. (London, England time)
two (2) Business Days before the commencement of such Interest Period to major
banks in the London interbank market for a period of ninety (90) days and in an
amount equal or comparable to the Unamortized Principal Balance, divided by (2)
a number equal to 1.00 minus the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of the LIBOR Reserve Requirements current on
the date two (2) Business Days prior to the first day of the Interest Period.
"LIBOR Reserve Requirements" shall mean the daily average for the
--------------------------
applicable Interest Period of the maximum rate applicable to Lessor or its
Participants at which reserves (including, without limitation, any supplemental,
marginal and emergency reserves) are imposed during such Interest Period by the
Board of Governors of the Federal Reserve System (or any successor) on
"Eurocurrency liabilities", as defined in such Board's Regulation D (or in
respect of any other category of liabilities that include deposits by reference
to which the interest rates on Eurodollar loans is determined or any category of
extensions of credit or other assets that include loans by non-United States
offices of any lender to United States residents), having a term equal to such
Interest Period, subject to any amendments of such reserve requirement by such
Board or its successor, taking into account any transitional adjustments
thereto.
If at any time Lessor or any Participant (or, without duplication, the
bank holding company of which such Participant is a subsidiary) determines that
either adequate and reasonable means do not exist for ascertaining the LIBOR
Rate, or it becomes impractical for Lessor or any Participant to obtain funds to
make or maintain the financing hereunder with interest at the LIBOR Rate, or
Lessor or any Participant shall have determined that the LIBOR Rate will not
adequately and fairly reflect the cost to Lessor or any Participant of making,
maintaining, or funding the transaction hereunder at the LIBOR Rate, or Lessor
or
2
<PAGE>
any Participant reasonably determines that, as a result of changes to applicable
law after the date of execution of the Agreement, or the adoption or making
after such date of any interpretations, directives or regulations (whether or
not having the force of law) by any court, governmental authority or reserve
bank charged with the interpretation or administration thereof, it shall be or
become unlawful or impossible to make, maintain, or fund the transaction
hereunder at the LIBOR Rate, then Lessor promptly shall give notice to Lessee of
such determination, and Lessor and Lessee shall negotiate in good faith a
mutually acceptable alternative method of calculating the Interest Rate and
shall execute and deliver such documents as reasonably may be required to
incorporate such alternative method of calculating the Interest Rate in this
Schedule, within thirty (30) days after the date of Lessor's notice to Lessee.
If the parties are unable mutually to agree to such alternative method of
calculating the Interest Rate in a timely fashion, on the Rent Payment Date next
succeeding the expiration of such thirty (30) day period Lessee shall purchase
all (but not less than all) of the Equipment described on all Schedules executed
pursuant to the Agreement and shall pay to Lessor, in cash, the purchase price
for the Equipment so purchased, determined as hereinafter provided. The purchase
price of the Equipment shall be an amount equal to the Stipulated Loss Value of
such Equipment calculated in accordance with Annex D as of the date of payment,
together with all rent and other sums then due on such date, plus all taxes and
charges upon sale and all other reasonable and documented expenses incurred by
Lessor in connection with such sale. Upon satisfaction of the conditions
specified in this paragraph, Lessor will transfer, on an AS IS BASIS, all of
Lessor's interest in and to the Equipment. Lessor shall not be required to make
and may specifically disclaim any representation or warranty as to the condition
of the Equipment and other matters. Lessor shall execute and deliver to Lessee
such Uniform Commercial Code statements of termination as reasonably may be
required in order to terminate any interest of Lessor in and to the Equipment.
2. If any Rent Payment Date or Interim Rent Payment Date is not a
Business Day, the Rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut, Maryland or Colorado are authorized by law
or other governmental action to close.
3. Interim Rent. For the period from and including the Lease Commencement
Date to the Basic Term Commencement Date ("Interim Period"), Lessee shall pay as
rent ("Interim Rent") for each unit of Equipment, the product of the Interest
Rate times the Capitalized Lessor's Cost of such unit times the number of days
in the Interim Period. Interim Rent shall be due quarterly in arrears the first
business day of the following quarter (the "Interim Rent Payment Date") through
the Interim Period.
D. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Schedule to be executed
by their duly authorized representatives as of the date first above written.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, MAIL WELL I CORPORATION
FOR ITSELF AND AS AGENT FOR
CERTAIN PARTICIPANTS
3
<PAGE>
By:__________________________________ By:_____________________________
Name:________________________________ Name:___________________________
Title:_______________________________ Title:__________________________
GRAPHIC ARTS CENTER, INC.
By:_____________________________
Name:___________________________
Title:__________________________
WISCO ENVELOPE CORP.
By:_____________________________
Name:___________________________
Title:__________________________
MAIL-WELL, INC.
By:_____________________________
Name:___________________________
Title:__________________________
MAIL-WELL WEST
By:_____________________________
Name:___________________________
Title:__________________________
PAVEY ENVELOPE AND TAG CORP.
By______________________________
Name:___________________________
Title:__________________________
WISCO II LLC
By:_____________________________
Name:___________________________
Title:__________________________
4
<PAGE>
ANNEX A
TO
SCHEDULE NO. _____________________
DATED THIS ____ DAY OF _____, 199_
TO MASTER LEASE AGREEMENT DATED AS OF ________, 1996
DESCRIPTION OF EQUIPMENT
<TABLE>
<CAPTION>
Manufacturer Serial Numbers Type and Model Number of Units Cost per Unit
of Equipment
========================================================================================================
<S> <C> <C> <C> <C>
</TABLE>
Initials: _________________ _________________
Lessor Lessee
2
<PAGE>
ANNEX B
TO
SCHEDULE NO.________________
TO MASTER LEASE AGREEMENT
DATED AS OF________________
PURCHASE ORDER ASSIGNMENT AND CONSENT
THIS ASSIGNMENT AGREEMENT, dated as of _________________, 199_
("Agreement"), between General Electric Capital Corporation, for Itself and as
Agent for Certain Participants, its successors and assigns ("Lessor"), and Mail
Well I Corporation, Graphic Arts Center, lnc., Mail-Well Inc. Mail-Well West,
Pavey Envelope & Tag Corp., Wisco II LLC and Wisco Envelope Corp. ("Lessee").
WITNESSETH:
Lessee desires to lease certain equipment ("Equipment") from Lessor
pursuant to the above schedule and lease (collectively, "Lease"). All terms used
herein which are not otherwise defined shall have the meaning ascribed to them
in the Lease.
Lessee desires to assign, and Lessor is willing to acquire, certain of
Lessee's rights and interests under the purchase order(s), agreement(s), and/or
document(s) (the "Purchase Orders") Lessee has heretofore issued to the
Supplier(s) of such Equipment.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, Lessor and Lessee hereby agree as follows:
SECTION 1. ASSIGNMENT.
(a) Lessee does hereby assign and set over to Lessor all of Lessee's
rights and interests in and to such Equipment and the Purchase Orders as the
same relate thereto including, without limitation, (i) the rights to purchase,
to take title, and to be named the purchaser in the bill of sale for, such
Equipment, (ii) all claims for damages in respect of such Equipment arising as a
result of any default by the Supplier (including, without limitation, all
warranty and indemnity claims) and (iii) any and all rights of Lessee to compel
performance by the Supplier.
(b) If, and so long as, no default exists under the Lease, Lessee shall
be, and is hereby, authorized during the term of the Lease to assert and
enforce, at Lessee's sole cost and expense, from time to time, in the name of
and for the account of Lessor and/or Lessee, as their interests may appear,
whatever claims and rights Lessor may have against any Supplier of the
Equipment.
SECTION 2. CONTINUING LIABILITY OF LESSEE.
It is expressly agreed that, anything herein contained to the contrary
notwithstanding: (a) Lessee shall at all times remain liable to the Supplier to
perform all of the duties and obligations of the purchaser under the Purchase
Orders to the same extent as if this Agreement had not been executed, (b) the
execution of this Agreement shall not modify any contractual rights of the
Supplier under the Purchase Orders and the liabilities of the Supplier under the
Purchase Orders shall be to the same extent and continue as if this Agreement
had not been executed, (c) the exercise by the Lessor of any of the rights
hereunder shall not release Lessee from any of its duties or obligations to the
Supplier under the
<PAGE>
Purchase Orders, (d) Lessor shall not have any obligation or liability under the
Purchase Orders by reason of, or arising out of, this Agreement or be obligated
to perform any of the obligations or duties of Lessee under the Purchase Orders
or to make any payment (other than under the terms and conditions set forth in
the Lease) or to make any inquiry of the sufficiency of or authorization for any
payment received by any Supplier or to present or file any claim or to take any
other action to collect or enforce any claim for any payment assigned hereunder,
and (e) title to and risk of loss of the Equipment shall pass to Lessor (and, if
applicable, be deemed revested in Supplier prior thereto) in accordance with
this Agreement and the Consent (to be entered into pursuant hereto).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written, and each Lessee agrees to be
jointly and severally liable for all of the representations, warranties and
agreements under this Purchase Order Assignment and Consent.
LESSOR: LESSEE:
GENERAL ELECTRIC CAPITAL CORPORATION, MAIL WELL I CORPORATION
FOR ITSELF AND AS AGENT FOR CERTAIN
PARTICIPANTS
By: By:
------------------------------------ --------------------------------
Name: Name:
---------------------------------- ------------------------------
Title: Title:
--------------------------------- -----------------------------
GRAPHIC ARTS CENTER, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MAIL-WELL, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
MAIL-WELL WEST
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PAVEY ENVELOPE & TAG CORP.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
WISCO II LLC
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
<PAGE>
By:
--------------------------------
Name:
--------------------------------
Title:
--------------------------------
<PAGE>
CONSENT AND AGREEMENT
Supplier hereby consents to the above assignment agreement
("Agreement") and agrees not to assert any claims against Lessor or Lessee
inconsistent with such Agreement. Supplier agrees that the Purchase Orders are
hereby amended as necessary to provide as follows:
(a) Title to and risk of loss of the Equipment shall pass to
Lessor upon Lessee's execution of the Certificate of
Acceptance for such Equipment and notwithstanding any
provision of the Purchase Orders to the contrary, (i) title to
and risk of loss of the Equipment shall not be deemed to have
passed to Lessee or (pursuant to the terms of the Agreement)
Lessor, prior to the date upon which Supplier has completed
its installation of the Equipment and other delivery related
actions with respect thereto, to Lessee's satisfaction, as
evidenced by Lessee's executing and delivering to Lessor a
Certificate of Acceptance (in the form of Annex C to the
Schedule) for the purpose of, among other things, accepting
such Equipment for all purposes of the Lease and (ii) if and
to the extent such title and risk of loss shall be deemed for
any reason to have passed to Lessee or any other person prior
to such date (and notwithstanding the intent of the Supplier,
Lessor and Lessee) all parties agree that such title and risk
of loss shall be deemed fully and indefeasibly revested in
Supplier (without Lessor or Lessee being deemed to have made
any warranty with respect thereto) until passed Lessee or
Lessor, as applicable, pursuant to cause use (i) hereof.
(b) Supplier hereby waives and discharges any security interest,
lien or other encumbrance in or upon the Equipment and agrees
to execute such documents as Lessor may request evidencing the
release of any such encumbrance and the conveyance of title
thereto to Lessor.
(c) Supplier agrees that on and after the date this Consent is
executed it will not make any addition to or delete any items
from the Equipment referred to in the Agreement without the
prior or written consent of both Lessor and Lessee.
(d) Seller represents that the Equipment has been accurately
labeled, consistent with the requirements of 40 CFR Part 82
Subpart E, with respect to products manufactured with a
controlled (ozone-depleting) substance.
IN WITNESS WHEREOF, the undersigned has caused this Consent to be
executed this ________ day of _______________________,199____.
SUPPLIER:
-----------------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
<PAGE>
ANNEX C
TO
SCHEDULE NO. ________
DATED THIS ______ DAY OF ______,199_
TO MASTER LEASE AGREEMENT DATED AS OF _________, 1996
CERTIFICATE OF ACCEPTANCE
To: General Electric Capital Corporation,
for Itself and as Agent for Certain Participants
Pursuant to the provisions of the above Schedule and Master Lease
Agreement (collectively, the "I-Lease"), Lessee hereby certifies and warrants
that (a) all Equipment listed in the related invoice is in good condition and
appearance, installed (if applicable), and in working order; and (b) Lessee
accepts the Equipment for all purposes of the Lease and all attendant documents.
Lessee does further certify that as of the date hereof (i) Lessee is
not in default under the Lease; and (ii) the representations and warranties made
by Lessee pursuant to or under the Lease are true and correct on the date
hereof.
_______________________________________________
Lessee's Authorized Representative
Dated: ________ __, 199_
6
<PAGE>
ANNEX D
TO
SCHEDULE NO. ________
DATED THIS ______ DAY OF ______, 199_
TO MASTER LEASE AGREEMENT DATED AS OF _______,1996
STIPULATED LOSS AND TERMINATION VALUE TABLE
Initials: ______________ ______________
Lessor Lessee
*The Stipulated Loss Value or Termination Value for any unit of Equipment shall
be equal to the Capitalized Lessor's cost of such unit multiplied by the
appropriate percentage derived from the above table. In the event that the
Lease is for any reason extended, then the last percentage figure shown above
shall control throughout any such extended term.
________________________________
7
<PAGE>
ANNEX E
TO
SCHEDULE NO. ________
DATED THIS ___ DAY OF _____,199_
TO MASTER LEASE AGREEMENT DATED AS OF ________,1996
AMORTIZATION SCHEDULE
OUTSTANDING PRINCIPAL
RENT PAYMENT PRINCIPAL* [INTEREST] BALANCE *
- ------------ --------- -------- -------
Initials: _______________ _______________
Lessor Lessee
- -------------------------------
*The Principal, Interest and Outstanding Principal Balance as of any Rent
Payment Date shall be equal to the Capitalized Lessor's Cost of such unit
multiplied by the appropriate percentage derived from the above table.
8
<PAGE>
ANNEX F
TO
SCHEDULE NO. __
DATED THIS ____ DAY OF ___________, 199_
TO MASTER LEASE AGREEMENT DATED AS OF ________, 1996
RETURN PROVISIONS: In addition to the provisions provided for in Section X of
- -----------------
the Lease, and provided that Lessee has elected not to exercise its option to
purchase the Equipment shall, at its expense:
(a) at least ninety (90) days and not more than one hundred eighty (180)
days prior to expiration or earlier termination of the Lease, provide to Lessor
a detailed inventory of all components of the Equipment. The inventory should
include, but not be limited to, a listing of model and serial numbers for all
components, including, but not limited to press units, folders, splicers,
envelope machines, etc., comprising the Equipment.
(b) at least one hundred eighty (180) days prior to expiration or earlier
termination of the Lease upon receiving reasonable notice from Lessor, provide
or cause the vendor(s) or manufacturer(s) to provide to Lessor the following
documents: (1) one set of service manuals, blue prints, process flow diagrams
and operating manuals including replacements and/or additions thereto, such that
all documentation is completely up-to-date; (2) one set of documents, detailing
equipment configuration, operating requirements, maintenance records, and other
technical data concerning the set-up and operation of the Equipment, including
replacements and/or additions thereto, such that all documentation is completely
up-to-date; (3) sample(s) of printing projects performed.
(c) at least one hundred eighty (180) days prior to expiration or earlier
termination of the Lease, upon receiving reasonable notice from Lessor, make the
Equipment available for on-site operational inspections by potential purchasers,
and provide personnel, power and other requirements necessary to demonstrate
electrical, mechanical, drying and pneumatic systems for each item of the
Equipment.
(d) at least one hundred twenty (120) days prior to expiration or earlier
termination of the Lease, cause manufacturer's representative(s) or qualified
equipment maintenance provider(s), acceptable to Lessor, to perform a
comprehensive physical inspection, including testing all material and
workmanship of the Equipment. The inspection shall verify that the Equipment can
perform at the manufacturer's performance specifications, with regard to speed,
register control, and quality of printed matter, for equipment of the same
manufacturer, make and model of, and similar age and use as, the Equipment
(assuming the Equipment was used in a manner consistent with the provisions
hereof), and, in any event, to no less extent than other similar items of
equipment then leased or owned by Lessee. Inspector shall examine printed
material coming off the press and related production equipment for its sale-
ability and conformance to manufacturer's specifications. The inspector shall
also review all maintenance records and file samples of printing projects. If
during such inspection, examination and test, the authorized inspector finds any
of the material or workmanship to be defective or the Equipment not operating
within manufacturer's specifications, then Lessee shall repair or replace such
defective material and, after corrective measures are completed, Lessee will
provide for a follow-up inspection of the Equipment by the authorized inspector
as outlined above.
(e) have each item of Equipment returned with an in-depth field service
report detailing said inspection as outlined in Section (d) of this Annex. The
report shall certify that the Equipment has been properly inspected, examined
and tested and is operating within the manufacturer's specifications for
equipment of the same manufacturer, make and model of, and similar age and use
as, the Equipment (assuming the Equipment was used in a manner consistent with
the provisions hereof), and, in any event, to no less extent than other similar
items of equipment then leased or owned by Lessee.
(f) permit Lessor to video tape the Equipment "under power" at the
Lessee's facility at a time during normal working hours mutually agreeable to
the Lessor and Lessee prior to deinstallation.
9
<PAGE>
(g) properly remove all excessive ink spillage and Lessee installed
markings which are not necessary for the operation, maintenance or repair of the
Equipment. Provide that all Equipment will be cleaned and cosmetically
acceptable (using general industry standards), and in such condition so that it
may be immediately installed and placed into use.
(h) ensure all Equipment and equipment operations conform to all
applicable local, state, Environmental Protection Agency ("EPA"), and federal
laws, health and safety guidelines, including those prescribed by OSHA.
(i) provide for the deinstallation, packing, transporting, and certifying
of the Equipment to include, but not be limited to, the following: (1) the
manufacturer's representation shall de-install all Equipment (including all
wire, cable and mounting hardware) in accordance with the specifications of the
manufacturer; (2) all process fluids shall be removed from the equipment and
disposed of in accordance with the then current waste disposal laws and
regulations including regulations specified by EPA and related government
agencies; (3) Equipment may only be removed by a licensed erector/rigger who
specializes in printing and related production equipment removal and
deinstallation must be performed in a prescribed matter, including proper
marking and labeling of electrical wires and components. Crating of the
Equipment shall be included as part of the service; (4) Lessee shall transport
the Equipment in a manner consistent with the manufacturer's recommendations and
practices.
(j) upon sale of the Equipment to a third party, obtain and pay for a
policy of transit insurance for the redelivery period in an amount equal to the
higher of replacement value or Termination Value of the Equipment and Lessor
shall be named as the loss payee on all such policies of insurance, and provide
transportation to any reasonable locations within the continental United States
selected by Lessor.
(k) at Lessor's choice, either (1) allow Lessor, at Lessor's expense, and
provided Lessor has provided reasonable notice to Lessee, to arrange for an on-
site auction of the Equipment in an assembled and functional state. Any such
auction will be conducted no more than sixty (60) days prior to Lease
termination and will be conducted in a manner which will not interfere with
Lessee's business operations, or (2) at the request of Lessor, provide safe,
secure storage for the Equipment for sixty (60) days after expiration of the
Lease at an accessible location satisfactory to Lessor.
MAINTENANCE PROVISIONS: In addition to the provisions provided for in Section XI
- ----------------------
of the Lease, Lessee shall, at its expense:
(a) lubricate the equipment on a basis that conforms to the maintenance
manual and/or lubrication schedule recommended by the manufacturer;
(b) supply replacement parts which have been purchased from sources
approved by the original manufacturer. Copies of all purchase orders are to be
filed in the Equipment File;
(c) provide that all Equipment will remain cleaned and cosmetically
acceptable;
(d) ensure that all tooling and documentation is present and available at
all times;
(e) keep the equipment in use and in operation and shall not remove the
equipment from operation without prior written consent of Lessor, which will not
be unreasonably withheld;
(f) the Lessor, at his sole discretion, may from time to time, with
notice, inspect the Equipment at the Lessor's sole expense. If any discrepancies
are found as they pertain to the general condition of the Equipment, the Lessor
will communicate these discrepancies to the Lessee in writing. The Lessee shall
have sixty (60) days to rectify any material discrepancies at his sole expense.
The Lessee should pay all expenses for the re-inspection by the Lessor appointed
expert, if corrective measures are required.
10
<PAGE>
Initials: _______________ _______________
Lessor Lessee
STATE OF _________________________________:
COUNTY OF _______________________________: TO WIT:
AFFIDAVIT OF OWNERSHIP
The undersigned, being duly sworn according to law, upon his oath deposes
and says:
I am the Chief Financial Officer of _________________________________
("Lessee") and I am authorized to make this affidavit on behalf of Lessee.
As of the date of this Affidavit, Lessee has good and marketable title to
all of the Equipment (as such term is defined in that certain Master Lease
Agreement dated as of the date hereof, between General Electric Capital
Corporation, for Itself and as Agent for Certain Participants ("Lessor"), as
lessor, and I-Lessee, as lessee), free and clear of all liens, claims, security
interests and encumbrances, except for the liens granted in favor of Lessor
under the aforesaid Master Lease Agreement.
Signed and sealed as of the _______ day of _______, 199_.
------------------------------------
Name:
-------------------------------
Title: Chief Financial Officer
------------------------------------
Notary Public
[SEAL]
My Commission Expires: ________________, 19__
11
<PAGE>
ANNEX G
TO
SCHEDULE NO.
DATED THIS ___ DAY OF _____,199_
TO MASTER LEASE AGREEMENT DATED AS OF _________, 1996
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS: MAIL-WELL, INC., MAIL-WELL I CORPORATION,
GRAPHIC ARTS CENTER, INC., MAIL-WELL WEST, PAVEY ENVELOPE & TAG CORP., WISCO II
LLC AND WISCO ENVELOPE CORP. (collectively "Seller"), for and in consideration
of the purchase price paid by General Electric Capital Corporation (the
"Buyer"), pursuant to that certain Purchase Order Assignment and Consent dated
as of ________________, 199_ (the "Assignment") among Seller, Buyer and the
Supplier referenced therein, and such other good and valuable consideration,
receipt and sufficiency of which is acknowledged, hereby grants, sells, assigns,
transfers and delivers to Buyer all of the Sellers rights, title, and interests,
if any, to and with respect to the equipment (the "Equipment") described in the
above referenced Schedule (said Schedule and related Master Lease Agreement
being collectively referred to as the "Lease"), along with whatever claims and
rights Seller may have against the manufacturer and/or supplier of the Equipment
(the "Supplier"), including but not limited to all warranties and
representations.
Buyer is purchasing the Equipment for leasing to Seller pursuant to the
Lease. Seller represents and warrants to Buyer that: (1) Buyer will acquire by
the terms of the bill of sale issued by the Supplier to the Buyer pursuant to
the Assignment and by the terms of this Bill of Sale, good title to the
Equipment, together with whatever rights, title and interests each Seller may be
deemed to have acquired in, the Equipment, free from all liens and encumbrances
whatsoever; (2) Seller has the right to sell all such rights, title and interest
it may be deemed to have in the Equipment; (3) the Equipment has been delivered
to Seller in good order and condition, and conforms to the specifications,
requirements and standards applicable thereto; (4) the Equipment has been
accurately labeled, consistent with the requirements of 40 C.F.R. Part 82,
Subpart E, with respect to products manufactured with a controlled (ozone-
depleting) substance; and (5) Seller has not previously conveyed all or any part
of such rights, title or interests.
Seller agrees to save and hold harmless Buyer from and against any and
all Federal, state, municipal and local license fees and taxes of any kind or
nature, including, without limiting the generality of the foregoing, any and all
excise, personal property, use and sales taxes, and from and against any and all
liabilities, obligations, losses, damages, penalties, claims, actions and suits
resulting therefrom and imposed upon, incurred by or asserted against Buyer as a
consequence of the sale of the Equipment to Buyer.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale this _____ day
of _______________, 1996, and each Seller agrees to be jointly and severally
liable for all of the representations, warranties and agreements under this Bill
of Sale.
SELLER:
MAIL-WELL, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
<PAGE>
MAIL-WELL I CORPORATION
By:_______________________________________
Name:_____________________________________
Title:____________________________________
GRAPHIC ARTS CENTER, INC.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
MAIL-WELL WEST
By:_______________________________________
Name:_____________________________________
Title:____________________________________
PAVEY ENVELOPE & TAG CORP.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
WISCO II LLC
By:_______________________________________
Name:_____________________________________
Title:____________________________________
WISCO ENVELOPE CORP.
By:_______________________________________
Name:_____________________________________
Title:____________________________________
<PAGE>
ATTACHMENT TO UNIFORM COMMERCIAL CODE FINANCING STATEMENT
1. SECURED PARTY: GENERAL ELECTRIC CAPITAL CORPORATION, FOR ITSELF AND AS
AGENT FOR CERTAIN PARTICIPANTS
DEBTOR: MAIL WELL I CORPORATION, GRAPHIC ARTS CENTER, INC. AND WISCO ENVELOPE
CORP.
2. DESCRIPTION OF PROPERTY:
The equipment leased pursuant to that certain Master Lease Agreement dated
as of the ________ day of ________________ , 1996, between Secured Party, as
lessor, and Debtor, as lessee, together with all accessions, substitutions and
replacements therefor, and proceeds (including insurance proceeds) thereof (but
without power of sale); more fully described on the attached Annex(es) A.
12
<PAGE>
SUGGESTED FORM OF OPINION LETTER
(LESSEE)
_________ 1996
General Electric Capital Corporation,
for Itself and as Agent for Certain
Participants
303 International Circle
Suite 300
Hunt Valley, Maryland 21031
Gentlemen:
As counsel for ____________________________ (the "Lessee"), we are
furnishing this opinion in connection with that certain Master Lease Agreement
dated as of _______, 1996 (the "Lease"), between General Electric Capital
Corporation, for Itself and as Agent for Certain Participants, as lessor (the
'Lessor"), and Lessee, as lessee.
All terms used herein which are defined in the Lease shall have the
meanings given them therein, unless the terms are specifically defined herein.
We have reviewed originals or copies, certified or otherwise identified
to our satisfaction, of the Lease. We have examined the Charter, By-Laws, and
records of corporate proceedings of Lessee, and such additional documents, and
we have obtained such other certificates, affidavits and advices from officers
of Lessee or from public officials as we have deemed necessary or appropriate
for the purposes of this opinion.
On the basis of the foregoing and on the basis of our consideration of
such facts and laws as we have deemed necessary, we are of the opinion that:
(a) Lessee is a corporation duly organized and validly existing in good
standing under the laws of the State of __________.
(b) The execution, delivery and performance of the Lease, the Equipment
Schedule, [the Bill of Sale,] and all related instruments and documents, (i)
have been duly authorized by all necessary corporate action on the part of
Lessee; (ii) do not require any stockholder approval or approval or consent of
any trustee or holders of any indebtedness or obligations of Lessee except such
as have been duly obtained; and (iii) do not and will not contravene any law,
governmental rule, regulation or order now binding on Lessee, or the charter or
by-laws of Lessee, or contravene the provisions of or constitute a default
under, or result in the creation of any lien or encumbrance upon the property of
Lessee under, any indenture, mortgage, contract or other agreement to which
Lessee is a party or by which it or its property is bound.
(c) The Lease, the Equipment Schedule, [the Bill of Sale,] and all other
related documents, when entered into, will constitute legal, valid and binding
obligations of Lessee, enforceable against Lessee in accordance with the terms
thereof, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally, and by applicable laws (including any applicable common law and
equity) and judicial decisions which may affect the remedies provided therein.
[No filing or recordation must be made, no notice must be given, and no other
action must be taken with respect to any state or local jurisdiction, or any
person, except such as have been duly made, given or taken, in order to preserve
to Lessor all the rights transferred by the Bill of Sale). Although the Lease is
expressed to be governed by the laws of the State of New York, for the purpose
of the opinion set forth in this paragraph we have assumed that the laws of the
State of ________________ are applicable to the transaction.
13
<PAGE>
(d) There are no pending actions or proceedings to which Lessee is a
party, and there are no other pending or threatened actions or proceedings of
which Lessee has knowledge, before any court, arbitrator or administrative
agency which, either individually or in the aggregate, would materially
adversely affect the financial condition of Lessee, or the ability of Lessee to
perform its obligations under the Lease. Further, Lessee is not in default under
any material obligation which, either individually or in the aggregate, would
have the same such effect.
This opinion is given for the benefit of, and may be relied on by, the
addressee and its successors and assigns.
Sincerely yours,
14
<PAGE>
CORPORATE LESSEE'S
BOARD OF DIRECTORS RESOLUTION
The undersigned hereby certifies that she/he is the Secretary of
___________________________ ; that the following is a true and correct copy of
resolutions duly adopted at a meeting of the Board of Directors of said
Corporation duly held on the __________________ day of __________________, 1996;
and that the resolutions have not been amended, rescinded, modified or revoked,
and are in full force and effect:
"RESOLVED, that each of the officers of this Corporation, whose name
appears below:
---------------------------------- --------------------------------
President Treasurer
---------------------------------- --------------------------------
Vice President Secretary
or the duly elected or appointed successor in office of any or all of them, be,
and hereby is, authorized and empowered in the name and on behalf of this
Corporation to enter into, execute and deliver a Master Lease Agreement with
General Electric Capital Corporation, for Itself and as Agent for Certain
Participants, and its successors and assignors ("Lessor") as lessor, providing
for the leasing to (or sale and leaseback by) this Corporation, from time to
time, of certain equipment, and further providing for this Corporation to
indemnify said Lessor against certain occurrences; and
FURTHER RESOLVED, that each officer of this Corporation be, and hereby
is, authorized and empowered in the name and on behalf of this Corporation to
enter into, execute and deliver any documents and to do and perform all other
acts and deeds which may be necessary or appropriate to effectuate this sale of
equipment from Lessor; and
FURTHER RESOLVED, that Lessor may rely upon the aforesaid resolutions
until receipt by it of written notice of any change."
IN WITNESS WHEREOF, I have set my hand and affixed the seal of said
Corporation this ______ day of ____________, 1996.
(CORPORATE SEAL)
----------------------------
Secretary
15
<PAGE>
EXHIBIT 10.37
================================================================================
MAIL-WELL I CORPORATION,
as Borrower
and
WISCO ENVELOPE CORP.,
PAVEY ENVELOPE AND TAG CORP.,
MAIL-WELL WEST, INC.,
WISCO II, L.L.C.,
MAIL-WELL CANADA HOLDINGS, INC.,
GRAPHIC ARTS CENTER, INC.
and
WISCO III, L.L.C.,
as Guarantors
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
dated as of November 15, 1996
$70,000,000 Term Loans Facility
$30,000,000 Revolving Credit Loans Facility
$30,000,000 Acquisition Loans Facility
BANQUE PARIBAS
as Agent
and
THE LENDERS NAMED HEREIN
===============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 1 - Definitions............................................................. 3
Section 1.1 Definitions.................................................... 3
Section 1.2 Other Definitional Provisions..................................36
Section 1.3 Accounting Terms and Determinations............................36
Section 1.4 Financial Covenants and Reporting..............................37
ARTICLE 2 - Loans...................................................................37
Section 2.1 Loans and Commitments..........................................37
Section 2.2 Notes..........................................................40
Section 2.3 Repayment of Loans.............................................40
Section 2.4 Interest.......................................................42
Section 2.5 Borrowing Procedure............................................42
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans...43
Section 2.7 Mandatory Prepayments..........................................43
Section 2.8 Minimum Amounts................................................45
Section 2.9 Certain Notices................................................45
Section 2.10 Use of Proceeds................................................46
Section 2.11 Fees...........................................................46
Section 2.12 Computations...................................................47
Section 2.13 Reduction or Termination of Commitments........................47
Section 2.14 Letters of Credit..............................................47
ARTICLE 3 - Payments................................................................50
Section 3.1 Method of Payment..............................................50
Section 3.2 Pro Rata Treatment.............................................51
Section 3.3 Sharing of Payments, Etc.......................................51
Section 3.4 Non-Receipt of Funds by the Agent..............................52
Section 3.5 Withholding Taxes..............................................52
Section 3.6 Withholding Tax Exemption......................................52
ARTICLE 4 - Yield Protection and Illegality.........................................53
Section 4.1 Additional Costs...............................................53
Section 4.2 Limitation on Types of Loans...................................54
Section 4.3 Illegality.....................................................55
Section 4.4 Treatment of Affected Loans....................................55
Section 4.5 Compensation...................................................56
Section 4.6 Capital Adequacy...............................................56
Section 4.7 Additional Interest on Eurodollar Loans........................56
ARTICLE 5 - Security................................................................57
Section 5.1 Collateral.....................................................57
Section 5.2 Guaranties.....................................................58
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 5.3 New Subsidiaries...............................................58
Section 5.4 New Mortgaged Properties.......................................59
Section 5.5 Release of Collateral..........................................59
Section 5.6 Setoff.........................................................60
ARTICLE 6 - Conditions Precedent....................................................60
Section 6.1 Initial Extension of Credit....................................60
Section 6.2 All Extensions of Credit.......................................65
Section 6.3 Acquisition Loans..............................................65
Section 6.4 Closing Certificates...........................................70
ARTICLE 7 - Representations and Warranties..........................................70
Section 7.1 Corporate Existence............................................71
Section 7.2 Financial Statements...........................................71
Section 7.3 Corporate Action; No Breach....................................71
Section 7.4 Operation of Business..........................................72
Section 7.5 Intellectual Property..........................................72
Section 7.6 Litigation and Judgments.......................................72
Section 7.7 Rights in Properties; Liens....................................72
Section 7.8 Enforceability.................................................73
Section 7.9 Approvals......................................................73
Section 7.10 Debt...........................................................73
Section 7.11 Taxes..........................................................73
Section 7.12 Margin Securities..............................................74
Section 7.13 ERISA..........................................................74
Section 7.14 Disclosure.....................................................75
Section 7.15 Capitalization.................................................75
Section 7.16 Agreements.....................................................76
Section 7.17 Compliance with Laws...........................................76
Section 7.18 Investment Company Act.........................................76
Section 7.19 Public Utility Holding Company Act.............................76
Section 7.20 Environmental Matters..........................................76
Section 7.21 Labor Disputes and Acts of God.................................77
Section 7.22 Bank Accounts..................................................78
Section 7.23 Outstanding Securities.........................................78
Section 7.24 Subordination..................................................78
Section 7.25 Related Transactions Documents.................................78
Section 7.26 Solvency.......................................................79
Section 7.27 Employee Matters...............................................79
Section 7.28 Insurance......................................................79
Section 7.29 No Default under Second Restated Agreement and Supremex
Credit Agreement...............................................80
Section 7.30 Common Enterprise..............................................80
ARTICLE 8 - Affirmative Covenants...................................................80
Section 8.1 Reporting Requirements.........................................80
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 8.2 Maintenance of Existence; Conduct of Business................. 84
Section 8.3 Maintenance of Properties..................................... 84
Section 8.4 Taxes and Claims.............................................. 85
Section 8.5 Insurance..................................................... 85
Section 8.6 Inspection Rights............................................. 86
Section 8.7 Keeping Books and Records..................................... 86
Section 8.8 Compliance with Laws.......................................... 87
Section 8.9 Compliance with Agreements.................................... 87
Section 8.10 Further Assurances............................................ 87
Section 8.11 ERISA......................................................... 87
Section 8.12 Interest Rate Protection Agreements........................... 88
Section 8.13 Concentration Accounts........................................ 88
Section 8.14 Indemnifications under Acquisition Documents.................. 88
Section 8.15 Ownership of Subsidiaries..................................... 88
ARTICLE 9 - Negative Covenants..................................................... 89
Section 9.1 Debt.......................................................... 89
Section 9.2 Limitation on Liens........................................... 91
Section 9.3 Mergers, Etc.................................................. 91
Section 9.4 Restricted Payments........................................... 92
Section 9.5 Investments................................................... 94
Section 9.6 Limitation on Issuance of Capital Stock....................... 97
Section 9.7 Transactions With Affiliates.................................. 97
Section 9.8 Disposition of Property....................................... 97
Section 9.9 Sale and Leaseback............................................ 99
Section 9.10 Lines of Business............................................. 99
Section 9.11 Environmental Protection...................................... 99
Section 9.12 Intercompany Transactions..................................... 99
Section 9.13 Management Fees...............................................100
Section 9.14 Modification of Other Agreements..............................100
Section 9.15 Bank Accounts.................................................101
Section 9.16 ERISA; Canadian Plans.........................................101
Section 9.17 Synthetic Leases..............................................101
ARTICLE 10 - Financial Covenants...................................................102
Section 10.1 Consolidated Current Ratio....................................102
Section 10.2 Consolidated Net Worth........................................102
Section 10.3 Ratio of Total Debt to EBITDA.................................102
Section 10.4 Ratio of Total Debt to Total Capitalization...................102
Section 10.5 Consolidated Fixed Charge Coverage Ratio......................103
Section 10.6 Consolidated Interest Coverage Ratio..........................103
Section 10.7 Capital Expenditures..........................................103
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 11 - Default.......................................................104
Section 11.1 Events of Default....................................104
Section 11.2 Remedies.............................................107
Section 11.3 Cash Collateral......................................108
Section 11.4 Performance by the Agent.............................108
ARTICLE 12 - The Agent.....................................................108
Section 12.1 Appointment, Powers and Immunities...................108
Section 12.2 Rights of Agent as a Lender..........................109
Section 12.3 Defaults.............................................109
Section 12.4 INDEMNIFICATION......................................110
Section 12.5 Independent Credit Decisions.........................111
Section 12.6 Several Commitments..................................111
Section 12.7 Successor Agent......................................111
ARTICLE 13 - Miscellaneous.................................................112
Section 13.1 Expenses.............................................112
Section 13.2 INDEMNIFICATION......................................112
Section 13.3 Limitation of Liability..............................113
Section 13.4 No Duty..............................................113
Section 13.5 No Fiduciary Relationship............................114
Section 13.6 Equitable Relief.....................................114
Section 13.7 No Waiver; Cumulative Remedies.......................114
Section 13.8 Successors and Assigns...............................114
Section 13.9 Survival.............................................118
Section 13.10 ENTIRE AGREEMENT.....................................118
Section 13.11 Amendments...........................................118
Section 13.12 Maximum Interest Rate................................119
Section 13.13 Notices..............................................120
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SERVICE OF PROCESS...................................120
Section 13.15 Counterparts.........................................121
Section 13.16 Severability.........................................121
Section 13.17 Headings.............................................121
Section 13.18 Construction.........................................121
Section 13.19 Independence of Covenants............................121
Section 13.20 Confidentiality......................................121
Section 13.21 WAIVER OF JURY TRIAL.................................122
Section 13.22 Approvals and Consent................................122
Section 13.23 Agent for Services of Process........................122
Section 13.24 Assignments and Assumptions..........................122
Section 13.25 Amendment and Restatement............................123
Section 13.26 Supplements to Certain Schedules.....................123
Section 13.27 Relationship to Supremex Credit Agreement............123
Section 13.28 Consolidated Financial Information...................123
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C> <C>
Section 13.29 Intercreditor Agreements ........................... 124
</TABLE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Section
- ------- ---------------------- -------
<S> <C> <C>
A Form of Acquisition Loans Note 1.1 and 2.2
B Form of Assignment and Acceptance 1.1
C Form of Revolving Credit Loans Note 1.1 and 2.2
D Form of Term Loans Note 1.1 and 2.2
E Form of Notice of Borrowings, Conversions,
Continuations or Prepayments 2.9
F Intercreditor Agreement 13.29
G Accounts Receivable Securitization Facility
Intercreditor Agreement 13.29
</TABLE>
INDEX TO SCHEDULES
------------------
<TABLE>
<CAPTION>
Schedule Description of Schedule
- -------- -----------------------
<S> <C>
1.1(a) Mortgaged Properties
1.1(b) Permitted Liens
5.5 GECC Equipment
7.6 Litigation and Judgments
7.10 Existing Debt
7.11 Taxes
7.13 Plans
7.15 Capitalization; Options, Etc.
7.22 Bank Accounts
7.27 Employee Matters
7.28 Insurance
9.5 Investments
</TABLE>
v
<PAGE>
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------------
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November
15, 1996, is among MAIL-WELL I CORPORATION, a Delaware corporation f/k/a Mail-
Well Corporation (the "Borrower"), WISCO ENVELOPE CORP., a Tennessee corporation
--------
("Wisco"), PAVEY ENVELOPE AND TAG CORP., a New Jersey corporation ("Pavey"),
----- -----
MAIL-WELL WEST, INC., a Delaware corporation ("Mail-Well West"), WISCO II,
--------------
L.L.C., a Delaware limited liability company ("Wisco II"), MAIL-WELL CANADA
--------
HOLDINGS, INC., a Delaware corporation ("Supremex Holdings"), GRAPHIC ARTS
-----------------
CENTER, INC., a Delaware corporation ("GAC"), WISCO III, L.L.C., a Delaware
---
limited liability company ("Wisco III"), each of the banks or other lending
---------
institutions which is a party hereto (as evidenced by the signature pages of
this Agreement) or which may from time to time become a party hereto or any
successor or assignee thereof (individually, a "Lender" and, collectively, the
------
"Lenders"), and BANQUE PARIBAS, a bank organized under the laws of France acting
- --------
through its Houston agency, as agent for itself and the other Lenders (in such
capacity, together with its successors in such capacity, the "Agent").
-----
RECITALS:
A. Mail-Well, Inc., a Delaware corporation f/k/a Mail-Well Holdings,
Inc. ("Holdings"), owns all of the issued and outstanding shares of capital
--------
stock of the Borrower.
B. Pursuant to that certain Credit Agreement dated as of February 24,
1994, among the Borrower, the Original Lenders (as defined herein) and Banque
Paribas as agent (as amended by that certain First Amendment to Credit Agreement
dated as of June 10, 1994, and that certain Second Amendment to Credit Agreement
dated as of September 10, 1994, the "Original Agreement"), the Original Lenders
------------------
extended certain term credit facilities and a revolving credit facility to the
Borrower.
C. Pursuant to that certain Amended and Restated Credit Agreement
dated as of December 19, 1994, among the Borrower, the First Restatement Lenders
(as defined herein) and Banque Paribas as agent (the "First Restated
--------------
Agreement"), the Original Agreement was amended and restated and the First
- ---------
Restatement Lenders extended certain term credit facilities and revolving credit
facilities to the Borrower.
D. Pursuant to that certain Second Amended and Restated Credit
Agreement dated as of July 31, 1995, among the Borrower, the Second Restatement
Lenders (as defined herein) and Banque Paribas as agent (as amended by that
certain First Amendment to Second Amended and Restated Credit Agreement dated as
of September 11, 1995, and the Second Amendment (as defined herein), the "Second
------
Restated Agreement"), the First Restated Agreement was amended and restated and
- ------------------
the Second Restatement Lenders extended certain term credit facilities and
revolving credit facilities to the Borrower.
E. Pursuant to that certain Credit Agreement dated as of July 31,
1995, among Supremex Inc., a corporation incorporated under the Canada Business
Corporations Act ("Supremex") and a wholly-owned subsidiary of Supremex
--------
Holdings, the Borrower, the Supremex Lenders (as defined herein) and Banque
Paribas as agent (as amended by that certain First Amendment to Credit
<PAGE>
Agreement dated as of September 11, 1995 and the Second Amendment, the "Original
--------
Supremex Credit Agreement"), the Supremex Lenders extended certain term credit
- -------------------------
facilities and a revolving credit facility to Supremex.
F. The Borrower desires to transfer its plant located in Chestertown,
Maryland, and Wisco desires to transfer its plants located in Tullahoma,
Tennessee and Kankakee, Illinois, to Wisco III, whose membership interests are
99% owned by Wisco and 1% owned by the Borrower, in consideration of the
issuance of such membership interests. The Lenders have agreed to consent to
such transfers to Wisco III subject to the terms and provisions of this
Agreement, including, without limitation, the condition that all of the Property
to be transferred pursuant to such transfers shall be transferred subject to the
existing Liens in favor of the Agent for the benefit of the Agent and the
Lenders.
G. The Borrower and its subsidiaries have requested that the Second
Restated Agreement be amended and restated (i) to provide for a $30,000,000
acquisition loans facility which may be used to finance Permitted Acquisitions
(as defined herein), (ii) to combine the Borrower's existing "Term Loans A" and
"Term Loans B" facilities into a single $70,000,000 term loan facility, (iii) to
eliminate the concept of a borrowing base in connection with the Revolving
Credit Loans, (iv) to provide for the prepayment in full of the existing
Revolving Credit Loans Tranche 2 and the existing ESOP Loans, (v) to provide for
the incorporation and organization of Wisco III and the transfer of assets to
Wisco III for the purposes specified in Recital F preceding, (vi) to allow for a
---------
$30,000,000 sale-leaseback transaction relating to certain existing equipment of
the Borrower and its subsidiaries, (vii) to allow for the incorporation and
organization of Mail-Well Trade Receivables Corporation, a Colorado corporation
("MTRC") and a wholly-owned, special purpose corporation subsidiary of the
----
Borrower, and a $100,000,000 accounts receivable securitization facility for
MTRC in connection with which the Borrower and its Subsidiaries (including
Supremex) will sell certain of their Receivables (as defined herein) to MTRC on
the Third Restatement Date (as defined herein) and from time to time thereafter,
and (viii) to amend the Second Restated Agreement in certain other respects.
H. The Borrower and its subsidiaries (including Supremex) have
requested that the Original Supremex Credit Agreement be amended and restated
(i) to combine Supremex's existing "Term Loans A" and "Terms Loan B" facilities
into a single $45,000,000 term loan facility, (ii) to provide for an additional
$20,000,000 term loan facility to finance the prospective PNG Acquisition (as
defined herein) by Supremex, (iii) to eliminate the concept of a borrowing base
in connection with the "Revolving Credit Loans" of Supremex, (iv) to allow for
the incorporation and organization of MTRC and a $100,000,000 accounts
receivable securitization facility for MTRC in connection with which the
Borrower and its Subsidiaries (including Supremex) will sell their Receivables
to MTRC on the Third Restatement Date and from time to time thereafter, and (v)
to amend the Original Supremex Credit Agreement in certain other respects.
I. The Borrower, the Lenders identified on the signature pages of
this Agreement (including, without limitation, certain of the Original Lenders,
the First Restatement Lenders and the Second Restatement Lenders) and the Agent
desire to amend and restate the Second Restated
2
<PAGE>
Agreement (i) to provide for the matters referred to in Recital G preceding, and
---------
(ii) to allow for the matters referred to in Recital H preceding.
---------
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
-----------
Section 1.1 Definitions. As used in this Agreement, the following
-----------
terms have the following meanings:
"Accounts Receivable Securitization Facility" means the transactions
-------------------------------------------
governed or contemplated by the Accounts Receivable Securitization Facility
Documents.
"Accounts Receivable Securitization Facility Documents" means that
-----------------------------------------------------
certain (a) Pooling and Servicing Agreement dated as of November 15, 1996, among
MTRC, the Borrower and Norwest Bank Colorado, National Association, as Trustee,
(b) Series 1996-1 Supplement to Pooling and Servicing Agreement dated as of
November 15, 1996, among MTRC, the Borrower and Norwest Bank Colorado, National
Association, as Trustee, (c) Series 1996-1 Asset Purchase Agreement dated as of
November 15, 1996, among Corporate Receivables Corporation, the "Liquidity
Providers" specified therein, Citicorp North America, Inc., Banque Paribas, New
York Branch and Norwest Bank Colorado, National Association, as Trustee, (d)
Series 1996-1 Certificate Purchase Agreement dated as of November 15, 1996,
among MTRC, Corporate Receivables Corporation, Norwest Bank Colorado, National
Association, as Trustee, and the Borrower, (e) Purchase and Contribution
Agreement dated as of November 15, 1996, between the Borrower, Wisco, Pavey,
Mail-Well West, Wisco II, GAC, Wisco III, Supremex, Innova and MTRC, (f)
Accounts Receivable Securitization Facility Intercreditor Agreement, and (g)
any and all agreements, documents and instruments executed or delivered pursuant
to or in connection with the agreements referred to in clauses (a) through (f)
----------- ---
preceding.
"Accounts Receivable Securitization Facility Intercreditor Agreement"
-------------------------------------------------------------------
means that certain Intercreditor Agreement dated as of November 15, 1996, among
Citicorp North America, Inc., Banque Paribas, New York Branch, Norwest Bank
Colorado, National Association, as Trustee, MTRC, the Borrower and Supremex, a
true and correct copy of which is attached hereto as Exhibit G.
---------
"Acquisitions" means the G-P Envelope Acquisition, the Pavey
------------
Acquisition, the AEC Acquisition, the Supremex Acquisition, the GAC Acquisition,
the Quality Park Acquisition, the PNG Acquisition and any and all (if any) New
Acquisitions.
"Acquisition Documents" means each acquisition agreement and each
---------------------
other material agreement, document or instrument executed or delivered in
connection with or pursuant to any
3
<PAGE>
of the Acquisitions (including, without limitation, the PNG Acquisition
Agreement and the New Acquisition Agreements).
"Acquisition Loans" means as specified in Section 2.1(c).
----------------- --------------
"Acquisition Loans Commitment" means, as to any Lender, the obligation
----------------------------
of such Lender to make or continue Acquisition Loans hereunder in an aggregate
principal amount up to but not exceeding the amount set forth opposite the name
of such Lender on the signature pages hereto under the heading "Acquisition
Loans Commitment", as the same may be terminated pursuant to Section 11.2, and
------------
"Acquisition Loans Commitments" means such obligations of all Lenders. As of
- ------------------------------
the Third Restatement Date, the aggregate principal amount of the Acquisition
Loans Commitments is $30,000,000.
"Acquisition Loans Commitment Expiration Date" means September
--------------------------------------------
30, 1998.
"Acquisition Loans Funding Date" means, with respect to any
------------------------------
Acquisition Loans, the date of the making of such Acquisition Loans by the
applicable Lenders.
"Acquisition Loans Maturity Date" means March 31, 2003.
-------------------------------
"Acquisition Loans Notes" means the promissory notes made by the
-----------------------
Borrower evidencing the Acquisition Loans, in the form of Exhibit A hereto, and
---------
also includes such promissory notes issued in registered form pursuant to
Section 2.2(b).
- --------------
"Additional Capital Expenditures" means as specified in Section
------------------------------- -------
10.7.
- ----
"Additional Costs" means as specified in Section 4.1(a).
---------------- --------------
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
------------------------
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Agent to be equal to the Eurodollar
Rate for such Eurodollar Loan for such Interest Period divided by 1 minus the
Reserve Requirement for such Eurodollar Loan for such Interest Period.
"AEC" means American Envelope Company, an Illinois corporation.
---
"AEC Acquisition" means the acquisition by the Borrower of
---------------
substantially all of the Property of AEC pursuant to the Acquisition Documents.
"Affiliate" means, as to any Person, any other Person (a) that
---------
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such Person; (b) that directly
or indirectly beneficially owns or holds ten percent or more of any class of
voting stock of such Person; or (c) ten percent or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or indirectly, of
the power to direct or cause direction
4
<PAGE>
of the management and policies of a Person, whether through the ownership of
voting securities, by contract or otherwise; provided, however, in no event
-------- -------
shall the Agent or any Lender be deemed an Affiliate of the Borrower or any of
its Subsidiaries.
"Agent" means as specified in the introductory paragraph of this
-----
Agreement.
"Agent's Letter" means that certain letter agreement dated as of
--------------
November 15, 1996 (and accepted by the Borrower as of November 15, 1996) between
the Borrower and the Agent.
"Aggregate Commitment Percentage" means, as to any Lender, the
-------------------------------
percentage equivalent of a fraction, the numerator of which is the sum of the
outstanding Revolving Credit Loans Commitment of such Lender (or, if such
Revolving Credit Loans Commitment has terminated or expired, the outstanding
principal amount of its Revolving Credit Loans and its Letter of Credit
Liabilities), plus the outstanding principal amount of the Term Loans of such
----
Lender, plus the outstanding Acquisition Loans Commitment of such Lender (or, if
----
such Acquisition Loans Commitment has terminated or expired, the outstanding
principal amount of the Acquisition Loans of such Lender), and the denominator
of which is the sum of the aggregate outstanding Revolving Credit Loans
Commitments of all Lenders (or, if the Revolving Credit Loans Commitments have
terminated or expired, the aggregate outstanding principal amount of all
Revolving Credit Loans and all Letter of Credit Liabilities), plus the aggregate
----
outstanding principal amount of the Term Loans of all Lenders, plus the
----
aggregate outstanding Acquisition Loans Commitments of all Lenders (or, if the
Acquisition Loans Commitments have terminated or expired, the aggregate
outstanding principal amount of all Acquisition Loans).
"Agreement" means this Third Amended and Restated Credit Agreement and
---------
any and all amendments, modifications, supplements, renewals, extensions or
restatements hereof.
"Applicable Lending Office" means for each Lender and each Type of
-------------------------
Loan, the Lending Office of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan below its name on the signature pages hereof
(or, with respect to a Lender that becomes a party to this Agreement pursuant to
an assignment made in accordance with Section 13.8, in the Assignment and
------------
Acceptance executed by it) or such other office of such Lender (or of an
Affiliate of such Lender) as such Lender may from time to time specify to the
Borrower and the Agent as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means (a) from the Third Restatement Date to the
-----------------
first Calculation Date, 0.50% with respect to Prime Rate Loans and 2.00% with
respect to Eurodollar Loans, and (b) for periods from each Calculation Date to
the next Calculation Date, the rate per annum set forth in the table below that
corresponds to the ratio of (i) Total Debt as of the date of the relevant
financial statement referred to below to (ii) EBITDA for the four fiscal
quarters of the Borrower then most recently ended as of the date of such
financial statement:
5
<PAGE>
<TABLE>
<CAPTION>
Ratio of Total Applicable Margin Applicable Margin
Debt to EBITDA for Eurodollar Loans for Prime Rate Loans
-------------- --------------------- ---------------------
<S> <C> <C>
Greater than or equal to 3.25 to 1.00 2.50% 1.00%
Greater than or equal to 2.75 to 1.00 2.00% 0.50%
and less than 3.25 to 1.00
Less than 2.75 to 1.00 1.75% 0.25%
</TABLE>
The Applicable Margin shall change on each Calculation Date and shall be
calculated on the basis of the financial statements delivered by the Borrower
pursuant to Section 8.1(b) and the certificate delivered by the Borrower
--------------
pursuant to Section 8.1(e); provided, that if the Borrower fails to deliver to
-------------- --------
the Agent such financial statements or certificate on or before the relevant
Calculation Date, the Applicable Margin for all Prime Rate Loans and Eurodollar
Loans shall be 1.00% and 2.50%, respectively, per annum for the period from such
Calculation Date until the date such statements and certificate are received by
the Agent, after which the Applicable Margin shall be determined as otherwise
provided herein.
(b) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of calculating "EBITDA", as such term is used in this
definition of "Applicable Margin", the financial attributes of the Persons
acquired or attributable to the businesses or assets acquired (as applicable)
pursuant to all New Acquisitions shall be included for the 12-month period
immediately prior to the date of determination of "EBITDA" (excluding any pro
forma adjustments thereto).
"Asset Disposition" means the disposition of any or all of the
-----------------
Property (other than sales of Inventory in the ordinary course of business and
the grant of a Lien as security and sales of accounts receivable to MTRC
pursuant to the Accounts Receivable Securitization Facility Documents) of the
Borrower or any of its Subsidiaries, whether by sale, lease, transfer,
assignment, condemnation or otherwise, but excluding any involuntary disposition
resulting from casualty damage to Property.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and its Assignee and accepted by the Agent pursuant to Section
-------
13.8(e), in substantially the form of Exhibit B hereto.
- ------- ---------
"Assignee" means as specified in Section 13.8(b).
-------- ---------------
"Assigning Lender" means as specified in Section 13.8(b).
---------------- ---------------
"Assumption Agreement" means an Assumption Agreement in form and
--------------------
substance satisfactory to the Agent executed by each New Loan Party pursuant to
which such New Loan Party assumes all indebtedness, liabilities and obligations
of a Loan Party under this Agreement and becomes a party to this Agreement.
6
<PAGE>
"Bankruptcy Code" means as specified in Section 11.1(e).
--------------- ---------------
"Basle Accord" means the proposals for risk-based capital framework
------------
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.
"Borrower" means as specified in the initial paragraph of this
--------
Agreement.
"Borrower Indenture" means the Indenture by and between the Borrower
------------------
and Fleet National Bank as Trustee (and executed by Holdings, Wisco and Pavey as
guarantors), dated as of the Closing Date, relating to the Borrower Subordinated
Notes, and any and all amendments, modifications, supplements, renewals,
extensions or restatements thereof.
"Borrower Security Agreement" means the Third Amended and Restated
---------------------------
Security Agreement dated the Third Restatement Date executed by the Borrower in
favor of the Agent for the benefit of the Agent, the Lenders, the Supremex
Lenders and/or the Equipment Lease Facility Lenders, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Borrower Subordinated Debt" means (a) the Debt of the Borrower under
--------------------------
the Borrower Subordinated Notes and the Borrower Indenture and (b) any and all
other current or future Debt of the Borrower or its Subsidiaries which is
subordinated to all or any portion of the Obligations or the Supremex
Obligations.
"Borrower Subordinated Debt Documents" means (a) the Borrower
------------------------------------
Subordinated Note Documents, (b) the Subsidiary Subordinated Guaranties, and (c)
any and all other agreements, documents and instruments now or hereafter
evidencing or governing any Borrower Subordinated Debt.
"Borrower Subordinated Note Documents" means the Borrower
------------------------------------
Subordinated Notes, the Borrower Indenture, all agreements, documents and
instruments now or hereafter executed by the Borrower and delivered to the
trustee pursuant to the Borrower Indenture, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Borrower Subordinated Notes" means the Borrower's 10 1/2% Senior
---------------------------
Subordinated Notes due 2004 issued pursuant to the Borrower Indenture, the
Exchange Notes at any time issued in exchange for such Senior Subordinated Notes
and pursuant to the terms of the Borrower Indenture, and any and all amendments,
modifications, supplements, renewals, extensions or restatements of such Senior
Subordinated Notes or Exchange Notes permitted pursuant to Section 9.14.
------------
"Business Day" means (a) any day on which commercial banks are not
------------
authorized or required to close in Houston, Texas, and (b) with respect to all
borrowings, payments,
7
<PAGE>
Conversions, Continuations, Interest Periods and notices in connection with
Eurodollar Loans, any day which is a Business Day described in clause (a) above
----------
and which is also a day on which dealings in Dollar deposits are carried out in
the London interbank market.
"Calculation Date" means the date occurring each quarter during the
----------------
term of this Agreement which is 15 days after the date on which quarterly
financial statements of the Borrower are required by Section 8.1(b) to be
--------------
delivered to the Agent.
"Canadian Five Year Rule" means that Supremex shall not be obligated,
-----------------------
under any circumstances other than the circumstance of the acceleration of the
maturity of the Supremex Term Loans upon the occurrence of an "Event of Default"
under the Supremex Credit Agreement, to pay more than 25% of the principal
amount of the Supremex Term Loans within five years and one day from the date of
the making of the Supremex Term Loans, whether from scheduled payments or
mandatory prepayments from asset sales, insurance proceeds, stock offerings,
excess cash flow, Debt issuances or otherwise.
"Canadian Pension and Benefits Law" means any federal or provincial
---------------------------------
legislation or regulations applicable to any Canadian Plan including, without
limitation, any pension benefits or tax legislation or regulations.
"Canadian Pension Authority" means any federal or provincial pension
--------------------------
regulator having jurisdiction over any Canadian Pension Plan.
"Canadian Pension Plan" means any pension or retirement plan, written
---------------------
or unwritten, registered or unregistered, maintained or contributed to for any
Canadian employee or former employee of Supremex or any other Loan Party
currently or at any time within the six years immediately preceding the Closing
Date.
"Canadian Plan" means any pension, retirement, profit sharing, stock
-------------
option, stock purchase, stock bonus, severance, bonus, incentive, deferred
compensation, supplemental unemployment, health, welfare, dental, disability,
life insurance or other plan, program or arrangement maintained for any Canadian
employee of Supremex or any other Loan Party, including any Canadian Pension
Plan.
"Canadian Subsidiary" means a Subsidiary of Supremex which is
-------------------
incorporated and organized under Canadian law or under the laws of a province of
Canada.
"Capital Expenditures" means, for any period, expenditures (including
--------------------
the aggregate amount of Capital Lease Obligations incurred during such period)
made by the Borrower (subject to Section 13.28) or any of its Subsidiaries to
-------------
acquire or construct fixed assets, plant or equipment (including renewals,
improvements or replacements, but excluding repairs) during such period and
which, in accordance with GAAP, are classified as capital expenditures,
exclusive of any expenditures for Permitted Acquisitions made prior to the
Acquisition Loans Commitment Expiration Date.
8
<PAGE>
"Capital Lease Obligations" means, as to any Person, the obligations
-------------------------
of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) real and/or personal Property, which obligations are
classified as a capital lease on a balance sheet of such Person under GAAP. For
purposes of this Agreement, the amount of such Capital Lease Obligations shall
be the capitalized amount thereof, determined in accordance with GAAP.
"Capital Stock" means corporate stock and any and all shares,
-------------
partnership interests, membership interests, equity interests, participations,
rights or other equivalents (however designated) of corporate stock issued by
any entity (whether a corporation, a partnership or another entity).
"Carryover Capital Expenditures Amount" means, for any fiscal year of
-------------------------------------
the Borrower, an amount equal to the positive remainder (if any) of (a)
$23,000,000 minus (b) the actual aggregate Capital Expenditures of the Borrower
-----
and its Subsidiaries made during the immediately preceding fiscal year exclusive
(for purposes of this clause (b)) of any such Capital Expenditures allocable to
----------
the Carryover Capital Expenditures Amount for such immediately preceding fiscal
year; provided, however, that, for purposes of this definition, no amount of the
-------- -------
maximum of $23,000,000 of Capital Expenditures permitted pursuant to Section
-------
10.7 for any fiscal year (the "designated fiscal year") may constitute any
- ---- ----------------------
Carryover Capital Expenditures Amount for any fiscal year other than the fiscal
year immediately succeeding such designated fiscal year and the amount of all
Capital Expenditures made during any fiscal year shall first be allocated to
such $23,000,000 maximum amount for such fiscal year and then to any (if any)
Carryover Capital Expenditures Amount for such fiscal year.
"Cdn. Dollars" and "Cdn. $" mean lawful money of Canada.
------------ ------
"Change of Control" means the existence or occurrence of any of the
-----------------
following: (a) any of the Capital Stock of the Borrower is owned by any Person
other than Holdings; (b) any Person or two or more Persons (other than the
Permitted Holders) acting as a group (as defined in Section 13d-3 of the
Securities Exchange Act of 1934) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 35% or more of the outstanding
shares of voting stock of Holdings; (c) individuals who, as of the Closing Date,
constitute the Board of Directors of Holdings (the "Holdings Incumbent Board")
------------------------
or of the Borrower (the "Borrower Incumbent Board") cease for any reason to
------------------------
constitute at least a majority of the Board of Directors of Holdings or the
Borrower, respectively; provided, however, that any individual becoming a
-------- -------
director of Holdings or the Borrower subsequent to the Closing Date whose
election, or nomination for election by Holdings' or the Borrower's
shareholders, as the case may be, was approved by a vote of at least a majority
of the directors then comprising the Holdings Incumbent Board or the Borrower
Incumbent Board, as the case may be, shall be considered as though such
individual were a member of the Holdings Incumbent Board or the Borrower
Incumbent Board, as the case may be, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Securities Exchange Act of 1934) or other
actual or threatened solicitation of proxies or contest by or on behalf of a
Person other than the Board
9
<PAGE>
of Directors of Holdings or the Borrower, as the case may be; (d) the
consummation of any transaction the result of which is that any Person or group
beneficially owns more of the voting stock of Holdings than is beneficially
owned, in the aggregate, by the Permitted Holders; or (e) a "Change in Control"
as such term is defined in the Borrower Indenture.
"Classic" means Classic Envelope Plus Ltd., a corporation
-------
incorporated under the Company Act (British Columbia).
"Closing Date" means February 24, 1994, the date of the Original
------------
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
----
regulations promulgated and rulings issued thereunder.
"Collateral" means all Property of any nature whatsoever upon which a
----------
Lien is created or purported to be created by any Loan Document as security for
the Obligations or any portion thereof.
"Commitments" means the Term Loans Commitments, the Revolving Credit
-----------
Loans Commitments and the Acquisition Loans Commitments.
"Commitment Percentage" means, as to any Lender and as to any of its
---------------------
Commitments or Loans or Letters of Credit (as may be applicable based upon the
context in which such term is used), the percentage equivalent of a fraction,
the numerator of which is the aggregate amount of the applicable Commitment of
such Lender or the outstanding principal amount of the applicable Loans or
Letters of Credit (as applicable) of such Lender, and the denominator of which
is the aggregate amount of such applicable Commitments of all of the Lenders or
the aggregate outstanding principal amount of the applicable Loans or Letters of
Credit (as applicable) of all Lenders, as adjusted from time to time in
accordance with Section 13.8.
------------
"Concentration Accounts" means concentration deposit accounts (or, if
----------------------
the Borrower and its Subsidiaries so desire, a single concentration deposit
account) into which all proceeds of Collateral (including, without limitation,
proceeds and sales of accounts by the Borrower and its Subsidiaries) shall be
deposited maintained by the Borrower and/or its Subsidiaries, other than
Supremex and its Subsidiaries, with a bank or banks selected by the Borrower or
such Subsidiary and reasonably acceptable to the Agent, and "Concentration
Account" means any of such Concentration Accounts.
"Consolidated Current Assets" means, at any particular time, all
---------------------------
amounts which, in conformity with GAAP, would be included as current assets on a
consolidated balance sheet of the Borrower (subject to Section 13.28) and its
-------------
Subsidiaries.
"Consolidated Current Liabilities" means, at any particular time, all
--------------------------------
amounts which, in conformity with GAAP, would be included as current liabilities
on a consolidated balance sheet of the Borrower (subject to Section 13.28) and
-------------
its Subsidiaries, less, in connection with any calculation of Consolidated
Current Liabilities during the 12-month period immediately preceding the
10
<PAGE>
Revolving Credit Loans Maturity Date, the outstanding principal amount of the
Revolving Credit Loans and the Supremex Revolving Credit Loans.
"Consolidated Current Ratio" means, at any particular time, the ratio
--------------------------
of Consolidated Current Assets to Consolidated Current Liabilities.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the
----------------------------------------
ratio of (a) (i) EBITDA of the Borrower (subject to Section 13.28) and its
-------------
Subsidiaries for such period minus (ii) taxes of the Borrower (subject to
-----
Section 13.28) and its Subsidiaries paid or payable in cash during such period,
- -------------
to (b) the Fixed Charges of the Borrower (subject to Section 13.28) and its
-------------
Subsidiaries for such period.
"Consolidated Funded Debt" means, at any particular time, (a) all Debt
------------------------
of the Borrower (subject to Section 13.28) and its Subsidiaries which matures by
-------------
its terms, or is renewable at the option of the Borrower (subject to Section
-------
13.28) or any of its Subsidiaries, to a date more than one year after the
- -----
original creation of such Debt and (b) all other Debt which would be classified
as "funded indebtedness" or "long-term indebtedness" on a consolidated balance
sheet of the Borrower (subject to Section 13.28) and its Subsidiaries as of such
-------------
date in accordance with GAAP.
"Consolidated Interest Coverage Ratio" means, for any period, the
------------------------------------
ratio of (a) EBITDA of the Borrower (subject to Section 13.28) and its
-------------
Subsidiaries for such period to (b) Consolidated Interest Expense for such
period.
"Consolidated Interest Expense" means, for any period, all interest on
-----------------------------
Debt of the Borrower (subject to Section 13.28) and its Subsidiaries paid or
-------------
accrued during such period, including the interest portion of payments under
Capital Lease Obligations.
"Consolidated Net Income" means, for any period, the net income (or
-----------------------
loss) of the Borrower (subject to Section 13.28) and its Subsidiaries for such
-------------
period, determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Worth" means, at any particular time, all amounts
----------------------
which, in conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of the Borrower (subject to Section 13.28) and its
-------------
Subsidiaries, plus any deductions made for currency translation adjustments, and
----
minus any additions made for currency translation adjustments.
- -----
"Consolidation Asset Dispositions" means Asset Dispositions made after
--------------------------------
the First Restatement Date directly in connection with the consolidation of the
(a) Denver, Colorado facilities, (b) the Dallas, Houston and San Antonio, Texas
facilities, (c) the Portland, Oregon and Seattle, Washington facilities and (d)
the Chicago, Illinois facilities, of the Borrower or its Wholly-Owned
Subsidiaries, other than Supremex and its Subsidiaries.
"Continue", "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 2.6 of a Eurodollar Loan as a Eurodollar Loan
-----------
of the same Type from one Interest Period to the next Interest Period.
11
<PAGE>
"Contract Rate" means as specified in Section 13.12(a).
------------- ----------------
"Convert", "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 2.6 or Article 4 of one Type of Loan into the other Type of
----------- ---------
Loan.
"Current Date" means a date occurring no more than 30 days prior to
------------
the Third Restatement Date or such earlier date which is reasonably acceptable
to the Agent.
"Debt" means as to any Person at any time (without duplication): (a)
----
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of Property or
services, except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than 90 days, (d) all Capital
Lease Obligations of such Person, (e) all obligations of such Person with
respect to the "Financing Loans" in the aggregate original principal amount of
$24,500,000 under the Equipment Lease Facility Documents, (f) all obligations
secured by a Lien existing on Property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are non-recourse
to such Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments, (h) all obligations of such
Person to redeem or retire shares of Capital Stock of such Person, (i) all
obligations and liabilities of such Person under Interest Rate Protection
Agreements, (j) all liabilities of such Person in respect of unfunded vested
benefits under any Plan or Canadian Plan, and (k) all Debt of others Guaranteed
by such Person.
"Default" means an Event of Default or the occurrence of an event or
-------
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, any
------------
Reimbursement Obligation or any other amount payable by the Borrower under this
Agreement or any other Loan Document which is not paid when due (whether at
stated maturity, by acceleration or otherwise), a rate per annum during the
period commencing on the due date until such amount is paid in full equal to the
sum of two percent plus the Prime Rate as in effect from time to time plus the
Applicable Margin for Prime Rate Loans; provided, however, that if such amount
-------- -------
in default is principal of a Eurodollar Loan and the due date is a day other
than the last day of an Interest Period therefor, the "Default Rate" for such
principal shall be, for the period from and including the due date and to but
excluding the last day of the Interest Period therefor, two percent plus the
interest rate for such Eurodollar Loan for such Interest Period as provided in
Section 2.4(a) hereof and, thereafter, the rate provided for above in this
- --------------
definition.
"Deposit Account" means a deposit account maintained by the Borrower
---------------
with a bank selected by the Borrower and reasonably acceptable to the Agent.
"Dollars" and "$" mean lawful money of the U.S.
------- -
12
<PAGE>
"EBITDA" means, for any period, without duplication, the sum of the
------
following for the Borrower (subject to Section 13.28) and its Subsidiaries for
-------------
such period determined on a consolidated basis in accordance with GAAP: (a)
Consolidated Net Income, plus (b) Consolidated Interest Expense, plus (c) income
---- ----
and franchise taxes to the extent deducted in determining Consolidated Net
Income, plus (d) depreciation and amortization expense and other non-cash items
----
to the extent deducted in determining Consolidated Net Income, minus (e) non-
-----
cash income to the extent included in determining Consolidated Net Income.
"Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
-----------------
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) acceptable to the Agent and
approved by the Borrower, which approval by the Borrower shall not be
unreasonably withheld, conditioned or delayed.
"Environmental Law" means any federal (U.S. or Canadian), state,
-----------------
provincial, local or foreign law, statute, code or ordinance, principle of
common law, rule or regulation, as well as any Permit, order, decree, judgment
or injunction issued, promulgated, approved or entered thereunder, relating to
pollution or the protection, cleanup or restoration of the environment or
natural resources, or to the public health or safety, or otherwise governing the
generation, use, handling, collection, treatment, storage, transportation,
recovery, recycling, discharge or disposal of Hazardous Materials, including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. (S) 9601 et seq., the Superfund Amendment and
------
Reauthorization Act of 1986, 99-499, 100 Stat. 1613, the Resource Conservation
and Recovery Act of 1976, 42 U. S. C. (S) 6901 et seq., the Occupational Safety
------
and Health Act, 29 U S.C. (S) 651 et seq., the Clean Air Act, 42 U.S.C. (S) 7401
------
et seq., the Clean Water Act, 33 U.S.C. (S) 1251 et seq., the Emergency Planning
- ------ ------
and Community Right to Know Act, 42 U.S.C. (S) 11001 et seq., the Federal
------
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S) 136 et seq., and the
-------
Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq., and any state or local
------
counterparts.
"Environmental Liabilities" means, as to any Person, all liabilities,
-------------------------
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability or criminal or civil statute, including, without
limitation, any Environmental Law, Permit, order or agreement with any
Governmental Authority or other Person, arising from environmental, health or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment.
"Equipment Lease Facility" means the transactions governed or
------------------------
contemplated by the Equipment Lease Facility Documents.
"Equipment Lease Facility Documents" means the "Operative Documents"
----------------------------------
as such term is defined in Appendix A to that certain (a) Participation
Agreement dated as of November 15, 1996, among the Borrower, certain
Subsidiaries of the Borrower, Paribas Properties, Inc., the "Equity
13
<PAGE>
Lenders" and "Financing Lenders" identified therein and Banque Paribas as agent
for such "Equity Lenders" and "Financing Lenders", (b) Master Equipment Lease
and Security Agreement dated as of November 15, 1996, between the Borrower and
Paribas Properties, Inc., and (c) Loan Agreement dated as of November 15, 1996,
among Paribas Properties, Inc., the "Equity Lenders" and "Financing Lenders"
identified therein and Banque Paribas as agent for such "Equity Lenders" and
"Financing Lenders" ("Appendix A").
----------
"Equipment Lease Facility Equipment" means the "Equipment" as
----------------------------------
such term is defined in Appendix A.
"Equipment Lease Facility Guaranty" means the "Guaranty" as such
---------------------------------
term is defined in Appendix A.
"Equipment Lease Facility Lenders" means the "Lenders" as such
--------------------------------
term is defined in Appendix A.
"Equipment Lease Facility Loan Agreement" means that certain Loan
---------------------------------------
Agreement dated as of November 15, 1996, among Paribas Properties, Inc., the
"Equity Lenders" and "Financing Lenders" identified therein and Banque Paribas
as agent for such "Equity Lenders" and "Financing Lenders"
"Equipment Lease Facility Obligations" means the "Obligations" as
------------------------------------
such term is defined in Appendix A.
"Equity Issuance" means any issuance by Holdings or the Borrower of
---------------
any Capital Stock of Holdings or the Borrower, respectively.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
---------------
a member of a group of entities, organizations or employers of which a Loan
Party is also a member and which is treated as a single employer within the
meaning of Sections 414(b), (c), (m) or (o) of the Code.
"ESOP Loans" means the "ESOP Loans" as such term is defined in
----------
the Second Restated Agreement.
"Eurodollar Loans" means Loans that bear interest at rates based upon
----------------
the Eurodollar Rate or the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
---------------
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted by the Reference Lender at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) two Business Days prior to
the first day of such Interest Period for the offering by the Reference Lender
to leading banks in the London interbank market of Dollar deposits in
immediately available funds having a
14
<PAGE>
term comparable to such Interest Period and in an amount comparable to the
principal amount of the Eurodollar Loan made by the Reference Lender to which
such Interest Period relates. If the Reference Lender is not participating in
any Eurodollar Loans during any Interest Period therefor (whether as a result of
Section 4.4 or for any other reason), the Eurodollar Rate and the Adjusted
- -----------
Eurodollar Rate for such Loans for such Interest Period shall be determined by
reference to the amount of the Loans which the Reference Lender would have made
had it been participating in such Loans.
"Event of Default" has the meaning specified in Section 11.1.
---------------- ------------
"Excess Cash Flow" means, for any period commencing on or after the
----------------
first day of fiscal year 1996, without duplication, the total of the following
of the Borrower and its Subsidiaries, other than Supremex and its Subsidiaries,
for such period determined on a consolidated basis in accordance with GAAP (but
for the exclusion of Supremex and its Subsidiaries): (a) Consolidated Net
Income, plus (b) depreciation and amortization expense and other non-cash items
----
to the extent deducted in determining Consolidated Net Income, minus (c) non-
-----
cash income to the extent included in determining Consolidated Net Income, plus
----
(d) income and franchise taxes to the extent deducted in determining
Consolidated Net Income; minus (e) cash payments of taxes, plus (f) taxes
----- ----
previously paid that have been refunded in cash, minus (g) the lesser of (i)
-----
actual Capital Expenditures or (ii) Permitted Capital Expenditures, minus (h)
-----
principal payments (including prepayments) made on the Term Loans and the "Term
Loans A" and the "Term Loans B" as such terms are defined in the Second Restated
Agreement.
"Excess Cash Flow Prepayment Date" means the 30th day of each April,
--------------------------------
commencing on April 30, 1997, and continuing on the 30th day of each April of
each subsequent year.
"Excess Insurance Proceeds" means any and all proceeds of any
-------------------------
Insurance Recovery which the Borrower or its Subsidiary (as applicable) (other
than Supremex and its Subsidiaries) (a) has elected to not apply to the repair,
construction or replacement of the Property affected or to the purchase of
other, similar Property for use in its business or (b) has not both (i) elected
to apply to the repair, construction or replacement of the Property affected or
to the purchase of other, similar Property for use in its business within 90
days of the event giving rise to the Insurance Recovery and (ii) actually
applied to such repair, construction, replacement or purchase (A) within 180
days after the earliest to occur of the receipt of such proceeds by the
Borrower, any of such Subsidiaries or the Agent, with respect to an Insurance
Recovery relating to other than real Property or the reconstruction of a plant,
or (B) commencing within 180 days after the earliest to occur of the receipt of
such proceeds by the Borrower, any of such Subsidiaries or the Agent and
continuing in a reasonably prompt and diligent fashion thereafter, with respect
to an Insurance Recovery relating to real Property or the reconstruction of a
plant.
"Exchange Notes" means the 10 1/2% Series B Senior Subordinated Notes
--------------
due 2004 issued by the Borrower pursuant to the Exchange Offer, as such term is
defined in the Borrower Indenture.
15
<PAGE>
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest one-sixteenth of one percent (1/16 of 1%))
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (a) if the day for
--------
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if such
rate is not so published on such next succeeding Business Day, the Federal Funds
Rate for any day shall be the average rate charged to the Reference Lender on
such day on such transactions as determined by the Agent.
"First Restated Agreement" means as specified in Recital C of
------------------------ ---------
this Agreement.
"First Restatement Date" means December 19, 1994, the date of the
----------------------
First Restated Agreement.
"First Restatement Lenders" means the parties to the First
-------------------------
Restated Agreement who were "Lenders" as defined therein.
"Fixed Charges" means, for any period, the sum of (a) Consolidated
-------------
Interest Expense of the Borrower (subject to Section 13.28) and its Subsidiaries
-------------
during such period, plus (b) all scheduled payments (as such scheduled payments
----
are reduced by application of any prepayments) of principal during such period
with respect to (i) the Term Loans, (ii) the "Term Loans A" and the "Term Loans
B" as such terms are defined in the Second Restated Agreement, (iii) the
Supremex Term Loans, (iv) the "Term Loans A" and the "Term Loans B" as such
terms are defined in the Original Supremex Credit Agreement, and (v) in the
event this definition is to be determined with respect to Holdings in accordance
with Section 13.28, any other Debt for borrowed money of Holdings and its
-------------
Subsidiaries, plus (c) Capital Expenditures of the Borrower (subject to Section
---- -------
13.28) and its Subsidiaries during such period.
- -----
"Future Acquisition" means any transaction or series of related
------------------
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition by the Borrower or any of its Subsidiaries of all or substantially
all of the assets of a Person or of any business or division of a Person, (b)
the acquisition by the Borrower or any of its Subsidiaries of 50% or more of any
class of the Capital Stock of any Person or any acquisition by the Borrower or
any of its Subsidiaries of Capital Stock of any Person which otherwise causes
such Person to become a Subsidiary, or (c) a merger, consolidation, amalgamation
or any other combination with another Person (other than a Person that is a
Subsidiary of the Borrower) if the Borrower or a Subsidiary of the Borrower is
the surviving entity. (A Synthetic Lease pursuant to which the Borrower or its
Subsidiary is lessee shall not be deemed to constitute an acquisition by the
Borrower or such Subsidiary, respectively, of the assets subject to such lease
for purposes of this definition.)
"G-P Envelope" means G-P Envelope Holdings, Inc., a Delaware
------------
corporation.
16
<PAGE>
"G-P Envelope Acquisition" means the acquisition by the Borrower of
------------------------
substantially all of the Property of G-P Envelope pursuant to the Acquisition
Documents.
"GAAP" means generally accepted accounting principles, applied on a
----
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"GAC" means as specified in the initial paragraph of this
---
Agreement.
"GAC Acquisition" means the acquisition by the Borrower (initially
---------------
indirectly through GAC Acquisition Company, Inc.) of all of the issued and
outstanding Capital Stock of GAC pursuant to the Acquisition Documents.
"GAC Acquisition Date" means August 25, 1995.
--------------------
"GECC Equipment" means as specified in Section 5.5.
-------------- -----------
"Georgia Pacific" means Georgia-Pacific Corporation, a Georgia
---------------
corporation.
"Governmental Authority" means any nation or government, any state or
----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Governmental Requirement" means any law, statute, code, ordinance,
------------------------
order, rule, regulation, judgment, decree, injunction, franchise, Permit,
certificate, license, authorization or other directive or requirement of any
federal, state, county, municipal, parish, provincial or other Governmental
Authority or any department, commission, board, court, agency or any other
instrumentality of any of them.
"Guarantee" by any Person means any obligation, contingent or
---------
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (a) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay or to maintain financial statement
conditions or otherwise) or (b) entered into for the purpose of assuring in any
other manner the obligee of such Debt or other obligation as to the payment
thereof or to protect the obligee against loss in respect thereof (in whole or
in part), provided that the term Guarantee shall not include endorsements for
--------
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning. The amount of any Guarantee shall
be deemed to be an amount equal to the stated or determinable amount of the
primary obligation in
17
<PAGE>
respect of which such Guarantee is made or, if not stated or determinable, the
maximum anticipated liability in respect thereof (assuming such Person is
required to perform thereunder).
"Hazardous Material" means any substance, product, waste, pollutant,
------------------
chemical, contaminant, insecticide, pesticide, gaseous or solid matter, organic
or inorganic matter, fuel, micro-organism, ray, odor, radiation, energy, vector,
plasma, constituent or material which (a) is or becomes listed, regulated or
addressed under any Environmental Law or (b) is, or is deemed to be, alone or in
any combination, hazardous, hazardous waste, toxic, a pollutant, a deleterious
substance, a contaminant or a source of pollution or contamination under any
Environmental Law, including, without limitation, asbestos, petroleum,
underground storage tanks (whether empty or containing any substance) and
polychlorinated biphenyls.
"Holdings" means as specified in Recital A of this Agreement.
-------- ---------
"Holdings Common Stock" means the common stock of Holdings, par
---------------------
value $0.01 per share.
"Holdings Deferred Coupon Notes" means the "Holdings Deferred Coupon
------------------------------
Notes" as such term is defined in the Second Restated Agreement.
"Holdings Guaranty" means the Third Amended and Restated Guaranty
-----------------
Agreement dated the Third Restatement Date executed by Holdings in favor of the
Agent for the benefit of the Agent, the Lenders and/or the Supremex Lenders, and
any and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Holdings Security Agreement" means the Third Amended and Restated
---------------------------
Security Agreement dated the Third Restatement Date executed by Holdings in
favor of the Agent for the benefit of the Agent, the Lenders, the Supremex
Lenders and/or the Equipment Lease Facility Lenders, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Holdings Subordinated Debt" means the Debt of Holdings evidenced by
--------------------------
the Holdings Subordinated Guaranty and any and all other current or future Debt
of Holdings which is subordinated to all or any portion of the obligations of
Holdings under the Holdings Guaranty or the other Loan Documents.
"Holdings Subordinated Debt Documents" means the Holdings Subordinated
------------------------------------
Guaranty and any and all other agreements, documents and instruments now or
hereafter evidencing or governing any Holdings Subordinated Debt.
"Holdings Subordinated Guaranty" means the obligations of Holdings
------------------------------
under the Borrower Indenture pursuant to which Holdings guarantees payment of
the Borrower Subordinated Notes.
"Innova" means Innova Envelope Inc., a corporation f/k/a Innova
------
Envelope (1995) Inc. continued under the laws of the Province of Ontario
(Canada).
18
<PAGE>
"Insurance Recovery" means, with respect to any Property of the
------------------
Borrower or any of its Subsidiaries other than Supremex or any of its
Subsidiaries and any single occurrence or related occurrences with respect
thereto, the receipt or constructive receipt by the Borrower or any of such
Subsidiaries, or the payment by an insurance company to the Agent, of proceeds
of any such Property or casualty insurance in an amount or aggregate amount (as
applicable) in excess of $500,000.
"Intellectual Property" means any U.S., Canadian or foreign patents,
---------------------
patent applications, trademarks, trade names, service marks, brand names, logos
and other trade designations (including unregistered names and marks), trademark
and service mark registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.
"Intercreditor Agreement" means that certain Amended and Restated
-----------------------
Intercreditor Agreement dated as of the Third Restatement Date among the
Lenders, the Supremex Lenders and the Equipment Lease Facility Lenders, and any
and all amendments, modifications, supplements, renewals, extensions or
restatements thereof, a true and correct copy of which is attached hereto as
Exhibit F.
- ---------
"Interest Period" means, with respect to any Eurodollar Loan, each
---------------
period commencing on the date such Loan is made or Converted from a Prime Rate
Loan or (if Continued) the last day of the next preceding Interest Period with
respect to such Loan, and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Borrower may
select as provided in Section 2.9 hereof, except that each such Interest Period
-----------
which commences on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (a) each Interest Period which
would otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b) any Interest
Period which would otherwise extend beyond an applicable Maturity Date shall end
on such Maturity Date; (c) no more than seven Interest Periods for Eurodollar
Loans shall be in effect at the same time; (d) no Interest Period shall have a
duration of less than one month and, if the Interest Period for any Eurodollar
Loans would otherwise be a shorter period, such Loans shall not be available
hereunder; and (e) no Interest Period for a Term Loan may commence before and
end after any principal repayment date unless, after giving effect thereto, the
aggregate principal amount of the Eurodollar Loans having Interest Periods that
end after such principal payment date shall be equal to or less than the amount
of the applicable Term Loans scheduled to be outstanding hereunder after such
principal payment date.
"Interest Rate Protection Agreements" means, with respect to any
-----------------------------------
Person (a) an interest rate swap, cap or collar agreement or similar arrangement
providing for the transfer or mitigation of interest rate risks either generally
or under specified contingencies or (b) an arrangement mitigating the risk of
fluctuations in the currency exchange rate between Cdn. Dollars and Dollars.
19
<PAGE>
"Inventory" means all inventory now owned or hereafter acquired by the
---------
Borrower or any of its Subsidiaries wherever located and whether or not in
transit, which is or may at any time be held for sale or lease, or furnished
under any contract (exclusive of leases of real Property covered by a Mortgage)
for service or held as raw materials, work in process, or supplies or materials
used or consumed in the business of the Borrower or any of its Subsidiaries.
"Investments" means as specified in Section 9.5.
----------- -----------
"Issuing Bank" means Banque Paribas or, if Banque Paribas is not
------------
acceptable to an intended beneficiary of a Letter of Credit as the issuer of
such Letter of Credit, such other Lender which is a commercial bank as the
Borrower may designate from time to time which agrees to be the issuer of such
Letter of Credit.
"Lender" and "Lenders" means as specified in the initial
------ -------
paragraph of this Agreement.
"Letter of Credit" means any standby letter of credit issued by the
----------------
Issuing Bank for the account of the Borrower pursuant to the Original Agreement,
the First Restated Agreement, the Second Restated Agreement or this Agreement.
"Letter of Credit Agreement" means, with respect to each Letter of
--------------------------
Credit to be issued by the Issuing Bank therefor, the letter of credit
application and reimbursement agreement which such Issuing Bank requires to be
executed by the Borrower in connection with the issuance of such Letter of
Credit.
"Letter of Credit Liabilities" means, at any time, the aggregate
----------------------------
undrawn face amounts of all outstanding Letters of Credit and all unreimbursed
drawings under Letters of Credit.
"Lien" means any lien, mortgage, security interest, tax lien,
----
financing statement, pledge, charge, hypothecation or other encumbrance of any
kind or nature whatsoever (including, without limitation, any conditional sale
or title retention agreement), whether arising by contract, operation of law or
otherwise.
"Loans" means the Term Loans, the Revolving Credit Loans and the
-----
Acquisition Loans, and "Loan" means any of the Term Loans, the Revolving Credit
----
Loans or the Acquisition Loans.
"Loan Documents" means this Agreement, the Notes, the Security
--------------
Documents, the Agent's Letter, the Letters of Credit, the Letter of Credit
Agreements, any Interest Rate Protection Agreement between the Borrower and any
Lender, the Intercreditor Agreement, the Accounts Receivable Securitization
Facility Intercreditor Agreement and all other agreements, documents and
instruments now or hereafter executed and/or delivered pursuant to or in
connection with any of the foregoing, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof.
"Loan Party" means Holdings, the Borrower, Wisco, Pavey, Mail-Well
----------
West, Wisco II, Supremex Holdings, GAC, Wisco III and each of the other
Subsidiaries (other than an Unrestricted
20
<PAGE>
Subsidiary) of the Borrower (including, without limitation, each New Loan Party)
and any other Person who is or becomes a party to any agreement, document or
instrument that Guarantees or secures payment or performance of the Obligations
or any part thereof.
"Mail-Well ESOP" means the trust created pursuant to the Mail-Well
--------------
Corporation Employee Stock Ownership Plan Trust Agreement dated as of February
23, 1994, by and between Bank One, Texas, N.A. and the Borrower and the Mail-
Well Corporation Employee Stock Ownership Plan dated as of February 23, 1994
executed by the Borrower (as such agreement is to be amended as of the funding
of the Additional ESOP Loans).
"Mail-Well ESOP Loan Documents" means the Mail-Well ESOP Note, the
-----------------------------
Mail-Well ESOP Security Agreement and all other agreements, documents and
instruments now or hereafter executed and/or delivered by the Mail-Well ESOP or
the Borrower pursuant to or in connection with the Mail-Well ESOP Loans, and any
and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Mail-Well ESOP Loans" means the "First Mail-Well ESOP Loan", the
--------------------
"Second Mail-Well ESOP Loan", the "Third Mail-Well ESOP Loan" and the "Fourth
Mail-Well ESOP Loan" as such terms are defined in the Second Restated Agreement.
"Mail-Well ESOP Note" means the Second Restated Promissory Note in the
-------------------
original principal amount of $3,627,911.62 dated August 9, 1995, made by the
Mail-Well ESOP payable to the Borrower evidencing certain of the Mail-Well ESOP
Loans, and any and all amendments, modifications, supplements, renewals,
extensions or restatements thereof.
"Mail-Well ESOP Security Agreement" means the Restated First Security
---------------------------------
Agreement dated the First Restatement Date executed by the Mail-Well ESOP in
favor of the Borrower, and any and all amendments, modifications, supplements,
renewals, extensions or restatements thereof.
"Mail-Well West" means as specified in the initial paragraph of
--------------
this Agreement.
"Majority Lenders" means, at any date of determination, Lenders having
----------------
in the aggregate at least 51% (in dollar amount as to any one or more of the
following) of the sum of the aggregate outstanding Revolving Credit Loans
Commitments (or, if the Revolving Credit Loans Commitments have terminated or
expired, the aggregate outstanding principal amount of the Revolving Credit
Loans and the aggregate Letter of Credit Liabilities), plus the aggregate
----
outstanding principal amount of the Term Loans, plus the aggregate outstanding
----
Acquisition Loans Commitments (or, if the Acquisition Loans Commitments have
terminated or expired, the aggregate outstanding principal amount of the
Acquisition Loans).
"Material Adverse Effect" means any material adverse effect, or the
-----------------------
occurrence of any event or the existence of any condition that could reasonably
be expected to have a material adverse effect, on (a) the prospects, business or
financial condition of Holdings and its Subsidiaries, taken as a whole, or of
Holdings on an individual basis, (b) the prospects, business or financial
condition of the Borrower and its Subsidiaries, taken as a whole, or of the
Borrower on an individual basis, (c) the
21
<PAGE>
ability of Holdings, the Borrower or its Subsidiaries to pay and perform the
Obligations, the Supremex Obligations or the Equipment Lease Facility
Obligations when due, or (d) the validity or enforceability of any of the Loan
Documents or the Supremex Loan Documents, any Lien created or purported to be
created by any of the Loan Documents or the Supremex Loan Documents or the
rights and remedies of the Agent or the Lenders under any of the Loan Documents
or the Supremex Loan Documents.
"Maturity Date" means the Term Loans Maturity Date, the Revolving
-------------
Credit Loans Maturity Date or the Acquisition Loans Maturity Date, as
applicable.
"Maximum Rate" means, with respect to any Lender, the maximum non-
------------
usurious interest rate, if any, that any time or from time to time may be
contracted for, taken, reserved, charged or received with respect to the
particular Obligations as to which such rate is to be determined, payable to
such Lender pursuant to this Agreement or any other Loan Document, under laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws now
allow. The Maximum Rate shall be calculated in a manner that takes into account
any and all fees, payments and other charges in respect of the Loan Documents
that constitute interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect without notice to the Borrower at the time of
such change in the Maximum Rate. For purposes of determining the Maximum Rate
under Texas law, the applicable rate ceiling shall be the indicated rate ceiling
described in, and computed in accordance with, Article 5069-1.04, Vernon's Texas
Civil Statutes; provided, however, that, to the extent permitted by applicable
-------- -------
law, the Agent shall have the right to change the applicable rate ceiling from
time to time in accordance with applicable law.
"Mortgaged Properties" means, collectively, the fee-owned Properties
--------------------
and leasehold interests in the Properties listed on Schedule 1.1(a) hereof which
---------------
are or are to be subject to the Mortgages, and any such after-acquired
Properties which become subject to a Mortgage pursuant to Section 5.4 hereof.
-----------
"Mortgages" means each deed of trust, leasehold deed of trust,
---------
mortgage, leasehold mortgage, collateral assignment of leases or other real
estate security document executed and delivered pursuant to or in connection
with the Original Agreement, the First Restated Agreement, the Second Restated
Agreement or this Agreement (including, without limitation, any such agreement
or document executed pursuant to Section 5.4) by the Borrower or any other Loan
-----------
Party in favor of the Agent for the benefit of the Agent, the Lenders, the
Supremex Lenders and/or the Equipment Lease Facility Lenders with respect to any
Mortgaged Property, and any and all amendments, modifications, supplements,
renewals or restatements thereof (including, without limitation, any and all
modification agreements relating thereto).
"MTRC" means as specified in Recital G of this Agreement.
---- ---------
22
<PAGE>
"Multiemployer Plan" means a multiemployer plan defined as such in
------------------
Section 3(37) of ERISA to which contributions have been made by or are required
from any Loan Party or any ERISA Affiliate since 1974 and which is covered by
Title IV of ERISA.
"Net Proceeds" means, with respect to any Asset Disposition, (a) the
------------
gross amount of cash received by the Borrower or any of its Subsidiaries from
such Asset Disposition, minus (b) the amount, if any, of all taxes paid or
-----
payable by the Borrower or any of its Subsidiaries directly resulting from such
Asset Disposition (including the amount, if any, estimated by the Borrower in
good faith at the time of such Asset Disposition for taxes payable by the
Borrower or any of its Subsidiaries on or measured by net income or gain
resulting from such Asset Disposition), minus (c) the reasonable out-of-pocket
-----
costs and expenses incurred by the Borrower or such Subsidiary in connection
with such Asset Disposition (including reasonable brokerage fees paid to a
Person other than an Affiliate of the Borrower) excluding any fees or expenses
paid to an Affiliate of the Borrower, minus (d) amounts applied to the repayment
-----
of indebtedness (other than the Obligations) secured by a Permitted Lien on the
Property subject to the Asset Disposition, minus (e) with respect to any
-----
Consolidation Asset Disposition, moving and severance costs and expenses
directly related to such Consolidation Asset Disposition if and to the extent
that such costs and expenses have been certified as to accuracy to the Agent by
a Responsible Officer of the Borrower. "Net Proceeds" with respect to any Asset
------------
Disposition shall also include proceeds (after deducting any amounts specified
in clauses (b), (c) and (d) of the preceding sentence) of insurance with respect
----------- --- ---
to any actual or constructive loss of Property, an agreed or compromised loss of
Property or the taking of any Property under the power of eminent domain and
condemnation awards and awards in lieu of condemnation for the taking of
Property under the power of eminent domain, except such proceeds and awards as
are released to and used by the Borrower in accordance with Section 8.5. "Net
----------- ---
Proceeds" means, with respect to any Equity Issuance, (a) the gross amount of
- --------
cash or cash equivalents received from such Equity Issuance, exclusive of the
proceeds of sales of Capital Stock of Holdings to employees or directors of
Holdings or its Subsidiaries in connection with the provision of compensation or
benefits to such employees or directors for their activities as employees or
directors, respectively, minus (b) the reasonable out-of-pocket costs and
-----
expenses incurred by the issuer in connection with such Equity Issuance
(including reasonable underwriting fees paid to a Person other than an Affiliate
of the Borrower) excluding any fees or expenses paid to an Affiliate of the
Borrower.
"New Acquisitions" means any and all Permitted Acquisitions which
----------------
have been consummated.
"New Acquisitions Agreements" means any and all stock purchase
---------------------------
agreements, asset purchase agreements and other similar agreements executed and
delivered in connection with any and all New Acquisitions.
"New Loan Party" means any Loan Party acquired pursuant to any
--------------
Permitted Acquisition of Capital Stock of another Person.
"Non-Recourse Debt" means Debt or that portion of Debt (a) as to which
-----------------
neither Holdings, the Borrower nor any of the Borrower's Subsidiaries (other
than an Unrestricted Subsidiary)
23
<PAGE>
(i) provides credit support pursuant to any guaranty, undertaking, agreement,
document or instrument that would constitute Debt, (ii) is directly or
indirectly liable, or (iii) constitutes the lender, and (b) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of Holdings, the
Borrower or any of the Borrower's Subsidiaries (other than an Unrestricted
Subsidiary) to declare a default on such other Debt or cause the payment thereof
to be accelerated or payable prior to its stated maturity.
"Notes" means the Term Loans Notes, the Revolving Credit Loans Notes
-----
and the Acquisition Loans Notes, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof and all substitutions
therefor (including promissory notes issued by the Borrower pursuant to Section
-------
13.8), and "Note" means any of such promissory notes.
- ---- ----
"Obligations" means any and all (a) indebtedness, liabilities and
-----------
obligations of the Loan Parties, or any of them, to the Agent, the Issuing Bank
and the Lenders, or any of them, evidenced by and/or arising pursuant to any of
the Loan Documents, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several
or joint and several, including, without limitation, (i) the obligations of the
Loan Parties to repay the Loans and the Reimbursement Obligations, to pay
interest on the Loans and Reimbursement Obligations (including, without
limitation, interest accruing after any, if any, bankruptcy, insolvency,
reorganization or other similar filing) and to pay all fees, indemnities, costs
and expenses (including attorneys' fees) provided for in the Loan Documents and
(ii) the indebtedness constituting the Loans, the Reimbursement Obligations and
such fees, indemnities, costs and expenses, and (b) indebtedness, liabilities
and obligations of the Borrower under any and all Interest Rate Protection
Agreements that it may enter into with any Lender.
"Original Agreement" means as specified in Recital B of this
------------------ ---------
Agreement.
"Original Lenders" means the parties to the Original Agreement
----------------
who were "Lenders" as defined therein.
"Original Supremex Credit Agreement" means as specified in
----------------------------------
Recital E of this Agreement.
- ----------
"Original Supremex Lenders" means the parties to the Original Supremex
-------------------------
Credit Agreement who were "Lenders" thereunder.
"Pavey" means as specified in the initial paragraph of this
-----
Agreement.
"Pavey Acquisition" means the acquisition by Holdings of all of the
-----------------
issued and outstanding Capital Stock of Pavey pursuant to the Acquisition
Documents.
"Payor" means as specified in Section 3.4.
----- -----------
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
----
succeeding to all or any of its functions under ERISA.
24
<PAGE>
"PBGF" means the Ontario Pension Benefits Guarantee Fund.
----
"Pension Plan" means an employee pension benefit plan as defined in
------------
Section 3(2) of ERISA (including a Multiemployer Plan) which is subject to the
funding requirements under Section 302 of ERISA or Section 412 of the Code, in
whole or in part, and which is maintained or contributed to currently or at any
time within the six years immediately preceding the Closing Date or, in the case
of a Multiemployer Plan, at any time since September 2, 1974, by the Borrower or
any ERISA Affiliate for employees of the Borrower or any ERISA Affiliate.
"Peril" means as specified in Section 8.5(a).
----- --------------
"Permit" means any permit, certificate, approval, order, license
------
or other authorization.
"Permitted Acquisition" means any Future Acquisition that
---------------------
complies with each of the following requirements:
(a) such Future Acquisition consists of an acquisition of assets
or Capital Stock by a Loan Party other than Holdings or Supremex or a
Subsidiary of Supremex;
(b) such Future Acquisition shall not involve an aggregate
purchase price paid or payable, whether in the form of cash, Capital Stock,
property, liabilities assumed (exclusive of current accruals and trade
payables incurred in the ordinary course of business to the extent that the
aggregate amount of such accruals and payables assumed does not exceed the
aggregate amount of accounts receivable and other current assets acquired)
or other consideration, in excess of the product of (i) the Pro Forma
EBITDA for a recent twelve-month period acceptable to the Agent
attributable to the assets, Person(s) and/or businesses (as applicable)
proposed to be acquired, which Pro Forma EBITDA for such period and any
adjustments thereto shall be approved by the Agent in writing, multiplied
----------
by (ii) five and one-half;
--
(c) such Future Acquisition shall not involve an aggregate
purchase price paid or payable, whether in the form of cash, property,
liabilities assumed (exclusive of current accruals and trade payables
incurred in the ordinary course of business to the extent that the
aggregate amount of such accruals and payables assumed does not exceed the
aggregate amount of accounts receivable and other current assets acquired)
or other consideration, in excess of $30,000,000 unless such Future
Acquisition has been approved in writing by the Agent and the Required
Lenders;
(d) such Future Acquisition and all Future Acquisitions
consummated or proposed to be consummated during any twelve-month period
shall not involve an aggregate purchase price paid or payable, whether in
the form of cash, property, liabilities assumed (exclusive of current
accruals and trade payables incurred in the ordinary course of business to
the extent that the aggregate amount of such accruals and payables assumed
does not exceed the aggregate amount of accounts receivable and other
current assets acquired) or
25
<PAGE>
other consideration, exceeding $60,000,000 without the prior written
approval of the Agent and the Required Lenders;
(e) both before and after giving effect to such Future
Acquisition and the Acquisition Loans requested to be made in connection
therewith, no Default exists or will exist and the Borrower shall have
demonstrated, to the reasonable satisfaction of the Agent, pro forma
compliance with the financial covenants contained in Article 10 of this
----------
Agreement for the most recent twelve-month period and as of the end of the
most recent fiscal quarter after giving effect to such Future Acquisition;
(f) the Loan Parties shall not, as a result of or in connection
with any such Future Acquisition, assume or incur any contingent
liabilities (whether relating to environmental, tax, litigation or other
matters) that could result in the existence or occurrence of a Material
Adverse Effect;
(g) if such Future Acquisition involves an acquisition of Capital
Stock, the Borrower (or other applicable Loan Party approved by the Agent
and the Required Lenders) shall acquire and own (and have voting control
with respect to) at least 90% of each class of the issued and outstanding
shares of Capital Stock of the New Loan Party whose Capital Stock is being
acquired unless a lesser percentage of each such class of Capital Stock has
been approved in writing by the Agent and the Majority Lenders (in which
case such lesser percentage is being acquired); and
(h) the Borrower shall have represented and warranted to the
Agent and the Lenders, in writing, as to the compliance with each of the
requirements set forth in clauses (a) through (g) preceding.
----------- ---
"Permitted Acquisition Documents" means each stock purchase or asset
-------------------------------
purchase agreement and all other agreements, documents or instruments which
evidence or govern any Permitted Acquisition or which are executed and/or
delivered in connection therewith.
"Permitted Capital Expenditures" means as specified in Section
------------------------------ -------
10.7.
- ----
"Permitted Holders" means (a) the officers and directors of Holdings
-----------------
and the Borrower and its Subsidiaries as of the Second Restatement Date, (b)
Sterling and its officers, directors, employees and shareholders as of the
Second Restatement Date, (c) the Mail-Well ESOP, (d) Unicorn, (e) all other
individuals who own Holdings Common Stock on the Second Restatement Date, and
(f) any spouse, parent, sibling, child or grandchild of any of the aforesaid
individuals (in each case, whether such relationship arises from birth, adoption
or through marriage) or any trust established for the benefit of any such
individuals or any spouse, parent, sibling, child or grandchild of any such
individuals (in each case whether such relationship arises from birth, adoption
or through marriage).
26
<PAGE>
"Permitted Liens" means:
---------------
(a) Liens disclosed on Schedule 1.1(b) hereto;
---------------
(b) Liens securing the Obligations in favor of the Agent (for the
benefit of the Agent and the Lenders) pursuant to the Loan Documents, Liens
securing the Supremex Obligations in favor of Banque Paribas as agent (for
the benefit of itself and the Supremex Lenders) pursuant to the Supremex
Loan Documents and Liens securing the Equipment Lease Facility Guaranty in
favor of the Equipment Lease Facility Lenders pursuant to the Loan
Documents and the Equipment Lease Facility Documents;
(c) Encumbrances consisting of easements, zoning restrictions or
other restrictions on the use of real Property or, as to the real Property
referred to in clause (ii) below only, imperfections to title that (i) as
-----------
to any Mortgaged Property, do not (individually or in the aggregate)
materially affect the value of the Property encumbered thereby or
materially impair the ability of the Borrower or any of its Subsidiaries to
use such Property in its businesses, and none of which is violated in any
material respect by existing or proposed structures or land use, and (ii)
as to any real Property other than Mortgaged Property, were entered into in
the ordinary course of business and could not have a Material Adverse
Effect;
(d) Liens for taxes, assessments or other governmental charges
that are not delinquent or which are being contested in good faith and for
which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords or other similar statutory Liens securing obligations that are
not yet due and are incurred in the ordinary course of business or which
are being contested in good faith and for which adequate reserves have been
established;
(f) Liens resulting from good faith deposits to secure payment of
workmen's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, contracts (other than for payment of Debt) or leases, all in the
ordinary course of business;
(g) Purchase-money Liens on any Property hereafter acquired or
the assumption after the Closing Date of any Lien on Property existing at
the time of such acquisition (and not created in contemplation of such
acquisition), or a Lien incurred after the Closing Date in connection with
any conditional sale or other title retention agreement or Capital Lease
Obligation; provided that:
--------
(i) any Property subject to the foregoing is acquired by the
Borrower or any of its Subsidiaries in the ordinary course of its
respective business and the Lien on the Property attaches
concurrently or within 90 days after the acquisition thereof;
27
<PAGE>
(ii) the Debt secured by any Lien so created, assumed or
existing shall not exceed the lesser of the cost or fair market value
at the time of acquisition of the Property covered thereby;
(iii) each such Lien shall attach only to the Property so
acquired and the proceeds thereof; and
(iv) the Debt secured by all such Liens shall not exceed
$12,000,000 at any time outstanding in the aggregate;
(h) Easements, rights-of-way, restrictions and other Liens and
imperfections to title that are approved by the Agent and are listed on
Exhibit B to any Mortgage; and
---------
(i) Any extension, renewal or replacement of any of the foregoing,
provided that Liens permitted hereunder shall not be extended or spread to
cover any additional indebtedness or Property;
provided, however, that (A) none of the Permitted Liens (except those in favor
- -------- -------
of the Agent) may attach or relate to the Capital Stock of or any other
ownership interest in the Borrower or any Subsidiary of the Borrower, (B) none
of the Permitted Liens referred to in clause (a) preceding may have a priority
----------
equal or prior to the Liens in favor of the Agent as security for the
Obligations, and (C) none of the Permitted Liens, other than the Permitted
Liens referred to in clauses (b) and (d) preceding, may attach or relate to any
----------- ---
accounts or inventory of any Loan Party or any Supremex Loan Party.
"Person" means any individual, corporation, trust, association, company,
------
partnership, joint venture, limited liability company, Governmental Authority or
other entity.
"Plan" means any employee benefit plan as defined in Section 3(3) of ERISA
----
established or maintained or contributed to by any Loan Party or any ERISA
Affiliate, including any Pension Plan.
"PNG Acquisition" means the "PNG Acquisition" as such term is defined in
---------------
the Supremex Credit Agreement.
"PNG Acquisition Agreement" means the "PNG Acquisition Agreement" as such
-------------------------
term is defined in the Supremex Credit Agreement.
"PNG Acquisition Documents" means the "PNG Acquisition Documents" as such
-------------------------
term is defined in the Supremex Credit Agreement.
"Prime Rate" means, at any time, the rate of interest per annum then most
----------
recently established by The Chase Manhattan Bank as its highest commercial prime
rate, which rate may not be the lowest rate of interest charged by The Chase
Manhattan Bank to its commercial borrowers. Each change in any interest rate
provided for herein based upon the Prime Rate resulting from a
28
<PAGE>
change in the Prime Rate shall take effect without notice to the Borrower at the
time of such change in the Prime Rate.
"Prime Rate Loans" means Loans that bear interest at rates based upon the
----------------
Prime Rate.
"Principal Office" means the principal office of the Agent in Houston,
----------------
Texas, presently located at 1200 Smith Street, Suite 3100, Houston, Texas.
"Pro Forma EBITDA" means, for any period, without duplication, the earnings
----------------
before interest, taxes, depreciation and amortization (as calculated consistent
with the definition of EBITDA contained herein) of the Person to be acquired or
attributable to the business or assets to be acquired pursuant to the applicable
Permitted Acquisition for such period as appropriately adjusted to reflect any
minority interest (in the case of a Permitted Acquisition of less than 100% of
all issued and outstanding Capital Stock) and as reasonably adjusted by the
Borrower consistent with the Borrower's past practice for calculating pro forma
EBITDA for acquisitions (which adjustments may include, if and to the extent
appropriate, changes in raw materials prices, reduction of staff and reductions
in overhead), which adjustments must be approved by the Agent (which approval
shall not be unreasonably withheld).
"Pro Formas" means the unaudited consolidated balance sheets of the
----------
Borrower and its consolidated Subsidiaries included in the Confidential
Information Memorandum dated September 1996, after giving effect to the Related
Transactions, including, without limitation, the PNG Acquisition, the Equipment
Lease Facility and the Accounts Receivable Securitization Facility.
"Prohibited Transaction" means any transaction set forth in Section 406 of
----------------------
ERISA or Section 4975 of the Code.
"Projections" means the Borrower's forecasted consolidated balance sheets,
-----------
income statements and cash flow statements, together with appropriate supporting
details and a statement of underlying assumptions, included in the Confidential
Information Memorandum dated September 1996, after giving effect to the Related
Transactions, including, without limitation, the Equipment Lease Facility and
the Accounts Receivable Securitization Facility.
"Property" means property of all kinds, real, personal or mixed, tangible
--------
or intangible (including, without limitation, all rights relating thereto),
whether owned or acquired on or after the Closing Date.
"Prospective Loan Party" means any Person whose Capital Stock is proposed
----------------------
to be acquired pursuant to any Permitted Acquisition.
"Purchase and Contribution Agreement" means the Purchase and Contribution
-----------------------------------
Agreement dated as of November 15, 1996, between the Borrower and MTRC.
"Quality Park" means Quality Park Products, Inc., a Delaware corporation.
------------
29
<PAGE>
"Quality Park Acquisition" means the acquisition by the Borrower of
------------------------
substantially all of the Property of Quality Park pursuant to the Acquisition
Documents.
"Quarterly Date" means the last day of each March, June, September and
--------------
December of each year, the first of which shall be the first such day after the
Closing Date.
"Receivables" means, as at any date of determination thereof, the unpaid
-----------
portion of the obligation, as stated on the respective invoice, or, if there is
no invoice, other writing, of a customer of the Borrower or any of its
Subsidiaries in respect of Inventory sold and shipped or services rendered by
the Borrower or any of its Subsidiaries.
"Reference Lender" means Banque Paribas.
----------------
"Register" means as specified in Section 13.8(d).
-------- ---------------
"Registered Note" means as specified in Section 2.2(b).
--------------- --------------
"Registered Note Register" means as specified in Section 13.8(h).
------------------------ ---------------
"Regulation D" means Regulation D of the Board of Governors of the Federal
------------
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to any Lender, any change after the
-----------------
Closing Date in any U.S. federal or state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders including
such Lender of or under any U.S. federal or state or foreign laws or regulations
(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
"Reimbursement Obligation" means the obligation of the Borrower to
------------------------
reimburse the Issuing Bank for any drawing under a Letter of Credit.
"Related Transactions" means, collectively, (a) the Acquisitions, (b) the
--------------------
execution and delivery of the Related Transactions Documents, (c) the
Reorganization Transaction, (d) the transactions contemplated by the Supremex
Credit Agreement, (e) the transactions contemplated by the Equipment Lease
Facility, (f) the transactions contemplated by the Accounts Receivable
Securitization Facility, and (g) the payment of all fees, costs and expenses
associated with the foregoing.
"Related Transactions Documents" means the Permitted Acquisition Documents,
------------------------------
the PNG Acquisition Documents, the Reorganization Documents, the Supremex Credit
Agreement and the Supremex Loan Documents, the Equipment Lease Facility
Documents, the Accounts Receivable Securitization Facility Documents and all
other agreements, documents and instruments executed and/or delivered pursuant
to or in connection with any of the foregoing.
30
<PAGE>
"Release" means, as to any Person, any release, spill, emission, leaking,
-------
pumping, injection, deposit, disposal, disbursement, leaching or migration of
Hazardous Materials into the indoor or outdoor environment or into or out of
Property owned by such Person, including, without limitation, the movement of
Hazardous Materials through or in the air, soil, surface water or ground water.
"Remedial Action" means all actions required to (a) cleanup, remove,
---------------
respond to, treat or otherwise address Hazardous Materials in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release of Hazardous Materials so that they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform studies and investigations on the extent and
nature of any actual or suspected contamination, the remedy or remedies to be
used or health effects or risks of such contamination, or (d) perform post-
remedial monitoring, care or remedy of a contaminated site.
"Reorganization Documents" means the General Conveyance, Assignment and
------------------------
Bill of Sale dated as of the Third Restatement Date executed by Wisco to and in
favor of Wisco III transferring ownership of certain real property in connection
with such general conveyances, and each other agreement, document or instrument
executed or delivered in connection with or pursuant to the Reorganization
Transaction.
"Reorganization Transaction" means the transfers by (a) the Borrower to
--------------------------
Wisco III of the plant located in Chestertown, Maryland, and (b) Wisco to Wisco
III of the plants located in Tullahoma, Tennessee and Kankakee, Illinois, in
consideration of the issuance of membership interests in Wisco III to the
Borrower and Wisco.
"Required Lenders" means, at any date of determination, Lenders having in
----------------
the aggregate at least 66 2/3% (in dollar amount as to any one or more of the
following) of the sum of the aggregate outstanding Revolving Credit Loans
Commitments (or, if the Revolving Credit Loans Commitments have terminated or
expired, the aggregate outstanding principal amount of the Revolving Credit
Loans and the aggregate Letter of Credit Liabilities), plus the aggregate
----
outstanding principal amount of the Term Loans, plus the aggregate outstanding
----
Acquisition Loans Commitments (or, if the Acquisition Loans Commitments have
terminated or expired, the aggregate outstanding principal amount of the
Acquisition Loans).
"Required Payment" means as specified in Section 3.4.
---------------- -----------
"Reportable Event" means any of the events set forth in Section 4043 of
----------------
ERISA.
"Repurchases" means as specified in Section 9.4(b).
----------- --------------
"Reserve Requirement" means, for any Eurodollar Loan of any Lender for any
-------------------
Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves
31
<PAGE>
required to be maintained by such Lender by reason of any Regulatory Change
against (a) any category of liabilities which includes deposits by reference to
which the Eurodollar Rate or the Adjusted Eurodollar Rate is to be determined or
(b) any category of extensions of credit or other assets which include
Eurodollar Loans.
"Responsible Officer" means, as to any Loan Party, the chief financial
-------------------
officer, chief operating officer or chief executive officer of such Person.
"Restricted Payment" means (a) any dividend or other distribution (whether
------------------
in cash, Property or obligations), direct or indirect, on account of (or the
setting apart of money for a sinking or other analogous fund for) any shares of
any class of Capital Stock of the Borrower or any of its Subsidiaries now or
hereafter outstanding, except a dividend payable solely in shares of that class
of stock to the holders of that class; (b) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding; (c) any
payment or prepayment of principal of, premium, if any, or interest on, or any
redemption, conversion, exchange, purchase, retirement or defeasance of, or
payment with respect to, any Borrower Subordinated Debt or Holdings Subordinated
Debt; (d) any loan, advance or payment (pursuant to a tax sharing agreement or
otherwise) to Holdings or the Mail-Well ESOP; and (e) any payment made to
retire, or to obtain the surrender of, any outstanding warrants, options or
other rights to acquire shares of any class of Capital Stock of the Borrower or
any of its Subsidiaries now or hereafter outstanding.
"Revolving Credit Loans" means as specified in Section 2.1(b).
---------------------- --------------
"Revolving Credit Loans Commitment" means, as to any Lender, the obligation
---------------------------------
of such Lender to make or continue Revolving Credit Loans and incur or
participate in Letter of Credit Liabilities hereunder in an aggregate principal
amount at any one time outstanding up to but not exceeding the amount set forth
opposite the name of such Lender on the signature pages hereto under the heading
"Revolving Credit Loans Commitment" or, if such Lender is a party to an
Assignment and Acceptance, the amount set forth in the most recent Assignment
and Acceptance of such Lender, as the same may be reduced or terminated pursuant
to Section 2.13 or 11.2, and "Revolving Credit Loans Commitments" means such
------------ ---- ----------------------------------
obligations of all Lenders. As of the Third Restatement Date, the aggregate
principal amount of the Revolving Credit Loans Commitments is $30,000,000.
"Revolving Credit Loans Maturity Date" means March 31, 2003.
------------------------------------
"Revolving Credit Loans Notes" means the promissory notes made by the
----------------------------
Borrower evidencing the Revolving Credit Loans, in the form of Exhibit C hereto,
---------
and also includes such promissory notes issued in registered form pursuant to
Section 2.2(b).
- --------------
"Revolving Credit Loans Tranche 1" means the "Revolving Credit Loans
--------------------------------
Tranche 1" as such term is defined in the Second Restated Agreement.
32
<PAGE>
"Revolving Credit Loans Tranche 2" means the "Revolving Credit Loans
--------------------------------
Tranche 2" as such term is defined in the Second Restated Agreement.
"Second Amendment" means that certain Second Amendment to Second Amended
----------------
and Restated Credit Agreement dated as of April 22, 1996, among the Borrower,
Supremex, the Second Restatement Lenders and the Agent.
"Second Amendment Date" means April 22, 1996, the date of the Second
---------------------
Amendment.
"Second Restated Agreement" means as specified in Recital D of this
------------------------- ---------
Agreement.
"Second Restatement Date" means July 31, 1995, the date of the Second
-----------------------
Restated Agreement.
"Second Restatement Lenders" means the parties to the Second Restated
--------------------------
Agreement who were "Lenders" as defined therein.
"Secured Equipment Lease Facility Obligations" means any and all "Financing
--------------------------------------------
Obligations" as such term is defined in Appendix A and any and all indebtedness,
liabilities and obligations of the "Guarantors", as such term is defined in
Appendix A, under the Equipment Lease Facility Guaranty.
"Security Documents" means the Borrower Security Agreement, the Mortgages,
------------------
the Holdings Security Agreement, the Holdings Guaranty, the Subsidiary Security
Agreements and the Subsidiary Guaranties, as they may be amended, modified,
supplemented, renewed, extended or restated from time to time, and any and all
other agreements, deeds of trust, mortgages, chattel mortgages, security
agreements, pledges, guaranties, assignments of proceeds, assignments of income,
assignments of contract rights, assignments of partnership interests,
assignments of royalty interests, assignments of performance or other collateral
assignments, completion or surety bonds, standby agreements, subordination
agreements, undertakings and other agreements, documents, instruments and
financing statements now or hereafter executed and/or delivered by any Loan
Party in connection with or as security or assurance for the payment or
performance of the Obligations or any part thereof.
"Solvent" means, with respect to any Person as of the date of any
-------
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future
33
<PAGE>
business conduct and the prevailing practice in the industry in which such
Person is engaged. In computing the amount of contingent liabilities at any
time, such liabilities shall be computed at the amount which, in light of the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Sterling" means The Sterling Group, Inc., a Texas corporation.
--------
"Subject Permitted Acquisition" means as specified in Section 6.3(a).
----------------------------- --------------
"Subsidiary" means, with respect to any Person, any corporation or other
----------
entity of which at least a majority of the outstanding shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons performing similar functions) of
such corporation or entity (irrespective of whether or not at the time, in the
case of a corporation, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.
"Subsidiary Guaranty" means the Guaranty Agreement or an amendment or
-------------------
restatement thereof, as applicable, dated the Third Restatement Date executed by
each Subsidiary of the Borrower, other than (a) Supremex and its Subsidiaries,
(b) Unrestricted Subsidiaries and (c) MTRC, in favor of the Agent for the
benefit of the Agent, the Lenders and/or the Supremex Lenders, and any guaranty
executed pursuant to Section 5.3 hereof, and any and all amendments,
-----------
modifications, supplements, renewals, extensions or restatements thereof.
"Subsidiary Security Agreement" means the Security Agreement (and, with
-----------------------------
respect to Supremex Holdings, the Securities Pledge Agreement executed by
Supremex Holdings) or an amendment or restatement thereof, as applicable, dated
the Third Restatement Date executed by each Subsidiary of the Borrower, other
than Supremex and its Subsidiaries and other than Unrestricted Subsidiaries, in
favor of the Agent for the benefit of the Agent, the Lenders, the Supremex
Lenders and/or the Equipment Lease Facility Lenders, and any security agreement
executed pursuant to Section 5.3 hereof, and any and all amendments,
-----------
modifications, supplements, renewals, extensions or restatements thereof.
"Subsidiary Subordinated Guaranties" means the obligations of Pavey, Wisco,
----------------------------------
Wisco II, Mail-Well West and Wisco III under the Borrower Indenture pursuant to
which Pavey, Wisco, Wisco II, Mail-Well West and Wisco III guarantee payment of
the Borrower Subordinated Notes.
"Supremex" means as specified in Recital E of this Agreement.
-------- ---------
"Supremex Acquisition" means the acquisition by Supremex Acquisition
--------------------
Company of all of the issued and outstanding Capital Stock, and certain stock
options relating to the Capital Stock, of Supremex Target pursuant to the
Acquisition Documents and the acquisition by Supremex Acquisition Company of the
remaining outstanding stock options relating to the Capital Stock of Supremex
Target.
34
<PAGE>
"Supremex Agent" means the "Agent" as such term is defined in the Supremex
--------------
Credit Agreement.
"Supremex Acquisition Company" means 3159051 Canada Inc., a corporation
----------------------------
incorporation under the Canada Business Corporations Act.
"Supremex Amalgamation" means the amalgamation of Supremex Acquisition
---------------------
Company, Supremex Target and Innova into a corporation incorporated under the
Canadian Business Corporations Act under the name "Supremex Inc."
"Supremex Commitments" means the "Commitments" as such term is defined in
--------------------
the Supremex Credit Agreement.
"Supremex Credit Agreement" means that certain Amended and Restated Credit
-------------------------
Agreement dated as of the Third Restatement Date among Supremex, the Borrower,
Innova, the Supremex Lenders and Banque Paribas as agent for the Supremex
Lenders and any and all amendments, modifications, supplements, renewals,
extensions or restatements thereof.
"Supremex Holdings" means as specified in the initial paragraph of this
-----------------
Agreement.
"Supremex Lenders" means the "Lenders" as such term is defined in the
----------------
Supremex Credit Agreement.
"Supremex Loan Documents" means the "Loan Documents" as such term is
-----------------------
defined in the Supremex Credit Agreement.
"Supremex Loan Party" means a "Loan Party" as such term is defined in the
-------------------
Supremex Credit Agreement.
"Supremex Loans" means the "Loans" as such term is defined in the Supremex
--------------
Credit Agreement.
"Supremex Notes" means the "Notes" as such term is defined in the Supremex
--------------
Credit Agreement.
"Supremex Obligations" means the "Obligations" as such term is defined in
--------------------
the Supremex Credit Agreement.
"Supremex Required Lenders" means the "Required Lenders" as such term is
-------------------------
defined in the Supremex Credit Agreement.
"Supremex Revolving Credit Loans" means the "Revolving Credit Loans" as
-------------------------------
such term is defined in the Supremex Credit Agreement.
35
<PAGE>
"Supremex Target" means Supremex Inc., a corporation incorporated under the
---------------
Canada Business Corporations Act, prior to the Supremex Amalgamation.
"Supremex Term Loans" means the "Term Loans" as such term is defined in the
-------------------
Supremex Credit Agreement.
"Supremex Term Loans A" means the "Term Loans A" as such term is defined in
---------------------
the Supremex Credit Agreement.
"Supremex Term Loans B" means the "Term Loans B" as such term is defined in
---------------------
the Supremex Credit Agreement.
"Synthetic Lease" means any lease (a) that is treated as an operating lease
---------------
under GAAP but for which the lessee is deemed to be the owner of the leased
Property for purposes of depreciation under the Code and (b) with respect to
which the total cost of the Property leased is greater than $50,000.
"Tax Sharing Agreement" means that certain Tax Sharing Agreement dated
---------------------
effective as of the first day of the consolidated return year ending December
31, 1994, among the Borrower, Holdings, Wisco and Pavey as amended to add
Supremex Holdings and Mail-Well West as parties thereto, and any and all
amendments, modifications, supplements, renewals, extensions or restatements
thereof.
"Term Loans" means as specified in Section 2.1(a).
---------- --------------
"Term Loans A" means the "Term Loans A" as such term is defined in the
------------
Second Restated Agreement.
"Term Loans B" means the "Term Loans B" as such term is defined in the
------------
Second Restated Agreement.
"Term Loans Commitment" means, as to any Lender, the obligation of such
---------------------
Lender to make or continue Term Loans hereunder in an aggregate principal amount
up to but not exceeding the amount set forth opposite the name of such Lender on
the signature pages hereto under the heading "Term Loans Commitment", as the
same may be terminated pursuant to Section 11.2, and "Term Loans Commitments"
------------ ----------------------
means such obligations of all Lenders. As of the Third Restatement Date, the
aggregate principal amount of the Term Loans Commitments is $-0-, such Term
Loans Commitments having terminated upon the prior making of the Terms Loans
pursuant to the Original Agreement, the First Restated Agreement and the Second
Restated Agreement.
"Term Loans Maturity Date" means March 31, 2003.
------------------------
"Term Loans Notes" means the promissory notes made by the Borrower
----------------
evidencing the Term Loans, in the form of Exhibit D hereto, and also includes
---------
such promissory notes issued in registered form pursuant to Section 2.2(b).
--------------
36
<PAGE>
"Third Restatement Date" means November 15, 1996, the date of this
----------------------
Agreement.
"Total Capitalization" means, at any particular time, an amount equal to
--------------------
the sum of (a) Consolidated Funded Debt plus (b) Consolidated Net Worth.
----
"Total Debt" means, at any particular time, the aggregate principal amount
----------
of all Debt of the Borrower (subject to Section 13.28) and its Subsidiaries
-------------
outstanding, determined on a consolidated basis.
"Type" means any type of Loan (i.e., a Prime Rate Loan or Eurodollar Loan).
----
"UCC" means the Uniform Commercial Code as in effect in the State of Texas
---
and/or any other jurisdiction, the laws of which may be applicable to or in
connection with the creation, perfection or priority of any Lien on any Property
created pursuant to any Security Document.
"UCP" means as specified in Section 2.14(b).
--- ---------------
"Unrestricted Subsidiary" means any Wholly-Owned Subsidiary of the Borrower
-----------------------
designated as an Unrestricted Subsidiary by the Board of Directors of the
Borrower and of which the Agent has been notified and which (a) has not acquired
any assets (other than as specifically permitted by this Agreement) from the
Borrower or any of its Subsidiaries, (b) is not a Subsidiary as of the Third
Restatement Date, (c) owns only Property acquired by it after the Third
Restatement Date, (d) has no Debt other than Non-Recourse Debt and (e) does not
own any Capital Stock, or any warrants, options or other rights to acquire
Capital Stock, of any Subsidiary (other than an Unrestricted Subsidiary).
"U.S." means the United States of America.
----
"U.S. Person" means a citizen or resident of the U.S., a corporation,
-----------
partnership or other entity created or organized in or under any laws of the
U.S. or any estate or trust that is subject to U.S. Federal income taxation
regardless of the source of its income.
"U.S. Taxes" means any present or future tax, assessment or other charge or
----------
levy imposed by or on behalf of the U.S. or any taxing authority thereof.
"Wholly-Owned Subsidiary" means, with respect to any Person, a Subsidiary
-----------------------
of such Person all of whose outstanding Capital Stock (other than directors'
qualifying shares, if any) shall at the time be owned by such Person and/or one
or more of its Wholly-Owned Subsidiaries.
"Wisco" means as specified in the initial paragraph of this Agreement.
-----
"Wisco II" means as specified in the initial paragraph of this Agreement.
--------
"Wisco III" means as specified in the initial paragraph of this Agreement.
---------
37
<PAGE>
Section 1.2 Other Definitional Provisions. All definitions contained in
-----------------------------
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations.
-----------------------------------
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP consistent with such accounting principles
applied in the preparation of the audited financial statements referred to in
Section 7.2(a). All financial information delivered to the Agent pursuant to
- --------------
Section 8.1 shall be prepared in accordance with GAAP applied on a basis
- -----------
consistent with such accounting principles applied in the preparation of the
audited financial statements referred to in Section 7.2(a) or in accordance with
--------------
Section 8.7.
- -----------
(b) The Borrower shall deliver to the Lenders at the same time as the
delivery of any annual, quarterly or monthly financial statement under Section
-------
8.1 (i) a description, in reasonable detail, of any material variation between
- ---
the application of GAAP employed in the preparation of the next preceding
annual, quarterly or monthly financial statements as to which no objection has
been made in accordance with the last sentence of Section 1.3 (a) preceding and
---------------
(ii) reasonable estimates of the difference between such statements arising as a
consequence thereof.
(c) To enable the ready and consistent determination of compliance with
the covenants set forth in this Agreement (including Article 10 hereof), the
----------
Borrower will not change the last day of its fiscal year from within six days
before or after December 31, or the last days of the first three fiscal quarters
of the Borrower in each of its fiscal years from within six days before or after
March 31, June 30 and September 30, respectively, in each case as exists as of
the Third Restatement Date (except to fix the last day of the first, second and
third fiscal quarters of the Borrower at March 31, June 30 and September 30,
respectively).
Section 1.4 Financial Covenants and Reporting. The financial covenants
---------------------------------
contained in Article 10 shall be calculated on a consolidated basis for the
----------
Borrower and its Subsidiaries (including, without limitation, Supremex and its
Subsidiaries), subject to (a) the proviso below, (b) Section 13.28 and (c)
-------------
appropriate adjustments for minority interests with respect to Subsidiaries
which are not Wholly-Owned Subsidiaries; provided, however, that,
-------- -------
notwithstanding anything to the contrary contained elsewhere in this Agreement
or any other Loan Document, such financial covenants shall be calculated
exclusive of any and all Unrestricted Subsidiaries.
38
<PAGE>
ARTICLE 2
Loans
-----
Section 2.1 Loans and Commitments.
---------------------
(a) Term Loans.
----------
(i) Prior Term Loans A. Pursuant to Section 2.1(a) of the Original
------------------
Agreement and subject to the terms and conditions of the Original Agreement and
after giving effect to Section 13.24, each Lender that now or hereafter holds a
-------------
Term Loans Commitment or its predecessor in interest made a term loan to the
Borrower in a single disbursement on the Closing Date in an amount equal to its
pro rata share (based upon its commitment percentage thereof) of $40,000,000.
Pursuant to Section 2.1(a) of the First Restated Agreement and subject to the
terms and conditions of the First Restated Agreement and after giving effect to
Section 13.24, each such Lender or its predecessor in interest made a term loan
- -------------
to the Borrower in a single disbursement on the First Restatement Date in an
amount equal to its pro rata share (based upon its commitment percentage
thereof) of $7,500,000. Pursuant to Section 2.1(a) of the Second Restated
Agreement as in effect before the Second Amendment Date and subject to the terms
and conditions of the Second Restated Agreement as in effect before the Second
Amendment Date and after giving effect to Section 13.24, each such Lender or its
-------------
predecessor in interest made a term loan to the Borrower in a single
disbursement on the GAC Acquisition Date in an amount equal to its pro rata
share (based upon its commitment percentage thereof) of $44,000,000. Pursuant
to the Second Amendment and subject to the terms and conditions of the Second
Restated Agreement and after giving effect to Section 13.24, each such Lender or
-------------
its predecessor in interest made a term loan to the Borrower in a single
disbursement on the Second Amendment Date in an amount equal to its pro rata
share (based upon its commitment percentage thereof) of $10,000,000.
(ii) Prior Term Loans B. Pursuant to Section 2.1(b) of the First
------------------
Restated Agreement and subject to the terms and conditions of the First Restated
Agreement and after giving effect to Section 13.24, each Lender that now or
-------------
hereafter holds a Term Loans Commitment or its predecessor in interest made a
term loan to the Borrower in a single disbursement on the First Restatement Date
in an amount equal to its pro rata share (based upon its commitment percentage
thereof) of $30,000,000. Pursuant to Section 2.1(c) of the First Restated
Agreement and subject to the terms and conditions of the First Restated
Agreement and after giving effect to Section 13.24, each such Lender or its
-------------
predecessor in interest made a term loan to the Borrower in a single
disbursement on the First Restatement Date in an amount equal to its pro rata
share (based upon its commitment percentage thereof) of $15,000,000. Pursuant
to Section 2.1(b) of the Second Restated Agreement as in effect before the
Second Amendment Date and subject to the terms and conditions of the Second
Restated Agreement as in effect before the Second Amendment Date and after
giving effect to Section 13.24, each such Lender or its predecessor in interest
-------------
made a term loan to the Borrower in a single disbursement on the GAC Acquisition
Date in an amount equal to its
39
<PAGE>
pro rata share (based upon its commitment percentage thereof) of
$30,500,000. Pursuant to the Second Amendment and subject to the terms and
conditions of the Second Restated Agreement and after giving effect to
Section 13.24, each such Lender or its predecessor in interest made a term
loan to the Borrower in a single disbursement on the Second Amendment Date
in an amount equal to its pro rata share (based upon its commitment
percentage thereof) of $10,000,000.
(iii) Term Loans. Such term loans referred to in this Section 2.1(a)
---------- --------------
made by the Lenders that now or hereafter hold Term Loans Commitments or
their predecessors in interest to the Borrower, including, without
limitation, the "Term Loans A" and the "Term Loans B" under the Second
Restated Agreement, are hereinafter collectively called the "Term Loans".
----------
The Term Loans Commitments have previously terminated. As of the Third
Restatement Date and after giving effect to the prepayments to be made by
the Borrower in accordance with Section 2.7(g), the aggregate unpaid
--------------
principal amount of the Term Loans made pursuant to the Original Agreement,
the First Restated Agreement and the Second Restated Agreement is
$70,000,000, which amount shall be deemed to be outstanding as Term Loans
under this Agreement.
(b) Revolving Credit Loans. Pursuant to Section 2.1(c) of the Original
----------------------
Agreement and subject to the terms and conditions of the Original Agreement and
after giving effect to Section 13.24, each Lender that now or hereafter holds a
-------------
Revolving Credit Loans Commitment or its predecessor in interest made one or
more revolving credit loans to the Borrower from time to time from and including
and after the Closing Date up to but not exceeding an amount equal to (in
aggregate amount at any time outstanding) its pro rata share (based upon its
commitment percentage thereof) of $30,000,000. Pursuant to subsection (i) of
Section 2.1(e) of the First Restated Agreement and subject to the terms and
conditions of the First Restated Agreement and after giving effect to Section
-------
13.24, each such Lender or its predecessor in interest made one or more
- -----
revolving credit loans to the Borrower from time to time from and including and
after the First Restatement Date up to but not exceeding an amount equal to (in
aggregate amount at any time outstanding) its pro rata share (based upon its
commitment percentage thereof) of $30,000,000. Pursuant to subsection (i) of
Section 2.1(d) of the Second Restated Agreement and subject to the terms and
conditions of the Second Restated Agreement and after giving effect to Section
-------
13.24, each such Lender or its predecessor in interest made one or more
- -----
revolving credit loans to the Borrower from time to time from and including and
after the Second Restatement Date up to but not exceeding an amount equal to (in
aggregate amount at any time outstanding) its pro rata share (based upon its
commitment percentage thereof) of $30,000,000. Subject to the terms and
conditions of this Agreement, each such Lender severally agrees to make one or
more revolving credit loans to the Borrower from time to time from and including
the Third Restatement Date to but excluding the Revolving Credit Loans Maturity
Date up to but not exceeding the amount of such Lender's Revolving Credit Loans
Commitment as then in effect. (Such revolving credit loans referred to in this
Section 2.1(b) made by the Lenders that now or hereafter hold Revolving Credit
- --------------
Loans Commitments to the Borrower from and including and after the Closing Date,
the First Restatement Date and the Second Restatement Date and now or hereafter
made by such Lenders to the Borrower from and including and after the Third
Restatement Date are hereinafter collectively called the "Revolving Credit
----------------
Loans".) Subject to the foregoing limitations and the other terms and
conditions of this Agreement,
40
<PAGE>
the Borrower may borrow, repay and reborrow the Revolving Credit Loans hereunder
prior to the Revolving Credit Loans Maturity Date. As of the Third Restatement
Date, the aggregate unpaid principal amount of the Revolving Credit Loans made
pursuant to the Original Agreement, the First Restated Agreement and the Second
Restatement Agreement is $______________ and the aggregate outstanding principal
amount of the Letters of Credit issued pursuant to the Original Agreement, the
First Restated Agreement and the Second Restatement Agreement is
$______________, which amounts shall be deemed to be outstanding as Revolving
Credit Loans and Letters of Credit, respectively, under this Agreement.
(c) Acquisition Loans. Subject to the terms and conditions of this
-----------------
Agreement, each Lender that now or hereafter holds an Acquisition Loans
Commitment severally agrees to make one or more loans to the Borrower from time
to time from and including the Third Restatement Date to but excluding the
Acquisition Loans Commitment Expiration Date up to but not exceeding the amount
of such Lender's Acquisition Loans Commitment as then in effect. (Such loans
referred to in this Section 2.1(c) now or hereafter made by the Lenders that now
--------------
or hereafter hold Acquisition Loans Commitments to the Borrower from and
including and after the Third Restatement Date are hereinafter collectively
called the "Acquisition Loans".) Subject to the foregoing limitations and the
-----------------
other terms and conditions of this Agreement, the Borrower may borrow, repay and
reborrow the Acquisitions Loans hereunder prior to the Acquisition Loans
Commitment Expiration Date.
(d) Borrowing, Continuation and Conversion of Loans. Subject to the
-----------------------------------------------
terms and conditions of this Agreement, the Borrower may borrow the Loans as
Prime Rate Loans or Eurodollar Loans and, until the applicable Maturity Date,
the Borrower may Continue Eurodollar Loans or Convert Loans of one Type into
Loans of the other Type.
(e) Lending Offices. Loans of each Type made by each Lender shall be
---------------
made and maintained at such Lender's Applicable Lending Office for Loans of such
Type.
Section 2.2 Notes.
-----
(a) Unregistered Notes. The Term Loans made by each Lender shall be
------------------
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit D hereto, dated the Third Restatement Date, payable to the order of
---------
such Lender in a principal amount equal to its Term Loans Commitment as
originally in effect and otherwise duly completed. The Revolving Credit Loans
made by each Lender shall be evidenced by a single promissory note of the
Borrower in substantially the form of Exhibit C hereto, dated the Third
---------
Restatement Date, payable to the order of such Lender in a principal amount
equal to its Revolving Credit Loans Commitment as originally in effect and
otherwise duly completed. The Acquisition Loans made by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit A hereto, dated the Third Restatement Date, payable to the order of
---------
such Lender in a principal amount equal to its Acquisition Loans Commitment as
originally in effect and otherwise duly completed. Each Lender is hereby
authorized by the Borrower to endorse on the schedule (or a continuation
thereof) attached to each Note of such Lender, to the extent applicable, the
date, amount and Type of and the Interest Period for each Loan made by such
Lender to the Borrower hereunder (or under the Original Agreement, the First
Restated Agreement or the Second Restated Agreement) and the amount of
41
<PAGE>
each payment or prepayment of principal of such Loan received by such Lender,
provided that any failure by such Lender to make any such endorsement shall not
affect the obligations of the Borrower under such Note or this Agreement in
respect of such Loan.
(b) Registered Notes. Any Lender that is not a U.S. Person and that
----------------
could become completely exempt from withholding of U.S. Taxes in respect of
payment of any Obligations due to such Lender hereunder relating to any of its
Term Loans or Acquisition Loans if such Term Loans or Acquisition Loans were in
registered form for U.S. Federal income tax purposes may request the Borrower
(through the Agent), and the Borrower agrees thereupon, to exchange such
Lender's Note evidencing its Term Loans or Acquisition Loans for a promissory
note registered as provided in Section 13.8(h) hereof (a "Registered Note").
--------------- ---------------
Registered Notes may not be exchanged for Notes that are not in registered form.
Section 2.3 Repayment of Loans.
-------------------
(a) The Borrower shall pay to the Agent for the account of each
applicable Lender the outstanding principal amount of the Term Loans (and the
outstanding principal amount of the Term Loans shall be due and payable) in 26
installments (aggregating $70,000,000 in principal amount) in the following
amounts on the following dates:
<TABLE>
<CAPTION>
Payment Date Principal Installment
------------ ---------------------
<S> <C>
December 31, 1996 $2,687,500.00
March 31, 1997 $2,687,500.00
June 30, 1997 $2,687,500.00
September 30, 1997 $2,687,500.00
December 31, 1997 $2,687,500.00
March 31, 1998 $3,687,500.00
June 30, 1998 $3,687,500.00
September 30, 1998 $3,687,500.00
December 31, 1998 $3,687,500.00
March 31, 1999 $3,687,500.00
June 30, 1999 $3,687,500.00
September 30, 1999 $3,687,500.00
December 31, 1999 $3,687,500.00
March 31, 2000 $3,687,500.00
June 30, 2000 $3,687,500.00
September 30, 2000 $3,687,500.00
December 31, 2000 $3,687,500.00
March 31, 2001 $3,687,500.00
June 30, 2001 $3,687,500.00
September 30, 2001 $3,687,500.00
December 31, 2001 $ 875,000.00
March 31, 2002 $ 75,000.00
June 30, 2002 $ 75,000.00
</TABLE>
42
<PAGE>
<TABLE>
<S> <C>
September 30, 2002 $ 75,000.00
December 31, 2002 $ 75,000.00
March 31, 2003 $ 75,000.00
</TABLE>
In addition, the Borrower shall pay to the Agent for the account of each
applicable Lender all outstanding principal of the Term Loans (and all
outstanding principal of the Term Loans shall be due and payable) on the Term
Loans Maturity Date.
(b) The Borrower shall pay to the Agent for the account of each applicable
Lender the outstanding principal amount of the Revolving Credit Loans (and the
outstanding principal amount of the Revolving Credit Loans shall be due and
payable) on the Revolving Credit Loans Maturity Date.
(c) The Borrower shall pay to the Agent for the account of each applicable
Lender the principal amount of the Acquisition Loans outstanding as of the
Acquisition Loans Commitment Expiration Date (and the principal amount of the
Acquisition Loans outstanding as of the Acquisition Loans Commitment Expiration
Date shall be due and payable) in 18 equal quarterly installments commencing on
December 31, 1998, and continuing on each Quarterly Date thereafter through and
including the Acquisition Loans Maturity Date. In addition, the Borrower shall
pay to the Agent for the account of each applicable Lender all outstanding
principal of the Acquisition Loans (and all outstanding principal of the
Acquisition Loans shall be due and payable) on the Acquisition Loans Maturity
Date.
Section 2.4 Interest.
--------
(a) Interest Rate. The Borrower shall pay to the Agent for the account of
-------------
each Lender interest on the unpaid principal amount of each Loan made by such
Lender for the period commencing on the date of such Loan to but excluding the
date such Loan shall be paid in full, at the following rates per annum:
(i) during the periods such Loan is a Prime Rate Loan, the Prime Rate
plus the Applicable Margin; and
----
(ii) during the periods such Loan is a Eurodollar Loan, the Eurodollar
Rate plus the Applicable Margin.
----
(b) Payment Dates. The Borrower shall pay to the Agent for the
-------------
account of the Second Restatement Lenders all interest accrued to the Third
Restatement Date and not previously paid with respect to all "Loans", as such
term is defined in the Second Restated Agreement, outstanding under the Second
Restated Agreement. In addition, accrued interest on the Loans shall be due and
payable as follows:
(i) in the case of Prime Rate Loans, on each Quarterly Date;
43
<PAGE>
(ii) in the case of each Eurodollar Loan, on the last day of the
Interest Period with respect thereto and, in the case of an Interest Period
greater than three months, at three-month intervals after the first day of such
Interest Period;
(iii) upon the payment or prepayment of any Loan or the
Conversion of any Loan to a Loan of the other Type (but only on the principal
amount so paid, prepaid or Converted); and
(iv) on the Maturity Date for such Loan.
(c) Default Interest. Notwithstanding the foregoing, the Borrower will
----------------
pay to the Agent for the account of each Lender interest at the applicable
Default Rate on any principal of any Loan made by such Lender, any Reimbursement
Obligation and (to the fullest extent permitted by law) any other amount payable
by the Borrower under this Agreement or any other Loan Document to or for the
account of such Lender, which is not paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period from and including the
due date thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand by the
Agent.
Section 2.5 Borrowing Procedure. The Borrower shall give the Agent notice
-------------------
of each borrowing hereunder in accordance with Section 2.9. Not later than 11:00
-----------
a.m. (Houston, Texas time) on the date specified for each borrowing hereunder,
each Lender will make available the amount of the Loan to be made by it on such
date to the Agent, at the Principal Office, in immediately available funds, for
the account of the Borrower. The amount so received by the Agent shall, subject
to the terms and conditions of this Agreement, be made available to the Borrower
by wire transfer of immediately available funds to the Deposit Account no later
than 1:00 p.m.
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans.
------------------------------------------------------------
Subject to Section 2.7, the Borrower shall have the right from time to time to
-----------
prepay the Loans, to Convert all or part of a Loan of one Type into a Loan of
another Type or to Continue Eurodollar Loans; provided that: (a) the Borrower
shall give the Agent notice of each such prepayment, Conversion or Continuation
as provided in Section 2.9, (b) Eurodollar Loans may only be Converted on the
-----------
last day of the Interest Period, (c) except for Conversions of Eurodollar Loans
into Prime Rate Loans, no Conversions or Continuations shall be made while a
Default has occurred and is continuing, (d) optional prepayments of the Term
Loans shall be applied to the then remaining installments of principal of the
Term Loans pro rata, and (e) optional prepayments of the Acquisition Loans made
on or after the Acquisition Loans Commitment Expiration Date shall be applied to
the then remaining installments of principal of the Acquisition Loans pro rata.
Section 2.7 Mandatory Prepayments.
----------------------
(a) Excess Cash Flow. The Borrower shall, on each Excess Cash Flow
----------------
Prepayment Date, pay to the Agent, as a prepayment of the Term Loans and the
Acquisition Loans, an aggregate amount equal to 50% of Excess Cash Flow for the
fiscal year of the Borrower then most recently ended, as reflected in the
audited annual financial statements of the Borrower and its Subsidiaries
44
<PAGE>
for such fiscal year. Concurrently with the making of any such payment, the
Borrower shall deliver to the Agent a certificate of a Responsible Officer of
the Borrower demonstrating its calculation of the amount required to be paid.
(b) Insurance Recovery. The Borrower shall, upon the receipt of any
------------------
Excess Insurance Proceeds, pay (or cause to be paid) to the Agent, as a
prepayment of the Term Loans and the Acquisition Loans, an aggregate amount
equal to such Excess Insurance Proceeds.
(c) Asset Dispositions. The Borrower shall, on each day that the
------------------
Borrower or any of its Subsidiaries receives any Net Proceeds from an Asset
Disposition, pay to the Agent, as a prepayment of the Term Loans and the
Acquisition Loans, an aggregate amount equal to 100% of the Net Proceeds from
such Asset Disposition; provided, that no such prepayment will be required (i)
--------
from the Net Proceeds from any single Asset Disposition or series of related
Asset Dispositions of used equipment if such Net Proceeds are $5,000,000 or less
and are fully re-invested in productive assets used in the ordinary course of
the Borrower's or its Subsidiary's (as applicable) business within 180 days of
such Asset Disposition, (ii) from the Net Proceeds from any condemnation of real
Property if and to the extent that such Net Proceeds are, as a result of such
condemnation, re-invested in similar real Property or used to modify other then-
existing real Property used in the ordinary course of the Borrower's or its
Subsidiary's (as applicable) business within 180 days of receipt of proceeds of
such condemnation or (iii) until the cumulative Net Proceeds from all Asset
Dispositions (other than the Net Proceeds satisfying each of the requirements in
clause (i) above and other than the Net Proceeds of Consolidation Asset
- ----------
Dispositions) exceed $5,000,000, in which case a prepayment shall be made in the
amount of the Net Proceeds from any specific Asset Disposition, or portion
thereof, causing the limit to be exceeded.
(d) Equity Issuances. The Borrower shall, on each day that Holdings or
----------------
any of its Subsidiaries (including, without limitation, the Borrower) receives
any Net Proceeds from any Equity Issuance, pay to the Agent, as a prepayment of
the Term Loans, the Acquisition Loans, the Supremex Term Loans A and the
Supremex Term Loans B, an aggregate amount equal to 50% of the Net Proceeds from
such Equity Issuance; provided, that if and to the extent that the application
--------
of any such prepayment (or any portion thereof) to the Supremex Term Loans would
result in noncompliance with the Canadian Five Year Rule, then such prepayment
(or portion thereof) shall be applied to the Term Loans and the Acquisition
Loans and not to the Supremex Term Loans.
(e) Application of Mandatory Prepayments. All prepayments pursuant to
------------------------------------
Section 2.7(a) preceding shall, if such prepayment is required to be made prior
- --------------
to the Acquisition Loans Commitment Expiration Date, be allocated to the unpaid
principal amount of the Acquisition Loans until the Acquisition Loans have been
paid in full and then shall be allocated to the unpaid principal amount of the
Term Loans and, if such prepayment is required to be made on or after the
Acquisition Loans Commitment Expiration Date, be allocated to the unpaid
principal amounts of the Term Loans and the Acquisition Loans pro rata in
accordance with the respective unpaid principal amounts of such Loans, and shall
be applied to the then remaining installments of principal of the Term Loans and
the Acquisition Loans pro rata. All prepayments pursuant to Section 2.7(b) or
--------------
(c) preceding shall, if such prepayment is required to be made prior to the
- ----
Acquisition Loans Commitment Expiration Date, be allocated to the unpaid
principal amount of the Term Loans until the Term Loans
45
<PAGE>
have been paid in full and then shall be allocated to the unpaid principal
amount of the Acquisition Loans and, if such prepayment is required to be made
on or after the Acquisition Loans Commitment Expiration Date, be allocated to
the unpaid principal amounts of the Term Loans and the Acquisition Loans pro
rata in accordance with the respective unpaid principal amounts of such Loans,
and shall be applied to the then remaining installments of principal of the Term
Loans and the Acquisition Loans pro rata. All prepayments pursuant to subsection
----------
(d) preceding, if such prepayment is required to be made prior to the
- ---
Acquisition Loans Commitment Expiration Date, shall be allocated to the unpaid
principal amounts of the Term Loans and (if and to the extent that such
prepayments or any portion thereof are to be applied to the Supremex Term Loans)
the Supremex Term Loans A and the Supremex Term Loans B pro rata in accordance
with the respective unpaid principal amounts of such loans until such loans have
been paid in full and then shall be allocated to the unpaid principal amount of
the Acquisition Loans and, if such prepayment is required to be made on or after
the Acquisition Loans Commitment Expiration Date, be allocated to the unpaid
principal amounts of the Term Loans and the Acquisition Loans and (if and to the
extent that such prepayments or any portion thereof are to be applied to the
Supremex Term Loans) the Supremex Term Loans A and the Supremex Term Loans B pro
rata in accordance with the respective unpaid principal amounts of such loans,
and shall be applied to the remaining installments of principal of such loans
pro rata.
(f) Canadian Five Year Rule. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement, Supremex shall not be obligated to make any
prepayment of the principal of the Supremex Term Loans if and to the extent that
such prepayment would result in noncompliance with the Canadian Five Year Rule;
provided, however, that the aggregate amount which would be required to be
- -------- -------
applied as a prepayment of the principal of the Supremex Term Loans but for this
Section 2.7(f) and which is not otherwise required to be applied to the Loans in
- --------------
accordance with this Agreement shall be reinvested in the ordinary course of
business of Supremex.
(g) Concurrent Prepayment of Term Loans and Revolving Credit Loans.
--------------------------------------------------------------
The Borrower shall, as of the Third Restatement Date and concurrently with the
execution and delivery of this Agreement, (i) prepay the principal amount of the
Term Loans in the amount of $_____________ such that, after giving effect
thereto, the aggregate outstanding principal amount of the Term Loans equals
$70,000,000, and (ii) prepay the principal amount of the Revolving Credit Loans
Tranche 2 in the amount of $___________ (i.e., the entirety of the aggregate
outstanding principal amount of the Revolving Credit Loans Tranche 2 as of the
Third Restatement Date) such that, after giving effect thereto, the aggregate
outstanding principal amount of the Revolving Credit Loans Tranche 2 is $-0-.
Section 2.8 Minimum Amounts. Except for Conversions and prepayments
---------------
pursuant to Section 2.7 and Article 4, each borrowing, each Conversion and each
----------- ---------
prepayment of principal of the Loans shall be in an amount at least equal to
$1,000,000 or an integral multiple of $250,000 in excess thereof (borrowings,
prepayments or Conversions of or into Loans of different Types or, in the case
of Eurodollar Loans, having different Interest Periods at the same time
hereunder shall be deemed separate borrowings, prepayments and Conversions for
purposes of the foregoing, one for each Type or Interest Period), provided, that
--------
no minimum prepayment amount shall exist with respect to the Revolving Credit
Loans.
46
<PAGE>
Section 2.9 Certain Notices. Notices by the Borrower to the Agent of
---------------
terminations or reductions of Commitments, of borrowings, Conversions,
Continuations and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the Agent not
later than 11:00 a.m. (Houston, Texas, time) on the Business Day prior to the
date of the relevant termination, reduction, borrowing, Conversion, Continuation
or prepayment or the first day of such Interest Period specified below:
<TABLE>
<CAPTION>
Number of
Notice Business Days Prior
------ -------------------
<S> <C>
Borrowing of Term Loans which are Prime Rate Loans 1
Borrowing of Term Loans which are Eurodollar Loans 3
Borrowing of Revolving Credit Loans which are Prime
Rate Loans 1
Borrowing of Revolving Credit Loans which are Eurodollar
Loans 3
Borrowing of Acquisitions Loans which are Prime Rate
Loans 1
Borrowing of Acquisition Loans which are Eurodollar Loans 3
Conversions or Continuations of Loans 3
Prepayments of Term Loans 5
Prepayments of Revolving Credit Loans 1
</TABLE>
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 2.8 hereof)
-----------
and Type of the Loans to be borrowed, Converted, Continued or prepaid (and, in
the case of a Conversion, the Type of Loans to result from such Conversion) and
the date of borrowing, Conversion, Continuation or prepayment (which shall be a
Business Day). Notices of borrowings, Conversions, Continuations or prepayments
shall be in the form of Exhibit E hereto, appropriately completed as applicable.
---------
Each such notice of the duration of an Interest Period shall specify the Loans
to which such Interest Period is to relate. The Agent shall promptly notify the
Lenders of the contents of each such notice. In the event the Borrower fails to
select the Type of Loan, or the duration of any Interest Period for any
Eurodollar Loan, within the time period and otherwise as provided in this
Section 2.9, such Loan (if outstanding as Eurodollar Loan) will be automatically
- -----------
Converted into a Prime Rate Loan on the last day of preceding Interest Period
for such Loan or (if outstanding as a Prime Rate Loan) will remain as, or (if
not then outstanding) will be made as, a Prime Rate Loan. The Borrower may not
borrow any Eurodollar Loans, Convert any Loans into Eurodollar Loans or Continue
any Loans as Eurodollar Loans if the interest rate for such Eurodollar Loans
would exceed the Maximum Rate.
Section 2.10 Use of Proceeds.
---------------
(a) The Borrower represents and warrants that the proceeds of the
Revolving Credit Loans to be made on and after the Third Restatement Date shall
be used by the Borrower to pay transaction costs associated with this Agreement,
the Reorganization Transaction, the Equipment Lease Facility and the Accounts
Receivable Securitization Facility and for working capital and
47
<PAGE>
general corporate purposes of the Borrower and its Wholly-Owned Subsidiaries
other than Supremex and its Subsidiaries; provided, however, that none of the
-------- -------
proceeds of the Revolving Credit Loans may be used to finance Future
Acquisitions or Permitted Acquisitions.
(b) The Borrower represents and warrants to the Agent and the Lenders
that all proceeds of any Acquisition Loans shall be used by the Borrower to
finance Permitted Acquisitions and to pay transaction costs associated
therewith.
(c) None of the proceeds of any Loan have been or will be used to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended, or to purchase or carry any
margin stock (within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System).
Section 2.11 Fees.
----
(a) The Borrower agrees to pay to the Agent for the account of each
Lender a commitment fee on the daily average unused or unfunded amount of such
Lender's Revolving Credit Loans Commitment and Acquisition Loans Commitment, for
the period from and including the Third Restatement Date to and including the
Revolving Credit Loans Maturity Date with respect to the Revolving Credit Loans
Commitment and for the period from and including the Third Restatement Date to
and including the Acquisition Loans Commitment Expiration Date with respect to
the Acquisition Loans Commitment, at the rate of one-half of one percent (.50%)
per annum based on a 360 day year and the actual number of days elapsed, which
accrued commitment fees shall be payable in arrears on each Quarterly Date
beginning on December 31, 1996 and on the Revolving Credit Loans Maturity Date
(with respect to the Revolving Credit Loans Commitment) or the Acquisition Loans
Maturity Date (with respect to the Acquisition Loans Commitment).
(b) The Borrower agrees to pay to the Agent such additional fees as
are specified in the Agent's Letter, which fees shall be payable in such amounts
and on such dates as are specified therein.
(c) On the Third Restatement Date, the Borrower agrees to pay (i) to
the Agent for the account of the Second Restatement Lenders, the accrued but
unpaid commitment fees referred to in Section 2.11(a) of the Second Restated
Agreement, (ii) to the Agent for the account of the Second Restatement Lenders,
the accrued but unpaid fees referred to in the first sentence of Section 2.14(c)
of the Second Restated Agreement relating to Letters of Credit, and (iii) to the
Issuing Bank, the accrued but unpaid fees referred to in the third sentence of
Section 2.14(c) of the Second Restated Agreement relating to Letters of Credit.
Section 2.12 Computations. Interest and fees payable by the Borrower
------------
hereunder and under the other Loan Documents on all Loans, other than Prime Rate
Loans, shall be computed on the basis of a year of 360 days and the actual
number of days elapsed (including the first day but excluding the last day)
occurring in the period for which payable unless, in the case of interest, such
calculation would result in a usurious rate, in which case interest shall be
calculated on the basis of a year of 365 or 366 days, as the case may be.
Interest and fees payable by the Borrower hereunder and under the
48
<PAGE>
other Loan Documents on Prime Rate Loans shall be computed on the basis of a
year of 365 or 366 days, as the case may be.
Section 2.13 Reduction or Termination of Commitments. The Borrower shall
--------------------------------------
have the right to terminate or reduce in part the unused portion of the
Revolving Credit Loans Commitments and the Acquisition Loans Commitments at any
time and from time to time, provided that (a) the Borrower shall give notice of
--------
each such termination or reduction as provided in Section 2.9 and (b) each
-----------
partial reduction shall be in an aggregate amount at least equal to $1,000,000.
The Revolving Credit Loans Commitments and the Acquisition Loans Commitments may
not be reinstated after they have been terminated or (if applicable) reduced.
Section 2.14 Letters of Credit.
-----------------
(a) Subject to the terms and conditions of this Agreement, the
Borrower may utilize the Revolving Credit Loans Commitments by requesting that
the Issuing Bank issue Letters of Credit; provided, that the aggregate amount of
--------
outstanding Letter of Credit Liabilities shall not at any time exceed
$12,000,000. Upon the date of issue of each Letter of Credit, the Issuing Bank
shall be deemed, without further action by any party hereto, to have sold to
each Lender, and each Lender shall be deemed, without further action by any
party hereto, to have purchased from the Issuing Bank, a participation to the
extent of such Lender's Commitment Percentage in such Letter of Credit.
(b) The Borrower shall give the Issuing Bank (with a copy to the
Agent) at least five Business Days irrevocable prior notice (effective upon
receipt) specifying the date of each Letter of Credit and the nature of the
transactions to be supported thereby. Upon receipt of such notice the Issuing
Bank shall promptly notify each applicable Lender of the contents thereof and of
such Lender's Commitment Percentage of the amount of the proposed Letter of
Credit. Each Letter of Credit shall have an expiration date that does not
exceed one year from the date of issuance and that does not extend beyond the
Revolving Credit Loans Maturity Date, shall be payable in Dollars, shall support
a transaction entered into in the ordinary course of the Borrower's business,
shall be satisfactory in form and substance to the Issuing Bank, and shall be
issued pursuant to such agreements, documents and instruments (including a
Letter of Credit Agreement) as the Issuing Bank may reasonably require, none of
which shall be inconsistent with this Section 2.14. Each Letter of Credit shall
------------
(i) provide for the payment of drafts presented for, on or thereunder by the
beneficiary in accordance with the terms thereof, when such drafts are
accompanied by the documents (if any) described in the Letter of Credit and (ii)
to the extent not inconsistent with the terms hereof or any applicable Letter of
Credit Agreement, be subject to the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No. 500
(together with any subsequent revision thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Issuing Bank, the
"UCP"), and shall, as to matters not governed by the UCP, be governed by, and
---
construed and interpreted in accordance with, the laws of the State of Texas.
(c) The Borrower agrees to pay to the Agent for the account of each
Lender, in arrears on each Quarterly Date beginning on December 31, 1996 and on
the Revolving Credit Loans Maturity Date, a nonrefundable letter of credit fee
with respect to each Letter of Credit issued in an
49
<PAGE>
amount equal to (i) the rate per annum equal to the Applicable Margin (for
Revolving Credit Loans) for Eurodollar Loans in effect on the date of issuance
of such Letter of Credit (with respect to the fee due on the first Quarterly
Date after issuance) or on the first day of the applicable quarterly or other
period beginning after the calender quarter during which the issuance of such
Letter of Credit occurred (with respect to the fee due on each subsequent
Quarterly Date or on the Revolving Credit Loans Maturity Date) minus one-eighth
of one percent (0.125%), multiplied by (ii) the daily average face amount of the
Letter of Credit in effect during the applicable period. The Agent agrees to pay
to each Lender, promptly after receiving any payment of letter of credit fees
referred to above in this Section 2.14 (c), such Lender's Commitment Percentage
----------------
of such fees. The Borrower agrees to pay to the Issuing Bank for its own
account, in arrears on each Quarterly Date beginning on December 31, 1996 and on
the Revolving Credit Loans Maturity Date, if such Letter of Credit was
outstanding at any time during any portion of the quarterly period (or, with
respect to the December 31, 1996 Quarterly Date, the period from the Third
Restatement Date through such Quarterly Date) immediately preceding such
Quarterly Date or the Revolving Credit Loans Maturity Date, a nonrefundable
letter of credit fee with respect to each Letter of Credit issued by the Issuing
Bank hereunder in an amount equal to (A) one-eighth of one percent (0.125%) per
annum, multiplied by (B) the daily average face amount of the Letter of Credit
in effect during such period. In addition to the foregoing fees, the Borrower
shall pay or reimburse the Issuing Bank for such normal and customary costs and
expenses, including, without limitation, administrative, issuance, amendment,
payment and negotiation charges, as are incurred or charged by the Issuing Bank
in issuing, effecting payment under, amending or otherwise administering any
Letter of Credit.
(d) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment or other drawing under such Letter of Credit, the Issuing
Bank shall promptly notify the Borrower and each Lender as to the amount to be
paid as a result of such demand or drawing and the respective payment date. If
at any time the Issuing Bank shall make a payment to a beneficiary of a Letter
of Credit pursuant to a drawing under such Letter of Credit, each Lender will
pay to the Issuing Bank, immediately upon the Issuing Bank's demand at any time
commencing after such payment until reimbursement therefor in full by the
Borrower, an amount equal to such Lender's Commitment Percentage of such
payment, together with interest on such amount for each day from the date of
such payment to the date of payment by such Lender of such amount at a rate of
interest per annum equal to the Federal Funds Rate.
(e) The Borrower shall be irrevocably and unconditionally obligated to
immediately reimburse the Issuing Bank for any amounts paid by the Issuing Bank
upon any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind. The Issuing Bank will pay to each
Lender such Lender's Commitment Percentage of all amounts received from or on
behalf of the Borrower for application in payment, in whole or in part, of the
Reimbursement Obligation in respect of any Letter of Credit, but only to the
extent such Lender has made payment to the Issuing Bank in respect of such
Letter of Credit pursuant to Section 2.14 (d). Outstanding Reimbursement
----------------
Obligations shall bear interest at the Default Rate and such interest shall be
payable on demand.
(f) The Reimbursement Obligations of the Borrower under this Agreement
and the other Loan Documents shall be absolute, unconditional and irrevocable,
and shall be performed strictly
50
<PAGE>
in accordance with the terms of this Agreement and the other Loan Documents
under all circumstances whatsoever, including, without limitation, the following
circumstances:
(i) Any lack of validity or enforceability of any Letter of
Credit or any other Loan Document;
(ii) Any amendment or waiver of or any consent to departure from
any Loan Document;
(iii) The existence of any claim, setoff, counterclaim, defense
or other right which any Loan Party or other Person may have at any time
against any beneficiary of any Letter of Credit, the Agent, the Issuing
Bank, the Lenders or any other Person, whether in connection with this
Agreement or any other Loan Document or any unrelated transaction;
(iv) Any statement, draft or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(v) Payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or other document that does not comply with
the terms of such Letter of Credit, provided, that such payment shall not
-------
have constituted gross negligence or willful misconduct of the Issuing
Bank; and
(vi) Any other circumstance whatsoever, whether or not similar
to any of the foregoing, provided that such other circumstance or event
shall not have been the result of the gross negligence or willful
misconduct of the Issuing Bank.
(g) The Borrower assumes all risks of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Agent, the Issuing Bank, the Lenders nor any of their
respective officers or directors shall have any responsibility or liability to
the Borrower or any other Person for: (a) the failure of any draft to bear any
reference or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents apart from
drafts as required by the terms of any Letter of Credit, or the failure of any
Person to note the amount of any instrument on any Letter of Credit, (b) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
(c) the validity, sufficiency or genuineness of any draft or other document, or
any endorsement(s) thereon, even if any such draft, document or endorsement
should in fact prove to be in any and all respects invalid, insufficient,
fraudulent or forged or any statement therein is untrue or inaccurate in any
respect, (d) the payment by the Issuing Bank to the beneficiary of any Letter of
Credit against presentation of any draft or other document that does not comply
with the terms of the Letter of Credit, or (e) any other circumstance whatsoever
in making or failing to make any payment under a Letter of Credit; provided,
--------
however, that, notwithstanding the foregoing, the Borrower shall have a claim
- -------
against the Issuing Bank, and the Issuing Bank shall be liable to the Borrower,
to the extent of any direct, but not indirect or consequential, damages suffered
by the Borrower which the Borrower proves in a
51
<PAGE>
final nonappealable judgment were caused by (i) the Issuing Bank's willful
misconduct or gross negligence in determining whether documents presented under
any Letter of Credit complied with the terms thereof or (ii) the Issuing Bank's
willful failure to pay under any Letter of Credit after presentation to it of
documents strictly complying with the terms and conditions of such Letter of
Credit. The Issuing Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
(h) All Letters of Credit issued pursuant to the Original Agreement,
the First Restated Agreement and the Second Restated Agreement shall be deemed
to be Letters of Credit issued pursuant to this Agreement.
ARTICLE 3
Payments
--------
Section 3.1 Method of Payment. All payments of principal, interest, fees
-----------------
and other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Agent at the Principal Office for the
account of each Lender's Applicable Lending Office in Dollars and in immediately
available funds, without setoff, deduction or counterclaim, not later than 11:00
a.m. (Houston, Texas time) on the date on which such payment shall become due
(each such payment made after such time on such due date to be deemed to have
been made on the next succeeding Business Day). The Borrower shall, at the time
of making each such payment, specify to the Agent the sums payable by the
Borrower under this Agreement and the other Loan Documents to which such payment
is to be applied (and in the event that the Borrower fails to so specify, or if
an Event of Default has occurred and is continuing, the Agent may apply such
payment to the Obligations in such order and manner as the Agent may elect,
subject to Section 3.2.) Upon the occurrence and during the continuation of an
-----------
Event of Default, all proceeds of any Collateral, and all funds from time to
time on deposit in any Concentration Account or any deposit account, may be
applied by the Agent to the Obligations in such order and manner as the Agent
may elect, subject to Section 3.2. Notwithstanding the foregoing, however, if
-----------
an Event of Default has occurred and is continuing, the Agent and the Lenders
agree among themselves that, subject to the terms of the Intercreditor
Agreement, all such payments, proceeds and funds shall be applied pro rata to
the outstanding principal amount of the Loans and unreimbursed drawings under
Letters of Credit (based upon the outstanding principal amount of the Term
Loans, the outstanding principal amount of the Revolving Credit Loans, the
aggregate unreimbursed drawings under Letters of Credit and the outstanding
principal amount of the Acquisition Loans as a percentage of the sum of the
aggregate outstanding principal amount of all of the Loans plus the aggregate
unreimbursed drawings under Letters of Credit). Each payment received by the
Agent under this Agreement or any other Loan Document for the account of a
Lender shall be paid promptly to such Lender, in immediately available funds,
for the account of such Lender's Applicable Lending Office. Whenever any
payment under this Agreement or any other Loan Document shall be stated to be
due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
52
<PAGE>
Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided in
------------------
this Agreement: (a) each Loan shall be made by the Lenders under Section 2.1,
-----------
each payment of commitment fees under Section 2.11(a) shall be made for the
---------------
account of the Lenders, and each termination or reduction of the Commitments
under Section 2.13 shall be applied to the appropriate Commitments of the
------------
Lenders, pro rata according to the respective unused Commitments; (b) the
making, Conversion and Continuation of Loans of a particular Type (other than
Conversions provided for by Section 4.4) shall be made pro rata among the
-----------
Lenders holding Loans of such Type according to the amounts of their respective
appropriate Commitments; (c) each payment and prepayment by the Borrower of
principal of or interest on Loans of a particular Type shall be made to the
Agent for the account of the Lenders holding Loans of such Type pro rata in
accordance with the respective unpaid principal amounts of such Loans held by
such Lenders; (d) Interest Periods for Loans of a particular Type shall be
allocated among the Lenders holding Loans of such Type pro rata according to the
respective principal amounts held by such Lenders; and (e) the Lenders (other
than the Issuing Bank) shall purchase participations in the Letters of Credit
pro rata in accordance with their Commitment Percentages of the aggregate
Revolving Credit Loans Commitments.
Section 3.3 Sharing of Payments, Etc. Subject to the terms of the
------------------------
Intercreditor Agreement, if a Lender shall obtain payment of any principal of or
interest on any of the Obligations due to such Lender hereunder through the
exercise of any right of setoff, banker's lien, counterclaim or similar right,
or otherwise, it shall promptly purchase from the other Lenders participations
in the Obligations held by the other Lenders in such amounts, and make such
adjustments from time to time as shall be equitable to the end that all the
Lenders shall share pro rata in accordance with the unpaid principal and
interest on the Obligations then due to each of them. To such end, all of the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
Lender so purchasing a participation in the Obligations by the other Lenders may
exercise all rights of setoff, banker's lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Obligations in the amount of such participation. Nothing contained
herein shall require any Lender to exercise any such right or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of the Borrower.
Section 3.4 Non-Receipt of Funds by the Agent. Unless the Agent shall have
---------------------------------
been notified by a Lender or the Borrower (the "Payor") prior to the date on
-----
which such Lender is to make payment to the Agent of the proceeds of a Loan to
be made by it hereunder or the Borrower is to make a payment to the Agent for
the account of one or more of the Lenders, as the case may be (such payment
being herein called the "Required Payment"), which notice shall be effective
----------------
upon receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by the Agent until the
53
<PAGE>
date the Agent recovers such amount at a rate per annum equal to the Federal
Funds Rate for such period.
Section 3.5 Withholding Taxes. All payments by the Borrower of principal
------------------
of and interest on the Loans and of all fees and other amounts payable under the
Loan Documents shall be made free and clear of, and without deduction by reason
of, any present or future taxes, duties, imposts, assessments or other charges
levied or imposed by any Governmental Authority (other than taxes on the overall
net income of the Agent or any Lender). If any such taxes, duties, imposts,
assessments or other charges are so levied or imposed, the Borrower will (a)
make additional payments in such amounts so that every net payment of principal
of and interest on the Loans and of all other amounts payable by it under the
Loan Documents, after withholding or deduction for or on account of any such
present or future taxes, duties, imposts, assessments or other charges
(including any tax imposed on or measured by net income of the Agent or a Lender
attributable to payments made to or on behalf of the Agent or a Lender pursuant
to this Section 3.5 and any penalties or interest attributable to such
-----------
payments), will not be less than the amount provided for herein or therein
absent such withholding or deduction (provided that the Borrower shall have no
--------
obligation to pay such additional amounts to the Agent or any Lender to the
extent that such taxes, duties, imposts, assessments or other charges are levied
or imposed by reason of the failure of the Agent or such Lender to comply with
the provisions of Section 3.6), (b) make such withholding or deduction, and (c)
-----------
remit the full amount deducted or withheld to the relevant Governmental
Authority in accordance with applicable law. The Borrower shall furnish
promptly to the Agent for distribution to each affected Lender, as the case may
be, upon request of such Lender, official receipts evidencing any such
withholding or reduction. The Borrower will indemnify the Agent and each Lender
(without duplication) against, and reimburse the Agent and each Lender for, all
present and future taxes, duties, imposts, assessments or other charges
(including interest and penalties) levied or collected (whether or not legally
or correctly imposed, assessed, levied or collected), excluding, however, any
taxes imposed on the overall net income of the Agent or such Lender, on or in
respect of this Agreement, any of the Loan Documents or the Obligations or any
portion thereof (the "reimbursable taxes"). Any such indemnification shall be
------------------
on an after-tax basis, taking into account any such reimbursable taxes imposed
on the amounts paid as indemnity. Without prejudice to the survival of any
other term or provision of this Agreement, the obligations of the Borrower under
this Section 3.5 shall survive the repayment of the Loans, the Letter of Credit
-----------
Liabilities and the other Obligations and termination of the Commitments.
Section 3.6 Withholding Tax Exemption. Each Lender that is not
-------------------------
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Third Restatement Date or the
date upon which it becomes a party to this Agreement and if it is legally able
to do so, deliver to the Borrower and the Agent two duly completed copies of
U.S. Internal Revenue Service Form 1001, 4224 or W-8, as appropriate, certifying
in any case that such Lender is entitled to receive payments from the Borrower
under any Loan Document without deduction or withholding of any U.S. federal
income taxes. Each Lender which so delivers a Form 1001, 4224 or W-8 further
undertakes to deliver to Borrower and the Agent two additional copies of such
form (or a successor form) on or before the date such form expires or becomes
obsolete or after the occurrence of any event requiring a change in the most
recent form so delivered by it, and such amendments thereto or extensions or
renewals thereof as may be reasonably requested by the
54
<PAGE>
Borrower or the Agent, in each case certifying that such Lender is entitled to
receive payments from the Borrower under any Loan Document without deduction or
withholding of any U.S. federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving such payments without
any deduction or withholding of U.S. federal income tax.
ARTICLE 4
Yield Protection and Illegality
-------------------------------
Section 4.1 Additional Costs.
----------------
(a) The Borrower shall pay directly to each Lender from time to time,
promptly upon the request of such Lender, the costs incurred by such Lender
which such Lender determines are attributable to its making or maintaining of
any Eurodollar Loans hereunder or its obligation to make any of such Loans
hereunder, or any reduction in any amount receivable by such Lender hereunder in
respect of any such Loans or such obligation (such increases in costs and
reductions in amounts receivable being herein called "Additional Costs"),
----------------
resulting from any Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans
(other than taxes imposed on the overall net income of such Lender or its
Applicable Lending Office for any of such Loans by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office);
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirement relating to any extensions of
credit or other assets of, or any deposits with or other liabilities or
commitments of, such Lender (including any of such Loans or any deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1 hereof,
-----------
but excluding the Reserve Requirement to the extent it is included in the
calculation of the Adjusted Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement or the
Notes or any of such extensions of credit or liabilities or commitments.
Each Lender will notify the Borrower (with a copy to the Agent) of any event
occurring after the Closing Date which will entitle such Lender to compensation
pursuant to this Section 4.1 (a) as promptly as practicable after it obtains
-----------
knowledge thereof and determines to request such compensation, and (if so
requested by the Borrower) will designate a different Applicable Lending Office
for the Eurodollar Loans of such Lender if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Lender, violate any law, rule or regulation or be in any way
disadvantageous to such Lender, provided that such Lender shall
--------
55
<PAGE>
have no obligation to so designate an Applicable Lending Office located in the
U.S. Each Lender will furnish the Borrower with a certificate setting forth the
basis and the amount of each request of such Lender for compensation under this
Section 4.1(a). If any Lender requests compensation from the Borrower under this
- --------------
Section 4.1(a), the Borrower may, by notice to such Lender (with a copy to the
- --------------
Agent), suspend the obligation of such Lender to make or Continue making, or
Convert Prime Rate Loans into, Eurodollar Loans until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 4.4 hereof shall be applicable).
-----------
(b) Without limiting the effect of the foregoing provisions of this
Section 4.1, in the event that, by reason of any Regulatory Change, any Lender
- -----------
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Lender
to make or Continue making, or Convert Prime Rate Loans into, Eurodollar Loans
hereunder shall be suspended until such Regulatory Change ceases to be in effect
(in which case the provisions of Section 4.4 hereof shall be applicable).
-----------
(c) Determinations and allocations by any Lender for purposes of this
Section 4.1 of the effect of any Regulatory Change on its costs of maintaining
- -----------
its obligation to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans, and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be conclusive
in the absence of manifest error, provided that such determinations and
allocations are made on a reasonable basis.
Section 4.2 Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if with respect to any Eurodollar Loans for any Interest Period
therefor:
(a) The Agent determines (which determination shall be conclusive
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" in Section 1.1
-----------
hereof are not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for such Loans
as provided in this Agreement; or
(b) Required Lenders determine (which determination shall be
conclusive absent manifest error) and notify the Agent that the relevant
rates of interest referred to in the definition of "Eurodollar Rate" or
"Adjusted Eurodollar Rate" in Section 1.1 hereof on the basis of which the
rate of interest for such Loans for such Interest Period is to be
determined do not accurately reflect the cost to the Lenders of making or
maintaining such Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lenders shall be under no obligation to
make Eurodollar Loans or to Convert Prime
56
<PAGE>
Rate Loans into Eurodollar Loans and the Borrower shall, on the last day(s) of
the then current Interest Period(s) for the outstanding Eurodollar Loans, either
prepay such Loans or Convert such Loans into Prime Rate Loans in accordance with
the terms of this Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
hereunder or (b) maintain Eurodollar Loans hereunder, then such Lender shall
promptly notify the Borrower (with a copy to the Agent) thereof and such
Lender's obligation to make or maintain Eurodollar Loans and to Convert Prime
Rate Loans into Eurodollar Loans hereunder shall be suspended until such time as
such Lender may again make and maintain Eurodollar Loans (in which case the
provisions of Section 4.4 hereof shall be applicable).
-----------
Section 4.4 Treatment of Affected Loans. If the obligation of any Lender
---------------------------
to make or Continue, or to Convert Prime Rate Loans into, Eurodollar Loans is
suspended pursuant to Section 4.1 or 4.3 hereof, such Lender's Eurodollar Loans
----------- ---
shall be automatically Converted into Prime Rate Loans on the last day(s) of the
then current Interest Period(s) for the Eurodollar Loans (or, in the case of a
Conversion required by Section 4.1(b) or 4.3 hereof, on such earlier date as
-------------- ---
such Lender may specify to the Borrower with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 4.1 or 4.3 hereof which gave rise to such Conversion no
----------- ---
longer exist:
(a) To the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Lender's Eurodollar Loans shall be applied instead to its
Prime Rate Loans; and
(b) All Loans which would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made as or Converted into Prime Rate
Loans and all Loans of such Lender which would otherwise be Converted into
Eurodollar Loans shall be Converted instead into (or shall remain as) Prime
Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof which gave rise to the
----------- ---
Conversion of such Lender's Eurodollar Loans pursuant to this Section 4.4 no
-----------
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Lender's
Prime Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding Eurodollar Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
Section 4.5 Compensation. The Borrower shall pay to the Agent for the
------------
account of each Lender, promptly upon the request of such Lender through the
Agent, such amount or amounts as shall be sufficient (in the reasonable opinion
of such Lender) to compensate it for any loss, cost or expense incurred by it as
a result of:
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(a) Any payment, prepayment or Conversion of a Eurodollar Loan for
any reason (including, without limitation, the acceleration of the
outstanding Loans pursuant to Section 11.2) on a date other than the last day
------------
of an Interest Period for such Loan; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 6 to
---------
be satisfied) to borrow, Convert or prepay a Eurodollar Loan on the date for
such borrowing, Conversion or prepayment specified in the relevant notice of
borrowing, prepayment or Conversion under this Agreement.
Section 4.6 Capital Adequacy. If, after the Closing Date, any Lender shall
----------------
have determined that the adoption or implementation of any applicable law, rule
or regulation regarding capital adequacy (including, without limitation, any
law, rule or regulation implementing the Basle Accord), or any change therein,
or any change in the interpretation or administration thereof by any central
bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on such Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, within ten Business Days after demand by
such Lender (with a copy to the Agent), the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender (or its parent)
for such reduction. A certificate of such Lender claiming compensation under
this Section 4.6 and setting forth the additional amount or amounts to be paid
-----------
to it hereunder shall be conclusive absent manifest error, provided that the
--------
determination thereof is made on a reasonable basis. In determining such amount
or amounts, such Lender may use any reasonable averaging and attribution
methods.
Section 4.7 Additional Interest on Eurodollar Loans. The Borrower shall
---------------------------------------
pay, directly to each Lender from time to time, additional interest on the
unpaid principal amount of each Eurodollar Loan held by such Lender, from the
date of the making of such Eurodollar Loan until such principal amount is paid
in full, at an interest rate per annum determined by such Lender in good faith
equal to the positive remainder (if any) of (a) the Adjusted Eurodollar Rate
applicable to such Eurodollar Loan minus (b) the Eurodollar Rate applicable to
-----
such Eurodollar Loan. Each payment of additional interest pursuant to this
Section 4.7 shall be payable by the Borrower on each date upon which interest is
- -----------
payable on such Eurodollar Loan pursuant to Section 2.4(b); provided, however,
-------------- -------- -------
that the Borrower shall not be obligated to make any such payment of additional
interest until the first Business Day after the date when the Borrower has been
informed (i) that such Lender is subject to a Reserve Requirement and (ii) of
the amount of such Reserve Requirement (after which time the Borrower shall be
obligated to make all such payments of additional interest, including, without
limitation, such payments of additional interest that otherwise would have been
payable by the Borrower on or prior to such time had the Borrower been earlier
informed).
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ARTICLE 5
Security
--------
Section 5.1 Collateral. To secure the full and complete payment and
----------
performance of the Obligations, the Loan Parties will, and will cause Holdings
and each of the Borrower's Subsidiaries, other than Supremex and its
Subsidiaries, other than Unrestricted Subsidiaries and other than MTRC, to,
grant to the Agent for the benefit of the Agent and the Lenders a perfected,
first priority Lien (except for Permitted Liens, if any, which are expressly
permitted by the Loan Documents to have priority over the Liens in favor of the
Agent) on all of their rights, titles and interests in and to the following
Property, whether now owned or hereafter acquired, pursuant to the Security
Documents:
(a) all Capital Stock of the Borrower and certain other Property
of Holdings as specified in the Holdings Security Agreement and all Capital
Stock of the Subsidiaries of the Borrower owned by the Borrower or any
Subsidiary of the Borrower other than Capital Stock of the Subsidiaries of
Supremex owned by Supremex or a Subsidiary of Supremex, including, without
limitation, Capital Stock of Unrestricted Subsidiaries and other
Subsidiaries of the Borrower; provided, however, that such Lien shall
-------- -------
relate only to 66% of the shares of each class of Capital Stock of Supremex
and 66% of the shares of each class of Capital Stock of Supremex Holdings
issued and outstanding from time to time; and
(b) all other Property of the Borrower and its Subsidiaries other
than (i) Supremex and its Canadian Subsidiaries, (ii) Unrestricted
Subsidiaries, and (iii) MTRC, including, without limitation, the Mortgaged
Properties and all accounts (including, without limitation, Receivables),
inventory (including, without limitation, Inventory), equipment (other than
equipment which is, concurrently herewith, being sold by the Borrower and
its Subsidiaries and immediately leased back by the Borrower and its
Subsidiaries pursuant to the Equipment Lease Facility Documents), contract
rights, general intangibles, instruments, chattel paper, Permits,
Intellectual Property and intercompany Debt, but excluding the Mail-Well
ESOP Loan Documents, immaterial leases, intangibles prohibiting liens and
certificated vehicles (provided, however, that (A) the Agent may, in its
-------- -------
discretion and given applicable mortgage tax considerations, determine that
certain real Properties of the Borrower or its Subsidiaries located in the
States of New York and Tennessee shall not be required to secure the
Obligations or any portion thereof if, in the Agent's judgment, the effect
thereof is not materially adverse to the Lenders and (B) the real
Properties acquired by the Borrower pursuant to the Quality Park
Acquisition and located at 2520 Como Avenue, St. Paul, Minnesota and 3350
Hamilton Boulevard, Atlanta, Georgia shall not be required to secure the
Obligations).
If required by the Agent, the pledge of the Capital Stock of Supremex shall be
appropriately registered in the share registry of Supremex. None of the Capital
Stock to be pledged in accordance with this Section 5.1 shall be subject to any
-----------
transfer restriction, shareholders' agreement or other restriction except for
such restrictions, if any, as may be reasonably acceptable to the Agent.
59
<PAGE>
Section 5.2 Guaranties. The Loan Parties shall cause Holdings and each
----------
Subsidiary of the Borrower in existence on the Third Restatement Date (before
and after giving effect to the Related Transactions), other than (a) Supremex
and its Canadian Subsidiaries, (b) Unrestricted Subsidiaries, and (c) MTRC, to
guaranty the payment and performance of the Obligations pursuant to the Holdings
Guaranty or the Subsidiary Guaranties, as the case may be.
Section 5.3 New Subsidiaries. Contemporaneously with the creation or
----------------
acquisition of any Subsidiary of the Borrower after the Third Restatement Date,
the Loan Parties shall:
(a) grant or cause to be granted to the Agent, for the benefit of
the Agent and the Lenders, the Supremex Lenders and the Equipment Lease
Facility Lenders as security for the payment and performance of the
Obligations, the Supremex Obligations and the Secured Equipment Lease
Facility Obligations, respectively, a perfected, first priority security
interest in all Capital Stock or other ownership interests in or indebtedness
of such Subsidiary owned by the Borrower or owned by any such Subsidiary
(other than an Unrestricted Subsidiary) of the Borrower (to the extent such
Capital Stock or other ownership interests or indebtedness are already not so
pledged to the Agent), and deliver or cause to be delivered to the Agent all
certificates and instruments evidencing such Capital Stock or other ownership
interests or indebtedness together with stock powers or other instruments of
transfer or endorsements as the Agent may request, all in form and substance
reasonably satisfactory to the Agent;
(b) cause each such Subsidiary (other than an Unrestricted
Subsidiary) to guaranty the payment and performance of the Obligations, the
Supremex Obligations and the Secured Equipment Lease Facility Obligations by
executing and delivering to the Agent a Subsidiary Guaranty; and
(c) cause each such Subsidiary (other than an Unrestricted
Subsidiary) to execute and deliver to the Agent a Subsidiary Security
Agreement and such other Security Documents (including, without limitation,
financing statements) as the Agent may reasonably request to grant the Agent,
for the benefit of the Agent and the Lenders, the Supremex Lenders and the
Equipment Lease Facility Lenders as security for the payment and performance
of the Obligations, the Supremex Obligations and the Secured Equipment Lease
Facility Obligations, respectively, a perfected, first priority Lien (except
for Permitted Liens, if any, which are expressly permitted by the Loan
Documents to have priority over the Liens in favor of the Agent) on all
Property of such Subsidiary, excluding immaterial leases, intangibles
prohibiting liens and certificated vehicles;
provided, however, that, notwithstanding anything to the contrary contained in
- -------- -------
this Section 5.3, (i) neither the Borrower nor any Subsidiary of the Borrower
-----------
shall be obligated to pledge more of the Capital Stock of Supremex or Supremex
Holdings than is specified in Section 5.1(a) or to pledge any Capital Stock or
--------------
other ownership interests in or other indebtedness of any Canadian Subsidiary of
Supremex, (ii) neither Supremex nor any Canadian Subsidiary of Supremex shall be
obligated to execute a Subsidiary Guaranty guaranteeing payment or performance
of the Obligations or the Secured Equipment Lease Facility Obligations as
otherwise required in clause (b) preceding, and
----------
60
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(iii) neither Supremex nor any Canadian Subsidiary of Supremex shall be
obligated to execute a Subsidiary Security Agreement or other Security Documents
securing payment or performance of the Obligations or the Secured Equipment
Lease Facility Obligations as otherwise required in clause (c) preceding. None
----------
of the Capital Stock to be pledged in accordance with this Section 5.3 shall be
-----------
subject to any transfer restriction, shareholders' agreement or other
restriction except for such restrictions, if any, as may be reasonably
acceptable to the Agent.
Section 5.4 New Mortgaged Properties. The Loan Parties will, and will cause
-------------------------
each of their Subsidiaries, other than (a) Supremex and its Canadian
Subsidiaries, (b) Unrestricted Subsidiaries, and (c) MTRC, to, contemporaneously
with (i) the acquisition of any fee real Property or (ii) the execution of any
lease of real Property where Inventory of the Borrower or any of such
Subsidiaries in excess of $1,000,000 is or will be located or covering any plant
or storage site, execute, acknowledge and deliver to the Agent a Mortgage or an
amendment or modification to an existing Mortgage covering (A) all fee real
Property acquired by the Borrower or any of such Subsidiaries subsequent to the
Closing Date and (B) all of the Borrower's or any of such Subsidiaries' rights
and interests as lessee, in, to and under each such real estate lease entered
into subsequent to the Closing Date, together with evidence reasonably
satisfactory to the Agent and its counsel, including, without limitation, if
requested by the Agent, a commitment for a mortgagee policy of title insurance
in favor of the Agent, in form and substance reasonably satisfactory to the
Agent, that the Mortgage creates a valid, first priority Lien on the fee estate
or leasehold estate, as the case may be, in favor of the Agent for the benefit
of the Agent and the Lenders (except for Permitted Liens, if any, which are
expressly permitted by the Loan Documents to have priority over the Liens in
favor of the Agent), together with appraisals and surveys if requested by the
Agent; provided, however, that, with respect to the acquisition of any fee real
-------- -------
Property having a fair market value of less than $500,000, the Borrower and such
Subsidiaries shall not be required to execute, acknowledge or deliver such
documents unless or until fee real Property or Properties having an aggregate
fair market value of $500,000 or more would be covered by any such new Mortgage
or amendment or modification to an existing Mortgage. Following the date of
each such acquisition of Property, if requested by the Agent, the Loan Parties
shall, and shall cause each of such Subsidiaries with an interest in such
Properties to, (i) deliver or cause to be delivered to the Agent, a mortgagee
policy of title insurance insuring the Liens of the Mortgage covering such fee
real Property in an amount reasonably satisfactory to the Agent on standard form
policies (except for Permitted Liens, if any, which are expressly permitted by
the Loan Documents to have priority over the Liens in favor of the Agent) and
(ii) provide the Agent with a current environmental assessment of such Property
in form and substance reasonably satisfactory to the Agent. In addition, with
respect to each such leasehold estate, the Loan Parties will, and will cause
each of such Subsidiaries to, use their best efforts to obtain either (A)
waivers of landlord's Liens from each lessor or (B) landlord agreements from
each lessor, in form and substance reasonably satisfactory to the Agent.
Section 5.5 Release of Collateral . Upon any sale, transfer or other
----------------------
disposition of Collateral that is expressly permitted under Section 9.8 and upon
-----------
five Business Days prior written request by the Borrower, the Agent shall
execute at the Borrower's expense such documents as may be necessary to evidence
the release by the Agent of its Liens on such Collateral; provided, however,
-------- -------
that (a) the Agent shall not be required to release any Lien on any Collateral
if a Default shall have occurred and be continuing, (b) the Agent shall not be
required to execute any such document on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation not
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reimbursed by the Borrower or entail any consequences other than the release of
such Lien without recourse or warranty, and (c) such release shall not in any
manner discharge, affect or impair any of the Obligations or any of the Agent's
Liens on any Collateral retained by Holdings or the Borrower or any of its
Subsidiaries, including, without limitation, its Liens on the proceeds of any
such sale, transfer or other disposition. The Loan Parties represent and warrant
to the Agent and the Lenders that none of the equipment listed on Schedule 5.5
------------
attached hereto (the "GECC Equipment") is, or was previously, owned by any Loan
--------------
Party, and that such equipment is being leased by one or more of the Loan
Parties as lessee from General Electric Capital Corporation as owner and lessor.
The Lenders authorize the Agent to confirm in writing (in the form of a release
or otherwise, as the Agent may determine) that the GECC Equipment and the
proceeds thereof do not constitute Collateral and to release the Agent's Lien on
the Mail-Well ESOP Loan Documents, the Equipment Lease Facility Equipment and,
concurrently with each transfer of such Receivables to MTRC in accordance with
the terms and provisions of the Accounts Receivable Securitization Facility
Documents, the Receivables. Without limiting the generality of the foregoing,
each Lender hereby acknowledges and agrees that the Agent has executed and
delivered, or will execute and deliver, a letter agreement to and in favor of
Paribas Properties, Inc. and the "Equity Lenders" and the "Financing Lenders",
as such terms are defined in the Equipment Lease Facility Documents, pursuant to
which the Agent (as among the Agent, the Lenders, the Supremex Lenders, Paribas
Properties, Inc. and such "Equity Lenders" and "Financing Lenders" only)
disclaims any security interest in the Equipment Lease Facility Equipment.
Section 5.6 Setoff. If an Event of Default shall have occurred and be
------
continuing, each Lender is hereby authorized at any time and from time to time,
without notice to the Borrower or any other Loan Party (any such notice being
hereby expressly waived by the Loan Parties), to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of any Loan Party against any and all of the Obligations
of the Loan Parties (or any one or more of them) now or hereafter existing under
this Agreement, any of such Lender's Notes or any other Loan Document,
irrespective of whether or not the Agent or such Lender shall have made any
demand under this Agreement, any of such Lender's Note or any such other Loan
Document and although such Obligations may be unmatured. Each Lender agrees
promptly to notify the Borrower (with a copy to the Agent) after any such setoff
and application, provided that the failure to give such notice shall not affect
--------
the validity of such setoff and application. The rights and remedies of each
Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Lender may have.
ARTICLE 6
Conditions Precedent
--------------------
Section 6.1 Initial Extension of Credit. Each of the obligation of each
----------------------------
Lender to make its initial Loan under this Agreement and the obligation of the
Issuing Bank to issue the initial Letter of Credit under this Agreement are
subject to the conditions precedent that the Agent shall have received, on or
before the date of the making of such initial Loan or the issuance of such
initial Letter of Credit, respectively, all of the following in form and
substance satisfactory to the Agent
62
<PAGE>
and, in the case of actions to be taken, evidence that the following required
actions have been taken to the satisfaction of the Agent:
(a) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery and performance by such Loan Party of the Loan
Documents and the Related Transactions Documents to which it is or is to be a
party;
(b) Incumbency Certificate. A certificate of incumbency certified by
----------------------
the Secretary or an Assistant Secretary of each Loan Party certifying the
name of each officer of such Loan Party (i) who is authorized to sign the
Loan Documents to which such Loan Party is or is to be a party (including any
certificates contemplated therein), together with specimen signatures of each
such officer, and (ii) who will, until replaced by other officers duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with the Loan Documents and the transactions contemplated thereby;
(c) Articles or Certificates of Incorporation, etc. The articles or
----------------------------------------------
certificates of incorporation, certificate of formation, certificate of
limited partnership, partnership agreement or other applicable constitutional
document of each Loan Party certified by a Secretary or an Assistant
Secretary or other appropriate officer of such Loan Party as being accurate
and complete copies thereof.
(d) Bylaws. The bylaws of each Loan Party certified by the Secretary
------
or an Assistant Secretary of such Loan Party;
(e) Governmental Certificates. Certificates of appropriate officials
-------------------------
as to the existence and good standing of each Loan Party in their respective
jurisdictions of incorporation or organization and any and all jurisdictions
where such Loan Party is qualified to do business as a foreign corporation or
other entity, each such certificate to be dated as of a Current Date;
(f) Term Loans Notes. The Term Loans Notes duly completed and executed
----------------
by the Borrower, and the payment of all interest accrued on the Term Loans to
the Third Restatement Date;
(g) Revolving Credit Loans Notes. The Revolving Credit Loans Notes
----------------------------
duly completed and executed by the Borrower, and the payment of all interest
accrued on the Revolving Credit Loans Tranche 1 and the Revolving Credit
Loans Tranche 2 to the Third Restatement Date;
(h) Acquisition Loans Notes. The Acquisition Loans Notes duly
-----------------------
completed and executed by the Borrower;
(i) Holdings Guaranty. The Holdings Guaranty executed by Holdings;
-----------------
63
<PAGE>
(j) Subsidiary Guaranties. A Subsidiary Guaranty executed by each of
---------------------
the Subsidiaries of the Borrower, other than (i) Supremex and its Canadian
Subsidiaries, (ii) Unrestricted Subsidiaries, and (iii) MTRC;
(k) Borrower Security Agreement. The Borrower Security Agreement
---------------------------
executed by the Borrower;
(l) Subsidiary Security Agreements. A Subsidiary Security Agreement
------------------------------
executed by each of the Subsidiaries of the Borrower, other than (i) Supremex
and its Canadian Subsidiaries, (ii) Unrestricted Subsidiaries, and (iii)
MTRC;
(m) Holdings Security Agreement. The Holdings Security Agreement
---------------------------
executed by Holdings;
(n) Mortgages. Mortgages covering all of the Mortgaged Properties
---------
owned by the Borrower or any of its Subsidiaries listed on Schedule 1.1(a)
---------------
hereof executed by the Borrower or such Subsidiary (as applicable) or, with
respect to such Mortgaged Properties as to which a Mortgage was previously
executed, amendments and restatements of or other modifications to such
Mortgages previously executed;
(o) Insurance Policies. Copies of all insurance policies required by
------------------
this Agreement and the other Loan Documents, together with loss payable
endorsements naming the Agent as loss payee under all such casualty insurance
policies and the Agent as an additional insured party under all such
liability policies;
(p) Stock Certificates. The stock certificates representing all of the
------------------
issued and outstanding Capital Stock of the Borrower and each of its
Subsidiaries accompanied by appropriate stock powers signed in blank, except
to the extent that such Capital Stock is not required to be pledged in
accordance with Section 5.1(a);
--------------
(q) Financing Statements. UCC-1 financing statements and all other
--------------------
requisite filing documents (or amendments to such financing statements or
other documents previously filed) executed by the Loan Parties necessary to
perfect the Liens created pursuant to the Security Documents;
(r) Lien Releases, etc. Duly executed (i) releases or assignments of
------------------
Liens and UCC-3 financing statements and other Lien releases in recordable
form, (ii) with respect to leased Mortgaged Properties, waivers and consents
of the landlords thereof and their lenders, and (iii) mortgagee policies of
title insurance issued (exclusive of endorsements relating to any real
Properties located in Texas, which endorsements shall not be required) in the
name of the Agent or endorsements to such mortgagee policies of title
insurance previously issued as may be necessary to reflect that the Liens
created by the Security Documents are first priority Liens (except for
Permitted Liens, if any, which are expressly permitted by the Loan Documents
to have priority over the Liens in favor of the Agent); each such mortgagee
policy of title insurance (or commitment therefor or endorsement thereto, as
applicable) shall (A) have been issued at the Borrower's or its Subsidiary's
expense, (B) contain no exceptions
64
<PAGE>
or exclusions except for those approved by the Agent, (C) have been issued and
underwritten by companies acceptable to the Agent, (D) contain such endorsements
as may be required by the Agent, (E) be in an amount satisfactory to the Agent,
and (F) be otherwise in form and substance satisfactory to the Agent;
(s) Lien Searches. Lien searches in the names of the Borrower and each
-------------
Subsidiary of the Borrower (and in all names under which each such Person has
done business within the last five years) in each state where each such
Person maintains an office or has Property, showing no financing statements
or other Lien instruments of record except for Permitted Liens;
(t) Letter of Credit Agreement. With respect to any issuance of a
--------------------------
Letter of Credit, a Letter of Credit Agreement in the form required by the
Issuing Bank with respect thereto executed by the Borrower;
(u) Solvency Certificate. A certificate executed by a Responsible
--------------------
Officer of Holdings (with respect to Holdings) and the Borrower (with respect
to the Borrower and its Subsidiaries) demonstrating that, concurrently with
and after giving effect to the Loans and the Related Transactions, each of
Holdings, the Borrower and the Subsidiaries of the Borrower are Solvent on a
consolidated and consolidating basis and contribution agreements between and
among the Borrower and its Subsidiaries to evidence applicable rights of
contribution;
(v) Related Transactions Documents. Copies of all Related Transaction
------------------------------
Documents certified by a Responsible Officer of the Borrower as being true
and correct copies of such documents as of the Third Restatement Date;
(w) Prepayment of Certain Loans. Prepayment of the principal amounts
---------------------------
of the Term Loans and the Revolving Credit Loans Tranche 2 as and to the
extent required by Section 2.7(g).
--------------
(x) Consummation of Related Transactions, etc. The Related
-----------------------------------------
Transactions Documents (i) shall have been executed and delivered by the
parties thereto, (ii) shall be binding and enforceable against the parties
thereto in accordance with their terms, and (iii) shall be satisfactory in
form and substance to the Agent, and the Related Transactions shall have been
consummated prior to or contemporaneously with the execution and delivery of
this Agreement in accordance with the Related Transaction Documents (and in
compliance with all conditions and requirements contained therein without
waiver or exception except as may have been consented to by the Agent in
writing). All conditions precedent to (A) the making of the Supremex Loans
under the Supremex Credit Agreement, (B) the advancement of funds under the
Equipment Lease Facility, and (C) the advancement of funds under the Accounts
Receivable Securitization Facility shall have been satisfied, and each of the
Equipment Lease Facility and the Accounts Receivable Securitization Facility
shall have been funded in accordance with the Related Transaction Documents
relating
65
<PAGE>
thereto and in compliance with all conditions and requirements contained
therein without waiver or exception except as may have been consented to by
the Agent in writing;
(y) Consents. Copies of all material consents necessary for the
--------
execution, delivery and performance by each of the Loan Parties of the Loan
Documents or Related Transactions Documents to which it is a party, which
consents shall be certified by a Responsible Officer of the Borrower or other
applicable Loan Party as true and correct copies of such consents as of the
Third Restatement Date;
(z) Permits. Copies of all material Permits affecting the Borrower or
-------
any of its Subsidiaries in connection with the Reorganization Transaction and
evidence satisfactory to the Agent that Wisco III has taken appropriate
action to ensure that it is able to conduct its businesses with the use of
such Permits in full force and effect;
(aa) Payment of Interest, Fees and Expenses. The Borrower shall have
--------------------------------------
paid all interest and fees accrued to the Third Restatement Date and not
previously paid with respect to the loans and letters of credit outstanding
under the Second Restated Agreement, and the Borrower shall have paid all
fees due on or before the Third Restatement Date as specified in this
Agreement or in the Agent's Letter and all fees and expenses of or incurred
by the Agent and its counsel to the extent billed on or before the Third
Restatement Date and payable pursuant to this Agreement;
(bb) Compliance with Laws. The Loan Parties shall have complied with
--------------------
all Governmental Requirements necessary to consummate the transactions
contemplated by this Agreement, the other Loan Documents and the Related
Transactions Documents;
(cc) No Prohibitions. No Governmental Requirement shall prohibit the
---------------
consummation of the transactions contemplated by this Agreement, any other
Loan Document or any Related Transactions Document, and no order, judgment or
decree of any Governmental Authority or arbitrator shall, and no litigation
or other proceeding shall be pending or threatened which would, enjoin,
prohibit, restrain or otherwise adversely affect the consummation of the
transactions contemplated by this Agreement, the other Loan Documents and the
Related Transactions Documents or otherwise have a Material Adverse Effect;
(dd) Bank Accounts. If and to the extent required by the Agent or the
-------------
Required Lenders, the Borrower and its Subsidiaries, other than (i) Supremex
and its Canadian Subsidiaries, (ii) Unrestricted Subsidiaries and (iii) MTRC,
shall have established Concentration Accounts (or, if the Borrower and its
Subsidiaries so desire, a single Concentration Account) into which proceeds
of all Collateral, including, without limitation, proceeds of sales of
accounts, are deposited directly, as received, which Concentration Account(s)
shall be governed by an agreement or agreements between the Borrower and/or
its Subsidiaries (as applicable), the Agent and the depository bank(s) in
form and substance satisfactory to the Agent;
66
<PAGE>
(ee) Financial Statements. Copies of each of the financial
--------------------
statements referred to in Section 7.2;
-----------
(ff) Opinions of Counsel. Favorable opinions of (i) Bracewell &
-------------------
Patterson, L.L.P., counsel for the Loan Parties, in form and substance
satisfactory to the Agent with respect to Holdings and the Borrower and its
Subsidiaries and with respect to the Loan Documents and the Related
Transactions and (ii) such other counsel as may be acceptable to the Agent
regarding the power and authority of Pavey and Wisco to execute and deliver
its Subsidiary Guaranty under the laws of New Jersey and Tennessee,
respectively, as the Agent may require; and
(gg) Intercreditor Agreement. The Intercreditor Agreement shall have
-----------------------
been executed by the Lenders, the Supremex Lenders and the Equipment Lease
Facility Lenders.
The Borrower shall deliver, or cause to be delivered, to the Agent sufficient
counterparts of each agreement, document or instrument to be received by the
Agent under this Section 6.1 to permit the Agent to distribute a copy of the
-----------
same to each of the Lenders. Upon the request of the Borrower, the Agent shall
inform the Borrower in writing as to the status of satisfaction of the
conditions precedent set forth in this Section 6.1 and each of the additional
-----------
conditions precedent set forth in this Article 6.
---------
Section 6.2 All Extensions of Credit . The obligation of each Lender to
-------------------------
make any Loan (including the initial Loan) and the obligation of the Issuing
Bank to issue any Letter of Credit (including the initial Letter of Credit)
under this Agreement are subject to the satisfaction of each of the conditions
precedent set forth in Section 6.1 and each of the following additional
-----------
conditions precedent:
(a) No Default. No Default shall have occurred and be continuing,
----------
or would result from such Loan or Letter of Credit;
(b) Representations and Warranties. All of the representations and
------------------------------
warranties of the Borrower and the other Loan Parties contained in Article 7
---------
hereof and in the other Loan Documents shall be true and correct on and as of
the date of such Loan or Letter of Credit with the same force and effect as
if such representations and warranties had been made on and as of such date;
and
(c) Additional Documentation. The Agent shall have received such
------------------------
additional approvals, opinions, agreement, documents and instruments as the
Agent may reasonably request.
Each notice of borrowing with respect to the making of any Loans or request for
the issuance of a Letter of Credit given by the Borrower hereunder shall
constitute a representation and warranty by the Borrower and the other Loan
Parties that the conditions precedent set forth in Sections 6.2(a) and (b) have
--------------- ---
been satisfied (both as of the date of such notice and, unless the Borrower
otherwise notifies
67
<PAGE>
the Agent prior to the date of such borrowing or Letter of Credit, as of the
date of such borrowing or Letter of Credit).
Section 6.3 Acquisition Loans. The obligation of each Lender to make any
-----------------
of the Acquisition Loans is subject to the conditions precedent that the Agent
shall have received, on or before the advance of such Acquisition Loans, all of
the following in form and substance reasonably satisfactory to the Agent (except
as otherwise provided in this Section 6.3 below) and, in the case of actions to
-----------
be taken, evidence that the following required actions have been taken to the
satisfaction of the Agent:
(a) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party that is a party to any Permitted Acquisition Documents or Loan
Documents to be executed in connection with such Acquisition Loans,
including, without limitation, each New Loan Party acquired in connection
with the Permitted Acquisition to be financed thereby (the "Subject Permitted
-----------------
Acquisition"), certified by its Secretary or an Assistant Secretary which
authorize the Subject Permitted Acquisition, the borrowing of such
Acquisition Loans (with respect to the resolutions of the Board of Directors
of the Borrower) and the execution, delivery and performance by such Loan
Party of the Loan Documents to be executed and/or delivered in connection
therewith;
(b) Incumbency Certificate. A certificate of incumbency certified by
----------------------
the Secretary or an Assistant Secretary of each Loan Party that is a party to
any Permitted Acquisition Documents or Loan Documents to be executed in
connection with such Acquisition Loans (including, without limitation, each
New Loan Party acquired in connection with the Subject Permitted Acquisition)
certifying the name of each officer of such Loan Party who is authorized to
sign the Loan Documents to be executed and/or delivered in connection with
the Subject Permitted Acquisition;
(c) Articles or Certificates of Incorporation, etc. Copies of any
----------------------------------------------
amendments to the articles or certificates of incorporation or other
applicable constitutional document of each Loan Party since the Third
Restatement Date and, with respect to each New Loan Party acquired in
connection with the Subject Permitted Acquisition, copies of the articles or
certificate of incorporation of such Loan Party, in each case certified by
the appropriate Governmental Authority of such Loan Party's state of
incorporation;
(d) Bylaws. A true and correct copy of any amendments to the bylaws
------
of each Loan Party since the Third Restatement Date and, with respect to each
New Loan Party acquired in connection with the Subject Permitted Acquisition,
a true and correct copy of the bylaws of such Loan Party, in each case
certified by the Secretary or an Assistant Secretary of such Loan Party;
(e) Governmental Certificates. Certificates of appropriate officials
-------------------------
as to the existence and good standing of each New Loan Party acquired in
connection with the Subject Permitted Acquisition in the jurisdiction of its
incorporation;
68
<PAGE>
(f) Security Documents for New Properties and New Loan Parties.
----------------------------------------------------------
Such security agreements, financing statements and assignments executed by
each of the Loan Parties as the Agent may request in connection with any
Property acquired by such Loan Party pursuant to the Subject Permitted
Acquisition and, in the case of each New Loan Party acquired in connection
with the Subject Permitted Acquisition, such Security Documents and other
Loan Documents executed and/or delivered by the Loan Parties (including,
without limitation, each New Loan Party) as is required pursuant to Section
-------
5.3, all of which Security Documents shall be within the power and authority
---
of the New Loan Party and shall be enforceable in accordance with their
respective terms, except as may be limited by bankruptcy, insolvency or other
laws of general application relating to the enforcement of creditors' rights
and general principles of equity;
(g) Mortgages. Mortgages covering all the material real Properties
---------
or interests therein (including fee and leasehold interests) acquired
pursuant to the Subject Permitted Acquisition, and such lease agreements,
surveys, appraisals, environmental reports, agreements of landlords and their
lenders relating to leased Properties, information relating to zoning and
mortgagee policies of title insurance as the Agent may require in connection
therewith (consistent with the requirements for real Properties contained in
the Original Agreement, the First Restated Agreement and the Second Restated
Agreement);
(h) Endorsements to Mortgagee Title Policies. Endorsements to
----------------------------------------
existing policies of title insurance as the Agent may reasonably require;
(i) Lien Releases. Payoff letters in form and substance reasonably
-------------
acceptable to the Agent or duly executed releases or assignments of Liens and
financing statements in recordable form as may be necessary to reflect that
the Liens created by the Security Documents affecting the assets acquired in
connection with the Subject Permitted Acquisition are first priority Liens
(except for Permitted Liens, if any, which are expressly permitted by the
Loan Documents to have priority over the Liens in favor of the Agent);
(j) Lien Searches. Lien searches in the name of each Person being
-------------
acquired (in the case of an acquisition of Capital Stock) or in the name of
each Person transferring any assets being acquired (in the case of an asset
acquisition) pursuant to the Subject Permitted Acquisition in each state
where such Person maintains an office or has Property, showing no financing
statements or other Lien instruments of record except for Permitted Liens or
Liens being released concurrently with such Permitted Acquisition;
(k) Acquisition Documents. Copies of all Permitted Acquisition
---------------------
Documents relating to the Subject Permitted Acquisition, and confirmation
that the Loan Parties will not, in connection with the Subject Permitted
Acquisition, assume or incur any Debt other than Debt permitted by Section
-------
9.1;
---
(l) Consummation of Subject Permitted Acquisition. All of the
---------------------------------------------
Permitted Acquisition Documents relating to the Subject Permitted Acquisition
shall have been duly and validly executed and delivered by each of the
parties thereto and shall constitute the
69
<PAGE>
legal, valid and binding obligations of the parties thereto, enforceable
against such parties in accordance with their respective terms (except as may
be limited by bankruptcy, insolvency or other laws of general application
relating to the enforcement of creditor's rights); and the Subject Permitted
Acquisition shall have been consummated contemporaneously with the making of
such Acquisition Loans (and in compliance in all material respects with all
conditions and requirements contained therein without waiver or exception
except as may have been consented to by the Loan Parties in the exercise of
their prudent business judgment), and the Borrower shall have informed the
Agent of the purchase price (whether payable in cash, property, assumption of
Debt or other form of consideration) payable in connection with the Subject
Permitted Acquisition;
(m) Consents, etc. All approvals, authorizations, consents and
-------------
waivers of any Governmental Authority or other Person necessary or
appropriate for the execution, delivery and performance by each of the Loan
Parties and other parties thereto of the Permitted Acquisition Documents to
which it is a party relating to the Subject Permitted Acquisition, including,
without limitation, (i) all such approvals, authorizations, consents and
waivers disclosed in the Permitted Acquisition Documents (including those
required in connection with the assignment of material contracts) and (ii)
any such approvals, authorizations, consents or waivers reasonably required
by the Agent in connection with the Mortgaged Properties acquired by any Loan
Party in connection with the Subject Permitted Acquisition and the granting
of a security interest to the Agent in each material contract acquired or
assumed by any Loan Party in connection with the Subject Permitted
Acquisition, shall have been obtained by the Loan Parties except to the
extent the same may have been waived by the applicable Loan Parties in the
exercise of their prudent business judgment and none of which approvals,
authorizations, consents or waivers which has not been obtained will,
individually or in the aggregate with all such approvals, authorizations,
consents or waivers which have not been obtained in connection with the
Subject Permitted Acquisition, materially adversely affect the assets or
business being acquired pursuant to the Permitted Acquisition Documents;
(n) Permits. The Loan Parties shall have obtained all material
-------
Permits that are necessary to ensure that they are able to conduct their
businesses and Properties acquired pursuant to the Subject Permitted
Acquisition substantially in accordance with all Governmental Requirements;
(o) Regulatory Approvals. All filings, consents or approvals with
--------------------
or of Governmental Authorities necessary to consummate the Subject Permitted
Acquisition shall have been made and/or obtained, as applicable, including,
without limitation, all filings (if any) required under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the lapse of all waiting periods with
respect thereto;
(p) No Prohibitions. No Governmental Requirement shall prohibit or
---------------
adversely affect the consummation of the transactions contemplated by this
Agreement or the other Loan Documents or the Permitted Acquisition Documents
relating to the Subject Permitted Acquisition, and no action, suit,
investigation, proceeding, order, judgment or decree of,
70
<PAGE>
before or by any Governmental Authority, arbitrator or other Person shall,
and no such action, suit, investigation, proceeding, order, judgment or
decree shall be pending or threatened which would, enjoin, prohibit, restrain
or otherwise adversely affect the consummation of the transactions
contemplated by this Agreement or the other Loan Documents and the Permitted
Acquisition Documents related to the Subject Permitted Acquisition or
otherwise have a Material Adverse Effect;
(q) Financial Statements; No Material Adverse Effect or Change. The
----------------------------------------------------------
financial statements (relating to the assets and/or Persons to be acquired
pursuant to the Subject Permitted Acquisition) delivered or to be delivered
pursuant to the Permitted Acquisition Documents (which financial statements
shall be audited if and to the extent available), and such other financial
statements, pro forma financial statements and financial projections as of
and for such periods as the Agent may reasonably request, shall have been
delivered to the Agent and the Lenders, and such financial statements, to the
knowledge of the Loan Parties, shall be true and correct in all material
respects and shall fairly and accurately present the financial condition and
results of operations of the Persons specified therein as of and for the
periods indicated therein; as of the proposed date of the making of such
Acquisition Loans and both before and after giving effect to such Acquisition
Loans and the Subject Permitted Acquisition, no Material Adverse Effect shall
have occurred or could reasonably be expected to occur as a result of or in
connection with the Subject Permitted Acquisition and no material adverse
change shall have occurred with respect to the financial condition, business,
operations, capitalization, liabilities, Properties or prospects of the
Borrower or its Subsidiaries since June 30, 1996;
(q) Disbursement Instructions. Disbursement instructions from the
-------------------------
Borrower to the Agent with respect to the disbursement of the proceeds of
such Acquisition Loans;
(s) Legal Opinions. Favorable opinions (or comfort letters with
--------------
respect to clause (ii) succeeding) of: (i) counsel for the Loan Parties, in
form and substance satisfactory to the Agent with respect to the Subject
Permitted Acquisition and the Loan Documents to be executed and/or delivered
in connection therewith and (ii) such other counsel as may be acceptable to
the Agent regarding the form and enforceability of the Mortgages in the
States where any real Property acquired in connection with the Subject
Permitted Acquisition is located;
(t) Reliance Letters. Copies of all legal opinions issued in
----------------
connection with the Subject Permitted Acquisition and (except if and to the
extent that the Loan Parties are not able to obtain such letters after
exercising their reasonable efforts to do so) letters from counsel that
issued such opinions stating that such opinions may be relied upon by the
Agent and the Lenders;
(u) Representations and Warranties. All representations and
------------------------------
warranties made by the Loan Parties in the Permitted Acquisition Documents
related to the Subject Permitted Acquisition and, to the knowledge of the
Loan Parties after due inquiry, all representations and warranties made by
all other Persons in the Permitted Acquisition Documents related
71
<PAGE>
to the Subject Permitted Acquisition shall be true and correct in all
material respects on and as of each date made or deemed made and as of the
Acquisition Loans Funding Date; and the Permitted Acquisition Documents
related to the Subject Permitted Acquisition shall set forth the entire
agreement and understanding of the parties thereto relating to the subject
matter thereof, and there shall be no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby;
(v) Satisfaction of Conditions Precedent. As of the Acquisition
------------------------------------
Loans Funding Date, all conditions precedent to the Permitted Acquisition
Documents related to the Subject Permitted Acquisition shall have been
fulfilled or (with the prior consent of the applicable Loan Parties in the
exercise of their prudent business judgment) waived, and there shall not have
been any breach of any material term or condition contained in such Permitted
Acquisition Documents; after giving effect to the Subject Permitted
Acquisition, the applicable Loan Party(ies) (i.e., the Borrower unless
otherwise approved by the Agent and the Required Lenders) will have acquired
and become the owner(s) of all of the Property to be acquired thereby free
and clear of any Liens, except Permitted Liens; in connection with the
Subject Permitted Acquisition, the Loan Parties shall not have assumed any
liabilities other than those reflected or reserved against in the applicable
pro forma financial statements delivered to the Agent or contingent
liabilities under the Permitted Acquisition Documents which are not required
to be reflected or reserved against in accordance with GAAP; and
(w) Assumption Agreement. An Assumption Agreement, the Subsidiary
--------------------
Security Agreement, the Subsidiary Guaranty and each of the other Loan
Documents required to be executed and/or delivered pursuant to Article 5 by
---------
each of the New Loan Parties acquired in connection with the Subject
Permitted Acquisition shall have been appropriately executed and/or delivered
by such New Loan Party.
Each notice of borrowing with respect to the making of any Acquisition Loans
given by the Borrower shall constitute a representation and warranty by the
Borrower and the other Loan Parties that all conditions precedent set forth in
this Section 6.3 have been satisfied (both as of the date of such notice and,
-----------
unless the Borrower otherwise notifies the Agent prior to the date of such
borrowing, as of the date of such borrowing). Notwithstanding the first
sentence of this Section 6.3, the documents or other matters referred to in
-----------
clauses (e), (k), (l), (n), (p), (u) and (v) shall not be required to be in form
- ------- --- --- --- --- --- --- ---
and substance satisfactory to the Agent.
Section 6.4 Closing Certificates. The Borrower shall, concurrently with
--------------------
the execution and delivery of this Agreement, execute and deliver to the Agent a
Closing Certificate in form and substance satisfactory to the Agent certifying
as to the satisfaction of each of the conditions precedent set forth in Section
-------
6.1 and 6.2 which are required to be satisfied on or before the Third
- --- ---
Restatement Date. The Borrower shall, concurrently with each advance of any of
the Acquisition Loans, execute and deliver to the Agent a Closing Certificate in
form and substance satisfactory to the Agent certifying as to the satisfaction
of each of the conditions precedent set forth in Sections 6.2 and 6.3 which are
------------ ---
required to be satisfied on or before each Acquisition Loans Funding Date (which
certificate relating to Section 6.3 shall, without limitation, expressly state
-----------
that the proposed Future Acquisition constitutes a Permitted Acquisition as such
term is defined in this Agreement and
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shall include a specific mathematical calculation evidencing compliance with
clause (b) of such definition), which subsequent Closing Certificate shall
incorporate any supplements to certain schedules hereto proposed by the Borrower
in accordance with Section 13.26.
-------------
ARTICLE 7
Representations and Warranties
------------------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby jointly and severally represents and warrants to the Agent and
the Lenders that the following statements are and, after giving effect to the
Related Transactions, will be true, correct and complete:
Section 7.1 Corporate Existence. Each Loan Party (a) is a corporation, or,
-------------------
with respect to Wisco II and Wisco III, a limited liability company, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority to own its Properties and carry on its business as now being or as
proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
Each Loan Party has the power and authority and legal right to execute, deliver
and perform its obligations under the Loan Documents and the Related
Transactions Documents to which it is or may become a party. Prior to the
Closing Date, neither Holdings, the Borrower nor Wisco engaged in any business
or incurred any liabilities except for activities, expenses and liabilities
incident to its organization and to the carrying out of the transactions
contemplated by the Original Agreement and the Related Transactions Documents.
Prior to the Second Restatement Date, neither Mail-Well West, Wisco II, Supremex
Holdings nor Supremex engaged in any business or incurred any liabilities except
for activities, expenses and liabilities incident to its organization and to the
carrying out of the transactions contemplated by the Second Restated Agreement
and the Related Transactions Documents. Prior to the Third Restatement Date,
Wisco III did not engage in any business or incur any liabilities except for
activities, expenses and liabilities incident to its organization and the
Reorganization Transaction.
Section 7.2 Financial Statements.
--------------------
(a) The Borrower has delivered to the Agent and the Lenders (i) its
audited consolidated balance sheet and statements of income, cash flow and
retained earnings for the fiscal year ended December 31, 1995 and (ii) its
unaudited consolidated balance sheet and statements of income, cash flow and
retained earnings for the period ended June 30, 1996. To the Borrower's
knowledge, such financial statements are true and correct, have been prepared in
accordance with GAAP and fairly and accurately present, on a consolidated basis,
the financial condition of the Borrower and its consolidated Subsidiaries as of
the respective dates indicated therein and the results of operations for the
respective periods indicated therein. There has not been, as of the Third
Restatement Date, any material adverse change in the business, condition
(financial or otherwise), operations, prospects or Properties of the Borrower or
any of its consolidated Subsidiaries since the effective dates of the most
recent applicable financial statements referred to in this Section 7.2(a).
--------------
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(b) Neither the Borrower nor any of its Subsidiaries has any contingent
liabilities, liabilities for taxes, unusual forward or long-term commitments or
unrealized or unanticipated losses from any unfavorable commitments except as
referred to or reflected in the Pro-Formas.
(c) The Projections represent, as of the Third Restatement Date, the
good faith estimate of the Borrower and its senior management concerning the
probable financial condition and performance of the Borrower and its
Subsidiaries based upon assumptions believed to be reasonable at the time made.
Section 7.3 Corporate Action; No Breach. The execution, delivery and
---------------------------
performance by each Loan Party of the Loan Documents and Related Transactions
Documents to which it is or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate or other entity action on the part of the Loan Parties and do not and
will not (a) violate or conflict with, or result in a breach of, or require any
consent under (i) the articles or certificates of incorporation or bylaws (or,
with respect to Wisco II and Wisco III, certificate of formation) of any Loan
Party, (ii) any Governmental Requirement or any order, writ, injunction or
decree of any Governmental Authority or arbitrator, or (iii) any material
agreement, document or instrument to which any Loan Party is a party or by which
any Loan Party or any of its Property is bound or subject, or (b) constitute a
default under any such material agreement, document or instrument, or result in
the creation or imposition of any Lien (except under the Security Documents as
provided in Article 5) upon any of the revenues or Property of any Loan Party.
---------
Section 7.4 Operation of Business. The Loan Parties possess all Permits,
---------------------
franchises, licenses and authorizations necessary to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted except where the failure to so possess would not cause a Material
Adverse Effect. None of such Persons is in material violation of any such
Permits, franchises, licenses or authorizations.
Section 7.5 Intellectual Property. The Loan Parties own or possess (or
---------------------
will be licensed or have the full right to use) all Intellectual Property which
is necessary for the operation of their respective businesses as presently
conducted and as proposed to be conducted, without any known conflict with the
rights of others. The consummation of the transactions contemplated by this
Agreement, the other Loan Documents and the Related Transactions Documents will
not materially alter or impair, individually or in the aggregate, any of such
rights of such Persons. No product of the Loan Parties infringes upon any
Intellectual Property owned by any other Person, and no claim or litigation is
pending or, to the knowledge of the Borrower, threatened against any Loan Party
or any such Person contesting its right to use any product or material which
could have a Material Adverse Effect. There is no violation by any Loan Party
of any right of such Loan Party with respect to any material Intellectual
Property owned or used by such Loan Party.
Section 7.6 Litigation and Judgments. Each material action, suit,
------------------------
investigation or proceeding before or by any Governmental Authority or
arbitrator pending or, to the knowledge of the Borrower, threatened against or
affecting any Loan Party, or that relates to any of the Related Transactions as
of the Third Restatement Date is, and as of each Acquisition Loans Funding Date
will be, disclosed on Schedule 7.6 (as such Schedule may be supplemented in
------------
accordance with
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Section 13.26). None of such actions, suits, investigations or proceedings
- -------------
could, if adversely determined, have a Material Adverse Effect. As of the Third
Restatement Date and as of each Acquisition Loans Funding Date, there are not
and will not be, respectively, any outstanding judgments against any Loan Party
except for such judgments as may be disclosed on Schedule 7.6 (as such Schedule
------------
may be supplemented in accordance with Section 13.26) which do not, with respect
-------------
to all such judgments affecting the Loan Parties, exceed $1,000,000 in aggregate
amount. No Loan Party has received any opinion or memorandum or legal advice
from legal counsel to the effect that it is exposed to any liability or
disadvantage that could have a Material Adverse Effect.
Section 7.7 Rights in Properties; Liens. Each of the Loan Parties has good
---------------------------
and indefeasible title to or, except as expressly stated to the contrary on
Schedule 1.1(a), valid leasehold interests in its Properties and assets, real
- ---------------
and personal, including the Properties, assets and leasehold interests reflected
in the financial statements described in Section 7.2(a) and the Pro-Formas, and
--------------
none of the Properties or leasehold interests of any Loan Party or any of its
Subsidiaries is subject to any Lien, except Permitted Liens and, with respect to
Holdings, Liens permitted by Section 8(b) of the Holdings Guaranty.
Section 7.8 Enforceability. The Loan Documents and the Related
--------------
Documents have been, or, with respect to the Loan Documents to be
executed in connection with the making of any Acquisition Loans, will be on or
before the Acquisition Loans Funding Date, duly and validly executed and
delivered by each of the Loan Parties that is a party thereto and constitute, or
will constitute upon such execution and delivery, the legal, valid and binding
obligations of the Loan Parties, enforceable against the Loan Parties in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
Section 7.9 Approvals. No authorization, approval or consent of, and no
---------
filing or registration with or notice to, any Governmental Authority or third
party is or will be necessary for the execution, delivery or performance by any
Loan Party of any of the Loan Documents or Related Transactions Documents to
which it is a party or may become a party or for the validity or enforceability
thereof, except for such consents, approvals and filings as have been, or, with
respect to the Loan Documents to be executed in connection with the making of
any Acquisition Loans, will be on or before the Acquisition Loans Funding Date,
validly obtained or made and are (or, as applicable, will be on or before the
Acquisition Loans Funding Date) in full force and effect. The consummation of
the Related Transactions does not require the consent or approval of any other
Person, except such consents and approvals (a) as have been, or, with respect to
the Loan Documents to be executed in connection with the making of any
Acquisition Loans, will be on or before the Acquisition Loans Funding Date,
validly obtained and are (or, as applicable, will be on or before the
Acquisition Loans Funding Date) in full force and effect or (b) as to which the
failure to obtain is not, individually or in the aggregate, material. None of
the Loan Parties has failed to obtain any material governmental consent,
approval, license, Permit, franchise or other governmental authorization
necessary for the ownership of any of its Properties or the conduct of its
business.
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Section 7.10 Debt. As of the Third Restatement Date and as of each
----
Acquisition Loans Funding Date, the Loan Parties and their Subsidiaries have and
will have no Debt except for (a) the Obligations and the Supremex Obligations,
(b) the Debt evidenced by the Borrower Subordinated Notes, the Holdings
Subordinated Guaranty and the Subsidiary Subordinated Guaranties, (c) the Debt
of the Borrower evidenced by the Equipment Lease Facility Guaranty, (d) the
Debt disclosed on the most recent balance sheets referred to in Schedule 7.2(a),
---------------
(e) the Debt disclosed on Schedule 7.10 hereto and (f) Debt incurred after the
-------------
Third Restatement Date which is permitted in accordance with Section 9.1.
-----------
Section 7.11 Taxes. The Loan Parties have filed all tax returns (federal,
-----
state and local) required to be filed, including all income, franchise,
employment, Property and sales tax returns, and have paid all of their
respective liabilities for taxes, assessments, governmental charges and other
levies that are due and payable. Except as may be disclosed on Schedule 7.11
-------------
(as such Schedule may be supplemented in accordance with Section 13.26), the
-------------
Borrower is not aware of any pending investigation of any Loan Party or,
immediately prior to the consummation of any Permitted Acquisition, any
Prospective Loan Party or the seller in connection with such Permitted
Acquisition, by any taxing authority or of any pending but unassessed tax
liability of any Loan Party or, immediately prior to any Permitted Acquisition,
any Prospective Loan Party or seller in connection with such Permitted
Acquisition, other than with respect to (a) ad valorem or other real property
taxes not in excess of $250,000 as to any such Person and (b) other taxes in an
aggregate amount as to any such Person which could not, if an adverse
determination is made with respect to such taxes, materially and adversely
affect such Person, which (as to each of clauses (a) and (b) preceding) are
----------- ---
currently being contested in good faith by appropriate proceedings diligently
conducted by or on behalf of such Person and as to which, if required by GAAP,
such Person has established adequate reserves. No tax Liens have been, or,
immediately prior to the consummation of any Permitted Acquisition, with respect
to any Prospective Loan Party or the seller in connection with such Permitted
Acquisition and except as may be disclosed on Schedule 7.11 (as such Schedule
-------------
may be supplemented in accordance with Section 13.26), will have been as of the
-------------
Acquisition Loans Funding Date, filed with respect to any Loan Party or such
Prospective Loan Party or seller, respectively, and to the knowledge of the
Loan Parties, except as disclosed on Schedule 7.11 (as such Schedule may be
-------------
supplemented in accordance with Section 13.26), no claims are being, or,
-------------
immediately prior to the consummation of any Permitted Acquisition, with respect
to any Prospective Loan Party or the seller in connection with such Permitted
Acquisition, will be as of the Acquisition Loans Funding Date, asserted against
any Loan Party or such Prospective Loan Party or seller, respectively, with
respect to any taxes. Except as disclosed on Schedule 7.11 (as such Schedule
-------------
may be supplemented in accordance with Section 13.26), as of the Third
-------------
Restatement Date and as of each Acquisition Loans Funding Date, none of the U.S.
income tax returns of the Loan Parties and the New Loan Parties are or will be
under audit. The charges, accruals and reserves on the books of the Loan
Parties in respect of taxes or other governmental charges are in accordance with
GAAP.
Section 7.12 Margin Securities. None of the Loan Parties or any of their
------------------
respective Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
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of any Loan will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
Section 7.13 ERISA. Neither any Loan Party nor any ERISA Affiliate
-----
maintains or contributes to, or has any obligation under, any Pension Plan other
than the Pension Plans identified on Schedule 7.13 (as such Schedule may be
-------------
supplemented in accordance with Section 13.26). Each Plan of each Loan Party is
--------------
in compliance in all material respects with all applicable provisions of ERISA
and the Code. Neither a Reportable Event nor a Prohibited Transaction has
occurred within the last 60 months with respect to any Plan. No notice of
intent to terminate a Pension Plan has been filed, nor has any Pension Plan been
terminated. No circumstances exist which constitute grounds entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Pension Plan, nor has the PBGC instituted any such proceedings. Neither any of
the Loan Parties nor any ERISA Affiliate has completely or partially withdrawn
from a Multiemployer Plan. Each Loan Party and each ERISA Affiliate have met
their minimum funding requirements under ERISA and the Code with respect to all
of their Plans subject to such requirements, and, as of the Third Restatement
Date and each Acquisition Loans Funding Date except as specified on Schedule
--------
7.13 (as such Schedule may be supplemented in accordance with Section 13.26),
- ---- -------------
the present value of all vested benefits under each funded Plan (exclusive of
any Multiemployer Plan) does not and will not exceed the fair market value of
all such Plan assets allocable to such benefits, as determined on the most
recent valuation date of such Plan and in accordance with ERISA. Neither any of
the Loan Parties nor any ERISA Affiliate has incurred any liability to the PBGC
under ERISA. No litigation is pending or threatened concerning or involving any
Plan. There are no unfunded or unreserved liabilities relating to any Plan that
could, individually or in the aggregate, have a Material Adverse Effect if such
Loan Party were required to fund or reserve such liability in full. As of the
Third Restatement Date and each Acquisition Loans Funding Date, no funding
waivers have been or will have been requested or granted under Section 412 of
the Code with respect to any Plan. No unfunded or unreserved liability for
benefits under any Plan or Plans (exclusive of any Multiemployer Plans) exceeds
$1,500,000 with respect to any such Plan or $3,000,000 with respect to all such
Plans in the aggregate as of the Third Restatement Date.
Section 7.14 Disclosure. No written statement, information, report,
----------
representation or warranty made by any Loan Party in any Loan Document or
Related Transaction Document or furnished to the Agent or any Lender by any Loan
Party in connection with the Loan Documents or the Related Transactions
Documents or any transaction contemplated hereby or thereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
any Loan Party which has had a Material Adverse Effect, and there is no fact
known to any Loan Party which might in the future have a Material Adverse
Effect, except as may have been disclosed in writing to the Agent and the
Lenders.
Section 7.15 Capitalization.
--------------
(a) On and as of the Third Restatement Date and on and as of each
Acquisition Loans Funding Date, the authorized Capital Stock, the par value per
share and the number of shares of each class of Capital Stock issued and
outstanding with respect to each of the Loan Parties and the legal
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and beneficial owners of all of such Capital Stock (other than the Capital Stock
of Holdings) are as specified on Schedule 7.15 (as such Schedule may be
-------------
supplemented in accordance with Section 13.26).
-------------
(b) The Holdings Deferred Coupon Notes have been paid in full.
(c) On and as of the Third Restatement Date, the aggregate outstanding
principal amount of the Borrower Subordinated Notes is $85,000,000.
(d) On and as of each Acquisition Loans Funding Date, with respect to
Acquisition Loans to be used to finance any Permitted Acquisition of Capital
Stock of a New Loan Party, the authorized Capital Stock, the par value per share
and the number of shares of each class of Capital Stock issued and outstanding
with respect to such New Loan Party and the legal and beneficial owners of all
such Capital Stock shall be as disclosed to the Agent and the Lenders on a
supplement to Schedule 7.15 to be delivered on or before the Acquisition Loans
-------------
Funding Date.
(e) On and as of the Third Restatement Date, the Borrower has no
Subsidiaries other than Wisco, Pavey, Mail-Well West, Wisco II, GAC, Supremex
Holdings, Supremex, Classic, Innova, Wisco III and MTRC, none of which are
Unrestricted Subsidiaries, and Holdings has no Subsidiaries other than the
Borrower and it Subsidiaries. On and as of each Acquisition Loans Funding Date,
the Borrower will have no Subsidiaries other than the Subsidiaries referred to
in the preceding sentence and any New Loan Parties acquired pursuant to a
Permitted Acquisition.
(f) All of the issued and outstanding Capital Stock of Holdings, the
Borrower and their respective Subsidiaries has been, and, as of each Acquisition
Loans Funding Date, will be, validly issued and is, and, as of each Acquisition
Loans Funding Date, will be, fully paid and nonassessable. Except as described
on Schedule 7.15 (as such Schedule may be supplemented in accordance with
-------------
Section 13.26), there are no outstanding subscriptions, options, warrants, calls
- -------------
or rights (including preemptive rights) to acquire, and no outstanding
securities or instruments convertible into, Capital Stock of (i) as of the Third
Restatement Date, Holdings, and (ii) the Borrower or any of its Subsidiaries.
Section 7.16 Agreements. None of the Loan Parties is a party to any
----------
indenture, loan, credit agreement, stock purchase agreement or any lease or
other agreement, document or instrument, or subject to any charter or corporate
restriction, that could have a Material Adverse Effect. None of the Loan
Parties is in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement, document or instrument binding on it or its Properties, except for
instances of noncompliance that, individually or in the aggregate, could not
have a Material Adverse Effect.
Section 7.17 Compliance with Laws. None of the Loan Parties is in violation
--------------------
of any Governmental Requirement, except for instances of non-compliance that,
individually or in the aggregate, could not have a Material Adverse Effect.
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Section 7.18 Investment Company Act. None of the Loan Parties is an
----------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.19 Public Utility Holding Company Act. None of the Loan Parties
----------------------------------
is a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 7.20 Environmental Matters.
---------------------
(a) Except for instances of noncompliance with or exceptions to any of
the following representations and warranties that could not have, individually
or in the aggregate, a Material Adverse Effect:
(i) The Loan Parties and all of their respective Properties and
operations are in full compliance with all Environmental Laws. The Loan
Parties are not aware of, nor has any Loan Party received written notice of,
any past, present or future conditions, events, activities, practices or
incidents which may interfere with or prevent the compliance or continued
compliance by any Loan Party with all Environmental Laws;
(ii) The Loan Parties have obtained all Permits that are required
under applicable Environmental Laws, and all such Permits are in good
standing and all such Persons are in compliance with all of the terms and
conditions thereof;
(iii) No Hazardous Materials exist on, about or within or have been (to
the knowledge of the Loan Parties) or are being used, generated, stored,
transported, disposed of on or Released from any of the Properties of the
Loan Parties except in compliance with applicable Environmental Laws. The use
which the Loan Parties make and intend to make of their respective Properties
will not result in the use, generation, storage, transportation,
accumulation, disposal or Release of any Hazardous Material on, in or from
any of their Properties except in compliance with applicable Environmental
Laws;
(iv) Neither the Loan Parties nor any of their respective currently or
previously owned or leased Properties or operations is subject to any
outstanding or, to the best knowledge of the Loan Parties, threatened order
from or agreement with any Governmental Authority or other Person or subject
to any judicial or administrative proceeding with respect to (A) any failure
to comply with Environmental Laws, (B) any Remedial Action, or (C) any
Environmental Liabilities;
(v) There are no conditions or circumstances associated with the
currently or previously owned or leased Properties or operations of the Loan
Parties that could reasonably be expected to give rise to any Environmental
Liabilities or claims resulting in any Environmental Liabilities. None of the
Loan Parties is subject to, or has received written notice of any claim from
any Person alleging that any of the Loan Parties is or will be subject to,
any Environmental Liabilities;
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(vi) None of the Properties of the Loan Parties is a treatment
facility (except for the recycling of Hazardous Materials generated
onsite and the treatment of liquid wastes subject to the Clean Water
Act), storage facility (except for temporary storage of Hazardous
Materials generated onsite prior to their disposal offsite) or disposal
facility requiring a permit under the Resource Conservation and Recovery
Act, 42 U.S.C. (S) 6901 et seq., regulations thereunder or any
------
comparable provision of state law. The Loan Parties and their
Subsidiaries are compliance with all applicable financial responsibility
requirements of all Environmental Laws; and
(vii) None of the Loan Parties has failed to file any notice
required under applicable Environmental Law reporting a Release.
(b) No Lien arising under any Environmental Law that could have,
individually or in the aggregate, a Material Adverse Effect has attached to any
Property or revenues of any Loan Party.
Section 7.2.1 Labor Disputes and Acts of God. Neither the business
------------------------------
nor the Properties of any Loan Party are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that is having or could have a Material
Adverse Effect.
Section 7.22 Bank Accounts. As of the Third Restatement Date and
-------------
as of each Acquisition Loans Funding Date, Schedule 7.22 (as such Schedule may
-------------
be supplemented in accordance with Section 13.26) sets forth the account numbers
-------------
and location of all bank accounts (including lock box and special accounts) of
the Loan Parties and the identity of the Loan Party that owns each of such
accounts.
Section 7.23 Outstanding Securities. As of the Third Restatement
----------------------
Date and as of each Acquisition Loans Funding Date, all outstanding securities
(as defined in the Securities Act of 1933, as amended, or any successor thereto,
and the rules and regulations of the Securities and Exchange Commission
thereunder) of the Loan Parties have been or will have been, respectively,
offered, issued, sold and delivered in compliance with all applicable
Governmental Requirements (except for the offering and issuance of Capital Stock
of Pavey, Supremex, Innova, Classic, GAC and the New Loan Parties as to which
the Borrower makes no representation or warranty).
Section 7.24 Subordination. The Loans and all other Obligations of
-------------
the Borrower to the Agent and the Lenders under the Loan Documents constitute
"Senior Indebtedness" of the Borrower (as such term is defined in the Borrower
Indenture), and the holders thereof from time to time shall be entitled to all
of the rights of a holder of "Senior Indebtedness" (as such term is defined in
the Borrower Indenture) pursuant to the Borrower Indenture.
Section 7.25 Related Transactions Documents.
------------------------------
(a) All representations and warranties made by the Loan Parties in
the Related Transactions Documents and, to the knowledge of the Loan Parties
after due inquiry, all representations and warranties made by all other Persons
in the Related Transactions Documents,
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are (or will be, with respect to the Related Transactions Documents relating to
the Permitted Acquisitions) true and correct in all material respects on and as
of the Third Restatement Date and on and as of the Acquisition Loans Funding
Date, with respect to the Permitted Acquisitions being consummated on such date.
No rights of cancellation or rescission and, to the knowledge of the Loan
Parties, no defaults or defenses exist (or will exist, with respect to the
Related Transactions Documents relating to the Permitted Acquisitions then being
consummated) with respect to any of the Related Transactions Documents. The
Borrower has delivered (or will deliver, with respect to the Related
Transactions Documents relating to the Permitted Acquisitions then being
consummated) to the Agent complete and correct copies of all Related
Transactions Documents, including all schedules and exhibits thereto. The
Related Transactions Documents set forth the entire agreements and
understandings of the parties thereto relating to the subject matter thereof,
and there are no other agreements, arrangements or understandings, written or
oral, relating to the matters covered thereby.
(b) On and as of the Third Restatement Date and on and as of the
Acquisition Loans Funding Date, with respect to the Permitted Acquisitions being
consummated on such date, all conditions precedent to the Related Transactions
pursuant to the Related Transactions Documents have been (or will be, with
respect to the Related Transactions Documents relating to the Permitted
Acquisitions then being consummated) fulfilled or (with the prior written
consent of the Agent) waived, the Related Transactions Documents have not been
(or will not be, with respect to the Related Transactions Documents relating to
the Permitted Acquisitions then being consummated) amended or otherwise modified
(except as permitted by this Agreement), and there has been (or will be, with
respect to the Related Transactions Documents relating to the Permitted
Acquisitions then being consummated) no breach of any material term or condition
contained in the Related Transactions Documents. As of the Acquisition Loans
Funding Date, the Borrower or other applicable Loan Party will have acquired and
become the owner of all Property (including, without limitation, Capital Stock
if applicable) contemplated to be acquired pursuant to the Permitted
Acquisitions being consummated on such date, free and clear of any Liens, except
Permitted Liens.
(c) The fair market value of the assets being transferred by the
Borrower and Wisco to Wisco III pursuant to the Reorganization Transaction does
not exceed $28,000,000 as of the Third Restatement Date. All of such assets
transferred pursuant to the Reorganization Transaction are being transferred
expressly subject to the existing Liens in favor of the Agent for the benefit of
the Agent and the Lenders, the Supremex Lenders and the Equipment Lease Facility
Lenders securing the Obligations, the Supremex Obligations and the Secured
Equipment Lease Facility Obligations, and Wisco III is, concurrently herewith,
granting Liens on such assets transferred to it to the Agent for the benefit of
the Agent and the Lenders, the Supremex Lenders and the Equipment Lease Facility
Lenders as security for the Obligations, the Supremex Obligations and the
Secured Equipment Lease Facility Obligations.
Section 7.26 Solvency. Each of Holdings, the Borrower and each of the
--------
Subsidiaries of the Borrower, as separate corporate entities and on a
consolidated basis, are Solvent, both before and after giving effect to the
Loans and the Related Transactions.
Section 7.27 Employee Matters. Except as set forth on Schedule 7.27 (as
----------------- -------------
such Schedule may be supplemented in accordance with Section 13.26), as of the
-------------
Third Restatement Date and as
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of each Acquisition Loans Funding Date (a) none of the Loan Parties or,
immediately prior to the Permitted Acquisition to be consummated on such
Acquisition Loans Funding Date, Prospective Loan Parties or any of their
respective Subsidiaries, or any of their respective employees, is subject to any
collective bargaining agreement, and (b) no petition for certification or union
election is pending with respect to the employees of any Loan Party or,
immediately prior to the Permitted Acquisition to be consummated on such
Acquisition Loans Funding Date, Prospective Loan Party or any of their
respective Subsidiaries, and no union or collection bargaining unit has sought
such certification or recognition with respect to the employees of any of the
Loan Parties or, immediately prior to the Permitted Acquisition to be
consummated on such Acquisition Loans Funding Date, Prospective Loan Parties or
any of their respective Subsidiaries. There are no strikes, slowdowns, work
stoppages or controversies pending or, to the best knowledge of the Loan Parties
after due inquiry, threatened against, any of the Loan Parties or, immediately
prior to each Permitted Acquisition, the Prospective Loan Parties to be acquired
pursuant to such Permitted Acquisition or any of their respective Subsidiaries,
or their respective employees which could have, either individually or in the
aggregate, a Material Adverse Effect. Except as set forth on Schedule 7.27 (as
-------------
such Schedule may be supplemented in accordance with Section 13.26), as of the
-------------
Third Restatement Date and as of each Acquisition Loans Funding Date, none of
the Loan Parties, the Prospective Loan Parties to be acquired pursuant to such
Permitted Acquisition or any of their Subsidiaries is subject to an employment
contract.
Section 7.28 Insurance. Schedule 7.28 (as such Schedule may be supplemented
--------- -------------
in accordance with Section 13.26) sets forth a complete and accurate description
-------------
of all policies of insurance that are or will be in effect as of the Third
Restatement Date and as of each Acquisition Loans Funding Date. To the extent
such policies have not been replaced, no notice of cancellation has been
received for such policies and the Borrower and its Subsidiaries are in
compliance with all of the terms and conditions of such policies.
Section 7.28 No Default under Second Restated Agreement and Supremex Credit
--------------------------------------------------------------
Agreement. As of and immediately prior to the Third Restatement Date, no
- ---------
Default (as such term is defined in the Second Restated Agreement, this
Agreement, the Original Supremex Credit Agreement and the Supremex Credit
Agreement) has occurred and is continuing.
Section 7.29 Common Enterprise. Each of Holdings, the Borrower and the
-----------------
other Loan Parties is a member of an affiliated group with each other such
Person and Holdings, the Borrower and their Subsidiaries, other than MTRC, are
collectively engaged in a common enterprise with one another. Each of Holdings,
the Borrower and the other Loan Parties has derived, and expects to continue to
derive, substantial benefit (and may reasonably be expected to derive
substantial benefit), directly and indirectly, from the Loans and Letters of
Credit contemplated by this Agreement, both in its separate capacity and as a
member of an affiliated and integrated group. Each of Holdings, the Borrower
and the other Loan Parties will receive reasonably equivalent value in exchange
for the Collateral and guaranty being provided by it as security for the payment
and performance of the Obligations.
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ARTICLE 8
Affirmative Covenants
---------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby jointly and severally covenants and agrees that, as long as the
Obligations or the Supremex Obligations or any part thereof are outstanding or
any Lender or Supremex Lender has any Commitment hereunder or any Supremex
Commitment under the Supremex Credit Agreement, respectively, or any Letter of
Credit or letter of credit or bankers' acceptance remains outstanding hereunder
or under the Supremex Credit Agreement, respectively, such Loan Party will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 8.1 Reporting Requirements. The Borrower and Supremex will furnish
----------------------
to the Agent and the Supremex Agent and each Lender and Supremex Lender:
(a) Annual Financial Statements. Subject to Section 13.28, as soon as
--------------------------- -------------
available, and in any event within 90 days after the end of each fiscal year of
the Borrower, beginning with the fiscal year ending December 31, 1996, (i) a
copy of the annual audit report of the Borrower and its consolidated
Subsidiaries as of the end of and for such fiscal year then ended containing, on
a consolidated basis, balance sheets and statements of income, retained earnings
and cash flow, in each case setting forth in comparative form the figures for
the preceding fiscal year, all in reasonable detail and audited and certified by
Deloitte & Touche LLP or other independent certified public accountants of
recognized standing acceptable to the Agent and containing no qualification
thereto except as may be reasonably acceptable to the Agent, to the effect that
such financial statements have been prepared in accordance with GAAP and (ii) a
certificate of such independent certified public accountants to the Agent (A)
stating that to their knowledge no Default has occurred and is continuing or, if
in their opinion a Default has occurred and is continuing, stating the nature
thereof, and (B) confirming the calculations set forth in the officer's
certificate delivered concurrently therewith;
(b) Quarterly Financial Statements. Subject to Section 13.28, as soon
------------------------------ -------------
as available, and in any event within 45 days after the end of each of the
quarters of each fiscal year of the Borrower, beginning with the fiscal quarter
ending September 30, 1996, a copy of (i) an unaudited financial report of the
Borrower and its consolidated Subsidiaries as of the end of such fiscal quarter
and for the portion of the fiscal year then ended containing, on a consolidated
basis, balance sheets and statements of income, retained earnings and cash flow,
in each case setting forth in comparative form the figures for the corresponding
period of the preceding fiscal year, all in reasonable detail certified by a
Responsible Officer of the Borrower to have been prepared in accordance with
GAAP and to fairly and accurately present (subject to year-end audit
adjustments) the financial condition and results of operations of the Borrower
and its consolidated Subsidiaries, on a consolidated basis, at the date and for
the periods indicated therein and (ii) management's financial reports comparing
actual financial results for the period to the current budget for the period;
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(c) Monthly Financial Statements. Subject to Section 13.28, as soon as
---------------------------- -------------
available, and in any event within 30 days after the end of each calendar month,
beginning with the calendar month ending September 30, 1996, a copy of (i) an
unaudited financial report of the Borrower and its consolidated Subsidiaries as
of the end of such calendar month and for the portion of the fiscal year then
ended containing, on a consolidated basis, balance sheets and statements of
income, retained earnings and cash flow, in each case setting forth in
comparative form the figures for the corresponding period of the preceding
fiscal year, all in reasonable detail certified by a Responsible Officer of the
Borrower to have been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the financial
condition and results of operations of the Borrower and its consolidated
Subsidiaries, on a consolidated basis, at the date and for the periods indicated
therein and (ii) management's financial reports comparing actual financial
results for the period to the current budget for the period;
(d) Certificate of No Default. Concurrently with the delivery of each
-------------------------
of the financial statements referred to in Sections 8.1(a), 8.1(b) and 8.1(c), a
--------------- ------ ------
certificate of a Responsible Officer of the Borrower and Supremex (i) stating
that, to the best of such officer's knowledge, no Default or "Default" (as
defined in the Supremex Credit Agreement) has occurred and is continuing with
respect to this Agreement or the Supremex Credit Agreement, respectively, or, if
such a Default or "Default" has occurred and is continuing, stating the nature
thereof and the action that has been taken and is proposed to be taken with
respect thereto, and (ii) showing (with respect to each certificate delivered
concurrently with the delivery of each of the financial statements referred to
in Section 8.1(a) or 8.1(b)) in reasonable detail the calculations demonstrating
-------------- ------
compliance with Article 10;
----------
(e) Applicable Margin Certificate. Concurrently with the delivery of
-----------------------------
each of the financial statements referred to in Section 8.1(b), a certificate of
--------------
a Responsible Officer of the Borrower showing in reasonable detail the
calculation of the Applicable Margin as of the next Calculation Date;
(f) Budget. As soon as available and in any event before the beginning
------
of each fiscal year of the Borrower, a copy of the budget of the Borrower and
its Subsidiaries for such fiscal year (segregated by entity and quarter and
setting forth all material assumptions);
(g) Management Letters. Promptly upon any request therefor by the
------------------
Agent or the Supremex Agent, a copy of any management letter or written report
submitted to any Loan Party or Supremex Loan Party by independent certified
public accountants with respect to the business, condition (financial or
otherwise), operations, prospects or Properties of any such Person;
(h) Notice of Litigation. Promptly after the commencement thereof,
--------------------
notice of all actions, suits and proceedings before any Governmental Authority
or arbitrator affecting any Loan Party or Supremex Loan Party which, if
determined adversely to any such Person, could have a Material Adverse Effect;
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(i) Notice of Default. As soon as possible and in any event
-----------------
immediately upon any Loan Party's or Supremex Loan Party's knowledge of the
occurrence of any Default or "Default" (as defined in the Supremex Credit
Agreement), a written notice setting forth the details of such Default or
"Default" and the action that the Loan Parties or Supremex Loan Parties have
taken and propose to take with respect thereto;
(j) ERISA and Canadian Plan Reports. Promptly after the filing or
-------------------------------
receipt thereof, copies of all reports, including annual reports, and notices
which any Loan Party or Supremex Loan Party or any of its ERISA Affiliates files
with or receives from the PBGC or the U.S. Department of Labor under ERISA or
the PBGF or a Canadian Pension Authority under Canadian Pension and Benefits
Law; and as soon as possible and in any event within five days after any such
Person knows or has reason to know that any Pension Plan or Canadian Pension
Plan is insolvent, or that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or Multiemployer Plan, or that any material
tax or penalty could become payable under Canadian Pension and Benefits Law with
respect to any Canadian Plan, or that the PBGC, any Canadian Pension Authority,
any Loan Party or Supremex Loan Party or any ERISA Affiliate has instituted or
will institute proceedings under ERISA or Canadian Pension and Benefits Law to
terminate or withdraw from or reorganize any Pension Plan or Canadian Pension
Plan, a certificate of a Responsible Officer of the Borrower and Supremex
setting forth the details as to such insolvency, withdrawal, Reportable Event,
Prohibited Transaction, tax or penalty or termination and the action that the
Loan Parties or Supremex Loan Parties have taken and propose to take with
respect thereto;
(k) Reports to Other Creditors. Promptly after the furnishing thereof,
--------------------------
a copy of any statement or report furnished by any Loan Party or Supremex Loan
Party to any other party pursuant to the terms of any indenture, loan, stock
purchase or credit or similar agreement and not otherwise required to be
furnished to the Agent or the Supremex Agent and the Lenders or the Supremex
Lenders pursuant to any other subsection of this Section 8.1;
-----------
(l) Notice of Material Adverse Effect. Within five Business Days after
---------------------------------
any Loan Party or Supremex Loan Party becomes aware thereof, written notice of
any matter that could have a Material Adverse Effect;
(m) Proxy Statements, Etc. As soon as available, one copy of each
----------------------
financial statement, report, notice or proxy statement sent by any Loan Party or
Supremex Loan Party to its stockholders generally and one copy of each regular,
periodic or special report, registration statement or prospectus filed by any
Loan Party or Supremex Loan Party with any securities exchange or the Securities
and Exchange Commission or any successor agency, and of all press releases and
other statements made by any of the Loan Parties or Supremex Loan Parties to the
public containing material developments in its business;
(n) Notice of New Properties and Subsidiaries. Concurrently with the
-----------------------------------------
delivery of each of the financial statements referred to in Sections 8.1(a),
---------------
8.1(b) and 8.1(c), notice of
- ------ ------
85
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(i) any real Property acquired or any lease of real Property which meets the
criteria set forth in Section 5.4 or Section 5.4 of the Supremex Credit
-----------
Agreement entered into by the Borrower or any of its Subsidiaries as lessee,
(ii) any additional patents, copyrights and trademarks of a material nature, and
any other Intellectual Property of a material nature of which the Agent or the
Supremex Agent should be aware in order to ensure its Lien thereon, acquired by
the Borrower or any of its Subsidiaries, and (iii) the creation or acquisition
of any Subsidiary of Holdings or the Borrower after the Third Restatement Date
and subsequent to the last delivery of such information and information
concerning the Properties, assets and operations of Holdings and its
Subsidiaries (other than the Borrower and its Subsidiaries) as the Agent or the
Required Lenders may reasonably request and as may be reasonably obtainable;
(o) Appraisals. From time to time if the Agent or the Supremex Agent
----------
determines that such appraisals are required to comply with applicable
Governmental Requirements or to syndicate the Loans or the Supremex Loans,
appraisals of the Mortgaged Properties reasonably satisfactory in form and
substance to the Agent or the Supremex Agent, respectively (such appraisals to
be at the expense of the Borrower);
(p) Insurance. Within 60 days prior to the end of each fiscal year of
---------
the Borrower, a report in form and substance reasonably satisfactory to the
Agent summarizing all material insurance coverage maintained by the Borrower and
its Subsidiaries as of the date of such report and all material insurance
coverage planned to be maintained by such Persons in the subsequent fiscal year;
(q) Plan Information. From time to time, as reasonably requested by
----------------
the Agent or any Lender or the Supremex Lender, such books, records and other
documents relating to the Mail-Well ESOP as the Agent or the Supremex Agent or
any Lender or Supremex Lender shall specify; prior to any termination, partial
termination or merger of a Pension Plan or Canadian Pension Plan covering
employees of the Borrower, any Loan Party, any Supremex Loan Party or any ERISA
Affiliate or the Mail-Well ESOP, or a transfer of assets of a Pension Plan or
Canadian Pension Plan covering employees of the Borrower, any Loan Party, any
Supremex Loan Party or any ERISA Affiliate or the Mail-Well ESOP, written
notification thereof; promptly upon any Loan Party's or Supremex Loan Party's
receipt thereof, a copy of any determination letter or advisory opinion
regarding the Mail-Well ESOP received from any Governmental Authority and any
amendment or modification to the Mail-Well ESOP as may be necessary as a
condition to obtaining a favorable determination letter or advisory opinion; and
promptly upon the occurrence thereof, written notification of any action
requested by any Governmental Authority to be taken as a condition to any such
determination letter or advisory opinion;
(r) Environmental Assessments and Notices. Promptly after the receipt
-------------------------------------
thereof, a copy of each environmental assessment (including any analysis
relating thereto) prepared with respect to any real Property of any Loan Party
or Supremex Loan Party and each notice sent by any Governmental Authority
relating to any failure or alleged failure to comply with any material
Environmental Law or any material liability with respect thereto;
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<PAGE>
(s) General Information. Promptly, such other information
-------------------
concerning the Loan Parties and the Supremex Loan Parties and their
respective Subsidiaries as the Agent or the Supremex Agent or any Lender or
Supremex Lender may from time to time reasonably request; and
(t) Purchase Price Adjustment. Promptly from time to time upon the
-------------------------
request of the Agent (if and to the extent such information was not provided
prior to the Third Restatement Date), a copy of each statement, report or
other information prepared or required to be prepared (in accordance with the
Acquisition Documents) or reasonably requested by the Agent or the Supremex
Agent to be prepared with respect to or in connection with the determination
of the purchase price paid or payable (whether in the form of cash, property,
liabilities assumed or other consideration) in connection with such
Acquisition or any adjustment to such purchase price.
Section 8.2 Maintenance of Existence; Conduct of Business. Each of the
---------------------------------------------
Loan Parties (other than Holdings) and the Supremex Loan Parties (other than
Holdings) will, and will cause each of its Subsidiaries to, preserve and
maintain its corporate or other entity existence (except for mergers of
Subsidiaries permitted by Section 9.3) and all of its material leases,
-----------
privileges, licenses, Permits, franchises, qualifications and rights that are
necessary in the ordinary conduct of its business. Each of the Loan Parties
(other than Holdings) and the Supremex Loan Parties (other than Holdings) will,
and will cause each of its Subsidiaries to, conduct its business in an orderly
and efficient manner in accordance with good business practices.
Section 8.3 Maintenance of Properties. Each of the Loan Parties (other
-------------------------
than Holdings) and the Supremex Loan Parties (other than Holdings) will, and
will cause each of its Subsidiaries to, maintain, keep and preserve all of its
Properties necessary in the proper conduct of its business in good repair,
working order and condition (ordinary wear and tear excepted) and make all
necessary repairs, renewals, replacements, betterments and improvements thereof.
Section 8.4 Taxes and Claims. Each of the Loan Parties (other than
----------------
Holdings) and the Supremex Loan Parties (other than Holdings) will, and will
cause each of its Subsidiaries to, pay or discharge at or before maturity or
before becoming delinquent (a) all taxes, levies, assessments and governmental
charges imposed on it or its income or profits or any of its Property and (b)
all lawful claims for labor, material and supplies, which, if unpaid, might
become a Lien upon any of its Property; provided, however, that neither any such
-------- -------
Loan Party nor any of its Subsidiaries and neither any Supremex Loan Party nor
any of its Subsidiaries shall be required to pay or discharge any tax, levy,
assessment or governmental charge or claim for labor, material or supplies whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings being diligently pursued and for which adequate reserves
have been established under GAAP.
Section 8.5 Insurance. Each of the Loan Parties and the Supremex Loan
---------
Parties will, and will cause each of its Subsidiaries to, keep insured by
financially sound and reputable insurers all Property of a character usually
insured by responsible corporations engaged in the same or a similar business
similarly situated against loss or damage of the kinds and in the amounts
customarily insured against by such corporations and carry such other insurance
as is usually carried
87
<PAGE>
by such corporations. Such insurance shall be written by financially responsible
companies selected by the Borrower and having an A.M. Best Rating of "A-" or
better and being in a financial size category of "VI" or larger, or by other
companies reasonably acceptable to the Required Lenders. Each policy referred to
in this Section 8.5 shall name the Agent (for the benefit of itself and the
-----------
Lenders) or, with respect to any such policy of Supremex or any of its
Subsidiaries, the Supremex Agent (for the benefit of itself and the Supremex
Lenders) as loss payee (with respect to casualty insurance policies) and
additional insured (with respect to liability insurance policies) and shall
provide that it will not be canceled, amended or reduced except after not less
than 15 days' prior written notice to the Agent and shall also provide that the
interests of the Agent and the Lenders shall not be invalidated by any act or
negligence of any Loan Party or Supremex Loan Party or any of its Subsidiaries.
The Borrower will advise the Agent promptly of any policy cancellation,
reduction or amendment.
(b) The Loan Parties (other than Holdings) will cause each Insurance
Recovery (other than any portion of an Insurance Recovery payable to a landlord
to repair or replace Property leased by any such Loan Party or any of its
Subsidiaries) to be deposited promptly with the Agent as security for the
Obligations. If no Event of Default or payment Default shall have occurred and
be continuing, such Loan Parties may use each such Insurance Recovery to repair,
restore or replace the Property that was the subject of such Insurance Recovery.
An Insurance Recovery will only be released to such Loan Parties pursuant to
this Section 8.5(b) upon delivery by the Borrower to the Agent of evidence
--------------
reasonably satisfactory to the Agent of the expenditure of amounts in repair,
restoration or replacement of the Property that was the subject of the Insurance
Recovery or the purchase of other, similar Property for use in such Loan Party's
or its Subsidiary's (as applicable) business. The Borrower will promptly pay
all Excess Insurance Proceeds to the Agent for application against the
Obligations in accordance with Section 2.7(b). This Section 8.5(b) shall not
-------------- --------------
apply to any Insurance Recovery payable to an Unrestricted Subsidiary with
respect to Property of such Unrestricted Subsidiary.
(c) The Supremex Loan Parties (other than Holdings) will cause each
"Insurance Recovery" (as defined in the Supremex Credit Agreement) (other than
any portion of such an "Insurance Recovery" payable to a landlord to repair or
replace Property leased by Supremex or any of its Subsidiaries) to be deposited
promptly with the Supremex Agent as security for the Supremex Obligations. If
no "Event of Default" (as defined in the Supremex Credit Agreement) or payment
"Default" (as defined in the Supremex Credit Agreement) shall have occurred and
be continuing, Supremex may use each such "Insurance Recovery" to repair,
restore or replace the Property that was the subject of such "Insurance
Recovery". An "Insurance Recovery" will only be released to Supremex pursuant
to this Section 8.5(c) upon delivery by Supremex to the Supremex Agent of
--------------
evidence reasonably satisfactory to the Supremex Agent of the expenditure of
amounts in repair, restoration or replacement of the Property that was the
subject of the "Insurance Recovery" or the purchase of other, similar Property
for use in Supremex's or its Subsidiary's (as applicable) business. Supremex
will promptly pay all "Excess Insurance Proceeds" (as defined in the Supremex
Credit Agreement) to the Supremex Agent for application against the Supremex
Obligations in accordance with Section 2.7(b) of the Supremex Credit Agreement.
This Section 8.5(c) shall not apply to any "Insurance Recovery" payable to an
--------------
Unrestricted Subsidiary with respect to Property of such Unrestricted
Subsidiary.
88
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(d) If a Default shall have occurred and be continuing, the Loan
Parties (other than Holdings) will cause all proceeds of insurance paid on
account of the loss of or damage to any Property of any such Loan Party or any
of its Subsidiaries and all awards of compensation for any Property of any such
Loan Party or any of its Subsidiaries taken by condemnation or eminent domain to
be paid directly to the Agent to be applied against or held as security for the
Obligations, at the election of the Agent and the Required Lenders.
(e) If a "Default" (as defined in the Supremex Credit Agreement) shall
have occurred and be continuing, Supremex will cause all proceeds of insurance
paid on account of the loss of or damage to any Property of Supremex or any of
its Subsidiaries and all awards of compensation for any Property of Supremex or
any of its Subsidiaries taken by condemnation or eminent domain to be paid
directly to the Supremex Agent to be applied against or held as security for the
Supremex Obligations, at the election of the Supremex Agent and the Supremex
Required Lenders.
Section 8.6 Inspection Rights. Each of the Loan Parties (other than
-----------------
Holdings) and the Supremex Loan Parties (other than Holdings) will, and will
cause each of its Subsidiaries and the Mail-Well ESOP to, permit representatives
and agents of the Agent and the Supremex Agent and each Lender and Supremex
Lender, during normal business hours and upon reasonable notice to the Borrower,
to examine, copy and make extracts from its books and records, to visit and
inspect its Properties and to discuss its business, operations and financial
condition with its officers and independent certified public accountants. Such
Loan Parties and Supremex Loan Parties will authorize, and will cause the Mail-
Well ESOP to authorize, their accountants in writing (with a copy to the Agent
and the Supremex Agent) to comply with this Section 8.6. The Agent and the
-----------
Supremex Agent or its representatives may, at any time and from time to time at
the Borrower's expense, conduct field exams for any purposes as the Agent may
reasonably request.
Section 8.7 Keeping Books and Records. Each of the Loan Parties (other
-------------------------
than Holdings) and the Supremex Loan Parties (other than Holdings) will, and
will cause each of its Subsidiaries and the Mail-Well ESOP to, maintain
appropriate books of record and account in accordance with GAAP consistently
applied in which true, full and correct entries will be made of all their
respective dealings and business affairs. If any changes in accounting
principles from those used in the preparation of the financial statements
referenced in Section 8.1 are hereafter required or permitted by GAAP and are
-----------
adopted by the Borrower or any of its Subsidiaries with the concurrence of its
independent certified public accountants and such changes in GAAP result in a
change in the method of calculation or the interpretation of any of the
financial covenants, standards or terms found in Section 8.1 or Article 10 or
----------- ----------
any other provision of this Agreement, such Loan Parties and Supremex Loan
Parties and the Required Lenders and the Supremex Required Lenders agree to
amend any such affected terms and provisions so as to reflect such changes in
GAAP with the result that the criteria for evaluating the Borrower's or such
Subsidiaries' financial condition shall be the same after such changes in GAAP
as if such changes in GAAP had not been made; provided that, until any necessary
--------
amendments have been made, the certificate required to be delivered under
Section 8.1(d) hereof demonstrating compliance with Article 10 shall include
- -------------- ----------
calculations setting forth the adjustments from the relevant items as shown in
the current financial statements based on the changes to GAAP to the
corresponding items based on GAAP as used in the financial statements referenced
in Section
-------
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7.2(a) or Section 7.2(a) of the Supremex Credit Agreement (as applicable), in
- ------
order to demonstrate how such financial covenant compliance was derived from the
current financial statements.
Section 8.8 Compliance with Laws. Each of the Loan Parties and the
--------------------
Supremex Loan Parties will, and will cause each of its Subsidiaries to, comply
with all applicable Governmental Requirements, except for instances of
noncompliance that could not have, individually or in the aggregate, a Material
Adverse Effect.
Section 8.9 Compliance with Agreements. Each of the Loan Parties and the
--------------------------
Supremex Loan Parties will comply with all terms and provisions of the Borrower
Indenture which are intended to benefit the holders of any "Senior Indebtedness"
(as such term is defined in the Borrower Indenture), including, without
limitation, the terms and provisions of Article Fourteen of the Borrower
Indenture. Without limiting the generality of the foregoing, the Borrower will,
and will use its reasonable efforts to cause the trustee under the Borrower
Indenture to, give all notices required to be given by the Borrower or such
trustee to the Agent in accordance with the Borrower Indenture as and when such
notices are required thereunder.
Section 8.10 Further Assurances. Each of the Loan Parties and the Supremex
------------------
Loan Parties will, and will cause each of its Subsidiaries to, execute and
deliver such further agreements, documents and instruments and take such further
action as may be requested by the Agent or the Supremex Agent to carry out the
provisions and purposes of this Agreement and the other Loan Documents and of
the Supremex Credit Agreement and the other Supremex Loan Documents, to evidence
the Obligations and the Supremex Obligations and to create, preserve, maintain
and perfect the Liens of the Agent and the Supremex Agent for the benefit of
itself and the Lenders and the Supremex Lenders in and to the Collateral and the
"Collateral" (as defined in the Supremex Credit Agreement) and the required
priority of such Liens.
Section 8.11 ERISA. Each of the Loan Parties and the Supremex Loan Parties
-----
will, and will cause each of its ERISA Affiliates to, comply with all minimum
funding requirements and all other material requirements of ERISA and Canadian
Pension and Benefits Law, if applicable, so as not to give rise to any liability
thereunder.
Section 8.12 Interest Rate Protection Agreements. The Borrower shall, until
-----------------------------------
June 30, 1999, maintain in full force and effect one or more Interest Rate
Protection Agreements reasonably satisfactory to the Agent with one or more of
the Lenders or with one or more other counterparties rated as specified in
Section 9.1(g) and otherwise reasonably acceptable to the Agent that enable the
- --------------
Borrower to fix or place a limit upon the rate of interest payable with respect
to not less than 50% of the aggregate principal amount of the Term Loans
outstanding from time to time. Supremex shall, until June 30, 1999, maintain in
full force and effect one or more Interest Rate Protection Agreements reasonably
satisfactory to the Supremex Agent with one or more of the Supremex Lenders or
with one or more other counterparties rated as specified in Section 9.1(g) and
--------------
otherwise reasonably acceptable to the Supremex Agent that enable Supremex (i)
fix or place a limit upon the rate of interest payable, and/or (ii) mitigate the
risk of fluctuations in the currency exchange rate between Cdn. Dollars and
Dollars, with respect to not less than 50% of the aggregate principal amount of
the Supremex Term Loans outstanding from time to time.
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Section 8.13 Concentration Accounts. Each of the Loan Parties and its
----------------------
Subsidiaries (other than Supremex and its Subsidiaries and other than
Unrestricted Subsidiaries) and, if and to the extent required by the Supremex
Agent, Supremex and its Subsidiaries, will ensure, and will cause each of such
Subsidiaries to ensure, that all proceeds of all Collateral and "Collateral" (as
defined in the Supremex Credit Agreement), including, without limitation,
proceeds of sales of accounts by the Borrower and its Subsidiaries, are
deposited directly, as received, into a Concentration Account. Each of the Loan
Parties (other than the Supremex Loan Parties) and, if and to the extent
required by the Supremex Agent, the Supremex Loan Parties will maintain in
effect, and will cause each of its Subsidiaries to maintain in effect, an
agreement governing each of its Concentration Accounts in the form approved by
the Agent in accordance with Section 6.1(dd) or the Supremex Agent in accordance
---------------
with Section 6.1(dd) of the Supremex Credit Agreement (as applicable) or a
similar agreement in form and substance satisfactory to the Agent or the
Supremex Agent, respectively, with a depository bank satisfactory to the Agent
or the Supremex Agent, respectively.
Section 8.14 Indemnifications under Acquisition Documents. In the event
--------------------------------------------
that, after the occurrence and during the continuation of an Event of Default or
an "Event of Default" (as defined in the Supremex Credit Agreement), Holdings,
the Borrower, Supremex or any of their Subsidiaries is or becomes aware of any
material right or claim (or probable right or claim) of indemnification in favor
of it arising under any of the Acquisition Documents which it does not intend to
pursue within reasonable promptness after it has become aware thereof, then (a)
the Borrower will promptly notify the Agent or the Supremex Agent and the
Lenders and the Supremex Lenders of such fact and the basis of such right or
claim in reasonable detail and (b) upon the request of the Agent or the Supremex
Agent or the Required Lenders or the Supremex Required Lenders, the Borrower or
Supremex (as applicable) will execute and deliver or cause Holdings or its
Subsidiary to execute and deliver (as applicable) a power of attorney in form
and substance reasonably satisfactory to the Agent and the Supremex Agent
pursuant to which the Agent and the Supremex Agent may, in the name of Holdings,
the Borrower or any of its Subsidiaries (as applicable), take all actions that
may be necessary or appropriate to diligently pursue such right or claim.
Section 8.15 Ownership of Subsidiaries. Holdings shall at all times own all
-------------------------
issued and outstanding shares of Capital Stock of the Borrower, and, except as
may result from a merger or consolidation expressly permitted by Section 9.3 or
-----------
as may occur as a result of prudent tax planning, each of the Borrower and each
of its Subsidiaries shall at all times own the same percentage of each class of
the Capital Stock of each of its Subsidiaries as is owned by it as of the Third
Restatement Date (with respect to each Subsidiary existing as of the Third
Restatement Date) or as of the applicable Acquisition Loans Funding Date (with
respect to each Subsidiary acquired pursuant to a Permitted Acquisition), in
each case as disclosed on Schedule 7.15 (as such schedule may be supplemented in
-------------
accordance with Section 13.26); provided, however, that (a) Supremex may acquire
------------- -------- -------
additional shares of Capital Stock of Classic in accordance with the terms and
conditions of this Agreement, (b) any change in ownership of any Subsidiary of
the Borrower that may occur as a result of tax planning (i) must result in the
Borrower or a Wholly-Owned Subsidiary of the Borrower owning the same percentage
of each class of the Capital Stock of such Subsidiary as is owned by the
Borrower and its Subsidiaries as of the Third Restatement Date (with respect to
such Subsidiary which is existing as of the Third Restatement Date) or as of the
applicable Acquisition Loans Funding Date (with respect to such Subsidiary
acquired pursuant to a Permitted Acquisition), (ii) if
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such change results (in whole or in part) from the transfer of Capital Stock,
must involve a transfer of Capital Stock that is expressly subject to the
existing Liens in favor of the Agent for the benefit of the Agent and the
Lenders, the Supremex Lenders and the Equipment Lease Facility Lenders as
security for the Obligations, the Supremex Obligations and the Secured Equipment
Lease Facility Obligations, (iii) if such change results (in whole or in part)
from the issuance of any Capital Stock, the owner(s) of such Capital Stock shall
grant to the Agent for the benefit of the Agent and the Lenders, the Supremex
Lenders and the Equipment Lease Facility Lenders a perfected, first priority
Lien in and to such Capital Stock as security for the Obligations, the Supremex
Obligations and the Secured Equipment Lease Facility Obligations, (iv) is not
permitted pursuant to this Section 8.15 unless the Borrower shall have given the
------------
Agent at least 30 days prior written notice of such proposed change in ownership
and such change in ownership could not materially adversely affect the Agent,
the Lenders, the Supremex Lenders or the Equipment Lease Facility Lenders, and
(v) is not permitted pursuant to this Section 8.15 if a Default has occurred and
------------
is continuing at the time of such proposed change in ownership or would result
therefrom.
ARTICLE 9
Negative Covenants
------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement jointly and severally covenants and agrees that, as long as the
Obligations or the Supremex Obligations or any part thereof are outstanding or
any Lender or Supremex Lender has any Commitment hereunder or any Supremex
Commitment under the Supremex Credit Agreement, respectively, or any Letter of
Credit or letter of credit or bankers' acceptance remains outstanding hereunder
or under the Supremex Credit Agreement, respectively, such Loan Party will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 9.1 Debt. Each of the Loan Parties (other than Holdings) and
----
Supremex Loan Parties (other than Holdings) will not, and will not permit any of
its Subsidiaries (other than Unrestricted Subsidiaries) to, incur, create,
assume or permit to exist any Debt, except:
(a) Debt of the Borrower and its Subsidiaries to the Lenders
pursuant to the Loan Documents, Debt of the Borrower and its Subsidiaries and
Supremex and its Subsidiaries to the Supremex Lenders pursuant to the
Supremex Loan Documents and Debt of the Borrower to the Equipment Lease
Facility Lenders pursuant to the Equipment Lease Facility Guaranty;
(b) Existing Debt described on Schedule 7.10 hereto and renewals,
-------------
extensions or refinancings of such Debt which do not increase the outstanding
principal amount of such Debt and the terms and provisions of which are not
materially more onerous than the terms and conditions of such Debt on the
Third Restatement Date;
(c) Purchase money Debt secured by purchase money Liens, which Debt
and Liens are permitted under and meet all of the requirements of clause (g)
----------
of the definition of Permitted Liens contained in Section 1.1;
-----------
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(d) Debt of the Borrower evidenced by the Borrower Subordinated
Notes and Debt of Pavey, Wisco, Wisco II, Mail-Well West and Wisco III
evidenced by the Subsidiary Subordinated Guaranties, provided that the
--------
obligations of Pavey, Wisco, Wisco II, Mail-Well West and Wisco III with
respect to such guaranties shall be subordinated to the payment of the
Obligations and such Subsidiaries' obligations under the Subsidiary
Guaranties to the same extent that the Borrower's obligations under the
Borrower Subordinated Notes are subordinated to the payment of the
Obligations;
(e) Intercompany Debt between or among the Borrower and any of its
Wholly-Owned Subsidiaries (other than an Unrestricted Subsidiary) incurred in
the ordinary course of business consistent with prudent business practices;
provided, however, that any and all of the Debt permitted pursuant to this
-------- -------
Section 9.1(e) shall be unsecured, shall be evidenced by instruments
--------------
satisfactory to the Agent which will be pledged to the Agent for the benefit
of the Agent and the Lenders, the Supremex Lenders and the Equipment Lease
Facility Lenders and shall be subordinated to the Obligations, the Supremex
Obligations and the Equipment Lease Facility Obligations pursuant to a
subordination agreement in form and substance satisfactory to the Agent;
(f) Intercompany Debt between or among the Borrower and any of its
non-Wholly-Owned Subsidiaries (other than an Unrestricted Subsidiary)
incurred in the ordinary course of business consistent with prudent business
practices, subject to each of the following requirements: (i) the aggregate
principal amount of all loans made by the Borrower or Supremex to its non-
Wholly-Owned Subsidiaries and outstanding at any time shall not exceed
$5,000,000, and (ii) any and all of the Debt permitted pursuant to this
Section 9.1(f) shall be unsecured, shall be evidenced by instruments
--------------
satisfactory to the Agent which will be pledged to the Agent for the benefit
of the Agent, the Lenders, the Supremex Lenders and the Equipment Lease
Facility Lenders and shall be subordinated to the Obligations, the Supremex
Obligations and the Equipment Lease Facility Obligations pursuant to a
subordination agreement in form and substance satisfactory to the Agent;
(g) Debt under Interest Rate Protection Agreements required by
Section 8.12, provided that each counterparty shall be rated in one of the
------------ --------
two highest rating categories of Standard and Poors Corporation or Moody's
Investors Service, Inc.;
(h) Debt of the Borrower consisting of a loan from a third party for
the purpose of making a loan to the Mail-Well ESOP or of a guaranty of any
such loan made by a third party in order to allow the Mail-Well ESOP to
repurchase Holdings Common Stock from exiting employees pursuant to the
requirements of Section 409(h) of ERISA or to purchase additional Holdings
Common Stock, in either case in order to keep its stock ownership percentage
in Holdings at substantially the same level existing on the date of the
funding of the Additional ESOP Loans (as defined in the Second Restated
Agreement) after giving effect to the purchase of the Holdings Common Stock
by the Mail-Well ESOP with the proceeds of the Fourth Mail-Well ESOP Loan (as
defined in the Second Restated Agreement), which Debt shall not exceed at any
time an outstanding principal amount equal to the positive remainder (if any)
of (i) $5,250,000 minus (ii) the sum of the outstanding
-----
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<PAGE>
principal balance of any loan made to the Mail-Well ESOP for such purpose
(other than the First Mail-Well ESOP Loan (as defined in the Second Restated
Agreement), the Third Mail-Well ESOP Loan (as defined in the Second Restated
Agreement) and the Fourth Mail-Well ESOP Loan (as defined in the Second
Restated Agreement) but including any loan made by the Borrower under this
Section 9.1(h) or Section 9.4(e)) plus the outstanding principal balance of
-------------- --------------
any loan made to the Mail-Well ESOP for such purpose and Guaranteed by the
Borrower under this Section 9.1(h) or Section 9.4(e);
-------------- --------------
(i) Subject to the limitations set forth in Section 9.4(g),
--------------
liabilities of the Borrower to purchase shares of Holdings Common Stock from
employees of the Borrower or its Subsidiaries upon the termination of the
employment of such employees;
(j) Unsecured Debt of the Borrower and its Subsidiaries in an
aggregate principal amount not to exceed $12,000,000 at any time outstanding;
provided, however, that such unsecured Debt of Supremex shall not exceed Cdn.
-------- -------
$4,000,000 in aggregate principal amount at any time outstanding; and
(k) Liabilities of the Borrower in respect of unfunded vested
benefits under any Plan and liabilities of Supremex in respect of unfunded
vested benefits under any Canadian Plan if and to the extent that the
existence of such liabilities will not constitute, cause or result in a
Default.
Section 9.2 Limitation on Liens . Each of the Loan Parties (other than
--------------------
Holdings) and the Supremex Loan Parties (other than Holdings) will not, and will
not permit any of its Subsidiaries (other than Unrestricted Subsidiaries) to,
incur, create, assume or permit to exist any Lien upon any of its Property or
revenues, whether now owned or hereafter acquired, except Permitted Liens. With
respect to the Capital Stock of Supremex Holdings, Supremex and Classic (or
portion thereof, as applicable) which is not required to be pledged as security
for the Obligations, the Loan Parties and Supremex Loan Parties will, if
requested by the Agent, cause an appropriate legend, in form and substance
satisfactory to the Agent, to be placed on the stock certificates evidencing
such Capital Stock which shall evidence the Lien prohibitions contained in this
Section 9.2.
- -----------
Section 9.3 Mergers, Etc . Each of the Loan Parties (other than Holdings)
-------------
and Supremex Loan Parties (other than Holdings) will not, and will not permit
any of its Subsidiaries to, become a party to a merger or consolidation, or
wind-up, dissolve or liquidate itself; provided, that so long as no Default or
--------
"Default" (as defined in the Supremex Credit Agreement) exists at such time or
would result therefrom (a) any of the Borrower's Subsidiaries, other than
Supremex or a Subsidiary of Supremex, may merge or consolidate with any of its
other Subsidiaries, other than Supremex or a Subsidiary of Supremex, if a
Wholly-Owned Subsidiary of the Borrower, other than an Unrestricted Subsidiary
and other than MTRC, is the surviving or resulting entity and if such surviving
or resulting corporation is incorporated in a state of the U.S. unless each of
the parties to such merger or consolidation is not incorporated in a state of
the U.S., (b) any of the Borrower's Subsidiaries, other than Supremex or a
Subsidiary of Supremex, may merge with the Borrower so long as the Borrower is
the surviving entity, (c) any of Supremex's Subsidiaries may amalgamate, merge
or consolidate with any of its other Subsidiaries so long as a Wholly-Owned
Subsidiary of
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Supremex is the surviving or resulting entity, and (d) any of Supremex's
Subsidiaries may merge with Supremex so long as Supremex is the surviving
entity. Each of the Loan Parties and the Supremex Loan Parties will not, and
will not permit any of its Subsidiaries to, purchase or acquire all or a
substantial part of the business or Properties of any Person if such purchase or
acquisition (i) could reasonably be expected to cause or result in the
occurrence of a Default or a "Default" (as defined in the Supremex Credit
Agreement) or (ii) could reasonably be expected to have a material adverse
effect upon the financial position or performance of the Borrower or Supremex.
The Borrower will not, and will not permit any of its Subsidiaries (other than
Supremex and its Subsidiaries) to, make or consummate any Future Acquisition
except for Permitted Acquisitions. In addition, Supremex will not, and will not
permit any of its Subsidiaries to, make or consummate any Future Acquisitions
except for the PNG Acquisition and Future Acquisitions, exclusive of the PNG
Acquisition, which do not exceed Cdn. $10,000,000, whether in the form of cash,
property, liabilities assumed (exclusive of current accruals and trade payables
incurred in the ordinary course of business to the extent that the aggregate
amount of such accruals and payables assumed does not exceed the aggregate
amount of accounts receivable and other current assets acquired) or other
consideration, subsequent to the Second Restatement Date if (but only if) each
of such Future Acquisitions is approved by the Supremex Required Lenders prior
to the consummation thereof.
Section 9.4 Restricted Payments. Each of the Loan Parties (other than
-------------------
Holdings) and the Supremex Loan Parties (other than Holdings) will not, and will
not permit any of its Subsidiaries (other than Unrestricted Subsidiaries) to,
make any Restricted Payments, except:
(a) Subject to the subordination provisions relating thereto, the
Borrower may make regularly scheduled payments of interest on the Borrower
Subordinated Notes;
(b) The Borrower may declare and pay dividends to Holdings to allow
Holdings to pay Holdings' operating and administrative expenses, including,
without limitation, directors' fees, legal and audit expenses, SEC compliance
expenses and corporate franchise and other taxes, in an aggregate amount (A)
exclusive of expenses directly relating to the initial public offering of
Holdings, in any fiscal year of the Borrower not to exceed the lesser of (1)
$250,000 or (2) the amount actually expended for such operating and
administrative expenses or (B) with respect to expenses directly relating to
the initial public offering of Holdings, not to exceed $1,000,000, all of
which expenses shall be evidenced by supporting information in detail
satisfactory to the Agent;
(c) The Borrower and its Subsidiaries may make tax payments to
Holdings pursuant to the Tax Sharing Agreement if and to the extent that all
such payments are promptly paid by Holdings to the appropriate Governmental
Authority to whom such payments are owed; provided that in no event shall
--------
such payments be greater than the lesser of (i) the amounts that would be
payable by the Borrower and its Subsidiaries if there were no Tax Sharing
Agreement in respect of the type of taxes covered by the Tax Sharing
Agreement or (ii) the amounts actually paid by Holdings in respect of such
taxes;
(d) (i) The Subsidiaries of the Borrower may make Restricted
Payments to the Borrower, (ii) the Subsidiaries of the Borrower other than
Supremex and the Subsidiaries of
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Supremex may make Restricted Payments to Wholly-Owned Subsidiaries of the
Borrower other than Supremex and the Subsidiaries of Supremex, Unrestricted
Subsidiaries of the Borrower and MTRC, and (iii) the Subsidiaries of Supremex
may make Restricted Payments to Supremex or Wholly-Owned Subsidiaries of
Supremex other than Unrestricted Subsidiaries of Supremex, provided, however,
-------- -------
that (A) with respect to clauses (ii) and (iii) preceding, such Restricted
------------ -----
Payments may be made to Wholly-Owned Subsidiaries of the Borrower or to
Wholly-Owned Subsidiaries of Supremex, respectively, only if and to the
extent that the transferor of such Restricted Payment is Solvent both before
and after giving effect to such Restricted Payment, and (B) with respect to
clause (ii) preceding, no such Restricted Payments may be made by a Wholly-
-----------
Owned Subsidiary incorporated in a state of the U.S. to a Wholly-Owned
Subsidiary not incorporated in a state of the U.S.;
(e) The Borrower (i) may make the Mail-Well ESOP Loans to the Mail-
Well ESOP, (ii) may make additional loans to the Mail-Well ESOP to the extent
necessary to allow the Mail-Well ESOP to repurchase Holdings Common Stock
from exiting employees pursuant to the requirements of Section 409(h) of
ERISA or to purchase additional Holdings Common Stock, in either case in
order to keep its stock ownership percentage in Holdings at substantially the
same level existing on the date of the funding of the Additional ESOP Loans
(as defined in the Second Restated Agreement) after giving effect to the
purchase of the Holdings Common Stock by the Mail-Well ESOP with the proceeds
of the Fourth Mail-Well ESOP Loan (as defined in the Second Restated
Agreement), which Restricted Payment shall not exceed at any time an
outstanding principal amount equal to the positive remainder (if any) of (x)
$5,250,000 minus (y) the sum of the outstanding principal balance of the
-----
Loans plus the outstanding principal balance of any loan made to the Mail-
----
Well ESOP for such purpose (other than the First Mail-Well ESOP Loan (as
defined in the Second Restated Agreement), the Third Mail-Well ESOP Loan (as
defined in the Second Restated Agreement) and the Fourth Mail-Well ESOP Loan
(as defined in the Second Restated Agreement) but including any loan made by
the Borrower under this Section 9.4(e) or Section 9.1(h)) plus the
-------------- --------------- ----
outstanding principal balance of any loan made to the Mail-Well ESOP for such
purpose and Guaranteed by the Borrower under this Section 9.4(e) or Section
-------------- -------
9.1(h);
------
(f) Contributions by the Borrower to the Mail-Well ESOP on behalf of
the employees of the Borrower or its Subsidiaries in an aggregate amount (i)
not to exceed the aggregate amount of principal and accrued interest then
paid (or then being paid) by the Mail-Well ESOP to the Borrower with respect
to the Mail-Well ESOP Loans and (ii) during fiscal years 1997 through 2000,
not to exceed ten percent of payroll expenses during such fiscal year
attributable to employees of the Borrower and its Subsidiaries who are
eligible to participate in the Mail-Well ESOP;
(g) Purchases by the Borrower of shares of Holdings Common Stock
from employees of the Borrower or its Subsidiaries upon the termination of
the employment of such employees, provided that the amount paid therefor
--------
shall not exceed the fair market value of such shares to be purchased and
shall not exceed $1,000,000 in the aggregate during any fiscal year and the
Borrower shall grant to the Agent, for the benefit of the Agent and the
Lenders, a Lien on all of such shares purchased by the Borrower as security
for the
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<PAGE>
Obligations pursuant to a pledge agreement in form and substance reasonably
satisfactory to the Agent;
(h) The Borrower may, on or after April 30, 1997, make Restricted
Payments from Excess Cash Flow retained by the Borrower after making the
prepayment with respect to such Excess Cash Flow required under Section
-------
2.7(a) on the date specified in such section and after giving effect to any
------
and all loans, Investments or Capital Expenditures made as a result of such
Excess Cash Flow, provided that such Restricted Payments shall not exceed
--------
$12,000,000 in the aggregate during any fiscal year; and
(i) Supremex may, on or after April 30, 1997, make Restricted
Payments from "Excess Cash Flow" (as defined in the Supremex Credit
Agreement) retained by Supremex after making the prepayment with respect to
such "Excess Cash Flow" required under Section 2.7(a) of the Supremex Credit
Agreement on the date specified in such section and after giving effect to
any and all loans, Investments or Capital Expenditures made as a result of
such "Excess Cash Flow", provided that such Restricted Payments shall not
--------
exceed Cdn. $4,000,000 in the aggregate during any fiscal year;
provided, however, that no Restricted Payments may be made pursuant to clauses
- -------- ------- -------
(a), (b), (e), (g), (h) or (i) preceding if a Default exists at the time of
- --- --- --- --- --- ----
such proposed Restricted Payment or would result therefrom and no Restricted
Payments may be made, other than pursuant to clause (c) or, to the extent
----------
payable to the Borrower or, if such Restricted Payments are made by Subsidiaries
of Supremex, Supremex, clause (d) preceding, if an Event of Default exists at
----------
the time of such proposed Restricted Payment or would result therefrom;
provided, further, however, that, if and to the extent that the payment of
- -------- ------- -------
Restricted Payments to Holdings is necessary to allow Holdings to pay its
operating expenses and if a Default exists at the time of a proposed Restricted
Payment or would result therefrom, the Borrower may make Restricted Payments to
Holdings to pay Holdings' operating expenses in an aggregate amount not to
exceed the lesser of (i) $500,000 during any fiscal year or (ii) the actual
amount of such operating expenses during such fiscal year if (A) the Default
that exists at the time of such Restricted Payment or would result therefrom is
not a payment Default and (B) no Event of Default exists at the time of such
Restricted Payment or would result therefrom.
Section 9.5 Investments. Each of the Loan Parties (other than Holdings)
------------
and the Supremex Loan Parties (other than Holdings) will not, and will not
permit any of its Subsidiaries (other than Unrestricted Subsidiaries) to, make
or permit to remain outstanding any advance, loan, extension of credit or
capital contribution to or investment in any Person, or purchase or own any
stock, bonds, notes, debentures or other securities of any Person, or be or
become a joint venturer with or partner of any Person (all such transactions
being herein called "Investments"), except:
-----------
(a) Investments in obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to the
Borrower or any of its Subsidiaries;
(b) Existing Investments identified on Schedule 9.5 hereto;
------------
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<PAGE>
(c) Investments in securities issued or guaranteed by the U.S. or,
with respect to Supremex and its Subsidiaries, Canada or any agency thereof
with maturities of one year or less from the date of acquisition;
(d) Investments in certificates of deposit and eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any Lender or with any domestic commercial
bank having capital and surplus in excess of $500,000,000;
(e) Investments in repurchase obligations with a term of not more
than seven days for securities of the types described in clause (c) preceding
----------
with any Lender or Supremex Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000;
(f) Investments in commercial paper of a domestic issuer rated A-1
or better or P-1 or better by Standard & Poor's Corporation or Moody's
Investors Services, Inc., respectively, maturing not more than six months
from the date of acquisition;
(g) (i) Investments (other than Intercompany Debt referred to in
clause (i) below) by the Borrower in its Subsidiaries, and by Supremex in its
----------
Subsidiaries, existing on the Third Restatement Date, (ii) Investments by the
Borrower in New Loan Parties which will exist on the applicable Acquisition
Loans Funding Date, (iii) additional Investments by the Borrower in its
Subsidiaries, other than Unrestricted Subsidiaries and MTRC, made after the
Third Restatement Date in an aggregate amount not to exceed $10,000,000 at
any time outstanding, (iv) additional Investments by Supremex in its
Subsidiaries, other than Unrestricted Subsidiaries, made after the Third
Restatement Date in an aggregate amount not to exceed Cdn. $500,000 at
anytime outstanding, and (v) additional investments by the Borrower and its
Subsidiaries in MTRC made after the Third Restatement Date pursuant to the
Accounts Receivable Securitization Facility Documents and in connection with
the sales of accounts receivable by the Borrower and its Subsidiaries to
MTRC; provided, however, that the aggregate amount of Investments that may be
-------- -------
made after the Third Restatement Date in Supremex or any Subsidiary of
Supremex or in any other Subsidiary of the Borrower not incorporated under
the laws of the U.S. shall not exceed $4,000,000, exclusive of Investments
made by the Borrower in Supremex to the extent necessary to allow Supremex to
make the mandatory prepayments of the Supremex Term Loans in accordance with
Section 2.7(d), in an amount not to exceed the amount of such prepayments;
--------------
(h) Investments by the Borrower in Unrestricted Subsidiaries or in
business ventures complimentary to the existing business of the Borrower, in
each case (i) in an aggregate amount not to exceed $5,000,000 at any time
outstanding or (ii) made from Excess Cash Flow retained by the Borrower after
making the prepayment with respect to such Excess Cash Flow required under
Section 2.7(a) on the date specified in such section and after giving effect
--------------
to any and all loans, Restricted Payments or Capital Expenditures made as a
result of such Excess Cash Flow; provided that such Investments shall not
--------
exceed
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$10,000,000 in the aggregate during any fiscal year and provided further
--------
that, at least ten Business Days' prior to the making of any such Investment,
the Borrower shall inform the Agent of its intent to make such Investment and
of any information relating thereto that the Agent may reasonably request
and, if requested by the Agent, shall grant to the Agent, for the benefit of
the Agent and the Lenders, a Lien on all of the Borrower's right, title and
interest in and to such Investment as security for the Obligations pursuant
to a pledge or security agreement in form and substance reasonably
satisfactory to the Agent;
(i) Investments by Supremex in business ventures complimentary to
the existing business of Supremex made from "Excess Cash Flow" (as defined in
the Supremex Credit Agreement) retained by Supremex after making the
prepayment with respect to such "Excess Cash Flow" required under Section
2.7(a) of the Supremex Credit Agreement on the date specified in such section
and after giving effect to all loans, Restricted Payments or Capital
Expenditures made as a result of such "Excess Cash Flow", provided that such
--------
Investments of Supremex shall not exceed Cdn. $2,000,000 in the aggregate
during any fiscal year and provided further that, at least ten Business Days'
--------
prior to the making of any such Investment, Supremex shall inform the
Supremex Agent of its intent to make such Investment and of any information
relating thereto that the Supremex Agent may reasonably request and, if
requested by the Supremex Agent, shall grant to the Supremex Agent, for the
benefit of the Supremex Agent and the Supremex Lenders, a Lien on all of
Supremex's right, title and interest in and to such Investment as security
for the Supremex's Obligations pursuant to a pledge or security agreement in
form and substance reasonably satisfactory to the Supremex Agent;
(j) Intercompany Debt permitted pursuant to Section 9.1(e) and
--------------
9.1(f); and
------
(k) Permitted Acquisitions and, with respect to Supremex, Future
Acquisitions if and to the extent permitted by Section 9.3;
-----------
provided, however, that no Investments may be made by the Borrower pursuant to
- -------- -------
clauses (g), (h) or (k) preceding and no Investment may be made by Supremex
- ----------- --- ---
pursuant to clause (i) or (k) preceding if a Default or a "Default" (as defined
---------- ---
in the Supremex Credit Agreement) exists at the time of such proposed Investment
or would result therefrom and no Investments may be made by the Borrower or
Supremex pursuant to clause (j) preceding without the prior written consent of
----------
the Agent or the Supremex Agent, respectively, if an Event of Default or "Event
of Default" (as defined in the Supremex Credit Agreement), respectively, exists
at the time of such proposed Investment or would result therefrom.
Section 9.6 Limitation on Issuance of Capital Stock. Each of the Loan
---------------------------------------
Parties (other than Holdings) and the Supremex Loan Parties (other than
Holdings) will not, and will not permit any of its Subsidiaries to, at any time
issue, sell, assign or otherwise dispose of (a) any of its Capital Stock, (b)
any securities exchangeable for or convertible into or carrying any rights to
acquire any of its Capital Stock, or (c) any option, warrant or other right to
acquire any of its Capital Stock; provided, however, that, if and to the extent
-------- -------
not otherwise prohibited by this Agreement or the other Loan Documents or the
Supremex Credit Agreement or the Supremex Loan Documents (i) the Borrower
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<PAGE>
may issue additional shares of its Capital Stock to Holdings for full and fair
consideration, (ii) any Subsidiary of the Borrower may issue additional shares
of its Capital Stock to the Borrower or another Subsidiary of the Borrower if
and to the extent that the ownership of such Capital Stock by the owners thereof
as of the Third Restatement Date does not change or, with respect to Classic and
the ownership of its Capital Stock by Supremex, does not decrease, and (iii) any
Unrestricted Subsidiary of the Borrower may issue, sell, assign, or otherwise
dispose of shares of its Capital Stock to any Person for full and fair
consideration; provided, further, however, that all of such additional shares of
-------- ------- -------
Capital Stock referred to in clauses (i) and (ii) preceding and all of such
----------- ----
shares of Capital Stock referred to in clause (iii) preceding that are issued to
------------
the Borrower or any Subsidiary (other than an Unrestricted Subsidiary) of the
Borrower shall be pledged to the Agent and the Supremex Agent, on behalf of the
Agent and the Lenders and the Supremex Lenders, as security for the Obligations
and as security for the Supremex Obligations pursuant to a pledge agreement in
form and substance reasonably satisfactory to the Agent and the Supremex Agent,
except that only 66% of the shares of each class of Capital Stock of Supremex
and Supremex Holdings shall be required to be pledged as security for the
Obligations and the Capital Stock of any Canadian Subsidiary of Supremex shall
not be required to be pledged by Supremex as security for the Obligations.
Section 9.7 Transactions With Affiliates. Except for (a) the payment of
----------------------------
salaries in the ordinary course of business consistent with prudent business
practices, (b) the furnishing of employment benefits in the ordinary course of
business consistent with prudent business practices, and (c) the transactions
permitted by Section 9.13, each of the Loan Parties and the Supremex Loan
------------
Parties will not, and will not permit any of its Subsidiaries to, enter into any
transaction, including, without limitation, the purchase, sale or exchange of
Property or the rendering of any service, with any Affiliate of such Loan Party
or such Supremex Loan Party or such Subsidiary except in the ordinary course of
and pursuant to the reasonable requirements of such Loan Party's or such
Supremex Loan Party's or such Subsidiary's business and upon fair and reasonable
terms no less favorable to such Loan Party or such Supremex Loan Party or such
Subsidiary than would be obtained in a comparable arms-length transaction with a
Person not an Affiliate of such Loan Party or such Supremex Loan Party or such
Subsidiary; provided, however, that the Reorganization Transactions shall not be
-------- -------
required to be in the ordinary course of business.
Section 9.8 Disposition of Property. Each of the Loan Parties (other than
------------------------
Holdings) and the Supremex Loan Parties (other than Holdings) will not, and will
not permit any of its Subsidiaries to, sell, lease, assign, transfer or
otherwise dispose of any of its Property, except:
(a) dispositions of Inventory in the ordinary course of business;
(b) Asset Dispositions (other than Consolidation Asset
Dispositions) by the Borrower and its Subsidiaries to Persons other than the
Borrower and its Subsidiaries if each of the following conditions have been
satisfied: (i) the Net Proceeds from any single Asset Disposition or series
of related Asset Dispositions in any fiscal year of the Borrower do not
exceed $7,500,000 and the cumulative Net Proceeds from all Asset Dispositions
do not exceed $25,000,000 and, with respect to Asset Dispositions by Supremex
and its Subsidiaries, the Net Proceeds from any such single Asset Disposition
or series of such related Asset Dispositions in any fiscal year of Supremex
do not exceed Cdn. $1,500,000 and
100
<PAGE>
the cumulative Net Proceeds from all such Asset Dispositions do not exceed
Cdn. $7,000,000, (ii) the consideration received by the Borrower or its
Subsidiaries is at least equal to the fair market value of such assets (as set
forth in a certificate satisfactory in form and substance to, and delivered to,
the Agent and the Supremex Agent and signed by a Responsible Officer of the
Borrower), (iii) the sole consideration received is cash payable at the closing,
and (iv) no Default exists at the time of or will result from such Asset
Disposition;
(c) Consolidation Asset Dispositions by the Borrower if the
following conditions have been satisfied: (i) the consideration received by
the Borrower is reasonably equivalent to the fair market value of such assets
(as set forth in a certificate satisfactory in form and substance to, and
delivered to, the Agent and signed by a Responsible Officer of the Borrower)
and (ii) no Default exists at the time of or will result from such Asset
Disposition;
(d) Asset Dispositions (other than Consolidation Asset
Dispositions) by the Borrower and its Subsidiaries (other than MTRC) to the
Borrower or any Wholly-Owned Subsidiary of the Borrower other than an
Unrestricted Subsidiary and other than MTRC if each of the following
conditions have been satisfied: (i) the aggregate fair market value of the
assets sold, disposed of or otherwise transferred by the Borrower and its
Subsidiaries and transferred to a Subsidiary of the Borrower shall not exceed
$15,000,000 in aggregate amount during any fiscal year exclusive of the
Reorganization Transaction, and, with respect to assets sold, disposed of or
otherwise transferred by Supremex and its Subsidiaries, the aggregate fair
market value of such assets sold, disposed of or otherwise transferred to a
Subsidiary of Supremex shall not exceed Cdn. $3,000,000 in aggregate amount
during any fiscal year, (ii) the assets sold, disposed of or otherwise
transferred shall continue to be subject to a perfected, first priority Lien
(except for Permitted Liens, if any, which are expressly permitted by the
Loan Documents to have priority over the Liens in favor of the Agent) in
favor of the Agent and the Lenders, and (iii) no Default exists at the time
of or will result from such Asset Disposition;
(e) transfers of assets by Wisco to Wisco III pursuant to the
Reorganization Transaction, if each of the representations and warranties set
forth in Section 7.25(c) are true and correct;
---------------
(f) dispositions of Property no longer used or useful in the
ordinary course of business; and
(g) transfers of Receivables by the Borrower and its Subsidiaries to
MTRC in accordance with the terms and provisions of the Accounts Receivable
Securitization Facility Documents;
provided, however, that (i) no Asset Dispositions may be made by any Loan
- -------- -------
Party or Supremex Loan Party or its Subsidiary pursuant to clause (d)
----------
preceding if a Default or a "Default" (as defined in the Supremex Credit
Agreement) exists at the time of such proposed Asset Disposition or would result
therefrom, (ii) no transfers of Receivables may be made by the Borrower or any
of its Subsidiaries
101
<PAGE>
pursuant to clause (g) preceding if an Event of Default or an "Event of Default"
------
(as defined in the Supremex Credit Agreement) exists at the time of such
proposed transfer or would result therefrom, (iii) no Asset Disposition that
results in any mandatory prepayment pursuant to Section 2.7(c) may be made by
--------------
any Loan Party or Supremex Loan Party or its Subsidiary unless such mandatory
prepayment is fully and timely made in accordance with Section 2.7, and (iv)
-----------
with respect to any disposition of Collateral authorized and made in compliance
with this Section 9.8 (other than Section 9.8(g)), the Liens in favor of the
----------- --------------
Agent shall continue in all proceeds of such Collateral.
Section 9.9 Sale and Leaseback. Except for the sale and lease of the
------------------
Equipment Lease Facility Equipment pursuant to the Equipment Lease Facility
Documents, each of the Loan Parties (other than Holdings) and the Supremex Loan
Parties (other than Holdings) will not, and will not permit any of its
Subsidiaries (other than Unrestricted Subsidiaries) to, enter into any
arrangement with any Person pursuant to which it leases from such Person real or
personal Property that has been or is to be sold or transferred, directly or
indirectly, by it to such Person.
Section 9.10 Lines of Business. Each of the Loan Parties (other than
-----------------
Holdings) and the Supremex Loan Parties (other than Holdings) will not, and will
not permit any of its Subsidiaries to, engage in any line or lines of business
activity other than (a) the businesses in which they are engaged on the Closing
Date (with respect to the Loan Parties) or the Second Restatement Date (with
respect to the Supremex Loan Parties) and (b) lines of business reasonably
related thereto or not substantially different from the lines of business
engaged in on the Closing Date.
Section 9.11 Environmental Protection. Each of the Loan Parties and the
------------------------
Supremex Loan Parties will not, and will not permit any of its Subsidiaries to,
(a) use (or permit any tenant to use) any of its Properties for the handling,
processing, storage, transportation or disposal of any Hazardous Material except
in compliance with applicable Environmental Laws, (b) generate any Hazardous
Material except in compliance with applicable Environmental Laws, (c) conduct
any activity that is likely to cause a Release or threatened Release of any
Hazardous Material in violation of any Environmental Law, or (d) otherwise
conduct any activity or use any of its Properties in any manner that violates or
is likely to violate any Environmental Law or create any Environmental
Liabilities for which the Borrower or any of its Subsidiaries would be
responsible, except for circumstances or events described in clauses (a) through
-----------
(d) preceding that could not have, individually or in the aggregate, a Material
- ---
Adverse Effect.
Section 9.12 Intercompany Transactions. Except as may be expressly
--------------------------
permitted or required by the Loan Documents, the Supremex Loan Documents or the
Equipment Lease Facility Documents, each of the Loan Parties and the Supremex
Loan Parties, respectively, will not, and will not permit any of its
Subsidiaries to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Subsidiary to (a) pay dividends or make any other distribution to the
Borrower or any of its Subsidiaries in respect of such Subsidiary's Capital
Stock or with respect to any other interest or participation in, or measured by,
its profits, (b) pay any indebtedness owed to the Borrower or any of its
Subsidiaries, (c) make any loan or advance to the Borrower or any of its
Subsidiaries, (d) participate in a unified cash management system, or (e) except
as may be expressly permitted or required by the Accounts
102
<PAGE>
Receivable Securitization Facility Documents, sell, lease or transfer any of its
Property to the Borrower or any of its Subsidiaries.
Section 9.13 Management Fees. Other than reasonable consulting fees paid to
---------------
Sterling on an arms-length basis for specific services rendered (all of which
fees shall be disclosed to the Agent and the Supremex Agent in writing prior to
payment), each of the Loan Parties and the Supremex Loan Parties will not, and
will not permit any of its Subsidiaries to, pay any management, consulting or
similar fees (excluding directors' fees) to any Affiliate of the Borrower or
Supremex or to any director, officer or employee of the Borrower or Supremex or
any Affiliate of the Borrower or Supremex; provided that (a) no such management,
--------
consulting or similar fees may be paid upon the occurrence and during the
continuance of a Default and (b) the aggregate of such management, consulting
and similar fees paid by Holdings, the Borrower, Supremex and their respective
Subsidiaries to Sterling during any fiscal year shall not exceed $250,000.
Section 9.14 Modification of Other Agreements. Each of the Loan Parties and
---------------------------------
the Supremex Loan Parties will not, and will not permit Holdings or any of the
Borrower's Subsidiaries to, consent to or implement any termination, amendment,
modification, supplement or waiver of (a) the Borrower Subordinated Debt
Documents, (b) the Holdings Subordinated Debt Documents, (c) the Acquisition
Documents, (d) the Tax Sharing Agreement, or (e) the certificate of
incorporation or bylaws (or analogous constitutional documents) of Holdings, the
Borrower or any of the Borrower's Subsidiaries if the same could have a Material
Adverse Effect or otherwise could be materially adverse to the Agent or the
Lenders or the Supremex Agent or the Supremex Lenders; provided, however, that
-------- -------
the Borrower and/or Holdings may amend or modify the agreements, documents and
instruments referred to in clauses (c), (d) or (e) preceding if and to the
----------- --- ---
extent that such amendment or modification is not substantive or material and
could not have a Material Adverse Effect. Without limiting the generality of
and in addition to the foregoing, the Borrower will not, and will not permit
Holdings to, consent to or implement any termination, amendment, modification,
supplement or waiver of the Borrower Subordinated Debt Documents or the Holdings
Subordinated Debt Documents (i) to increase the principal amount of any Borrower
Subordinated Debt or Holdings Subordinated Debt, (ii) to shorten the maturity
of, or any date for the payment of any principal of or interest on, any Borrower
Subordinated Debt or Holdings Subordinated Debt, (iii) to increase the rate of
interest on or with respect to any Borrower Subordinated Debt or Holdings
Subordinated Debt, (iv) to otherwise amend or modify the payment or
subordination terms of any Borrower Subordinated Debt or Holdings Subordinated
Debt, (v) to increase any cost, fee or expense payable by Holdings, the Borrower
or any of the Borrower's Subsidiaries, (vi) to provide any Collateral or
security for payment or collection of any Borrower Subordinated Debt or Holdings
Subordinated Debt, or (vii) in any other respect that could be materially
adverse to the Borrower or Holdings. Notwithstanding anything to the contrary
contained in this Agreement, each of the Loan Parties and the Supremex Loan
Parties will not, and will not permit any of its Subsidiaries to, consent to or
implement any termination, amendment, modification, supplement or waiver of any
of the Equipment Lease Facility Documents or any of the Accounts Receivable
Securitization Facility Documents without the prior written consent of the
Agent and the Required Lenders and the Supremex Agent and the Supremex Required
Lenders; provided, however, that immaterial amendments, modifications,
-------- -------
supplements and waivers may be effectuated without the prior written consent of
the Required Lenders or the Supremex Required Lenders.
103
<PAGE>
Section 9.15 Bank Accounts. Each of the Loan Parties and the Supremex Loan
-------------
Parties will not, and will not permit any of its Subsidiaries (other than
Unrestricted Subsidiaries and MTRC) to, create or maintain any bank accounts
other than those listed on Schedule 7.22 (as such Schedule may be supplemented
-------------
in accordance with Section 13.26) or consented to in writing by the Agent or,
-------------
with respect to Supremex and its Subsidiaries, the Supremex Agent, which consent
shall not be unreasonably withheld.
Section 9.16 ERISA; Canadian Plans. Each of the Loan Parties and the
---------------------
Supremex Loan Parties will not:
(a) allow, or take (or permit any ERISA Affiliate or Supremex
Loan Party to take) any action which would cause, any unfunded or
unreserved liability for benefits under any Plan (exclusive of any
Multiemployer Plan) or Canadian Plan to exist or to be created that exceeds
$1,500,000 with respect to any such Plan or $3,000,000 or Cdn. $1,500,000
with respect to any such Canadian Plans with respect to all such Plans in
the aggregate or Cdn. $3,000,000 with respect to all such Canadian Plans in
the aggregate;
(b) permit default in repayment of the ESOP Loan;
(c) take any action, including without limitation, amending the
Mail-Well ESOP, that would have the effect of accelerating or increasing
the Borrower's repurchase liability with respect to the Mail-Well ESOP;
provided, however, that the First Mail-Well ESOP Loan (as defined in the
-------- -------
Second Restated Agreement), the Third Mail-Well ESOP Loan (as defined in
the Second Restated Agreement) and the Fourth Mail-Well ESOP Loan (as
defined in the Second Restated Agreement) may be prepaid if and to the
extent that a corresponding prepayment is made with respect to the ESOP
Loans; or
(d) with respect to any Multiemployer Plan, allow, or take (or
permit any ERISA Affiliate to take) any action which would cause, any
unfunded or unreserved liability for benefits under any Multiemployer Plan
to exist or to be created, either individually as to any such Plan or in
the aggregate as to all such Plans, that could, upon any partial or
complete withdrawal from or termination of any such Multiemployer Plan or
Plans, have a Material Adverse Effect.
Section 9.17 Synthetic Leases. The Borrower and its Subsidiaries shall not
----------------
maintain or enter into Synthetic Leases for which the residual value of the
leased Property upon the expiration of the primary lease terms that may be
required to be paid by the Borrower or any of its Subsidiaries (as primary
obligor, guarantor or otherwise) exceeds $30,000,000 in aggregate amount
outstanding at any time, exclusive of the Equipment Lease Facility.
104
<PAGE>
ARTICLE 10
Financial Covenants
-------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby jointly and severally covenants and agrees that, as long as the
Obligations or the Supremex Obligations or any part thereof are outstanding or
any Lender or Supremex Lender has any Commitment hereunder or any Supremex
Commitment under the Supremex Credit Agreement, respectively, or any Letter of
Credit or letter of credit or bankers' acceptance remains outstanding hereunder
or under the Supremex Credit Agreement, respectively, such Loan Party will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 10.1 Consolidated Current Ratio. The Borrower will at all times
--------------------------
maintain a Consolidated Current Ratio of not less than 1.05 to 1.00.
Section 10.2 Consolidated Net Worth. The Borrower will at all times
----------------------
maintain Consolidated Net Worth in an amount not less than the sum of (a)
$95,000,000, plus (b) 75% of cumulative Consolidated Net Income, if positive for
----
any fiscal quarter, i.e., exclusive of negative Consolidated Net Income for any
fiscal quarter, after the Third Restatement Date, plus (c) all Net Proceeds of
----
each Equity Issuance after the Third Restatement Date.
Section 10.3 Ratio of Total Debt to EBITDA. The Borrower will not permit
-----------------------------
the ratio, calculated as of the end of each fiscal quarter of the Borrower
commencing with the fiscal quarter ended December 31, 1996, of (i) Total Debt to
(ii) EBITDA for the four fiscal quarters of the Borrower then ended, to exceed
the ratio set forth below for the period during which such fiscal quarter end
occurs:
<TABLE>
<CAPTION>
Period Ratio
------ ----
<S> <C>
From the Third Restatement Date through December 31, 1996 3.75 to 1.00
From January 1, 1997, through December 31, 1997 3.75 to 1.00
From January 1, 1998, through December 31, 1998 3.50 to 1.00
From January 1, 1999, through December 31, 1999 3.00 to 1.00
From January 1, 2000, through December 31, 2000 2.50 to 1.00
From January 1, 2001 and at all times thereafter 2.00 to 1.00
</TABLE>
Section 10.4 Ratio of Total Debt to Total Capitalization. The Borrower will
-------------------------------------------
not permit the ratio, calculated as of the end of each fiscal quarter of the
Borrower, of Total Debt to Total Capitalization to exceed the ratio set forth
below for the period during which such fiscal quarter end occurs:
105
<PAGE>
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Third Restatement Date through December 31, 1996 0.80 to 1.00
From January 1, 1997, through December 31, 1997 0.80 to 1.00
From January 1, 1998, through December 31, 1998 0.75 to 1.00
From January 1, 1999, through December 31, 1999 0.70 to 1.00
From January 1, 2000, through December 31, 2000 0.65 to 1.00
From January 1, 2001, and at all times thereafter 0.60 to 1.00
</TABLE>
Section 10.5 Consolidated Fixed Charge Coverage Ratio. The Borrower will
----------------------------------------
not permit the Consolidated Fixed Charge Coverage Ratio, calculated as of the
end of each fiscal quarter of the Borrower commencing with the fiscal quarter
ended December 31, 1996, for the four fiscal quarters of the Borrower then ended
to be less than 1.10 to 1.00.
Section 10.6 Consolidated Interest Coverage Ratio. The Borrower will not
------------------------------------
permit the Consolidated Interest Coverage Ratio, calculated as of the end of
each fiscal quarter of the Borrower commencing with the fiscal quarter ended
December 31, 1996, for the four fiscal quarters of the Borrower then ended to be
less than the ratio set forth below for the period during which such fiscal
quarter end occurs:
<TABLE>
<CAPTION>
Period Ratio
------ -----
<S> <C>
From the Third Restatement Date through December 31, 1996 2.50 to 1.00
From January 1, 1997, through December 31, 1997 3.00 to 1.00
From January 1, 1998, through December 31, 1998 3.50 to 1.00
From January 1, 1999, through December 31, 1999 4.00 to 1.00
From January 1, 2000, through December 31, 2000 4.50 to 1.00
From January 1, 2001, and at all times thereafter 5.00 to 1.00
</TABLE>
Section 10.7 Capital Expenditures. The Borrower will not permit the
--------------------
aggregate Capital Expenditures of the Borrower and its Subsidiaries during any
fiscal year of the Borrower to exceed an amount equal to the sum of
(a)$23,000,000, plus (b) the Carryover Capital Expenditures Amount for such
----
fiscal year (each such sum being "Permitted Capital Expenditures" for such
------------------------------
fiscal year). In addition to Permitted Capital Expenditures, so long as no
Default or Event of Default has occurred or will occur as a result of such
Capital Expenditure, the Borrower and its Subsidiaries may, subsequent to fiscal
year 1995, make additional Capital Expenditures (the "Additional Capital
------------------
Expenditures") from the (A) proceeds of an Insurance Recovery if and to the
- ------------
extent permitted by Section 8.5(b), (B) from Excess Cash Flow retained by the
--------------
Borrower after making the prepayment required with respect to such Excess Cash
Flow under Section 2.7(a) on the date specified in such section and after giving
--------------
effect to any and all loans, Restricted Payments or Investments made as a result
of such Excess Cash Flow, and (C) from "Excess Cash Flow" (as defined in the
Supremex Credit Agreement) retained by Supremex after the prepayment required
with respect to such "Excess Cash Flow" under Section 2.7(a) of the Supremex
Credit Agreement on the date specified in such
106
<PAGE>
section and after giving effect to any and all loans, Restricted Payments or
Investments made as a result of such "Excess Cash Flow."
ARTICLE 11
Default
-------
Section 11.1 Events of Default. Each of the following shall be deemed an
-----------------
"Event of Default":
- -----------------
(a) The Borrower shall fail to pay, repay or prepay when due any
amount of principal of any Loan or any amount of any Reimbursement
Obligation owing to the Agent or any Lender pursuant to this Agreement or
any other Loan Document, or the Borrower or any other Loan Party shall fail
to pay within five days after the due date thereof any interest, fee or
other amount or other Obligation owing by it to the Agent or any Lender
pursuant to this Agreement or any other Loan Document.
(b) Any representation or warranty made or deemed made by the
Borrower or any Loan Party in any Loan Document or in any certificate,
report, notice or financial statement furnished at any time in connection
with this Agreement or any other Loan Document shall be false, misleading
or erroneous in any material respect when made or deemed to have been made.
(c) Any Loan Party (other than Holdings) or Supremex Loan Party
(other than Holdings) shall fail to perform, observe or comply with any
covenant, agreement or term contained in Sections 5.1, 8.1(i), 8.1(l), 8.2
------------ ------ ------ ---
(other than the last sentence of Section 8.2), 8.6, 8.7, 8.8, 8.9, 8.10,
----------- --- --- --- --- ----
8.15, Article 9 or Article 10 of this Agreement; any Loan Party shall fail
---- --------- ----------
to perform, observe or comply with any covenant, agreement or term
contained in Sections 5.3, 8.1 (other than Sections 8.1(i) or 8.1(l)), 8.4,
------------ --- --------------- ------ ---
8.5 or 8.13 and such failure is not remedied or waived within ten days
--- ----
after such failure commenced; the Borrower shall fail to perform, observe
or comply with any covenant, agreement or term contained in the Borrower
Security Agreement other than in Section 4.05, 4.08, 4.11(b), 4.11(c), 4.12
or 4.16 thereof; any Subsidiary of the Borrower shall fail to perform,
observe or comply with any covenant, agreement or term contained in its
Subsidiary Security Agreement other than in Section 4.05, 4.08, 4.11(b),
4.11(c), 4.12 or 4.15 thereof; Holdings shall fail to perform, observe or
comply with any covenant, agreement or term contained in the Holdings
Security Agreement other than in Section 4.05, 4.08, 4.11(b), 4.11(c), 4.12
or 4.16 thereof; the Borrower or any Subsidiary of the Borrower shall fail
to perform, observe or comply with any covenant, agreement or term
contained in Section 2.1(e), 2.1(f) or 4.1(c) of any Mortgage executed by
it; Holdings shall fail to perform, observe or comply with any covenant,
agreement or term contained in the Holdings Guaranty other than in Section
7(a) thereof; any Subsidiary of the Borrower shall fail to perform, observe
or comply with any covenant, agreement or term contained in its Subsidiary
Guaranty, subject to any grace period applicable to such covenant,
agreement or term in this Agreement to the extent this Agreement is
incorporated therein by reference; or any Loan Party shall fail to perform,
observe or comply with any
107
<PAGE>
other covenant, agreement or term contained in this Agreement or any other Loan
Document (other than covenants to pay the Obligations) and such failure is not
remedied or waived within the earlier to occur of 30 days after such failure
commenced or, if a different grace period is expressly made applicable in such
other Loan Documents, such applicable grace period.
(d) Any of the Loan Parties shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due.
(e) Any Loan Party shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, examiner,
liquidator or the like of itself or of all or any substantial part of its
Property, (ii) make a general assignment for the benefit of its creditors, (iii)
commence a voluntary case under the United States Bankruptcy Code (as now or
hereafter in effect, the "Bankruptcy Code"), (iv) institute any proceeding or
---------------
file a petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, winding-up or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code, or (vi) take any corporate or
other action for the purpose of effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the application,
approval or consent of any of the Loan Parties in any court of competent
jurisdiction, seeking (i) its reorganization, liquidation, dissolution,
arrangement or winding-up, or the composition or readjustment of its debts, (ii)
the appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of any of the Loan Parties or of all or any substantial part of its
Property, or (iii) similar relief in respect of any of the Loan Parties under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of the
foregoing shall be entered and continue unstayed and in effect, for a period of
60 or more days; or an order for relief against any of the Loan Parties shall be
entered in an involuntary case under the Bankruptcy Code.
(g) Any of the Loan Parties shall fail to discharge within a period of
30 days after the commencement thereof any attachment, sequestration, forfeiture
or similar proceeding or proceedings involving an aggregate amount in excess of
$2,500,000 against any of its Properties.
(h) A final judgment or judgments for the payment of money in excess of
$2,500,000 in the aggregate shall be rendered by a court or courts against the
Loan Parties or any of them on claims not covered by insurance or as to which
the insurance carrier has denied responsibility and the same shall not be
discharged, or a stay of execution thereof shall not be procured, within 30 days
from the date of entry thereof and the Loan Parties shall not, within said
period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal.
108
<PAGE>
(i) Any of the Loan Parties shall fail to pay when due any principal of
or interest on any Debt (other than the Obligations) having (either individually
or in the aggregate) a principal amount of at least $5,000,000, or the maturity
of any such Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any event shall
have occurred (and shall not have been waived or otherwise cured) that permits
(or, with the giving of notice or lapse of time or both, would permit) any
holder or holders of such Debt or any Person acting on behalf of such holder or
holders to accelerate the maturity thereof or require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Loan Party or any
of its shareholders, or any Loan Party shall deny that it has any further
liability or obligation under any of the Loan Documents, or any Lien created by
the Loan Documents shall for any reason cease to be a valid, first priority
perfected Lien (except for Permitted Liens, if any, which are expressly
permitted by the Loan Documents to have priority over the Liens in favor of the
Agent) upon any of the Collateral purported to be covered thereby.
(k) Any of the following events shall occur or exist with respect to any
Loan Party or any ERISA Affiliate: (i) any Prohibited Transaction involving any
Plan; (ii) any Reportable Event with respect to any Pension Plan; (iii) the
filing under Section 4041 of ERISA of a notice of intent to terminate any
Pension Plan or the termination of any Pension Plan; (iv) any event or
circumstance that might constitute grounds entitling the PBGC to institute
proceedings under Section 4042 of ERISA for the termination of, or for the
appointment of a trustee to administer, any Pension Plan, or the institution by
the PBGC of any such proceedings; (v) any "accumulated funding deficiency" (as
defined in Section 406 of ERISA or Section 412 of the Code), whether or not
waived, shall exist with respect to any Plan; or (vi) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Plan or the
reorganization, insolvency or termination of any Pension Plan; and in each case
above, such event or condition, together with all other events or conditions, if
any, have subjected or could in the reasonable opinion of Required Lenders
subject any Loan Party or any ERISA Affiliate to any tax, penalty or other
liability to a Plan, a Multiemployer Plan, the PBGC or otherwise (or any
combination thereof) which in the aggregate exceed or could reasonably be
expected to exceed $5,000,000.
(l) The occurrence of a Change of Control.
(m) If, at any time, the subordination provisions of the Borrower
Indenture, any other Borrower Subordinated Debt Documents or any Holdings
Subordinated Debt Documents (if any such subordination provisions exist in the
Holdings Subordinated Debt Documents) shall be invalidated or shall otherwise
cease to be in full force and effect.
(n) The occurrence of (i) a default under (including, without
limitation, a "Default" as such term is used or defined in) the Borrower
Subordinated Notes, the Borrower Indenture or any other Borrower Subordinated
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Debt Documents or Holdings Subordinated Debt Documents, unless (A) such
default has been waived, cured or consented to in accordance with such
documents, (B) such default is not a payment default, (C) the maturity of
the Debt affected thereby has not been accelerated, (D) a blockage under
Section 1403(b) of the Borrower Indenture has not been invoked, and (E)
such waiver or consent is not made in connection with any amendment or
modification of any such documents in violation of Section 9.14 or Section
------------
908 of the Borrower Indenture or in connection with any payment to the
holders of any Borrower Subordinated Debt or Holdings Subordinated Debt,
(ii) a payment default under (including, without limitation, a payment
"Default" as such term is used or defined in) the Borrower Subordinated
Notes, the Borrower Indenture or any other Borrower Subordinated Debt
Documents or Holdings Subordinated Debt Documents, (iii) an event of
default under (including, without limitation, an "Event of Default" as such
term is used or defined in) the Borrower Subordinated Notes, the Borrower
Indenture or any other Borrower Subordinated Debt Documents or Holdings
Subordinated Debt Documents, or (iv) any acceleration of the maturity of
the Borrower Subordinated Notes or any other Borrower Subordinated Debt or
Holdings Subordinated Debt.
(o) If, at any time, (i) any event or circumstance shall occur
which gives the trustee under the Borrower Indenture, or the holders of the
Borrower Subordinated Notes, the right to request or require the Borrower
to redeem, purchase or prepay such Borrower Subordinated Notes, or (ii) the
Borrower shall, or shall cause the trustee under the Borrower Indenture to,
initiate or give (A) any election or notice relating to any redemption of
the Borrower Subordinated Notes or (B) any election or notice relating to
any defeasance of the Borrower Subordinated Notes pursuant to the Borrower
Indenture.
(p) The occurrence of (i) any "Event of Default" as such term is
defined in the Supremex Credit Agreement, (ii) any "Loan Agreement Event of
Default" as such term is defined in the Equipment Lease Facility Loan
Agreement, or (iii) any "Event of Termination" as such term is defined in
the Purchase and Contribution Agreement which results in the occurrence of
the "Facility Termination Date" as such term is defined in the Purchase and
Contribution Agreement.
Section 11.2 Remedies. If any Event of Default shall occur and be
--------
continuing, the Agent may (subject to Section 13.11 with respect to clauses (a)
------------- -----------
and (b) below) and, if directed by the Required Lenders, the Agent shall do any
---
one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
------------
accrued and unpaid interest on the Loans and all other amounts payable by
the Borrower and/or any other Loan Party under the Loan Documents
immediately due and payable, and the same shall thereupon become
immediately due and payable, without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, protest
or other formalities of any kind, all of which are hereby expressly waived
by the Borrower and the other Loan Parties;
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(b) Termination of Commitments. Terminate the Commitments (including,
--------------------------
without limitation, the obligation of the Issuing Bank to issue Letters of
Credit) without notice to the Borrower or any other Loan Party;
(c) Judgment. Reduce any claim to judgment;
--------
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to
-----------
the Agent for the benefit of the Agent and the Lenders to secure payment and
performance of the Obligations in accordance with the terms of the Loan
Documents; or
(e) Rights. Exercise any and all rights and remedies afforded by the
------
laws of the State of Texas or any other jurisdiction, by any of the Loan
Documents, by equity or otherwise;
provided, however, that upon (i) the occurrence of an Event of Default under
- -------- -------
Section 11.1(e) or Section 11.1(f), the Commitments of all of the Lenders
- --------------- ---------------
(including, without limitation, the obligation of the Issuing Bank to issue
Letters of Credit) shall immediately and automatically terminate, and the
outstanding principal of and accrued and unpaid interest on the Loans and all
other amounts payable by the Borrower and/or any other Loan Party under the Loan
Documents shall thereupon become immediately and automatically due and payable,
and (ii) upon the occurrence of an Event of Default under clause (iv) of Section
----------- -------
11.1(n) or under Section 11.1(o), the outstanding principal of and accrued and
- ------- ---------------
unpaid interest on the Loans and all other amounts payable by the Borrower
and/or any other Loan Party under the Loan Documents shall thereupon become
immediately and automatically due and payable, all (with respect to each of
clause (i) and (ii) preceding) without notice, demand, presentment, notice of
- ---------- ----
dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived by each
of the Borrower and the other Loan Parties which is now or hereafter a party to
this Agreement.
Section 11.3 Cash Collateral. If an Event of Default shall have occurred
--------------
and be continuing, the Borrower shall, if requested by the Agent or the Required
Lenders, pledge to the Agent as security for the Obligations an amount in
immediately available funds equal to the then outstanding Letter of Credit
Liabilities, such funds to be held in a cash collateral account satisfactory to
the Agent without any right of withdrawal by the Borrower or any other Loan
Party.
Section 11.4 Performance by the Agent. If any Loan Party shall fail to
-----------------------
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of the Required Lenders, perform or
attempt to perform such covenant or agreement on behalf of such Loan Party. In
such event, the Borrower shall, at the request of the Agent, promptly pay any
amount expended by the Agent or the Lenders in connection with such performance
or attempted performance to the Agent at the Principal Office, together with
interest thereon at the applicable Default Rate from and including the date of
such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that neither the Agent nor
any Lender shall have any liability or responsibility for the performance of any
obligation of the Borrower or any other Loan Party under this Agreement or any
of the other Loan Documents.
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ARTICLE 12
The Agent
---------
Section 12.1 Appointment, Powers and Immunities. Each Lender hereby
----------------------------------
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Neither the Agent
nor any of its Affiliates, officers, directors, employees, attorneys or agents
shall be liable for any action taken or omitted to be taken by any of them
hereunder or otherwise in connection with this Agreement or any of the other
Loan Documents except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the preceding sentence, the
Agent (a) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent, (b) shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents, and shall not by reason of this Agreement or any other
Loan Document be a trustee or fiduciary for any Lender, (c) shall not be
required to initiate any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Lenders,
(d) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder, (e) may consult with legal counsel
(including counsel for any Loan Party), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and (f) shall incur no liability under or in respect of
any Loan Document by acting upon any notice, consent, certificate or other
instrument or writing reasonably believed by it to be genuine and signed or sent
by the proper party or parties. As to any matters not expressly provided for by
this Agreement, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders;
provided, however, that the Agent shall not be required to take any action which
- -------- -------
exposes the Agent to liability or which is contrary to this Agreement or any
other Loan Document or applicable law.
Section 12.2 Rights of Agent as a Lender. With respect to its Commitments,
---------------------------
the Loans made by it and the Notes issued to it, Banque Paribas (and any
successor acting as Agent) in its capacity as a Lender hereunder shall have the
same rights and powers hereunder as any other Lender and may exercise the same
as though it were not acting as the Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Agent in its
individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, own
securities of, and generally engage in any kind of banking, trust or other
business with, the Loan
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Parties or any of their Affiliates and any other Person who may do business with
or own securities of the Loan Parties or any of their Affiliates, all as if it
were not acting as the Agent and without any duty to account therefor to the
Lenders. Without limiting the generality of the foregoing, an Affiliate of the
Agent purchased 24,397 shares of Holdings Common Stock on or about the First
Restatement Date. Each Lender acknowledges the potential conflict of interest
(a) between Banque Paribas (i) as a Lender holding disproportionate interests in
the various Commitments and Loans and (ii) as the Agent under this Agreement and
(b) between Banque Paribas (or an Affiliate of Banque Paribas) (i) as a
stockholder of Holdings and (ii) as the Agent under this Agreement, and each
Lender expressly consents to, and waives any claim based upon, such potential
conflicts of interest.
Section 12.3 Defaults. The Agent shall not be deemed to have knowledge or
--------
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on the Loans or of commitment fees) unless the Agent has received
notice from a Lender or the Borrower specifying such Default and stating that
such notice is a "Notice of Default". In the event that the Agent receives such
a notice of the occurrence of a Default, the Agent shall give prompt notice
thereof to the Lenders (and shall give each Lender prompt notice of each such
non-payment). The Agent shall (subject to Section 12.1) take such action with
------------
respect to such Default as shall be directed by the Required Lenders, provided
--------
that unless and until the Agent shall have received such directions, the Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall seem advisable and in the
best interest of the Lenders.
SECTION 12.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY THE
---------------
AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
------------- ----
BORROWER AND THE OTHER LOAN PARTIES UNDER SECTIONS 13.1 AND 13.2), RATABLY IN
------------- ----
ACCORDANCE WITH ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF THE AGGREGATE
COMMITMENT PERCENTAGES), ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE
TAKEN BY THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED,
--------
FURTHER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE
EXTENT CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT THE
AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT (EXCEPT TO THE
EXTENT THE SAME ARE CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
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MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION 12.4, EACH
------------
LENDER AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE
(CALCULATED ON THE BASIS OF THE AGGREGATE COMMITMENT PERCENTAGES) OF ANY AND ALL
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE AGENT IS NOT
PROMPTLY REIMBURSED FOR SUCH EXPENSES BY THE BORROWER OR ANOTHER LOAN PARTY.
Section 12.5 Independent Credit Decisions. Each Lender agrees that it has
----------------------------
independently and without reliance on the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Holdings, the Borrower and the other Loan Parties and its own
decision to enter into this Agreement and that it will, independently and
without reliance upon the Agent or any other Lender, and based upon such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under this
Agreement or any of the other Loan Documents. The Agent shall not be required
to keep itself informed as to the performance or observance by any Loan Party of
this Agreement or any other Loan Document or to inspect the Properties or books
of any Loan Party. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Lender with any credit or other financial
information concerning the affairs, financial condition or business of any Loan
Party (or any of their Affiliates) which may come into the possession of the
Agent or any of its Affiliates.
Section 12.6 Several Commitments. The Commitments and other obligations of
-------------------
the Lenders under this Agreement are several. The default by any Lender in
making a Loan in accordance with its Commitment shall not relieve the other
Lenders of their obligations under this Agreement. In the event of any default
by any Lender in making any Loan, each nondefaulting Lender shall be obligated
to make its Loan but shall not be obligated to advance the amount which the
defaulting Lender was required to advance hereunder. In no event shall any
Lender be required to advance an amount or amounts with respect to any of the
Loans which would in the aggregate exceed such Lender's Commitment with respect
to such Loans. No Lender shall be responsible for any act or omission of any
other Lender.
Section 12.7 Successor Agent. Subject to the appointment and acceptance of
---------------
a successor Agent as provided below, the Agent may resign at any time by giving
notice thereof to the Lenders and the Borrower and the Agent may be removed at
any time with cause by the Required Lenders. Upon any such resignation or
removal, the Required Lenders will have the right, after notice to and
consultation with the Borrower and with the prior written consent of the
Borrower (which consent shall not be unreasonably withheld, conditioned or
delayed) if (but only if) no Default has then
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occurred and is continuing, to appoint another Lender as a successor Agent. If
no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the U.S. or any state thereof or of a foreign country if acting through its U.S.
branch and having combined capital and surplus of at least $100,000,000. Upon
the acceptance of its appointment as successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges,
immunities and duties of the resigning or removed Agent, and the resigning or
removed Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. After any Agent's resignation or removal
as Agent, the provisions of this Article 12 shall continue in effect for its
----------
benefit in respect of any actions taken or omitted to be taken by it while it
was the Agent. Each Agent (including each successor Agent) agrees that, so long
as it is acting as Agent under this Agreement, it shall be a Lender under this
Agreement and shall have or hold the lesser of (a) Commitments, Loans and/or
Letter of Credit aggregating at least $10,000,000 in amount, calculated based
upon the sum of the Agent's (as a Lender hereunder) outstanding Revolving Credit
Loans Commitment (or, if such Commitment has terminated or expired, the
outstanding principal amount of its Revolving Credit Loans and its Letter of
Credit Liabilities), plus the outstanding principal amount of its Term Loans,
----
plus its outstanding Acquisition Loans Commitments, plus the outstanding
- ---- ----
principal amount of its Acquisition Loans or (b) an Aggregate Commitment
Percentage of at least 7.5%.
ARTICLE 13
Miscellaneous
-------------
Section 13.1 Expenses. Whether or not the transactions contemplated hereby
--------
are consummated, the Borrower hereby agrees, on demand, to pay or reimburse the
Agent and each of the Lenders for paying: (a) all reasonable out-of-pocket
costs and expenses of the Agent in connection with the preparation, negotiation,
execution and delivery of this Agreement and the other Loan Documents, and any
and all amendments, modifications, renewals, extensions and supplements thereof
and thereto, and the syndication of the Loans, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent, (b) all
reasonable out-of-pocket costs and expenses of the Agent and the Lenders in
connection with any Default, the exercise of any right or remedy and the
enforcement of this Agreement or any other Loan Document or any term or
provision hereof or thereof, including, without limitation, the reasonable fees
and expenses of legal counsel for the Agent and the Lenders, (c) all transfer,
stamp, documentary or other similar taxes, assessments or charges levied by any
Governmental Authority in respect of this Agreement or any of the other Loan
Documents, (d) all costs, expenses, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any Lien
contemplated by this Agreement or any other Loan Document, and (e) all
reasonable out-of-pocket costs and expenses incurred by the Agent in connection
with due diligence, computer services, copying, appraisals, environmental
audits, collateral audits, field exams, insurance, consultants and search
reports. Without incurring any liability for its failure to do so and without
affecting its right to be paid for such costs and expenses,
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the Agent will, prior to the occurrence of a Default, endeavor to advise the
Borrower of any such costs and expenses to be incurred and which are
individually in excess of $5,000.
SECTION 13.2 INDEMNIFICATION. THE BORROWER AND EACH OTHER LOAN PARTY SHALL
----------------
INDEMNIFY THE AGENT AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' AND CONSULTANTS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION,
DELIVERY, PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN
DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C)
THE RELATED TRANSACTIONS, (D) ANY BREACH BY ANY LOAN PARTY OF ANY
REPRESENTATION, WARRANTY, COVENANT OR OTHER AGREEMENT CONTAINED IN ANY OF THE
LOAN DOCUMENTS, (E) THE USE OR PROPOSED USE OF ANY LOAN OR LETTER OF CREDIT, (F)
ANY AND ALL TAXES, LEVIES, DEDUCTIONS AND CHARGES IMPOSED ON THE AGENT, THE
ISSUING BANK OR ANY LENDER IN RESPECT OF ANY LOAN OR LETTER OF CREDIT, (G) THE
PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL OR CLEANUP OF ANY
HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY OF THE PROPERTIES
OF ANY LOAN PARTY, EXCEPT TO THE EXTENT THAT THE LOSS, DAMAGE OR CLAIM IS THE
DIRECT RESULT OF AN INTENTIONAL AND AFFIRMATIVE ACT BY THE PERSON TO BE
INDEMNIFIED THAT CONSTITUTES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
PERSON, OR (H) ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING, INCLUDING,
WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION OR OTHER PROCEEDING
RELATING TO ANY OF THE FOREGOING; BUT EXCLUDING ANY OF THE FOREGOING TO THE
EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON TO BE
INDEMNIFIED. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION 13.2 SHALL BE INDEMNIFIED FROM AND
------------
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER TERM
OR PROVISION OF THIS AGREEMENT, THE OBLIGATIONS OF THE BORROWER AND THE OTHER
LOAN PARTIES UNDER THIS SECTION 13.2 SHALL SURVIVE THE REPAYMENT OF THE LOANS.
------------
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Section 13.3 Limitation of Liability. None of the Agent, any Lender or any
-----------------------
Affiliate, officer, director, employee, attorney or agent thereof shall be
liable for any error of judgment or act done in good faith, or be otherwise
liable or responsible under any circumstances whatsoever (including such
Person's negligence), except for such Person's gross negligence or willful
misconduct. None of the Agent, any Lender or any Affiliate, officer, director,
employee, attorney or agent thereof shall have any liability with respect to,
and the Borrower and each other Loan Party hereby waives, releases and agrees
not to sue any of them upon, any claim for any special, indirect, incidental or
consequential damages suffered or incurred by the Borrower or any other Loan
Party in connection with, arising out of or in any way related to this Agreement
or any of the other Loan Documents, or any of the transactions contemplated by
this Agreement or any of the other Loan Documents. The Borrower and each other
Loan Party hereby waives, releases and agrees not to sue the Agent or any Lender
or any of their respective Affiliates, officers, directors, employees, attorneys
or agents for exemplary or punitive damages in respect of any claim in
connection with, arising out of or in any way related to this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers and other
-------
professional Persons and consultants retained by the Agent and the Lenders shall
have the right to act exclusively in the interests of the Agent and the Lenders
and shall have no duty of disclosure, duty of loyalty, duty of care or other
duty or obligation of any type or nature whatsoever to any Loan Party or any of
its shareholders or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between each Loan
-------------------------
Party and each Lender is solely that of debtor and creditor, and neither the
Agent nor any Lender has any fiduciary or other special relationship with the
Borrower or any other Loan Party, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between the Borrower
and any Lender, or any other Loan Party and any Lender, to be other than that of
debtor and creditor. No joint venture or partnership is created by this
Agreement among the Lenders or among the Borrower or any other Loan Party and
the Lenders.
Section 13.6 Equitable Relief. Each of the Loan Parties recognizes that in
----------------
the event it or any other Loan Party fails to pay, perform, observe or discharge
any or all of the Obligations, any remedy at law may prove to be inadequate
relief to the Agent and the Lenders. Each of the Loan Parties therefore agrees
that the Agent and the Lenders, if the Agent or the Lenders so request, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of the
------------------------------
Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege under this Agreement or any
other Loan Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
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Section 13.8 Successors and Assigns.
----------------------
(a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. Neither the
Borrower nor any other Loan Party may assign or transfer any of its rights or
obligations under this Agreement or any other Loan Document without the prior
written consent of the Agent and the Lenders. Any Lender may sell
participations in all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Loans owing to it); provided, however, that
-------- -------
(i) such Lender's obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender shall remain solely responsible to the Borrower for the performance
of such obligations, (iii) such Lender shall remain the holder of its Notes for
all purposes of this Agreement, (iv) the Loan Parties shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and the other Loan Documents, and (v) such
Lender shall not sell a participation that conveys to the participant the right
to vote or give or withhold consents under this Agreement or any other Loan
Document, other than (if and to the extent that such Lender so agrees) the right
to vote upon or consent to (A) any increase of such Lender's Commitments (other
than an increase resulting from an assignment to or in favor of such Lender from
another Lender in accordance with this Agreement), (B) any reduction of the
principal amount of, or interest to be paid on, the Loans of such Lender, (C)
any reduction of any commitment fee or other amount payable to such Lender under
any Loan Document if and to the extent that such reduction would decrease the
fee or other amount payable to the participant, (D) any postponement of any date
for the payment of any amount payable in respect of the Loans of such Lender,
(E) any release of a material portion of the Collateral from the Liens created
by the Security Documents and not otherwise expressly authorized by the Loan
Documents, and (F) any release of any Loan Party from liability under the Loan
Documents.
(b) Each of the Loan Parties and each of the Lenders agree that any
Lender (the "Assigning Lender") may at any time assign to one or more Eligible
----------------
Assignees all, or a proportionate part of all, of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, its Commitments, Loans and Letters of Credit) (each an "Assignee");
--------
provided, however, that (i) subject to the last sentence of this Section
- -------- ------- -------
13.8(b), each such assignment may be of a varying percentage of the Assigning
- ------
Lender's rights and obligations under this Agreement and the other Loan
Documents and may relate to some but not all of such rights and/or obligations,
(ii) except in the case of an assignment of all of a Lender's rights and
obligations under this Agreement and the other Loan Documents, the amount of the
Commitments and Loans of the Assigning Lender being assigned pursuant to each
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment), when aggregated with the amount of the
"Commitments" and "Loans" (as such terms are defined in the Supremex Credit
Agreement) then being assigned in connection with the Supremex Credit Agreement,
shall in no event be less than the lesser of (A) an aggregate amount equal to
$5,000,000 (calculated based upon the sum of the Revolving Credit Loans
Commitment assigned (or, if such Commitment has terminated or expired, the
aggregate outstanding principal amount of the Revolving Credit Loans and the
Letter of Credit Liabilities assigned), plus the Acquisition Loans Commitment
----
assigned (or, if such Commitment has terminated or expired, the aggregate
outstanding principal amount of the Acquisition Loans
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assigned), plus the aggregate outstanding principal amount of the Term Loans
----
assigned, plus the "Revolving Credit Loans Commitment" (as defined in the
Supremex Credit Agreement) assigned (or, if such commitment has terminated or
expired, the aggregate outstanding principal amount of the "Revolving Credit
Loans", "Letter of Credit Liabilities" and "Bankers' Acceptance Liabilities" (as
such terms are defined in the Supremex Credit Agreement) assigned), plus the
----
aggregate outstanding principal amount of the Supremex Term Loans assigned), or
(B) an aggregate amount equal to five percent of the sum of the aggregate
outstanding Revolving Credit Loans Commitments (or, if such Commitments have
terminated or expired, the aggregate outstanding principal amount of the
Revolving Credit Loans and the Letter of Credit Liabilities), plus the aggregate
----
outstanding Acquisition Loans Commitments (or, if such Commitments have
terminated or expired, the aggregate outstanding principal amount of the
Acquisition Loans), plus the aggregate outstanding principal amount of the Term
----
Loans, plus the aggregate outstanding "Revolving Credit Loans Commitments" (as
----
defined in the Supremex Credit Agreement) (or, if such commitments have
terminated or expired, the aggregate outstanding principal amount of the
"Revolving Credit Loans", "Letter of Credit Liabilities" and "Bankers'
Acceptance Liabilities" (as such terms are defined in the Supremex Credit
Agreement)), plus the aggregate outstanding principal amount of the Supremex
----
Term Loans, and (iii) the parties to each such assignment shall execute and
deliver to the Agent for its acceptance and recording in the Register (as
defined below), an Assignment and Acceptance, together with the Notes subject to
such assignment, and a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the effective date
specified in each Assignment and Acceptance, which effective date shall be at
least five Business Days after the execution thereof, or, if so specified in
such Assignment and Acceptance, the date of acceptance thereof by the Agent, (1)
the Assignee thereunder shall be a party hereto as a "Lender" and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and under the Loan Documents, and (2) the Assigning Lender thereunder shall, to
the extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and be
released from its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of a Lender's rights and obligations under the Loan Documents, such
Lender shall cease to be a party thereto, provided that such Lender's rights
under Article 4, Section 13.1 and Section 13.2 accrued through the date of
--------- ------------ ------------
assignment shall continue). Notwithstanding anything to the contrary contained
in this Section 13.8, each Assigning Lender shall, in connection with any
------------
assignment of its Term Loans or Acquisition Loans (or any commitment relating
thereto or any portion thereof or interest therein) to an assignee and
concurrently with each such assignment, also assign to such assignee the same
percentage of the Acquisition Loans or Terms Loans, respectively, the Supremex
Term Loans and the "Financing Loans" (as defined in the Equipment Lease Facility
Documents) then owned by such Assigning Lender (if, but only if, such Assigning
Lender then holds any such other Loans or loans or commitments therefor) as the
percentage of the Term Loans or Acquisition Loans, respectively, owned by such
Assigning Lender then being assigned. (For example, in the event that an
Assigning Lender proposes to assign 50% of its Term Loans to an assignee, such
Assigning Lender shall also, concurrently therewith, assign 50% of each of its
Acquisition Loans, its Supremex Term Loans and its "Financing Loans" (as defined
in the Equipment Lease Facility Documents) to such assignee.)
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(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; (ii) such Assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or the performance or observance by any Loan Party
of its obligations under the Loan Documents; (iii) such Assignee confirms that
it has received a copy of the other Loan Documents, together with copies of the
financial statements referred to in Section 7.2 and such other documents and
-----------
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent or such Assigning Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents; (v) such Assignee confirms
that it is an Eligible Assignee; (vi) such Assignee appoints and authorizes the
Agent to take such action as agent on its behalf and exercise such powers under
the Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; and (vii) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
(d) The Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
- ---------
all purposes, absent manifest error, and the Borrower, the Agent and the Lenders
may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes under the Loan Documents. The Register shall be
available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible Assignee,
together with the Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit B hereto, (i) accept such Assignment and Acceptance, (ii) record the
- ---------
information contained therein in the Register, and (iii) give prompt written
notice thereof to the Borrower. Within five Business Days after its receipt of
such notice the Borrower, at its expense, shall execute and deliver to the Agent
in exchange for each surrendered Note evidencing particular Loans, a new Note
evidencing each such Loans payable to the order of such Eligible Assignee in an
amount equal to such Loans assigned to it and, if the Assigning Lender has
retained any Loans, a new Note evidencing each such Loans payable to the order
of the Assigning Lender in the amount of such Loans retained by it (each such
promissory note shall constitute a "Note" for purposes of the Loan Documents).
Such new Notes shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibits A, C, D
---------- - -
and E hereto, as applicable.
-
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<PAGE>
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 13.8, disclose to
------------
the Assignee or participant or proposed Assignee or participant any information
relating to Holdings, the Borrower, any other Loan Party or any of their
respective Subsidiaries furnished to such Lender by or on behalf of Holdings,
the Borrower, any other Loan Party or any of their respective Subsidiaries;
provided that each such actual or proposed Assignee or participant shall agree
- --------
to be bound by the provisions of Section 13.20.
-------------
(g) Any Lender may assign and pledge all or any of the Notes held by it to
any Federal Reserve Bank or the U.S. Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System and/or Federal Reserve
Bank; provided, that, any payment made by the Borrower for the benefit of such
--------
assigning and/or pledging Lender in accordance with the terms of the Loan
Documents shall satisfy the Borrower's obligations under the Loan Documents in
respect thereof to the extent of such payment. No such assignment and/or pledge
shall release the assigning and/or pledging Lender from its obligations
hereunder.
(h) The Borrower shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of the Borrower, shall
------------------------
be kept by the Agent on behalf of the Borrower at no extra charge to the
Borrower at the address to which notices to the Agent are to be sent hereunder)
on which it enters the name of the registered owner of each of the Term Loans
and Acquisition Loans evidenced by a Registered Note. Notwithstanding anything
to the contrary contained in this Section 13.8, a Registered Note and the Term
------------
Loans or Acquisition Loans evidenced thereby may be assigned or otherwise
transferred in whole or in part only by registration of such assignment or
transfer of such Registered Note and the Term Loans or Acquisition Loans
evidenced thereby on the Registered Note Register (and each Registered Note
shall expressly so provide). Any assignment or transfer of all or part of such
Term Loans or Acquisition Loans and the Registered Note evidencing the same
shall be registered on the Registered Note Register only upon surrender for
registration of assignment or transfer of the Registered Note evidencing such
Term Loans or Acquisition Loans, duly endorsed by (or accompanied by a written
instrument of assignment or transfer duly executed by) the registered noteholder
thereof, and thereupon one or more new Registered Notes in the same aggregate
principal amount shall be issued to the designated assignee(s) or transferee(s).
Prior to the due presentment for registration of transfer of any Registered
Note, the Borrower and the Agent shall treat the Person in whose name such Term
Loans or Acquisition Loans and the Registered Note(s) evidencing the same are
registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding any notice to the contrary.
The Registered Note Register shall be available for inspection by the Borrower
and any Lender at any reasonable time upon reasonable prior notice.
Section 13.9 Survival. All representations and warranties made or deemed
--------
made in this Agreement or any other Loan Document or in any document, statement
or certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents and the
making of the Loans, and no investigation by the Agent or any Lender or any
closing shall affect the representations and warranties or the right of the
Agent or any Lender to rely upon them. Without prejudice to the survival of any
other obligation of the Borrower
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<PAGE>
or any other Loan Party hereunder, the obligations of the Borrower and the other
Loan Parties under Article 4 and Sections 13.1 and 13.2 shall survive repayment
--------- ------------- ----
of the Loans and Reimbursement Obligations and termination of the Commitments.
SECTION 13.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER
----------------
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 13.11 Amendments. No amendment or waiver of any provision of this
----------
Agreement, the Notes or any other Loan Document to which the Borrower or any
other Loan Party is a party, nor any consent to any departure by the Borrower or
any other Loan Party therefrom, shall in any event be effective unless the same
shall be agreed or consented to by the Required Lenders and the Borrower or such
other Loan Party, respectively, in writing, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, that no amendment, waiver or consent shall, unless in
--------
writing and signed by all of the Lenders and the Borrower, do any of the
following: (a) increase the Commitments of the Lenders or subject the Lenders to
any additional obligations; (b) reduce the principal of, or interest on, the
Loans or any fees or other amounts payable hereunder; (c) postpone any date
fixed for any payment (including, without limitation, any mandatory prepayment)
of principal of, or interest on, the Loans or any fees or other amounts payable
hereunder; (d) waive any of the conditions precedent specified in Article 6; (e)
---------
change the Commitment Percentages or the aggregate unpaid principal amount of
the Loans or the number or interests of the Lenders which shall be required for
the Lenders or any of them to take any action under this Agreement; (f) change
any provision contained in Section 3.2, Section 9.14 or this Section 13.11 or
----------- ----- -------------
modify the definition of "Required Lenders" contained in Section 1.1; or (g)
-----------
except as expressly authorized by this Agreement, release any Collateral from
any of the Liens created by the Security Documents or release any guaranty of
all or any portion of the Obligations; and provided, further, however, that, (i)
-------- ------- -------
except in the case of the automatic acceleration of maturity of the Loans and
the automatic termination of the Commitments pursuant to Section 11.2 as a
------------
result of the occurrence of an Event of Default under Section 11.1(e) or Section
--------------- -------
11.1(f), after any acceleration of the maturity of the Loans by the Agent
- -------
pursuant to Section 11.2(a) or any termination of the Commitments by the Agent
---------------
pursuant to Section 11.2(b) without the consent of the Required Lenders, the
---------------
acceleration of the maturity of the Loans may be rescinded and the Commitments
may be reinstated with the prior written consent of the Required Lenders, and
(ii) no amendment, waiver or consent relating to Sections 12.1, 12.2, 12.3, 12.4
------------- ---- ---- ----
or 12.5 shall require the agreement of any Loan Party. Notwithstanding anything
----
to the contrary contained in this Section 13.11, no amendment, waiver or consent
-------------
shall be made with respect to Article 12 hereof without the prior written
----------
consent of the Agent.
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<PAGE>
Section 13.12 Maximum Interest Rate.
---------------------
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the interest
rate (the "Contract Rate") for any Obligation shall exceed the Maximum Rate,
-------------
thereby causing the interest accruing on such Obligation to be limited to the
Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
(b) Notwithstanding anything to the contrary contained in this Agreement
or the other Loan Documents, none of the terms and provisions of this Agreement
or the other Loan Documents shall ever be construed to create a contract or
obligation to pay interest at a rate in excess of the Maximum Rate; and neither
the Agent nor any Lender shall ever charge, receive, take, collect, reserve or
apply, as interest on the Obligations, any amount in excess of the Maximum Rate.
The parties hereto agree that any interest, charge, fee, expense or other
obligation provided for in this Agreement or in the other Loan Documents which
constitutes interest under applicable law shall be, ipso facto and under any and
---- -----
all circumstances, limited or reduced to an amount equal to the lesser of (i)
the amount of such interest, charge, fee, expense or other obligation that would
be payable in the absence of this Section 13.12(b) or (ii) an amount, which when
----------------
added to all other interest payable under this Agreement and the other Loan
Documents, equals the Maximum Rate. If, notwithstanding the foregoing, the
Agent or any Lender ever contracts for, charges, receives, takes, collects,
reserves or applies as interest any amount in excess of the Maximum Rate, such
amount which would be deemed excessive interest shall be deemed a partial
payment or prepayment of principal of the Obligations and treated hereunder as
such; and if the Obligations, or applicable portions thereof, are paid in full,
any remaining excess shall promptly be paid to the Borrower or other appropriate
Loan Party. In determining whether the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, the Borrower, the other Loan
Parties, the Agent and the Lenders shall, to the maximum extent permitted by
applicable law, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate and spread in equal or
unequal parts the total amount of interest throughout the entire contemplated
term of the Obligations, or applicable portions thereof, so that the interest
rate does not exceed the Maximum Rate at any time during the term of the
Obligations; provided that, if the unpaid principal balance is paid and
-------- ----
performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the
Maximum Rate, the Agent and/or the Lenders, as appropriate, shall refund to the
Borrower or other appropriate Loan Party the amount of such excess and, in such
event, the Agent and the Lenders shall not be subject to any penalties provided
by any laws for contracting for, charging, receiving, taking, collecting,
reserving or applying interest in excess of the Maximum Rate.
(c) Pursuant to Article 15.10(b) of Chapter 15, Subtitle 79, Revised
Civil Statutes of Texas 1925, as amended, the Borrower and the other Loan
Parties agree that such Chapter 15 (which
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<PAGE>
regulates certain revolving credit loan accounts and revolving tri-party
accounts) shall not govern or in any manner apply to the Obligations.
Section 13.13 Notices. All notices and other communications provided for
-------
in this Agreement and the other Loan Documents to which the Borrower or any
other Loan Party is a party shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof (or, with respect to a Lender that becomes a party to
this Agreement pursuant to an assignment made in accordance with Section 13.8,
------------
in the Assignment and Acceptance executed by it or, with respect to a New Loan
Party, in the Assumption Agreement executed by it), or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party given in accordance with this Section 13.13. Except as may be expressly
-------------
otherwise provided in this Agreement or any other Loan Document, all such
communications shall be deemed to have been duly given when transmitted by
telecopy or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid; provided, however, that
-------- -------
notices to the Agent shall be deemed given when received by the Agent.
SECTION 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
-----------------------------------------------------
PROCESS. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN LOAN
- -------
DOCUMENTS, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE U.S.
EACH OF THE LOAN PARTIES HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, THE U.S. DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN
HOUSTON, TEXAS, OR DALLAS, TEXAS, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF THE LOAN PARTIES HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH LOAN PARTY AT ITS
ADDRESS SET FORTH UNDERNEATH ITS SIGNATURE HERETO. EACH OF THE LOAN PARTIES
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORM.
Section 13.15 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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<PAGE>
Section 13.16 Severability. Any provision of this Agreement held by a court
------------
of competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 13.18 Construction. Each of the Loan Parties, the Agent and each
------------
Lender acknowledges that it has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 13.19 Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 13.20 Confidentiality. Each Lender agrees to exercise its best
---------------
efforts to keep any information delivered or made available by any Loan Party to
it which is clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by such Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Lender
--------
from disclosing such information (a) to any other Lender, (b) to any Person if
reasonably incidental to the administration of the Loans or Letters of Credit,
(c) upon the order of any court or administrative agency, (d) upon the request
or demand of any regulatory agency or authority having jurisdiction over such
Lender, (e) which has been publicly disclosed, (f) in connection with any
litigation to which the Agent, any Lender or their respective Affiliates may be
a party, (g) to the extent reasonably required in connection with the exercise
of any remedy under the Loan Documents, (h) to such Lender's legal counsel,
independent auditors and affiliates, and (i) to any actual or proposed
participant or Assignee of all or part of its rights hereunder, so long as such
actual or proposed participant or Assignee agrees to be bound by the provisions
of this Section 13.20.
-------------
SECTION 13.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION OR
ENFORCEMENT THEREOF.
Section 13.22 Approvals and Consent. Except as may be expressly provided to
---------------------
the contrary in this Agreement or in the other Loan Documents (as applicable),
in any instance under this
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<PAGE>
Agreement or the other Loan Documents where the approval, consent or exercise of
judgment of the Agent or any Lender is requested or required, (a) the granting
or denial of such approval or consent and the exercise of such judgment shall be
within the sole discretion of the Agent and such Lender, and the Agent and such
Lender shall not, for any reason or to any extent, be required to grant such
approval or consent or to exercise such judgment in any particular manner,
regardless of the reasonableness of the request or the action or judgment of the
Agent or such Lender, and (b) no approval or consent of the Agent or any Lender
shall in any event be effective unless the same shall be in writing and the same
shall be effective only in the specific instance and for the specific purpose
for which given.
Section 13.23 Agent for Services of Process. Each of the Loan Parties
-----------------------------
hereby irrevocably designates CT Corporation System with offices at 350 N. St.
Paul Street, Dallas, Texas 75201 to receive for and on behalf of such Loan Party
service of process in the State of Texas. In the event that CT Corporation
System resigns or ceases to serve as such Loan Party's agent for service of
process hereunder, such Loan Party agrees forthwith (a) to designate another
agent for service of process in Houston, Texas and (b) to give prompt written
notice to the Agent of the name and address of such agent. Each of the Loan
Parties agrees that the failure of its agent for service of process to give any
notice of any such service of process to such Loan Party shall not impair or
affect the validity of such service or of any judgment based thereon. If,
despite the foregoing, there is for any reason no agent for service of process
of a particular Loan Party available to be served, then such Loan Party further
irrevocably consents to the service of process by the mailing thereof by the
Agent or the Required Lenders by registered or certified mail, postage prepaid,
to such Loan Party at its address listed on the signature pages hereof (or, with
respect to a New Loan Party, on the signature page to the Assumption Agreement
executed by it). Nothing in this Section 13.23 shall affect the right of the
-------------
Agent or the Lenders to serve legal process in any other manner permitted by law
or affect the right of the Agent or any Lender to bring any action or proceeding
against any Loan Party or its Property in the court of any jurisdiction.
Section 13.24 Assignments and Assumptions. The Lenders hereby agree among
---------------------------
themselves (and each of the Loan Parties hereby consents to such agreement)
that, concurrently with the Third Restatement Date, there shall be deemed to
have occurred assignments and assumptions with respect to the Debt, Liens,
rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, the Commitments, the Loans and the Letters of
Credit) such that, after giving effect to such assignments and assumptions, the
Commitments and the outstanding Loans and Letters of Credit of each of the
Lenders are as stated in this Agreement, and the Lenders hereby make such
assignments and assumptions. The Lenders shall make all appropriate payments
and adjustments among themselves to effectuate the appropriate purchase price
for and other amounts payable with respect to such assignments and assumptions.
Section 13.25 Amendment and Restatement. This Agreement is and shall be
-------------------------
deemed to be an amendment and restatement of the Second Restated Agreement;
provided, however, that the Second Restated Agreement shall remain in existence
- -------- -------
as if it had not been amended or restated for purposes of the defined terms,
definitions, representations, warranties and other terms and provisions of the
Second Restated Agreement referred to herein (including, without limitation,
defined terms and the definitions thereof referred to in all such terms and
provisions) as if such
126
<PAGE>
defined terms, definitions, representations, warranties and other terms and
provisions of the Second Restated Agreement, without amendment or restatement,
were incorporated herein by reference.
Section 13.26 Supplements to Certain Schedules. The Schedules hereto, other
--------------------------------
than Schedules 1.1(b), 7.10 and 9.5, may be proposed to be supplemented by the
---------------- ---- ---
Borrower concurrently with each advance of the Acquisition Loans as they relate
to (but only as they relate to) the Permitted Acquisition to be financed with
such advance if (but only if) (a) the Agent approves of any such supplement,
which approval shall not be unreasonably withheld and (b) the supplemental
information proposed to be included on any such Schedule is not, in the judgment
of the Agent, adverse in any material respect to the Agent or the Lenders or the
Supremex Agent or the Supremex Lenders. Any such supplement proposed by the
Borrower and so approved shall be deemed to be a part of the Schedule to which
such supplement relates.
Section 13.27 Relationship to Supremex Credit Agreement. Notwithstanding
-----------------------------------------
anything to the contrary contained in this Agreement or any other Loan Document,
the representations, warranties, covenants and agreements of or relating to the
Borrower or any other Loan Party contained in this Agreement shall continue in
full force and effect until the latest to occur of (a) the termination of all
Commitments, the expiration of all Letters of Credit and the irrevocable payment
and performance in full of all of the Obligations, (b) the termination of all
Supremex Commitments, the expiration of all "Letters of Credit" as such term is
defined in the Supremex Credit Agreement and the irrevocable payment and
performance in full of all of the Supremex Obligations, (c) the irrevocable
payment and performance in full of all of the "Obligations" as such term is
defined in Appendix A (to certain of the Equipment Lease Facility Documents), or
(d) such other date or time as may be provided in this Agreement, it being
agreed and understood that Banque Paribas in its capacity as agent under the
Supremex Credit Agreement and the Equipment Lease Facility Documents and the
Supremex Lenders and the Equipment Lease Facility Lenders are relying upon such
representations, warranties, covenants and agreements in connection with the
Supremex Credit Agreement and the Supremex Loans and in connection with the
Equipment Lease Facility Documents and the Equipment Lease Facility Obligations,
respectively.
Section 13.28 Consolidated Financial Information. Notwithstanding anything
----------------------------------
to the contrary contained in this Agreement, the Borrower may, in order to avoid
the incurrence of additional costs, prepare and deliver financial statements for
Holdings (as opposed to the Borrower) and its Subsidiaries (including, without
limitation, the Borrower and its Subsidiaries) on a consolidated and
consolidating basis for purposes of Sections 8.1(a), 8.1(b) and 8.1(c) in lieu
--------------- ------ ------
of preparing and delivering such financial statements for the Borrower and its
Subsidiaries on a consolidated and consolidating basis; provided, however, that
-------- -------
either the Agent or the Required Lenders may, at any time by the giving of 30
days prior written notice to the Borrower, request that the Borrower prepare and
deliver financial statements for the Borrower (as opposed to Holdings) and its
Subsidiaries on a consolidated and consolidating basis and, thereupon and at all
times thereafter, the Borrower shall do so strictly in accordance with the terms
and provisions of Sections 8.1(a), 8.1(b) and 8.1(c). In the event and for the
--------------- ------ ------
times and during the periods that the financial statements to be prepared and
delivered pursuant to Sections 8.1(a), 8.1(b) and 8.1(c) are, and are permitted
--------------- ------ ------
to be in accordance with this Section 13.28, prepared and delivered for Holdings
-------------
(as opposed to the Borrower) and its Subsidiaries (including, without
limitation, the Borrower and its Subsidiaries) on a consolidated and
127
<PAGE>
consolidating basis, then the financial covenants contained in Sections 10.1,
-------------
10.2, 10.3, 10.4, 10.5 and 10.6 shall also (for, but only for, the applicable
- ---- ---- ---- ---- ----
times and during, but only during, the applicable periods) be calculated and
determined on a consolidated basis with respect to Holdings (as opposed to the
Borrower) and its Subsidiaries (including, without limitation, the Borrower and
its Subsidiaries); provided, however, that (a) in calculating Capital
-------- -------
Expenditures, the Consolidated Current Ratio, the Consolidated Fixed Charge
Coverage Ratio, the Consolidated Interest Coverage Ratio, Consolidated Interest
Expense, Consolidated Net Income, Consolidated Net Worth, EBITDA, Fixed Charges,
Total Capitalization and Total Debt for purposes of Article 10, the Borrower
----------
will make, and will cause Holdings to make, all appropriate adjustments (if any)
as the Agent may reasonably request in order to ensure the proper calculation
thereof in accordance with the intent of this Agreement and (b) the Borrower
shall prepare and deliver to the Agent and the Required Lenders such summary
financial information regarding Holdings and its Subsidiaries (other than the
Borrower and its Subsidiaries) as the Agent or the Required Lenders may
reasonably request in order to estimate the financial attributes of Holdings and
its Subsidiaries (other than the Borrower and its Subsidiaries) and the effect
thereof on the financial covenants contained in Sections 10.1, 10.2, 10.3, 10.4,
------------- ---- ---- ----
10.5 and 10.6.
- ---- ----
Section 13.29 Intercreditor Agreements. Each of the Lenders hereby (a)
------------------------
agrees to all terms and provisions of each of the Intercreditor Agreement and
the Accounts Receivable Securitization Facility Intercreditor Agreement, (b)
agrees to be bound by all of the terms and provisions of each of the
Intercreditor Agreement and the Accounts Receivable Securitization Facility
Intercreditor Agreement as if it were a direct party and a signatory thereto
(whether or not it is a direct party or a signatory thereto) and (c) grants to
the Agent a special power of attorney to execute and deliver each of the
Intercreditor Agreement and the Accounts Receivable Securitization Facility
Intercreditor Agreement for, on behalf of and in the name of such Lender.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
128
<PAGE>
BORROWER:
--------
MAIL-WELL I CORPORATION
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
129
<PAGE>
OTHER LOAN PARTIES:
------------------
WISCO ENVELOPE CORP.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
130
<PAGE>
PAVEY ENVELOPE AND TAG CORP.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
131
<PAGE>
MAIL-WELL WEST, INC.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
132
<PAGE>
WISCO II, L.L.C.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
133
<PAGE>
MAIL-WELL CANADA HOLDINGS, INC.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
134
<PAGE>
GRAPHICS ARTS CENTER, INC.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
135
<PAGE>
WISCO III, L.L.C.
By:____________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
136
<PAGE>
BANQUE PARIBAS
Term Loans
Commitment:
- ----------
$6,852,043.84
By:____________________________________
Name: Pierre-Jean de Filippis
Title: General Manager
Revolving Credit
Loans Committment:
- -----------------
$3,357,606.79
By:____________________________________
Name: Christopher S. Goodwin
Title: Vice President
Acquisition Loans
Commitment:
- ----------
$3,357,606.76
Address for Notices:
-------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telecopy No.: 713-659-3832
Telephone No.: 713-659-4811
Attention: Corporate Banking Group
Lending Office for Prime Rate Loans:
-----------------------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Leah Hughes
Operations Officer
137
<PAGE>
LENDERS:
-------
ARAB BANKING CORPORATION (B.S.C.)
Term Loans
Commitment:
- ----------- By:___________________________________
Name:_________________________________
$4,568,029.26 Title:________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ------------------- Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
$2,238,404.50 New York, New York 10172
Telecopy No.: 212-583-0921
Telephone No.:___________________
Acquisition Loans Attention: Ms. Louise Weiss
Commitment:
- -------------------
With a copy to:
$2,238,404.50
Arab Banking Corporation (B.S.C.)
600 Travis Street, Suite 1900
Houston, Texas 77002
Telecopy No.: 713-227-6507
Telephone No.: 713-227-8444
Attention: Stephen Plauche
Lending Office for Prime Rate Loans:
-----------------------------------
Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
New York, New York 10172-3299
Attention: Ms. Louise Weiss
Lending Office for Eurodollar Loans:
-----------------------------------
Arab Banking Corporation (G.C.I.)
277 Park Avenue, 32nd Floor
New York, New York 10172-3299
Attention: Ms. Louise Weiss
138
<PAGE>
BANQUE PARIBAS
Term Loans
Commitment:
- ----------- By:____________________________________
Name: Pierre-Jean de Filippis
$11,240,758.57 Title: General Manager
Revolving Credit
Loans Commitment:
- ------------------- By:____________________________________
Name: Christopher S. Goodwin
$3,357,606.79 Title: Vice President
Acquisition Loans Address for Notices:
Commitment: -----------------------
- ---------- Banque Paribas
1200 Smith Street, Suite 3100
$3,357,606.76 Houston, Texas 77002
Telecopy No.: 713-659-3832
Telephone No.: 713-659-4811
Attention: Corporate Banking Group
Lending Office for Prime Rate Loans:
-----------------------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Leah Hughes
Operations Officer
Lending Office for Eurodollar Loans:
-----------------------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Leah Hughes
Operations Officer
139
<PAGE>
BANK OF AMERICA ILLINOIS
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$7,613,382.09 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: ---------------------------------
- ---------------- Bank of America Illinois
231 S. LaSalle Street
$3,730,674.17 Chicago, Illinois 60697
Telecopy No.: 312-974-9626
Telephone No.: 312-828-6386
Acquisition Loans Attention: Juanita L. Hester
Commitment:
- ----------
With a copy to:
$3,730,674.17 --------------
Bank of America
U.S. Div. - S.F. Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attention: Kevin Leader
Lending Office for Prime Rate Loans:
-----------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Juanita L. Hester
Lending Office for Eurodollar Loans:
-----------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Juanita L. Hester
140
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,568,029.26 Title:_________________________________
Revolving Credit Addresses for Notices:
Loans Commitment: ---------------------
- ---------------- Credit Lyonnais
1301 Avenue of the Americas
$2,238,404.50 New York, New York 10019
Telecopy No.: 212-459-3170
Telephone No.: 212-459-7000
Acquisition Loans Attention: Mark Koneval
Commitment:
- ----------
$2,238,404.50 With a copy to:
Credit Lyonnais
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Telecopy No.: 214-220-2323
Telephone No.: 214-220-2300
Attention: Brian Brown
Lending Office for Prime Rate Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
Lending Office for Eurodollar Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
141
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,388,714.73 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ------------------- Merrill Lynch
800 Scudders Mill Road - Area 2C
$-0- Plainsboro, New Jersey 08536
Telecopy No.: 609-282-2550
Telephone No.: 609-282-2092
Acquisition Loans Attention: Anthony Clemente
Commitment:
- -------------------
$-0- Lending Office for Prime Rate Loans:
-----------------------------------
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road - Area 2C
Plainsboro, New Jersey 08536
Attention: Anthony Clemente
Lending Office for Eurodollar Loans:
-----------------------------------
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road - Area 2C
Plainsboro, New Jersey 08536
Attention: Anthony Clemente
142
<PAGE>
NATIONAL BANK OF CANADA
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$3,806,691.04 Title:_________________________________
Revolving Credit
Loans Commitment: By:_____________________________________
- ---------------- Name:___________________________________
Title:__________________________________
$1,865,337.09
Address for Notices:
-------------------
National Bank of Canada
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Telecopy No.: 214-871-2015
Telephone No.: 214-871-1208
Acquisition Loans Attention: Larry Sears (2 copies requested)
Commitment:
- ----------
$1,865,337.09 Lending Office for Prime Rate Loans:
-----------------------------------
National Bank of Canada, New York Branch
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
Lending Office for Eurodollar Loans:
-----------------------------------
National Bank of Canada
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
143
<PAGE>
NATIONSBANK OF TEXAS, N.A.
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,568,029.26 Title:_________________________________
Address for Notices:
Revolving Credit -------------------
Loans Commitment: NationsBank of Texas, N.A.
- ---------------- 901 Main Street
Dallas, Texas 75202
$2,238,404.50 Telecopy No.: 214-508-0980
Telephone No.: 214-508-3363
Attention: Kimberly Knop
Acquisition Loans
Commitment:
- ----------
$2,238,404.50 Lending Office for Prime Rate Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
Lending Office for Eurodollar Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
144
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$3,045,352.84 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- Societe Generale
1111 Bagby, Suite 2020
$1,492,269.67 Houston, Texas 77002
Telecopy No.: 713-650-0824
Telephone No.: 713-759-6318
Acquisition Loans Attention: Dick Erbert
Commitment:
- ----------
with a copy to:
$1,492,269.67
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Prime Rate Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Eurodollar Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
145
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,419,421.13 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
$2,165,584.23 Houston, Texas 77002
Telecopy No.: 713-216-6387
Telephone No.: 713-216-5656
Acquisition Loans Attention: Mary Arnold
Commitment:
- ----------
$2,165,584.24 Lending Office for Prime Rate Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
Lending Office for Eurodollar Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
146
<PAGE>
THE BANK OF NOVA SCOTIA
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$3,806,691.04 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
$1,865,337.09 Atlanta, Georgia 30308
Telecopy No.: 404-888-8998
Telephone No.: 404-877-1500
Acquisition Loans Attention: F.C.H. Ashby
Commitment:
- ----------
with a copy to:
$1,865,337.09
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telecopy No.: 713-752-2425
Telephone No.: 713-759-3432
Attention: Rosine Matthews
Lending Office for Prime Rate Loans:
-----------------------------------
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: Cleve Bushey
Lending Office for Eurodollar Loans:
-----------------------------------
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: Cleve Bushey
147
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,419,421.13 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- The Boatmen's National Bank of St. Louis
800 Market Street, Mail Station LBP 37-01
$2,165,584.23 St. Louis, Missouri 63101
Telecopy No.: 314-466-6645
Telephone No.: 314-466-7368
Acquisition Loans Attention: Pamela Boggeman
Commitment:
- ----------
$2,165,584.24 Lending Office for Prime Rate Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis,
Leveraged Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
Lending Office for Eurodollar Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis,
Leveraged Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
148
<PAGE>
THE CIT GROUP/BUSINESS CREDIT, INC.
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,419,421.13 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
$2,165,584.23 Dallas, Texas 75240
Telecopy No.: 972-455-1690
Telephone No.: 972-455-1678
Acquisition Loans Attention: Pam Wozniak or Susan Brooks
Commitment:
- ----------
$2,165,584.24 Lending Office for Prime Rate Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
Lending Office for Eurodollar Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
149
<PAGE>
THE FUJI BANK, LIMITED
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$4,568,029.26 Title:_________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
$2,238,404.50 Houston, Texas 77010
Telecopy No.: 713-759-0048
Telephone No.: 713-650-7854
Acquisition Loans Attention: Nate Ellis
Commitment:
- ----------
$2,238,404.50 Lending Office for Prime Rate Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
Lending Office for Eurodollar Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
150
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
Term Loans
Commitment:
- ----------- By:____________________________________
Name: Shuichi Tajima
$4,568,029.26 Title: Deputy General Manager
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- The Long-Term Credit Bank of Japan, Limited,
New York Branch
$2,238,404.50 165 Broadway, 49th Floor
New York, New York 10006
Telecopy No.: 212-608-2371
Telephone No.: 212-335-4550
Acquisition Loans Attention: Frank H. Madden
Commitment:
- ----------
$2,238,404.50 Lending Office for Prime Rate Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
Lending Office for Eurodollar Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
151
<PAGE>
CERES FINANCE LTD.
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$395,260.24 Director
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- Ceres Finance Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
$-0- P. O. Box 1984 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Director
Acquisition Loans
Commitment: with a copy to:
- ----------
$-0- Ceres Finance Ltd.
c/o Chancellor Senior Secured Management, Inc.
1166 Avenue of the Americas, 27th Floor
New York, New York 10036
Telephone: 212-278-9404
Telecopy: 212-278-9619
Attention: Gregory L. Smith
Lending Office for Prime Rate Loans:
-----------------------------------
Ceres Finance Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
P. O. Box 1984 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Director
Lending Office for Eurodollar Loans:
-----------------------------------
Ceres Finance Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
P. O. Box 1984 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Director
152
<PAGE>
STRATA FUNDING LTD.
Term Loans
Commitment:
- ----------- By:____________________________________
Name:__________________________________
$288,928.42 Director
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- Strata Funding Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
$-0- P. O. Box 1984 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Director
Acquisition Loans
Commitment: with a copy to:
- ----------
$-0- Strata Funding Ltd.
c/o Chancellor Senior Secured Management, Inc.
1166 Avenue of the Americas, 27th Floor
New York, New York 10036
Telephone: 212-278-9404
Telecopy: 212-278-9619
Attention: Gregory L. Smith
Lending Office for Prime Rate Loans:
-----------------------------------
Strata Funding Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
P. O. Box 1984 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Director
Lending Office for Eurodollar Loans:
-----------------------------------
Strata Funding Ltd.
c/o Deutsche Morgan Grenfell (Cayman) Limited
P. O. Box 1984 GT, Elizabethan Square
Grand Cayman, Cayman Islands
Attention: Director
153
<PAGE>
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V.
Term Loans By: ABN Trust Company (Netherlands),
Commitment: its Managing Director
- -------------------
$3,704,526.07 By:_____________________________________________
Name:___________________________________________
Title:__________________________________________
Revolving Credit Address for Notices:
Loans Commitment: -------------------
- ---------------- Chancellor Senior Secured Management, Inc.
1166 Avenue of the Americas, 27th Floor
$-0- New York, New York 10036
Telephone: 212-278-9404
Telecopy: 212-278-9619
Acquisition Loans Attention: Gregory L. Smith
Commitment:
- ----------
$-0- Lending Office for Prime Rate Loans:
-----------------------------------
State Street Bank & Trust Co.
Corporate Trust Department
Two International Place
Boston, Massachusetts 02110
Telephone: 617-664-5327
Telecopy: 617-664-5366
Attention: Mike Abril
Lending Office for Eurodollar Loans:
-----------------------------------
State Street Bank & Trust Co.
Corporate Trust Department
Two International Place
Boston, Massachusetts 02110
Telephone: 617-664-5327
Telecopy: 617-664-5366
Attention: Mike Abril
154
<PAGE>
EXHIBIT "A"
Form of Acquisition Loans Note
------------------------------
<PAGE>
ACQUISITION LOANS NOTE
----------------------
$_________________ Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, MAIL-WELL I CORPORATION, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of ___________
--------
_______________________________ (the "Lender"), at the Principal Office of the
------
Agent, in lawful money of the United States of America and in immediately
available funds, the principal amount of
__________________________________________ Dollars ($_____________) or such
lesser amount as shall equal the aggregate unpaid principal amount of the
Acquisition Loans made by the Lender (or its predecessor in interest) to the
Borrower under the Credit Agreement referred to below, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of such Loans, at such office, in like money and funds,
for the period commencing on the date of such Loans until such Loans shall be
paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
This Note is one of the Acquisition Notes referred to in the Third Amended
and Restated Credit Agreement dated as of November __, 1996, among the Borrower,
certain Subsidiaries of the Borrower, the Lenders named therein and Banque
Paribas, as agent for the Lenders (such Third Amended and Restated Credit
Agreement, as the same may be amended, modified, supplemented, renewed, extended
or restated from time to time, being referred to herein as the "Credit
------
Agreement"), and evidences the Acquisition Loans made by the Lender (or its
predecessor in interest) thereunder. The holder of this Note shall be entitled
to, without limitation, the benefits provided in the Credit Agreement as set
forth therein. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity of this Note upon the happening of certain
stated events and for prepayment of the Acquisition Loans prior to the maturity
of this Note upon the terms and conditions specified in the Credit Agreement.
Capitalized terms used in this Note have the respective meanings assigned to
them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or
ACQUISITION LOANS NOTE - Page 1
<PAGE>
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
MAIL-WELL I CORPORATION
By:_______________________________
Name: Paul V. Reilly
Title: Vice President - Finance
ACQUISITION LOANS NOTE - Page 2
<PAGE>
EXHIBIT "B"
Form of Assignment and Acceptance
---------------------------------
<PAGE>
ASSIGNMENT AND ACCEPTANCE
-------------------------
Date: _______________, 19__
Reference is made to the Third Amended and Restated Credit Agreement dated
as of November __, 1996 (as the same may be amended, modified, supplemented,
renewed, extended or restated from time to time, the "Credit Agreement"), among
----------------
Mail-Well I Corporation, a Delaware corporation (the "Borrower"), certain
--------
Subsidiaries of the Borrower, the Lenders named therein (the "Lenders"), and
-------
Banque Paribas, as agent for the Lenders (in such capacity, the "Agent").
-----
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement. This Assignment and
Acceptance is being executed pursuant to Section 13.8 of the Credit Agreement.
------------
_________________________ (the "Assignor") and ______________________ (the
"Assignee") agree as follows:
--------
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the following interests
in and to the Assignor's rights and obligations under the Credit Agreement and
the other Loan Documents as of the Effective Date (as defined below):
(a) a ____% interest in the Revolving Credit Loans Commitments (which
percentage interest represents a $________ commitment with
respect to the aggregate Revolving Credit Loans Commitments of
$30,000,000);
(b) a ____% interest in the Acquisition Loans Commitments (which
percentage interest represents a $________ commitment with
respect to the aggregate Acquisition Loans Commitments of
$30,000,000);
(c) a ____% interest in the aggregate outstanding principal amount of
the Term Loans (which percentage interest represents a $______
interest in the $________ aggregate principal amount of the Term
Loans presently outstanding);
(d) a ____% interest in the aggregate outstanding principal amount of
the Revolving Credit Loans (which percentage interest represents
a $______ interest in the $________ aggregate principal amount of
the Revolving Credit Loans presently outstanding);
(e) a ____% interest in the aggregate outstanding principal amount of
the Acquisition Loans (which percentage interest represents a
$______ interest in the $________ aggregate principal amount of
the Acquisition Loans presently outstanding).
After giving effect to this Assignment and Acceptance, the Revolving
Credit Loans Commitment and the Acquisition Loans Commitment of
Assignor will be $__________________ and $ __________________,
respectively, and the
ASSIGNMENT AND ACCEPTANCE - Page 1
<PAGE>
outstanding principal amount of Assignor's interest in the Term Loans,
Revolving Credit Loans and Acquisition Loans will be $_________,
$__________ and $_________, respectively.
2. The Assignor (i) represents that, as of the date hereof, (A) its
Revolving Credit Loans Commitment is $_______________, (B) its Acquisition Loans
Commitment is $_______________, (C) the outstanding principal balance of its
Term Loans is $_______________, (D) the outstanding principal balance of its
Acquisition Loans is $_______________, and (E) the outstanding principal balance
of its Revolving Credit Loans is $_______________, and its pro rata share of the
Letters of Credit outstanding under its Revolving Credit Loans Commitment is
$___________(all as unreduced by any assignments which have not yet become
effective); (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other Loan Document, other than that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under the Credit Agreement or any other
Loan Document; and (iv) attaches the Notes held by Assignor and requests that
the Agent exchange such Notes for a new [TERM LOANS NOTE, REVOLVING CREDIT LOANS
NOTE AND ACQUISITION LOANS NOTE PAYABLE TO THE ORDER OF (A) THE ASSIGNEE IN AN
AMOUNT EQUAL TO (I) IN THE CASE OF THE TERM LOANS NOTE, THE PRINCIPAL AMOUNT OF
THE TERM LOANS ASSIGNED TO ASSIGNEE PURSUANT HERETO, (II) IN THE CASE OF THE
REVOLVING CREDIT LOANS NOTE, THE AMOUNT OF ASSIGNOR'S REVOLVING CREDIT LOANS
COMMITMENT ASSUMED BY ASSIGNEE HEREUNDER, AND (III) IN THE CASE OF THE
ACQUISITION LOANS NOTE, THE AMOUNT OF ASSIGNOR'S ACQUISITION LOANS COMMITMENT
ASSUMED BY ASSIGNEE HEREUNDER, AND (B) THE ASSIGNOR IN AN AMOUNT EQUAL TO (I) IN
THE CASE OF THE TERM LOANS NOTE, THE PRINCIPAL AMOUNT OF THE TERM LOANS RETAINED
BY ASSIGNOR, (II) IN THE CASE OF THE REVOLVING CREDIT LOANS NOTE, THE PRINCIPAL
AMOUNT OF THE REVOLVING CREDIT LOANS COMMITMENT RETAINED BY ASSIGNOR, AND (III)
IN THE CASE OF THE ACQUISITION LOANS NOTE, THE PRINCIPAL AMOUNT OF THE
ACQUISITION LOANS COMMITMENT RETAINED BY ASSIGNOR]/1/.
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.1 thereof, and such other
-----------
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement and the other Loan Documents; (iv)
confirms that it is an Eligible Assignee; (v) appoints and authorizes the Agent
to take
____________________
/1/ If this Assignment and Acceptance does not relate to all of the Loans
or if the Acquisition Loans Commitments have terminated at the time of
the execution of this Assignment and Acceptance, this language is to
be revised accordingly.
ASSIGNMENT AND ACCEPTANCE - Page 2
<PAGE>
such action on the Assignee's behalf and to exercise such powers under the Loan
Documents as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; (vi) agrees that it will perform in
accordance with their terms all obligations which by the terms of the Credit
Agreement and the other Loan Documents are required to be performed by it as a
Lender; (vii) agrees that it will keep confidential all information with respect
to the Loan Parties furnished to it by any Loan Party or the Assignor marked as
being confidential (other than information generally available to the public) in
accordance with Section 13.20 of the Credit Agreement; and (viii) attaches the
-------------
forms prescribed by the Internal Revenue Service of the United States certifying
as to the Assignee's exemption from United States withholding taxes with respect
to all payments to be made to the Assignee under the Credit Agreement, or a
certificate as to the Assignee's exemption from United States withholding taxes
with respect to all payments to be made to the Assignee under the Credit
Agreement, or such other documents as are necessary to indicate that all such
payments are subject to such tax at a rate reduced by an applicable tax
treaty./2/
4. The effective date for this Assignment and Acceptance shall be
___________ ____, 19__ (the "Effective Date")./3/ Following the execution of
--------------
this Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording by the Agent.
5. Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, shall have the rights and
obligations of a Lender thereunder and under the other Loan Documents, (ii) the
Assignee shall be a party to each of the Intercreditor Agreement and the
Accounts Receivable Securitization Facility Intercreditor Agreement as if it
were a signatory thereto, and to the extent provided in this Assignment and
Acceptance, shall have the rights and obligations of a Lender thereunder, and
(iii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement and the other Loan Documents.
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
_________________
/2/ If the Assignee is organized under the laws of a jurisdiction outside
the United States.
/3/ Such date shall be at least five Business Days after the execution of
this Assignment and Acceptance and delivery thereof to the Agent (unless
otherwise agreed by the Agent).
ASSIGNMENT AND ACCEPTANCE - Page 3
<PAGE>
8. The Assignee's address for notices and Applicable Lending Office for
purposes of the Credit Agreement (until such address or office are subsequently
changed in accordance with the Credit Agreement) are specified below its name on
the signature pages of this Assignment and Acceptance.
[NAME OF ASSIGNOR]
By: ________________________________
Name: ________________________________
Title: ________________________________
[NAME OF ASSIGNEE]
By: ________________________________
Name: ________________________________
Title: ________________________________
Address for Notices:
-------------------
_______________________________________
_______________________________________
_______________________________________
Fax No. (_____) _______________________
Telephone No. (_____) _________________
Attention: ____________________________
Lending Office for Prime Rate Loans:
-----------------------------------
_______________________________________
_______________________________________
_______________________________________
Lending Office for Eurodollar Loans:
-----------------------------------
_______________________________________
_______________________________________
_______________________________________
ASSIGNMENT AND ACCEPTANCE - Page 4
<PAGE>
ACCEPTED BY:
BANQUE PARIBAS, as Agent for the Lenders
By: ____________________________
Name: ____________________________
Title: ____________________________
By: ____________________________
Name: ____________________________
Title: ____________________________
Date: ____________________________
APPROVED BY:
MAIL-WELL I CORPORATION
By: ____________________________
Name: ____________________________
Title: ____________________________
ASSIGNMENT AND ACCEPTANCE - Page 5
<PAGE>
EXHIBIT "C"
Form of Revolving Credit Loans Note
-----------------------------------
<PAGE>
REVOLVING CREDIT LOANS NOTE
---------------------------
$_________________ Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, MAIL-WELL I CORPORATION, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of ___________
--------
_______________________________ (the "Lender"), at the Principal Office of the
------
Agent, in lawful money of the United States of America and in immediately
available funds, the principal amount of
__________________________________________ Dollars ($_____________) or such
lesser amount as shall equal the aggregate unpaid principal amount of the
Revolving Credit Loans made or deemed made by the Lender (or its predecessor in
interest) to the Borrower under the Credit Agreement referred to below, on the
dates and in the principal amounts provided in the Credit Agreement, and to pay
interest on the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of each such Loan
until each such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
This Note is one of the Revolving Credit Loans Notes referred to in the
Third Amended and Restated Credit Agreement dated as of November __, 1996, among
the Borrower, certain Subsidiaries of the Borrower, the Lenders named therein
and Banque Paribas, as agent for the Lenders (such Third Amended and Restated
Credit Agreement, as the same may be amended, modified, supplemented, renewed,
extended or restated from time to time, being referred to herein as the "Credit
------
Agreement"), and evidences Revolving Credit Loans made or deemed made by the
- ---------
Lender (or its predecessor in interest) thereunder. The holder of this Note
shall be entitled to, without limitation, the benefits provided in the Credit
Agreement as set forth therein. The Credit Agreement, among other things,
contains provisions for acceleration of the maturity of this Note upon the
happening of certain stated events and for prepayment of the Revolving Credit
Loans prior to the maturity of this Note upon the terms and conditions specified
in the Credit Agreement. Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS ( WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or
REVOLVING CREDIT LOANS NOTE - PAGE 1
<PAGE>
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
This Note is issued in replacement of, but not in extinguishment of the
indebtedness evidenced by, those certain Revolving Credit Loans Tranche 1 Notes
made by the Borrower and delivered pursuant to the Original Agreement, the First
Restated Agreement and the Second Restated Agreement.
MAIL-WELL I CORPORATION
By:_____________________________
Name: Paul V. Reilly
Title: Vice President - Finance
REVOLVING CREDIT LOANS NOTE - PAGE 2
<PAGE>
EXHIBIT "D"
Form of Term Loans Note
-----------------------
<PAGE>
TERM LOANS NOTE
---------------
$_________________ Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, MAIL-WELL I CORPORATION, a Delaware
corporation (the "Borrower"), hereby promises to pay to the order of ___________
--------
_______________________________ (the "Lender"), at the Principal Office of the
------
Agent, in lawful money of the United States of America and in immediately
available funds, the principal amount of
__________________________________________ Dollars ($_____________) on the dates
and in the principal amounts provided in the Credit Agreement referred to below
with respect to the Term Loans evidenced by this Note, and to pay interest on
the unpaid principal amount of the Term Loans evidenced by this Note, at such
office, in like money and funds, for the period commencing on the date of such
Loans until such Loans shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
This Note is one of the Term Loans Notes referred to in the Third Amended
and Restated Credit Agreement dated as of November __, 1996, among the Borrower,
certain Subsidiaries of the Borrower, the Lenders named therein and Banque
Paribas, as agent for the Lenders (such Third Amended and Restated Credit
Agreement, as the same may be amended, modified, supplemented, renewed, extended
or restated from time to time, being referred to herein as the "Credit
------
Agreement"), and evidences the Term Loans made or deemed made by the Lender (or
its predecessor in interest) thereunder. The holder of this Note shall be
entitled to, without limitation, the benefits provided in the Credit Agreement
as set forth therein. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity of this Note upon the happening of
certain stated events and for prepayment of the Term Loans prior to the maturity
of this Note upon the terms and conditions specified in the Credit Agreement.
Capitalized terms used in this Note have the respective meanings assigned to
them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or
<PAGE>
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
This Note is issued in replacement of, but not in extinguishment of the
indebtedness evidenced by, those certain Term Loans A Notes (as defined in the
Second Restated Agreement) and Term Loans B Notes (as defined in the Second
Restated Agreement) made by the Borrower and delivered pursuant to the Original
Agreement, the First Restated Agreement and the Second Restated Agreement.
MAIL-WELL I CORPORATION
By:___________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
TERM LOANS NOTE - PAGE 2
<PAGE>
EXHIBIT "E"
Form of Notice of Borrowings, Conversions, Continuation or Prepayments
----------------------------------------------------------------------
<PAGE>
NOTICE OF BORROWINGS, CONVERSIONS,
CONTINUATIONS OR PREPAYMENTS
----------------------------
Date: _______________, 19__
Banque Paribas, as Agent
1200 Smith Street
Suite 3100
Houston, Texas 77002
__________________:
Reference is made to the Third Amended and Restated Credit Agreement dated
as of November __, 1996 (as the same may be amended, modified, supplemented,
renewed, extended or restated from time to time, the "Credit Agreement"), among
----------------
Mail-Well I Corporation, a Delaware corporation (the "Borrower"), certain of the
--------
Subsidiaries of the Borrower, the Lenders named therein (the "Lenders"), and
-------
Banque Paribas, as Agent for the Lenders (in such capacity, the "Agent").
-----
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Credit Agreement.
The Borrower hereby gives you this Notice, irrevocably, pursuant to Section
-------
2.9 of the Credit Agreement. The Borrower hereby notifies you of the following
- ---
(check and/or complete the applicable item):
____ (a) New Loan.
--------
(i) (A) The Borrower requests Revolving Credit Loans in the
amount of $________ on _______________, 199__.
(B) The Revolving Credit Loans will be of the following
Type: [Prime Rate Loan] [Eurodollar Loan].
(C) If the Revolving Credit Loans will be a Eurodollar
Loan, the Interest Period will be _____ month[s].
(ii) (A) The Borrower requests Acquisition Loans in the amount
of $_________ on _______________, 199__.
(B) The Acquisition Loans will be of the following type:
[Prime Rate Loan ] [Eurodollar Loan].
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 1
<PAGE>
(C) If the Acquisition Loans will be a Eurodollar Loan, the
Interest Period will be _____ month[s].
____ (b) [Conversion] [Continuation] of Loan
-----------------------------------
(i) (A) The Borrower requests a [Conversion] [Continuation] of
Term Loans in the amount of $________ on __________, ____.
(B) The Type of Term Loans to be [Converted] [Continued]
will be a [Prime Rate Loan] [Eurodollar Loan].
(C) The Term Loans resulting from the [Conversion]
[Continuation] will be a [Prime Rate Loan] [Eurodollar Loan].
(D) If the Term Loans resulting from the [Conversion]
[Continuation] will be a Eurodollar Loan, the Interest Period for such
Loan will be _____ month[s].
(ii) (A) The Borrower requests a [Conversion] [Continuation] of
Revolving Credit Loans in the amount of $________ on __________, ____.
(B) The Type of Revolving Credit Loans to be [Converted]
[Continued] will be a [Prime Rate Loan] [Eurodollar Loan].
(C) The Revolving Credit Loans resulting from the
[Conversion] [Continuation] will be a [Prime Rate Loan] [Eurodollar
Loan].
(D) If the Revolving Credit Loans resulting from the
[Conversion] [Continuation] will be a Eurodollar Loan, the Interest
Period for such Loan will be _____ month[s].
(iii) (A) The Borrower requests a [Conversion] [Continuation] of
Acquisition Loans in the amount of $________ on ___________, ____.
(B) The Type of Acquisition Loans to be [Converted]
[Continued] will be a [Prime Rate Loan] [Eurodollar Loan].
(C) The Acquisition Loans resulting from the [Conversion]
[Continuation] will be a [Prime Rate Loan] [Eurodollar Loan].
(D) If the Acquisition Loans resulting from the
[Conversion] [Continuation] will be a Eurodollar Loan, the Interest
Period for such Loan will be _____ month[s].
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 2
<PAGE>
____ (c) Prepayment.
----------
(i) (A) The Borrower will make a prepayment of the principal of
the Term Loans in the amount of $___________ on ______________, ____.
(B) The Term Loans to be prepaid will be of the following
Type: [Prime Rate Loan] [Eurodollar Loan].
(C) If the Term Loans to be prepaid is a Eurodollar Loan,
it has an Interest Period of _____ month[s] that will end on
_____________, ____.
(ii) (A) The Borrower will make a prepayment of the principal of
the Revolving Credit Loans in the amount of $___________ on
______________, ____.
(B) The Revolving Credit Loans to be prepaid will be of the
following Type: [Prime Rate Loan] [Eurodollar Loan].
(C) If the Revolving Credit Loans to be prepaid is a
Eurodollar Loan, it has an Interest Period of _____ month[s] that will
end on _____________, ____.
(iii) (A) The Borrower will make a prepayment of the principal
of the Acquisition Loans in the amount of $___________ on
______________, ____.
(B) The Acquisition Loans to be prepaid will be of the
following Type: [Prime Rate Loan] [Eurodollar Loan].
(C) If the Acquisition Loans to be prepaid is a Eurodollar
Loan, it has an Interest Period of _____ month[s] that will end on
_____________, ____.
MAIL-WELL I CORPORATION
By:___________________________________
Name:_________________________________
Title:________________________________
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 3
<PAGE>
EXHIBIT "F"
Intercreditor Agreement
-----------------------
<PAGE>
AMENDED AND RESTATED INTERCREDITOR AGREEMENT
--------------------------------------------
THIS AMENDED AND RESTATED INTERCREDITOR AGREEMENT (this "Agreement"), dated
---------
effective as of November 15, 1996, is made and entered into by and among the
"Mail-Well Lenders" as hereinafter defined, the "Supremex Lenders" as
hereinafter defined and the "Financing Lenders" as hereinafter defined (the
Mail-Well Lenders, the Supremex Lenders and the Financing Lenders are
hereinafter collectively referred to as the "Lenders").
-------
RECITALS:
WHEREAS, concurrently herewith, Mail-Well I Corporation, a Delaware
corporation ("Mail-Well"), certain of the subsidiaries of Mail-Well, Banque
---------
Paribas, as Agent, and the lenders which are parties thereto (the "Mail-Well
---------
Lenders") are entering into that certain Third Amended and Restated Credit
- -------
Agreement dated as of November 15, 1996 (the "Mail-Well Credit Agreement")
--------------------------
pursuant to which the Mail-Well Lenders have made and will make loans to, and
have issued (or participated in the issuance of) and will issue (or participate
in the issuance of) letters of credit for the account of, Mail-Well secured by
the "Collateral" as described and defined in the Mail-Well Credit Agreement (the
"U.S. Collateral");
---------------
WHEREAS, concurrently herewith, Supremex Inc., a corporation organized
under the Canada Business Corporations Act ("Supremex"), Mail-Well, Innova
--------
Envelope Inc. (a subsidiary of Supremex), Banque Paribas, as Agent, and the
lenders which are parties thereto (the "Supremex Lenders") are entering into
----------------
that certain Amended and Restated Credit Agreement dated as of November 15, 1996
(the "Supremex Credit Agreement") pursuant to which the Supremex Lenders have
-------------------------
made and will make loans to, have accepted (or participated in the acceptance
of) and will accept (or participate in the acceptance of) bankers' acceptances
drawn by Supremex and have issued (or participated in the issuance of) and will
issue (or participate in the issuance of) letters of credit for the account of,
Supremex secured by (a) the "Collateral" in which Liens are granted by Supremex
and Innova as described and defined in the Supremex Credit Agreement (the
"Canadian Collateral") and (b) the U.S. Collateral;
-------------------
WHEREAS, in connection with predecessor agreements to the Mail-Well Credit
Agreement and the Supremex Credit Agreement, the Mail-Well Lenders and the
Supremex Lenders (or their predecessors in interest) entered into that certain
Intercreditor Agreement dated as of July 31, 1995 (the "Original Intercreditor
----------------------
Agreement") pursuant to which they agreed upon certain relative rights in and to
- ---------
the U.S. Collateral and the Canadian Collateral as a means of avoiding any
controversy regarding conflicting liens, security interests and/or other rights,
titles and/or interests in and to such collateral or any part thereof;
WHEREAS, concurrently herewith, Mail-Well, certain subsidiaries of Mail-
Well, Paribas Properties, Inc. (as lessor), Banque Paribas, as Agent, and the
lenders, including the "Financing Lenders" as described and defined therein (the
"Financing Lenders") and the "Equity Lenders", as described and defined therein
-----------------
(the "Equity Lenders"), which are parties thereto (the "Equipment Lease Facility
-------------- ------------------------
Lenders") are entering into the "Equipment Lease Facility Documents", as such
- -------
term is defined in the Mail-Well Credit Agreement (the "Equipment Lease Facility
------------------------
Documents") pursuant
- ---------
<PAGE>
to which the Equipment Lease Facility Lenders are making loans to Paribas
Properties, Inc. to finance its purchase of certain equipment (the "Equipment")
---------
from Mail-Well and certain subsidiaries of Mail-Well which is, concurrently
herewith, being leased to Mail-Well and certain subsidiaries of Mail-Well, which
loans made by the Financing Lenders (the "Financing Loans") are, concurrently
---------------
herewith, being guaranteed by Mail-Well, Inc. ("Holdings") and Mail-Well and
--------
certain subsidiaries of Mail-Well and are secured by (a) a second priority
security interest (subordinate to the first priority security interest in favor
of the Equity Lenders) in the Equipment (the "Equipment Collateral") and (b) the
--------------------
U.S. Collateral; and
WHEREAS, the parties hereto desire to amend and restate the Original
Intercreditor Agreement to provide for the relative rights of the Mail-Well
Lenders, the Supremex Lenders and the Financing Lenders in and to the U.S.
Collateral, the Canadian Collateral and the Equipment Collateral;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Pro Rata Sharing of Collateral. Except as provided below, the Mail-
------------------------------
Well Lenders, the Supremex Lenders and the Financing Lenders expressly
acknowledge and agree that any and all rights, titles and/or interests of the
Mail-Well Lenders, the Supremex Lenders and/or the Financing Lenders (including
their respective successors and assigns) in and to the U.S. Collateral, the
Supremex Collateral and the Equipment Collateral, whether such rights, titles
and/or interests now or hereafter exist or arise and whether the U.S.
Collateral, the Supremex Collateral and the Equipment Collateral, or any part
thereof is now owned or hereafter acquired by Holdings, Mail-Well or any
subsidiary of Mail-Well, are and shall be in all respects, as among the Mail-
Well Lenders, the Supremex Lenders and the Financing Lenders, equal as to
priority. Without limiting the generality of the foregoing, upon the exercise of
any right or remedy with respect to the U.S. Collateral, the Supremex Collateral
or the Equipment Collateral or any portion thereof by or on behalf of the Mail-
Well Lenders, the Supremex Lenders or the Financing Lenders with respect to the
Mail-Well Credit Agreement, the Supremex Credit Agreement or the Equipment Lease
Facility Documents, respectively, or otherwise, the U.S. Collateral, the
Canadian Collateral and the Equipment Collateral shall be (a) shared among the
Mail-Well Lenders, the Supremex Lenders and the Financing Lenders pro rata based
--- ----
upon the aggregate principal amount of the indebtedness then outstanding under
the Mail-Well Credit Agreement (inclusive of the then-outstanding face amount of
the letters of credit issued pursuant to the Mail-Well Credit Agreement,
collectively the "Mail-Well Indebtedness"), the aggregate principal amount of
----------------------
the indebtedness then outstanding under the Supremex Credit Agreement (inclusive
of the then-outstanding face amount of the letters of credit issued and bankers'
acceptances accepted pursuant to the Supremex Credit Agreement, collectively the
"Supremex Indebtedness") and the aggregate principal amount of the indebtedness
---------------------
constituting the "Financing Loans" then outstanding under the Equipment Lease
Facility Documents (collectively, the "Financing Loans"), and (b) applied to
---------------
(and/or held for application against) such indebtedness in such pro rata manner.
--- ----
Notwithstanding the foregoing, no proceeds of the U.S. Collateral or the
Equipment Collateral shall be applied against the Supremex Indebtedness until
such time as all of the Canadian Collateral has been foreclosed upon,
transferred in lieu of foreclosure or otherwise realized upon, and no proceeds
of the U.S. Collateral or the Supremex Collateral shall be applied against the
Financing Loans until such time as all of the Equipment Collateral has been
foreclosed upon, transferred in lieu
2
<PAGE>
of foreclosure or otherwise realized upon. Any proceeds of the U.S. Collateral
or the Equipment Collateral (including any interest earned with respect thereto)
which would, but for the provisions of the preceding sentence, be applied to the
Supremex Indebtedness shall be held by Banque Paribas, as collateral agent for
the Mail-Well Lenders, the Supremex Lenders and the Financing Lenders (the
"Collateral Agent"), until such time as they are permitted to be applied to the
Supremex Indebtedness in accordance with the preceding sentence, and any
proceeds of the U.S. Collateral or the Supremex Collateral (including any
interest earned with respect thereto) which would, but for the provisions of the
preceding sentence, be applied to the Financing Loans shall be held by the
Collateral Agent until such time as they are permitted to be applied to the
Financing Loans in accordance with the preceding sentence. Any and all U.S.
Collateral or Equipment Collateral or proceeds thereof initially held for
application against the Supremex Indebtedness as provided in this Paragraph 1
-----------
above shall be applied to the Mail-Well Indebtedness and the Financing Loans, on
a pro rata basis as provided above, after all Supremex Indebtedness has been
paid in full, and any and all U.S. Collateral or Supremex Collateral or proceeds
thereof initially held for application against the Financing Loans as provided
in this Paragraph 1 above shall be applied to the Mail-Well Indebtedness and the
-----------
Supremex Indebtedness, on a pro rata basis as provided above, after all
Financing Loans have been paid in full.
2. Application of Priority Notwithstanding Order of Creation or
------------------------------------------------------------
Perfection. The terms and provisions of Paragraph 1 of this Agreement are
- ---------- -----------
applicable irrespective of (a) whether or not the Supremex Collateral secures
the Mail-Well Indebtedness or the Financing Loans (as between the grantors of
the liens, security interests or other collateral assignments in the Supremex
Collateral and the beneficiaries thereof) and whether or not the Equipment
Collateral secures the Mail-Well Indebtedness or the Supremex Indebtedness (as
between the grantors of the liens, security interests or other collateral
assignments in the Equipment Collateral and the beneficiaries thereof), (b) the
validity or enforceability of, or the time or order of creation, attachment or
perfection of, any lien, security interest and/or other right, title and/or
interest of the Mail-Well Lenders, the Supremex Lenders and the Financing
Lenders in and to the U.S. Collateral, the Supremex Collateral or the Equipment
Collateral or any part thereof, (c) the time or order of the execution,
delivery, performance or filing of any mortgage, deed of trust, security
agreement, financing statement or other agreement, document, instrument or
certificate, or (d) the time of giving or the failure to give notice of the
creation, existence or acquisition, or the expected creation, existence or
acquisition, of any lien, security interest and/or other right, title and/or
interest.
3. Appointment of Collateral Agent, Etc. Each Lender hereby irrevocably
------------------------------------
appoints and authorizes the Collateral Agent to act as its agent hereunder with
such powers as are specifically delegated to the Collateral Agent by the terms
of this Agreement, the Mail-Well Credit Agreement, the Supremex Credit Agreement
and/or the Equipment Lease Facility Documents, together with such other powers
as are reasonably incidental thereto. Neither the Collateral Agent nor any of
its affiliates, officers, directors, employees, attorneys or agents shall be
liable for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with this Agreement except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Collateral Agent (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement, and shall
not by reason of this Agreement be a trustee or fiduciary for any Lender, (b)
shall not be required to initiate any litigation or collection proceedings
hereunder, (c) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement, or any
certificate or other document referred to or provided
3
<PAGE>
for in, or received by any of them under, this Agreement, or for the value,
validity, effectiveness, enforceability or sufficiency of this Agreement or any
other document referred to or provided for herein or therein or for any failure
by any person or entity to perform any of its indebtedness, liabilities or
obligations hereunder or thereunder, (d) may consult with legal counsel
(including counsel for any "Loan Party" as such term is defined in the Mail-Well
Credit Agreement, the Supremex Credit Agreement and the Equipment Lease Facility
Documents), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts, and
(e) shall incur no liability under or in respect of this Agreement by acting
upon any notice, consent, certificate or other instrument or writing reasonably
believed by it to be genuine and signed or sent by the proper party or parties.
As to any matters not expressly provided for by this Agreement, the Collateral
Agent shall in all cases be fully protected vis-a-vis the Mail-Well Lenders, the
Supremex Lenders and the Financing Lenders in acting, or in refraining from
acting, hereunder in accordance with instructions signed by the "Required
Lenders" (as such term is defined in the Mail-Well Credit Agreement), the
"Required Lenders" (as such term is defined in the Supremex Credit Agreement)
and the "Required Financing Lenders"(as such term is defined in the Equipment
Lease Facility Documents), respectively, and such instructions of such portion
of each of the Mail-Well Lenders, the Supremex Lenders and the Financing Lenders
and any action taken or failure to act pursuant thereto shall be binding on all
of the Lenders; provided, however, that the Collateral Agent shall not be
-------- -------
required to take any action which exposes the Collateral Agent to liability or
which is contrary to this Agreement, any other agreement, document or instrument
between or among the applicable parties or applicable law.
4. Rights of Agent as a Lender. With respect to the Mail-Well
---------------------------
Indebtedness, the Supremex Indebtedness and the Financing Loans held by it,
Banque Paribas (and any successor acting as Collateral Agent) in its capacity as
a Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the Collateral
Agent, and the term "Lender" or "Lenders" shall, unless the context otherwise
indicates, include the Collateral Agent in its individual capacity. The
Collateral Agent and its affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, act as trustee under indentures
of, provide merchant banking services to, own securities of and generally engage
in any kind of banking, trust or other business with, any Loan Party, as such
term is defined in the Mail-Well Credit Agreement, the Supremex Credit Agreement
and the Equipment Lease Facility Documents, or any of its affiliates and any
other person or entity who may do business with or own securities of any such
Loan Party or any of its affiliates, all as if it were not acting as the
Collateral Agent and without any duty to account therefor to the Lenders.
5. INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY THE
---------------
COLLATERAL AGENT FROM AND HOLD THE COLLATERAL AGENT HARMLESS AGAINST, RATABLY IN
ACCORDANCE WITH ITS PRO RATA SHARE OF THE AGGREGATE OF THE MAIL-WELL
--- ----
INDEBTEDNESS, THE SUPREMEX INDEBTEDNESS AND THE FINANCING LOANS OUTSTANDING AS
OF THE RELEVANT TIME, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY OR ASSERTED
4
<PAGE>
AGAINST THE COLLATERAL AGENT IN ANY WAY RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY THE COLLATERAL AGENT
UNDER OR IN RESPECT OF THIS AGREEMENT; PROVIDED, FURTHER, THAT NO LENDER SHALL
--------
BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY THE
COLLATERAL AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF
THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT THE COLLATERAL
AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE COLLATERAL AGENT
(EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY THE COLLATERAL AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF THIS
PARAGRAPH 5, EACH LENDER AGREES TO REIMBURSE THE COLLATERAL AGENT PROMPTLY UPON
- -----------
DEMAND FOR ITS PRO RATA SHARE OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING
ATTORNEYS' FEES) INCURRED BY THE COLLATERAL AGENT IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THIS AGREEMENT.
6. Irrevocable and Continuing Agreement. This Agreement is an irrevocable
------------------------------------
and continuing agreement, and each Lender may rely, and continue to rely, upon
this Agreement in extending credit and making other financial accommodations
without the necessity of the giving of any notice to any Lender (or their
respective successors or assigns). If, notwithstanding the agreement and intent
of the parties hereto as set forth in the immediately preceding sentence, it is
determined that any party hereto (or its successors or assigns) shall have the
legal right to terminate this Agreement, then such termination shall not be
effective unless and until 60 days after the other parties hereto shall have
actually received written notice of such termination from the terminating party,
which notice must have been delivered to the address or telecopy number of the
non-terminating party specified in Paragraph 7 of this Agreement.
-----------
Notwithstanding anything to the contrary contained in the immediately preceding
sentence or elsewhere in this Agreement, no termination of this Agreement by any
Lender (or their respective successors or assigns) shall in any way affect or
impair (a) the relative priorities of any lien, security interest and/or other
right, title and/or interest of the Lenders in and to the Collateral or any part
thereof securing, or the relative priorities of the application of the proceeds
of any Collateral whether or not securing, the Mail-Well Indebtedness, the
Supremex Indebtedness and/or the Financing Loans existing or arising created by
this Agreement (as if this Agreement were not terminated), or (b) the rights or
obligations of any party hereto created, existing or arising prior to such
termination.
7. Notices. Any notice to be given by any Mail-Well Lender, Supremex
-------
Lender or Financing Lender to any other Lender with respect to this Agreement
shall be in writing and, except as provided in Paragraph 6 of this Agreement,
-----------
shall be deemed given on the third day after actual
5
<PAGE>
delivery thereof (by mail, telecopy or otherwise) to the addressee at the
following address or telecopy number (or to such other address or telecopy
number as any Lender may specify in writing from time to time pursuant to a
written notice given pursuant to this Paragraph 7):
-----------
(a) if to any Mail-Well Lender:
c/o Banque Paribas, as Collateral Agent
2121 San Jacinto Street, Suite 930
Dallas, Texas 75201
Attention: Mr. Christopher S. Goodwin
Telecopy No.: (214) 969-0380
(b) if to any Supremex Lender:
c/o Banque Paribas, as Collateral Agent
2121 San Jacinto Street, Suite 930
Dallas, Texas 75201
Attention: Mr. Christopher S. Goodwin
Telecopy No.: (214) 969-0380
(c) if to any Financing Lender:
c/o Banque Paribas, as Collateral Agent
2121 San Jacinto Street, Suite 930
Dallas, Texas 75201
Attention: Mr. Christopher S. Goodwin
Telecopy No.: (214) 969-0380
8. Successors and Assigns. This Agreement shall be binding upon, and
----------------------
shall inure to the benefit of, the Lenders and their respective successors and
assigns. No person or entity other than the parties hereto and their respective
successors and assigns shall have any right or remedy with respect to, or
otherwise be a beneficiary of, this Agreement. Without limiting the generality
of the foregoing, neither Holdings, Mail-Well, Supremex, any subsidiary of Mail-
Well or Supremex or any other "Loan Party", as such term is defined in the Mail-
Well Credit Agreement, the Supremex Credit Agreement and the Equipment Lease
Facility Documents, shall have any right or remedy with respect to, or otherwise
be a beneficiary of, this Agreement.
9. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
10. Multiple Counterparts. This Agreement may be executed in multiple
---------------------
counterparts.
11. Amendment and Restatement. This Agreement shall constitute an
-------------------------
amendment and restatement of the Original Intercreditor Agreement.
6
<PAGE>
IN WITNESS WHEREOF, each of the undersigned has caused this Agreement to be
executed by its duly authorized officer as of the date stated hereinabove.
COLLATERAL AGENT:
----------------
BANQUE PARIBAS, as Collateral Agent
By:______________________________________
Name: Pierre-Jean de Filippis
Title: General Manager
By:______________________________________
Name: Christopher S. Goodwin
Title: Vice President
7
<PAGE>
MAIL-WELL LENDERS,
SUPREMEX LENDERS
AND/OR FINANCING
LENDERS (AS APPLICABLE):
-----------------------
ARAB BANKING CORPORATION (B.S.C.)
By:______________________________________
Name:____________________________________
Title:___________________________________
8
<PAGE>
BANQUE PARIBAS
By:______________________________________
Name: Pierre-Jean de Filippis
Title: General Manager
By:______________________________________
Name: Christopher S. Goodwin
Title: Vice President
9
<PAGE>
BANK OF AMERICA ILLINOIS
By:______________________________________
Name:____________________________________
Title:___________________________________
10
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
By:______________________________________
Name:____________________________________
Title:___________________________________
11
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
12
<PAGE>
NATIONAL BANK OF CANADA
By:______________________________________
Name:____________________________________
Title:___________________________________
NATIONAL BANK OF CANADA
By:______________________________________
Name:____________________________________
Title:___________________________________
13
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By:______________________________________
Name:____________________________________
Title:___________________________________
14
<PAGE>
PARIBAS BANK OF CANADA
By:______________________________________
Name:____________________________________
Title:___________________________________
15
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY
By:______________________________________
Name:____________________________________
Title:___________________________________
16
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By:______________________________________
Name:____________________________________
Title:___________________________________
17
<PAGE>
THE BANK OF NOVA SCOTIA
By:______________________________________
Name:____________________________________
Title:___________________________________
THE BANK OF NOVA SCOTIA
By:______________________________________
Name:____________________________________
Title:___________________________________
18
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
By:______________________________________
Name:____________________________________
Title:___________________________________
19
<PAGE>
THE CIT GROUP/BUSINESS CREDIT, INC.
By:______________________________________
Name:____________________________________
Title:___________________________________
20
<PAGE>
THE FUJI BANK, LIMITED
By:______________________________________
Name:____________________________________
Title:___________________________________
21
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:______________________________________
Name:____________________________________
Title:___________________________________
22
<PAGE>
CERES FINANCE LTD.
By:______________________________________
Name:____________________________________
Title:___________________________________
23
<PAGE>
STRATA FUNDING LTD.
By:______________________________________
Name:____________________________________
Title:___________________________________
24
<PAGE>
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V.
By: ABN Trust Company (Netherlands),
its Managing Director
By:__________________________________
Name:________________________________
Title:_______________________________
25
<PAGE>
EXHIBIT G
INTERCREDITOR AGREEMENT
Dated as of November 15, 1996
by and among
CITICORP NORTH AMERICA, INC.,
as Securitization Company Agent
BANQUE PARIBAS, NEW YORK BRANCH,
as Liquidity Agent
BANQUE PARIBAS,
as Credit Lenders' Agent
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
as Trustee
MAIL-WELL TRADE RECEIVABLES CORPORATION,
as Receivables Seller
MAIL-WELL I CORPORATION,
as Servicer, Originator and the Mail-Well Credit Borrower
SUPREMEX INC.,
as the Supremex Credit Borrower
and
THE OTHER PARTIES HERETO
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1. DEFINITIONS................................................................ 3
1.1. Certain Defined Terms.................................................... 3
1.2. References to Terms Defined in the Purchaser Documents and the
Loan Documents........................................................... 8
ARTICLE 2. INTERCREDITOR PROVISIONS................................................... 8
2.1. Priorities with Respect to Purchased Property, Etc....................... 8
2.2. [Reserved]............................................................... 12
2.3. Distribution of Proceeds................................................. 12
2.4. Collection Accounts...................................................... 13
2.5. Enforcement Actions...................................................... 14
2.6. Access to and Use of Credit Collateral and Purchased Property............ 15
2.7. Accountings.............................................................. 17
2.8. Agency for Perfection.................................................... 17
2.9. UCC Notices.............................................................. 17
2.10. Independent Credit Investigations........................................ 18
2.11. Limitation on Liability of Parties to Each Other......................... 18
2.12. Amendments to Financing Arrangements or to this Agreement................ 18
2.13. Marshalling of Assets.................................................... 19
2.14. Relative Rights.......................................................... 19
2.15. Effect Upon Loan Documents and Purchaser Documents....................... 19
2.16. Nature of the Credit Claims and Modification of Loan Documents........... 20
2.17. Nature of the Purchaser Claims and Modification of Purchaser
Documents................................................................ 20
2.18. Further Assurances....................................................... 20
2.19. Filing................................................................... 20
2.20. Reports.................................................................. 21
ARTICLE 3. MISCELLANEOUS.............................................................. 21
3.1. Notices.................................................................. 21
3.2. Agreement Absolute....................................................... 21
3.3. Successors and Assigns................................................... 21
3.4. Beneficiaries............................................................ 22
3.5. GOVERNING LAW............................................................ 22
3.6. Section Titles........................................................... 22
3.7. Severability............................................................. 22
3.8. Execution in Counterparts................................................ 22
3.9. Limited Recourse......................................................... 22
</TABLE>
i
<PAGE>
INTERCREDITOR AGREEMENT dated as of November 15, 1996 (as modified,
amended, restated or supplemented from time to time in accordance with the terms
hereof, this "AGREEMENT"), by and among:
CITICORP NORTH AMERICA, INC. (in its capacity as Securitization
Company Agent under the Asset Purchase Agreement (as defined below), together
with its successors and assigns (including pursuant to any refinancing,
replacement or refunding) in such capacity, the "SECURITIZATION COMPANY AGENT"),
BANQUE PARIBAS, NEW YORK BRANCH (in its capacity as Liquidity Agent for the
Liquidity Providers (as defined below) under the Asset Purchase Agreement,
together with its permitted successors and assigns (including pursuant to any
refinancing, replacement or refunding) in such capacity, the "LIQUIDITY AGENT"),
BANQUE PARIBAS (in its capacity as agent for the Credit Lenders (as defined
below), together with its permitted successors and assigns (including pursuant
to any refinancing, replacement or refunding) in such capacity, the "CREDIT
LENDERS' AGENT"), NORWEST BANK COLORADO, NATIONAL ASSOCIATION (in its capacity
as Trustee under the Pooling and Servicing Agreement (as defined below),
together with its successors and assigns (including pursuant to any refinancing,
replacement or refunding) in such capacity, the "TRUSTEE"), MAIL-WELL TRADE
RECEIVABLES CORPORATION (the "RECEIVABLES SELLER"), MAIL-WELL I CORPORATION
("MAIL-WELL" and in its capacity as Servicer under the Pooling and Servicing
Agreement, the "SERVICER", and as Originator under the Pooling and Servicing
Agreement together with any other Person (as defined below) named as an
originator under, or added as an originator in accordance with, the PCA (as
defined below) , the "ORIGINATOR", and in its capacity as borrower under the
Mail-Well Credit Agreement (as defined below), the "MAIL-WELL CREDIT BORROWER")
and SUPREMEX INC., in its capacity as borrower under the Supremex Credit
Agreement (as defined below) the "SUPREMEX CREDIT BORROWER", and together with
the Mail-Well Credit Borrower, collectively, the "CREDIT BORROWERS").
R E C I T A L S :
A. The Originator has agreed to sell, transfer and assign to the
Receivables Seller, and the Receivables Seller has agreed to purchase or
otherwise acquire from the Originator, all of the right, title and interest of
the Originator in the Receivables (as hereinafter defined) pursuant to a
Purchase and Contribution Agreement (as amended, supplemented, modified or
restated from time to time, and as the same may be refinanced, replaced or
refunded, the "PCA") dated as of the date hereof between the Originator and the
Receivables Seller.
B. The Receivables Seller, the Servicer and the Trustee are parties
to a Pooling and Servicing Agreement dated as of the date hereof (as amended,
supplemented (including, without limitation, as supplemented by the Series 1996-
1 Supplement thereto), modified or restated from time to time, and as the same
may be refinanced, replaced or refunded, the "POOLING AND SERVICING AGREEMENT")
pursuant to which the Receivables Seller has agreed to transfer to the Trustee
the Receivables purchased by or contributed to the Receivables Seller pursuant
to the PCA.
<PAGE>
C. The PCA and the Pooling and Servicing Agreement provide for the
filing of UCC financing statements to perfect the ownership and security
interests of the parties thereto with respect to the property covered thereby.
D. The Receivables Seller, Corporate Receivables Corporation (the
"Receivables Purchaser"), the Servicer and the Trustee are parties to a
Certificate Purchase Agreement dated as of the date hereof (as amended,
supplemented, modified or restated from time to time, and as the same may be
refinanced, replaced or refunded, the "CERTIFICATE PURCHASE AGREEMENT") pursuant
to which the Receivables Purchaser has agreed to purchase the Series 1996-1
Certificate (as defined in the Purchaser Documents) which represents an interest
in the Receivables.
E. The Receivables Purchaser, the Liquidity Providers parties
thereto (the "LIQUIDITY PROVIDERS"), the Securitization Company Agent and the
Liquidity Agent are parties to an Asset Purchase Agreement dated as of the date
hereof (as amended, supplemented, modified or restated from time to time, and as
the same may be refinanced, replaced or refunded, the "ASSET PURCHASE
AGREEMENT") pursuant to which the Liquidity Providers have agreed to purchase
the Series 1996-1 Certificate from the Receivables Purchaser.
F. Mail-Well, certain subsidiaries of Mail-Well, Paribas Properties,
Inc. (as lessor), Banque Paribas, as agent, and the lenders, including the
"Financing Lenders" and the "Equity Lenders" as described and defined therein,
which are parties thereto (the "EQUIPMENT LENDERS") are entering into the
"Equipment Lease Facility Documents", as such term is defined in the Mail-Well
Credit Agreement (the "EQUIPMENT LEASE FACILITY DOCUMENTS") pursuant to which
the Equipment Lenders are making loans to Paribas Properties, Inc. to finance
its purchase of certain equipment from Mail-Well which is, concurrently
therewith, being leased to Mail-Well and, in part, sub-leased by Mail-Well to
certain subsidiaries of Mail-Well.
G. The Mail-Well Credit Borrower, the Credit Lenders' Agent, the
lenders party thereto from time to time (the "MAIL-WELL CREDIT LENDERS") and
certain subsidiaries of the Mail-Well Credit Borrower are parties to a Third
Amended and Restated Credit Agreement, dated as of the date hereof (as amended,
supplemented, modified or restated from time to time, and as the same may be
refinanced, replaced or refunded, the "MAIL-WELL CREDIT AGREEMENT").
H. The Supremex Credit Borrower, the Credit Lenders' Agent, the
lenders party thereto from time to time (the "SUPREMEX CREDIT LENDERS", and
together with the Mail-Well Credit Lenders and the Equipment Lenders,
collectively, the "CREDIT LENDERS"), Innova Envelope Inc., and Mail-Well are
parties to an Amended and Restated Credit Agreement, dated as of the date hereof
(as amended, supplemented, modified or restated from time to time, and as the
same may be refinanced, replaced or refunded, the "SUPREMEX CREDIT AGREEMENT",
and together with the Mail-Well Credit Agreement and the Equipment Lease
Facility Documents, the "CREDIT AGREEMENTS").
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I. To secure their obligations to the Credit Lenders and Credit
Lenders' Agent under the Credit Agreements and other Loan Documents and to the
Equipment Lenders under the Equipment Lease Facility Documents, the Credit
Borrowers and certain Affiliates thereof have granted to the Credit Lenders'
Agent for the benefit of the Credit Lenders' Agent, the Credit Lenders, as
applicable, a security interest in, among other things, certain collateral,
including, without limitation, certain accounts receivable, inventory, equipment
and certain general intangibles, including, without limitation, the Receivables,
and all proceeds of the foregoing.
J. The parties hereto wish to set forth certain agreements with
respect to the Purchased Property (as hereinafter defined) and with respect to
the Collateral (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, and for other good and valuable
consideration, receipt of which is hereby acknowledged, it is hereby agreed as
follows:
ARTICLE 1. DEFINITIONS.
-----------
1.1. Certain Defined Terms. As used in this Agreement, the following
---------------------
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"AGREEMENT" has the meaning ascribed to such term in the preamble
hereto.
"ASSET PURCHASE AGREEMENT" has the meaning ascribed to such term in
the recitals hereto.
"BUSINESS DAY" has the meaning ascribed to such term in the Pooling
and Servicing Agreement.
"CERTIFICATE PURCHASE AGREEMENT" has the meaning ascribed to such
term in the recitals hereto.
"CLAIMS" means the Credit Claims or the Purchaser Claims, as
applicable.
"COLLATERAL" means all property (including proceeds thereof) and
interests in property (including proceeds thereof), now owned or hereafter
acquired or created, of any one or more of the Loan Parties in or upon which a
Credit Security Interest is granted or purported to be granted by any one or
more of the Loan Parties to the Credit Lenders or the Credit Lenders' Agent
under any of the Loan Documents.
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"COLLECTION ACCOUNT" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"COLLECTIONS" has the meaning ascribed to such term in the
definition of "Receivables."
"CONTRACT" has the meaning ascribed to such term in the Pooling and
Servicing Agreement.
"CREDIT AGREEMENTS" has the meaning ascribed to such term in the
recitals hereto.
"CREDIT BORROWERS" has the meaning ascribed to such term in the
preamble hereto.
"CREDIT CLAIMS" means all loans, advances, liabilities and obligations
for the payment of monetary amounts (whether or not such payment is then
required or contingent, or amounts are liquidated or determinable) owing by any
Loan Party to the Credit Lenders' Agent or any Credit Lender, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under any of the Loan Documents. This term includes
all principal, interest (including, without limitation, interest accruing after
the commencement of a bankruptcy, insolvency or similar proceeding relating to
the Credit Borrowers, whether or not such interest is an allowed claim in any
such proceeding), any reimbursement obligations, obligations with respect to
letters of credit or bankers' acceptances, fees and expenses due thereunder, and
any costs of collection or enforcement, attorneys' fees and any other sum
chargeable to any Loan Party under any of the Loan Documents.
"CREDIT COLLATERAL" means all Collateral which does not constitute
Purchased Property.
"CREDIT LENDERS" has the meaning ascribed to such term in the
recitals hereto.
"CREDIT LENDERS' AGENT" has the meaning ascribed to such term in the
preamble hereto.
"CREDIT SECURITY INTEREST" means, with respect to any property or
interests in property, now owned or hereafter acquired or created, of any Loan
Party, any lien, claim, encumbrance, security interest or other interest of the
Credit Lenders' Agent or the Credit Lenders in such property or interests in
property.
"DISPOSITION" has the meaning ascribed to such term in Section
2.1(e)(y) hereof.
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"ENFORCEMENT" means collectively or individually, (i) the occurrence
and continuation of an Amortization Period Commencement Date under the
Purchaser Documents; or (ii) (x) demand, by any of the Credit Lenders or the
Credit Lenders' Agent after the occurrence and during the continuance of an
Event of Default, for payment in full of, or acceleration of all or any portion
of, the Credit Claims (or the automatic acceleration thereof) and (y) the
commencement thereafter by any of the Credit Lenders or Credit Lenders' Agent of
judicial or nonjudicial enforcement of any of the default rights and remedies
under the Loan Documents.
"ENFORCEMENT NOTICE" means a written notice delivered in accordance
with Section 2.5 which notice shall (i) if delivered by the Securitization
Company Agent, the Liquidity Agent or the Trustee that an Amortization Period
Commencement Date has occurred, specify the nature of any Pay-Out Event
resulting in such Amortization Period Commencement Date, and state that an
Enforcement Period has commenced or (ii) if delivered by the Credit Lenders'
Agent, state that an Event of Default has occurred, the payment in full of the
Credit Claims has been demanded or all or any portion of the Credit Claims have
been accelerated, specify the nature of the Event of Default that caused such
demand or acceleration, and state that an Enforcement Period has commenced.
"ENFORCEMENT PERIOD" means the period of time following the receipt by
either the Credit Lenders' Agent, on the one hand, or the Trustee, the
Securitization Company Agent and the Liquidity Agent and on the other hand of an
Enforcement Notice delivered by the other until the earliest of the following:
(1) the Purchaser Claims have been satisfied in full in cash, the Receivables
Purchaser and the Liquidity Providers have no further obligations under the
Purchaser Documents and the Purchaser Documents have been terminated; (2) the
Credit Claims have been satisfied in full in cash, the Credit Lenders have no
further obligations under the Loan Documents, no Letters of Credit or Bankers'
Acceptances (as defined in, and issued or accepted pursuant to, the Credit
Agreements) are outstanding (other than any for which cash collateral to the
extent required at such time by the Credit Agreements has been provided) and the
Loan Documents have been terminated (the occurrence of the foregoing,
hereinafter referred to as "TERMINATION OF CREDIT CLAIMS"); and (3) the Credit
Lenders' Agent, the Securitization Company Agent, the Liquidity Agent and the
Trustee agree in writing to terminate the Enforcement Period.
"EVENT OF DEFAULT" has the meaning ascribed to such term in the
Credit Agreements.
"FACILITY TERMINATION DATE" has the meaning ascribed to such term in
the PCA.
"LIQUIDITY PROVIDERS" has the meaning ascribed to such term in the
recitals hereto.
"LOAN DOCUMENTS" means collectively, the "Loan Documents" as defined
in the Credit Agreements together with the Equipment Lease Facility Documents.
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"LOAN PARTIES" has the meaning ascribed to such term in the Credit
Agreements including, without duplication, Mail-Well, and any Affiliates
thereof that are parties to the Equipment Lease Facility Documents.
"LOCKBOX" has the meaning ascribed to such term in the Pooling and
Servicing Agreement.
"LOCKBOX ACCOUNT" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"LOCKBOX BANK" has the meaning ascribed to such term in the Pooling
and Servicing Agreement.
"OBLIGOR" has the meaning ascribed to such term in the Pooling and
Servicing Agreement; provided that "Obligor" shall in no event include any
person liable to any of the Credit Lenders or the Credit Lenders' Agent for and
solely to the extent of the purchase price of any Credit Collateral sold to such
person by the Credit Lenders' Agent or any Credit Lender.
"ORIGINATOR" has the meaning ascribed to such term in the preamble
hereto.
"OUTSTANDING BALANCE" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"PAY-OUT EVENT" has the meaning ascribed to such term in the Pooling
and Servicing Agreement.
"PCA" has the meaning ascribed to such term in the recitals hereto.
"PERSON" means any individual, sole proprietorship, partnership,
corporation (including a business trust), joint stock company, limited liability
company, trust, unincorporated organization, joint venture, association,
institution, public benefit corporation, government (whether Federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof) or other entity.
"POOLING AND SERVICING AGREEMENT" has the meaning ascribed to such
term in the recitals hereto.
"PURCHASED PROPERTY" means (i) the Purchased Receivables, (ii) the
Collections related to such Purchased Receivables and (iii) subject to Section
2.4(c) hereof, the Collection Account, the Special Funding Account, the
Lockboxes and the Lockbox Account to which any Collections of such Purchased
Receivables are deposited (but in no event shall Purchased Property include any
Collections or other monies deposited in such accounts or the Lockboxes which
are not Collections related to Purchased Receivables).
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<PAGE>
"PURCHASED RECEIVABLES" means now owned or hereafter existing
Receivables sold, purported to be sold, transferred or contributed or purported
to be transferred or contributed by the Originator to the Receivables Seller
under the PCA; provided, that, for purposes hereof, Receivables will be
-------- ----
purported to be sold, transferred or contributed if (i) consideration, including
consideration in the form of Purchase Price, is received therefor or if such
Receivables are transferred by means of a contribution to equity, (ii)
transferred in accordance with the PCA and (iii) the parties to the Purchaser
Documents have acted in good faith with respect to such transfer.
"PURCHASER CLAIMS" means all indebtedness, obligations and other
liabilities of the Originator to the Receivables Seller and of the Originator
and/or the Receivables Seller to the Securitization Company Agent, the Liquidity
Agent, the Trustee, the Liquidity Providers and/or the Receivables Purchaser now
or hereafter arising under, or in connection with, the Purchaser Documents,
including, but not limited to, all sums or increases now or hereafter advanced
or made to or for the benefit of the Receivables Seller thereunder as the
purchase price paid for Purchased Receivables or otherwise under the Purchaser
Documents, any yield thereon (including, without limitation, yield accruing
after the commencement of a bankruptcy, insolvency or similar proceeding
relating to the Originator, whether or not such yield is an allowed claim in any
such proceeding), any repayment obligations, fees or expenses due thereunder,
and any costs of collection or enforcement, attorneys' fees and any other sums
chargeable to the Originator or the Receivable Seller, as the case may be, under
any of the Purchaser Documents.
"PURCHASER DOCUMENTS" means the PCA, the Pooling and Servicing
Agreement (including each supplement thereto), the Asset Purchase Agreement, the
Certificate Purchase Agreement and any other agreements, instruments or
documents (i) executed by the Originator and delivered to the Receivables Seller
or (ii) executed by the Receivables Seller and delivered to the Trustee,
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and/or the Receivables Purchaser.
"PURCHASER INTEREST" means, with respect to any property (including
proceeds) or interests in property (including proceeds), now owned or hereafter
acquired or created, of the Receivables Seller or the Originator, any lien,
claim, encumbrance, security interest or other interest of the Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and/or the Receivables Purchaser in such property or interests in property.
"RECEIVABLE" means the indebtedness of any Obligor resulting from the
provision or sale of merchandise, insurance or services by an Originator under a
Contract, and includes the right to payment of any interest or finance charges
and other obligations of such Obligor with respect thereto and all Related
Security with respect thereto.
"RECEIVABLES PURCHASER" has the meaning ascribed to such term in the
preamble hereto.
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"RECEIVABLES SELLER" has the meaning ascribed to such term in the
preamble hereto.
"RECORDS" has the meaning ascribed to such term in the definition of
"Receivables."
"SECOND LIEN OBLIGATIONS" has the meaning ascribed to such term in
Section 2.1(b) hereof.
"SELLER" has the meaning ascribed to such term in the Pooling and
Servicing Agreement.
"SERIES REPRESENTATIVE" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"SERVICER" has the meaning ascribed to such term in the recitals
hereto.
"STOCK COLLATERAL" means the common stock of the Receivables Seller
and related property, including distributions, dividends and proceeds, in which
a Credit Security Interest is granted or purported to be granted by the Credit
Borrowers to the Credit Lenders or the Credit Lenders' Agent under any of the
Loan Documents.
"TERMINATION OF CREDIT CLAIMS" has the meaning ascribed to such term
in clause (2) of the definition of "Enforcement Period".
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction.
"UNSOLD RECEIVABLES" means all Receivables other than Purchased
Receivables.
1.2 References to Terms Defined in the Purchaser Documents and the
--------------------------------------------------------------
Loan Documents. All capitalized terms used herein and not otherwise defined
- --------------
herein shall have the meanings ascribed to them in the Pooling and Servicing
Agreement. Whenever in Section 1.1 or pursuant to the previous sentence a term
is defined by reference to the meaning ascribed to such term in any of the
Purchaser Documents or in any of the Loan Documents, then, unless otherwise
specified herein, such term shall have the meaning ascribed to such term in the
Purchaser Documents or Loan Documents, respectively, as in existence on the date
hereof, without giving effect to any amendments of such term (or any amendment
of terms used in such term) as may hereafter be agreed to by the parties to such
documents, unless such amendments have been consented to in writing by the
Trustee, Securitization Company Agent, the Liquidity Agent and the Credit
Lender's Agent.
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ARTICLE 2. INTERCREDITOR PROVISIONS.
------------------------
2.1. Priorities with Respect to Purchased Property, Etc. (a)
--------------------------------------------------
Notwithstanding any provision of the UCC, any applicable law or decision or any
of the Loan Documents or the Purchaser Documents, the Credit Lenders' Agent and
the Credit Lenders hereby agree that, upon the sale or other transfer or
purported sale or transfer of an interest in any Receivable by the Originator to
the Receivables Seller pursuant to the PCA, any Credit Security Interest of the
Credit Lenders in such Receivable and Collections thereof shall automatically
and without further action cease and be forever released and discharged and the
Credit Lenders' Agent and the Credit Lenders shall have no Credit Security
Interest therein; provided, however, that nothing in this Section 2.1 shall be
deemed to constitute a release by the Credit Lenders' Agent or the Credit
Lenders of: (i) any Credit Security Interest in the proceeds received or
receivable by the Originator from the Receivables Seller for the sale or other
transfer of Receivables (including, without limitation, cash payments made by
the Receivables Seller and any claim for payment of the purchase price of the
Receivables sold under the PCA) or (ii) any Credit Security Interest or right
the Credit Lenders' Agent and the Credit Lenders have in any residual interests
which the Originator may have in Purchased Property and the proceeds thereof.
Notwithstanding anything in the Purchaser Documents or otherwise, if the
Facility Termination Date shall occur, or if the Credit Claims shall have become
immediately due and payable and the Credit Lenders' Agent shall have delivered
written notice thereof to the Trustee, the Securitization Company Agent and the
Liquidity Agent, no Receivables shall, without the prior written consent of the
Credit Lenders' Agent, be sold or otherwise transferred to the Receivables
Seller. Notwithstanding any provision of the PCA to the contrary, the
Receivables Seller, the Trustee, the Securitization Company Agent and the
Liquidity Agent hereby agree that, unless otherwise instructed by the Credit
Lenders' Agent, upon the occurrence of an Event of Termination described in
Section 7.01(e) or (i) of the PCA, the Trustee shall immediately declare a
Facility Termination Date and from and after such date, no Receivables shall,
without the prior written consent of the Credit Lenders' Agent, be sold or
otherwise transferred to the Receivables Seller.
(b) Notwithstanding any provision of the UCC, any applicable law or
decision or any of the Purchaser Documents, each of the Receivables Seller,
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers and the Receivables Purchaser hereby agrees that (i) the Credit
Security Interest in Credit Collateral for all present and future Credit Claims
shall be and hereby is and shall be deemed to have priority over, and be senior
in all respects to, the Purchaser Interest therein, (ii) the Purchaser Interest
in Credit Collateral shall be and hereby is and shall be deemed to be junior and
subject and subordinate to the Credit Security Interest therein for all present
and future Credit Claims and (iii) the Purchaser Interests in Unsold Receivables
shall only secure the obligations (the "SECOND LIEN OBLIGATIONS") of the
Originator under Sections 5.01, 5.04 and 8.01 of the PCA. The Credit Security
Interest in the Credit Collateral for all present and future Credit Claims shall
be and hereby is senior and prior to the Purchaser Interest therein irrespective
of the time, order or method of attachment or perfection of the Credit Security
Interest or Purchaser Interest, or the time or order of the filing or non-filing
and recording or non-recording of the Loan Documents, the Purchaser Documents or
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related financing statements, or the giving of or failure to give notice of
purchase money security interests and irrespective of any other fact,
circumstance, act or occurrence that might otherwise affect the priorities
established under this Section 2.1(b). Subject to clause (c) below, nothing
contained in this Agreement shall, or shall be deemed to, restrict, impair or
impose any condition with respect to the exercise by the Credit Lenders' Agent
or the Credit Lenders of any right, remedy, power or privilege under any Loan
Document.
(c) Each of the Receivables Seller, Trustee, the Securitization
Company Agent, the Liquidity Agent, the Liquidity Providers and the Receivables
Purchaser agrees that it will not commence or continue any default, foreclosure
or liquidation proceedings or remedies, whether legal or equitable, in respect
of any of the Credit Collateral or otherwise take any action of any kind or
nature to collect or receive, or enforce its rights in, realize upon, seek
adequate protection with regard to, object to sale or use of or granting of
liens on, take or gain possession of, give it preference against, or priority
over, any of the Credit Collateral prior to the liquidation of all Purchased
Property and for so long as the Credit Lender's Agent and Credit Lenders are
diligently pursuing all remedies specified above.
(d) Subject to the limitation contained in clause (c) above, each of
the Receivables Seller, Trustee, the Securitization Company Agent and the
Liquidity Agent hereby irrevocably and unconditionally waives any rights which
it may now or hereafter have against the Credit Lenders' Agent or any Credit
Lender under, relating or with respect to any Credit Collateral, including,
without limitation, any rights under the UCC or other applicable law, and in the
event that any of the Receivables Seller, the Trustee, the Securitization
Company Agent and the Liquidity Agent shall assert any such rights, then
notwithstanding anything contained herein or in any Purchaser Documents or
otherwise, the Purchaser Interest in the Credit Collateral is as to all
Purchaser Claims hereby forever released and discharged immediately without any
further action.
(e) (x) Notwithstanding anything to the contrary contained in any
Purchaser Documents or otherwise except for and subject to the limitation
contained in clause (c) above, none of the Receivables Seller, the Trustee,
the Securitization Company Agent or the Liquidity Agent shall have (and
each of such persons does hereby irrevocably waive) any right to restrict
or permit, or approve or disapprove, any Disposition (as hereinafter
defined) of all or any portion or item of the Credit Collateral. Each of
the Receivables Seller, Trustee, the Securitization Company Agent, the
Liquidity Agent, the Liquidity Providers and the Receivables Purchaser
agrees that (1) upon any release by the Credit Lenders' Agent of the Credit
Security Interest in any Credit Collateral, pursuant to a Disposition or
otherwise in accordance with the Loan Documents (other than in connection
with the Termination of the Credit Claims or other than in connection with
the termination or release of any Credit Security Interest hereunder), the
Purchaser Interest therein shall automatically terminate and (2) each of
the Receivables Seller, Trustee, the Securitization Company Agent and the
Liquidity Agent will, immediately upon the request of the Credit Lenders'
Agent, release or
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otherwise terminate the Purchaser Interest in such Credit Collateral, and
each of such persons agrees to deliver to the Credit Lenders' Agent all
documents and instruments deemed necessary by the Credit Lenders' Agent in
connection therewith. Subject to the limitation contained in clause (c)
above, in the event that the Credit Lenders' Agent settles, adjusts or
compromises any claim in respect of all or any portion of the Credit
Collateral, including, without limitation, any condemnation, confiscation,
seizure, loss or destruction or theft of, or damage to, all or any portion
of the Credit Collateral, each of the Receivables Seller, Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and the Receivables Purchaser agrees that it is and shall be bound by any
such settlement, adjustment or compromise and shall, immediately upon the
request of the Credit Lenders' Agent, confirm its consent to same and
release any claim that it might otherwise have in respect of such Credit
Collateral, claim or proceeds thereof.
(y) Should there be any liquidation of any of the Originator or the
Credit Borrowers, as applicable, or its assets, the establishment of any
receivership for the Originator or the Credit Borrowers, as applicable, or
its assets, a bankruptcy proceeding of the Originator or the Credit
Borrowers, as applicable (either voluntary or involuntary), the payment of
any insurance, condemnation, confiscation, seizure or other claim upon the
condemnation, confiscation, seizure, loss or destruction or theft of, or
damage to, or any other sale, transfer, assignment or other disposition
(all of the foregoing referred to collectively as "Disposition") of all or
any part of the Credit Collateral, the Credit Lenders' Agent (for the
benefit of the Credit Lenders' Agent and the Credit Lenders) shall be
entitled, to the exclusion of the Receivables Seller, the Trustee, the
Securitization Company Agent and the Liquidity Agent, to receive all of the
proceeds of such Disposition, and the Credit Lenders' Agent may, without
any further consent or agreement on the part of any of the Receivables
Seller, the Trustee, the Securitization Company Agent and the Liquidity
Agent, apply any or all of such proceeds to any outstanding Credit Claims
or other obligations and liabilities owing under the Credit Agreements or
other Loan Documents, in such manner as the Credit Lenders' Agent may
determine, or release such proceeds to the Credit Borrowers for use in
repairing or replacing such Credit Collateral or otherwise, as the Credit
Lenders' Agent may determine in its sole discretion, and each of the
Receivables Seller, Trustee, the Securitization Company Agent and the
Liquidity Agent hereby consents to any such application or release.
(f) Notwithstanding any of the foregoing (i) each of the Credit
Lenders and Credit Lenders' Agent shall transfer without representation or
warranty, express or implied, and without recourse, all right, title and
interest each has in the Credit Collateral to or as directed by the Trustee, the
Securitization Company Agent or the Liquidity Agent (or such other persons as
shall be required by applicable law or court order) (except in the case of any
refinancing, refunding or replacement of the Credit Agreements, in which event
the provisions of Section 3.3 shall control) after Termination of the Credit
Claims (and the Credit Borrowers consents thereto),
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(ii) the provisions of paragraphs (a) through (e) of this Section 2.1 shall be
of no further force and effect after Termination of the Credit Claims, and (iii)
the Credit Lenders and Credit Lenders' Agent shall not be released from their
obligations under Section 2.4 until the Purchaser Claims have been paid in full
in cash and the Purchaser Documents have been terminated.
2.2. [Reserved]
2.3. Distribution of Proceeds. At all times, all proceeds of Credit
------------------------
Collateral and Purchased Property shall be distributed in accordance with the
following procedure:
(a) Except as otherwise provided in Section 2.4 with
respect to Collections of Receivables, (i) all proceeds of the Credit Collateral
shall be paid to the Credit Lenders' Agent for application on the Credit Claims
and other obligations and liabilities owing under the Credit Agreements and
other Loan Documents until the Termination of the Credit Claims; and (ii) any
remaining proceeds shall be paid to the Credit Borrowers or as otherwise
required by applicable law; provided that proceeds in respect of any Unsold
Receivables shall be paid to the Trustee for application solely to the payment
of any Second Lien Obligations due and owing and thereafter to the Credit
Borrowers or as otherwise required by applicable law.
(b) Except as otherwise provided in Section 2.4(a)(ii), (i)
all proceeds of the Purchased Property shall be paid to the Trustee for
application against the Purchaser Claims and for application in accordance with
the Purchaser Documents until the Purchaser Claims have been paid and satisfied
in full in cash and the Purchaser Documents have terminated; and (ii) any
remaining proceeds shall be paid to the Receivables Seller or as otherwise
required by applicable law, and the Credit Lenders' Agent and the Credit
Lenders' agree that they do not have and shall not have any Credit Security
Interest in such remaining proceeds.
(c) In the event that any of the Receivables Seller, the
Trustee, the Securitization Company Agent and the Liquidity Agent now or
hereafter obtains possession of any Credit Collateral prior to the Termination
of the Credit Claims, including proceeds of a Disposition of Credit Collateral
it shall immediately deliver to the Credit Lenders' Agent such Credit Collateral
or proceeds (and until delivered to the Credit Lenders' Agent such Credit
Collateral shall be held in trust for the Credit Lenders' Agent), regardless of
whether the Credit Lenders' Agent has a perfected and enforceable lien in such
Credit Collateral or the assets of the Credit Borrowers from which the proceeds
of any such Disposition have been received.
(d) In the event that any of the Credit Borrowers, the
Credit Lenders or the Credit Lenders' Agent now or hereafter obtains possession
of any Purchased Property, it shall immediately deliver to the Trustee such
Purchased Property or proceeds thereof (and until delivered such Purchased
Property shall be held in trust for the Trustee), regardless of whether the
Trustee has a perfected and enforceable lien in the assets from which the
proceeds of such Disposition have been received.
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(e) The parties hereto agree that any amounts to be
distributed pursuant to this Section 2.3 to the Originator, any proceeds or
other amounts payable to the Originator with respect to and as consideration for
the sale of the Purchased Receivables by the Originator to the Receivables
Seller and any amounts payable to the Receivables Seller under the Pooling and
Servicing Agreement shall be paid to Account #1018026652 at Norwest Bank
Colorado, National Association, Reference: Mail-Well I Corporation Concentration
Account, or as otherwise specified by the Credit Lenders' Agent.
2.4. Collection Accounts . (a) Each of the parties hereto hereby
--------------------
agrees that all Collections received on account of Purchased Property shall be
paid or delivered to the Trustee for application in accordance with Section
2.3(b) and all Collections received on account of Unsold Receivables shall be
paid or delivered to the Credit Lenders' Agent for application in accordance
with Section 2.3(a). For the purpose of determining whether specific
Collections have been received on account of Purchased Property or on account of
Unsold Receivables, the parties agree as follows:
(i) All payments made by an Obligor which at the time of
the making of such payment is obligated to make payments on Purchased
Receivables but is not obligated to make any payments on Unsold Receivables
shall be conclusively presumed to be payments on account of Purchased
Receivables and all payments made by an Obligor which at the time of the making
of such payment is obligated to make payments on Unsold Receivables but is not
obligated to make any payments on Purchased Receivables shall be conclusively
presumed to be payments on account of Unsold Receivables.
(ii) All payments made by an Obligor which at the time of
the making of such payment is obligated to make payments with respect to both
Purchased Receivables and Unsold Receivables shall be applied against the
specific Receivables, if any, which are designated by such Obligor by reference
to the applicable invoice (or otherwise identified by such Obligor in a writing
delivered with such payment) as the Receivables with respect to which such
payments should be applied; provided that where any Obligor makes payment and
designates the applicable invoices of a group of two or more Receivables to
which such payment shall be applied and such payment is in an amount less than
the aggregate Outstanding Balance of such Receivables, such payment shall be
applied pro rata to all such Receivables; provided further, that in the absence
of such designation after reasonable efforts by the Originator to obtain such
designation, such payments shall be applied against the outstanding Receivables
in the order in which they were created, in any case to the extent such
Receivables or portions thereby owed by such Obligor are not in dispute.
(b) Subject to the terms and conditions of this Section 2.4(b), the
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers and the Receivables Purchaser agree that the Trustee and the Series
Representative shall transfer dominion and control over the Lockboxes, Lockbox
Accounts, the Special Funding Account and Collection Account to the Credit
Lenders' Agent upon the earlier of the following events: (i) the
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Purchaser Claims have been satisfied in full and the Purchaser Documents have
terminated, and (ii) such earlier date as the Trustee, the Securitization
Company Agent, the Liquidity Agent, the Credit Agent and the Credit Lenders may
hereafter unanimously agree to in writing. Any such transfer shall be without
representation, recourse or warranty of any kind on the part of the Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers and
the Receivables Purchaser. Notwithstanding any such transfer, all Collections
subsequently deposited into the Collection Accounts, the Special Funding Account
or the Lockbox Account on account of the Purchased Property shall be delivered
to the Trustee as provided in Section 2.4(a). The Credit Lenders and Credit
Lenders' Agent agree that, at the time of such transfer, the Credit Lenders and
Credit Lenders' Agent shall take such steps as may be reasonably requested by
the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers or the Receivables Purchaser (including, without limitation,
notification to the banks at which Collection Accounts are maintained and the
Lockbox Banks of the continuing interest, if any, in the Collection Accounts and
the Lockbox Account) to maintain perfection of the Trustee's interest in the
Collections on account of the Purchased Property.
(c) In order to effect more fully the provisions of this Agreement,
each of the parties hereto agrees that subject to the Credit Security Interest
of the Credit Lenders or the Credit Lenders' Agent in any Unsold Receivables,
during an Enforcement Period, each of the parties hereto shall not send any
notices to the Obligors directing them to remit Collections of any Receivables
other than to the Lockbox Accounts.
(d) The Credit Lenders' Agent agrees that it shall not, at any time
prior to Enforcement, exercise any rights it may have under the Loan Documents
to take any actions regarding remedies with respect to Purchased Property,
including but not limited to sending any notices to Obligors (i) informing them
of the Credit Lenders' interest in the Receivables, or (ii) directing such
Obligors to make payments in any particular manner of any amounts due under the
Receivables; the Credit Lenders' Agent further agrees that it shall not take any
of the foregoing actions during Enforcement or prior to one year and one day
after the latest of payment in full of the Purchaser Claims and the termination
of the Purchaser Documents except that the Credit Lenders' Agent may inform any
Obligors of Unsold Receivables that such Unsold Receivables have been assigned
to the Credit Lenders' Agent so long as such notices expressly state that all
payments on account of such Receivables shall continue to be made to the Lockbox
Accounts. The Credit Lenders' Agent further agrees that, prior to one year and
one day after the latest of payment in full of the Purchaser Claims and the
termination of the Purchaser Documents, if it receives payments directly from
any Obligor on account of an Unsold Receivable, it shall immediately forward
such payment to the Trustee in order that such agent may determine whether such
payment was, in fact, properly allocated to such Unsold Receivable in accordance
with the terms of this Section 2.4 and, if necessary pursuant to the terms
hereof, reallocate such payment.
2.5 Enforcement Actions. Each of the Credit Lenders' Agent, the
-------------------
Credit Lenders, the Trustee, the Securitization Company Agent and the Liquidity
Agent agrees to use
14
<PAGE>
reasonable efforts to give an Enforcement Notice to the others prior to
commencement of Enforcement (but failure to do so shall not prevent such Person
from commencing Enforcement or affect its rights hereunder nor create any cause
of action or liability against such person). Subject to the foregoing, the
parties hereto agree that during an Enforcement Period:
(a) Subject to any applicable restrictions in the Purchaser
Documents, the Trustee may at its option and without the prior written
consent of the other parties hereto take any action to (i) accelerate
payment of the Purchaser Claims or any other obligations and liabilities
under any of the Purchaser Documents and (ii) liquidate the Purchased
Property or to foreclose or realize upon or enforce any of its rights with
respect to the Purchased Property.
(b) Subject to any applicable restrictions in the Loan Documents,
the Credit Lenders' Agent or the Credit Lenders may, at their option and
without the prior written consent of the other parties hereto, take any
action to accelerate payment of the Credit Claims or any other obligation
or liability arising under any of the Loan Documents and to foreclose or
realize upon or enforce any of their rights with respect to the Credit
Collateral or other collateral security or take such other actions as they
deem appropriate; provided, however, that the Credit Lenders' Agent shall
not otherwise take any action to foreclose upon the common stock included
in the Stock Collateral so as to obtain or transfer title thereto or to
enforce any rights it may have with respect to any of the Purchased
Property or to enforce any voting rights it may have with respect to the
Stock Collateral in order to nominate or elect any one or more members of
the Board of Directors of the issuer of the stock included in the Stock
Collateral, in each case, without the Trustee's, the Securitization Company
Agent's and the Liquidity Agent's prior written consent unless the
Purchaser Claims or any other obligation or liability arising under any of
the Purchaser Documents shall have been first paid and satisfied in full in
cash and the Purchaser Documents have terminated and, solely with respect
to the Stock Collateral, one year and one day has passed since the latest
of the date of such payment in full and termination and shall not otherwise
take any action which challenges the enforceability of any of the Purchaser
Documents.
2.6 Access to and Use of Credit Collateral and Purchased Property.
-------------------------------------------------------------
The Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers, the Receivables Purchaser, the Credit Lenders' Agent, the
Credit Lenders, the Originator or Credit Borrowers, as applicable, and the
Receivables Seller hereby agree that, notwithstanding the priorities set forth
in this Agreement, the Trustee, the Securitization Company Agent, the Liquidity
Agent, the Receivables Purchaser, the Credit Lenders' Agent and the Credit
Lenders shall have the following rights of access to and use of the Credit
Collateral and Purchased Property respectively (in addition to other rights set
forth in the Loan Documents or Purchaser Documents):
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<PAGE>
(a) Except as otherwise provided in the Purchaser Documents, each
of the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers and the Receivables Purchaser may enter one or more
premises of the Loan Parties or the Receivables Seller, whether leased or
owned, at any time during reasonable business hours, without force or
process of law and without obligation to pay rent or compensation to the
Originator, the Receivables Seller or the Credit Lenders, whether before,
during or after an Enforcement Period, and may have access to and use of
all Records located thereon and may have access to and use of any other
property to which such access and use are granted under the Purchaser
Documents, in each case provided that such use is for the purposes of
enforcing the Receivables Purchaser's and the Trustee's rights with respect
to the Purchased Property provided, however, that such access does not
interfere (other than in a diminimus manner) with the enforcement by the
Credit Lenders' Agent or the Credit Lenders of any rights granted under the
Loan Documents.
(b) Except as otherwise provided in the Loan Documents, the Credit
Lenders' Agent and the Credit Lenders may enter one or more premises of the
Loan Parties, whether leased or owned, at any time during reasonable
business hours, without force or process of law and without obligation to
pay rent or compensation to the Loan Parties, the Receivables Seller, the
Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers or the Receivables Purchaser whether before, during or
after an Enforcement Period, and may have access to and use of all Records
located thereon and use of any other property to which such access and use
are granted under the Loan Documents, in each case provided that such use
is for the purposes of enforcing the Credit Lenders' and Credit Lenders'
Agent's rights with respect to the Credit Collateral provided, however,
that such access does not interfere (other than in a diminimus manner) with
the enforcement by the Trustee, the Securitization Company Agent, the
Liquidity Agent or the Liquidity Providers of any rights granted under the
Purchaser Documents.
(c) In order to facilitate the purposes of this Section 2.6, the
parties agree as follows: (i) any mortgage of, assignment of, security
interest in or lien upon any real property and interests in real property
of the Credit Borrowers or Loan Parties, as applicable, (whether leased or
owned) and any of the Collateral constituting equipment to the extent not
sold in favor of the Credit Lenders' Agent shall be subject to the
Receivables Purchaser's, the Trustee's, the Securitization Company's, the
Liquidity Agent's, the Liquidity Provider's and the Receivable Purchaser's
rights of access and use described above; and (ii) any ownership interest
of the Loan Parties in the Purchased Property shall be subject to the
Credit Lenders' Agent's and Credit Lenders' right of access and use
described above; provided that the foregoing shall not imply that the
Credit Lenders and Credit Lenders' Agent have any rights to allow such
access and use; provided further that neither the Credit Agent nor the
Credit Lenders shall have any liability for any actions taken or omitted by
the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers or the Receivables Purchaser under rights created in
this Section 2.6 and neither the Trustee, the Securitization Company
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<PAGE>
Agent, the Liquidity Agent, the Liquidity Providers or the Receivables
Purchaser shall have any liability for any actions taken or omitted by the
Credit Agent or the Credit Lenders under rights created in this Section
2.6.
2.7 Accountings. The Credit Lenders' Agent agrees to render
-----------
accounts of the Credit Claims to the Trustee, the Securitization Company Agent
and the Liquidity Agent upon reasonable request, giving effect to the
application of proceeds of Credit Collateral as hereinbefore provided. The
Liquidity Agent agrees to render statements to the Credit Lenders' Agent upon
reasonable request, which statements shall identify in reasonable detail the
Purchased Receivables and shall render an account of the Purchaser Claims,
giving effect to the application of proceeds of Purchased Property and
Collateral as hereinbefore. Neither the Credit Lenders' Agent on the one hand
nor the Liquidity Agent on the other hand shall have any liability to each other
or to any other Person if their respective accounts or statements are incorrect.
2.8 Agency for Perfection. The Trustee on the one hand and the
----------------------
Credit Lenders' Agent on the other hand hereby appoint each other as agent for
purposes of perfecting by possession their respective security interests and
ownership interests and liens on the Collateral and Purchased Property described
hereunder. In the event that the Trustee or the Liquidity Agent obtains
possession of any of the Credit Collateral, the Trustee, or the Liquidity Agent,
as applicable, shall promptly notify the Credit Lenders' Agent and the Credit
Lenders of such fact, shall hold such Credit Collateral in trust and shall
deliver such Credit Collateral to the Credit Lenders' Agent upon request. In
the event that the Credit Lenders' Agent obtains possession of any of the
Purchased Property, the Credit Lenders' Agent shall promptly notify the Trustee,
the Securitization Company Agent and the Liquidity Agent of such fact, shall
hold such Purchased Property in trust and shall deliver such Purchased Property
to the Trustee upon request. Additionally, each of the parties hereto agrees
that the Trustee, as secured party with respect to any security interest in
proceeds of Unsold Receivables and claims in respect thereof, whether in the
Lockbox Accounts or otherwise, is, in addition to acting for and on behalf of
the secured parties referred to in recital B hereof, acting for and on behalf of
the Credit Agent and Credit Lenders in order to perfect the security interest of
the Credit Agent and Credit Lenders in such Proceeds and claims in respect
thereof.
2.9 UCC Notices. In the event that any party hereto shall be
-----------
required by the UCC or any other applicable law to give notice to the other of
intended disposition of Purchased Property or Credit Collateral, respectively,
such notice shall be given in accordance with Section 3.1 hereof and ten (10)
days' notice shall be deemed to be commercially reasonable.
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<PAGE>
2.10 Independent Credit Investigations. Neither the Trustee, the
---------------------------------
Securitization Company Agent, or the Liquidity Agent, the Liquidity Providers,
the Credit Lenders' Agent nor the Credit Lenders nor any of their affiliates,
nor their nor their affiliates' respective directors, officers, agents or
employees shall be responsible to the other or to any other person, firm or
corporation for the solvency, financial condition or ability of the Originator,
the Receivables Seller or the Credit Borrowers, as applicable, to repay the
Purchaser Claims or the Credit Claims, or for the worth of the Purchased
Property or the Credit Collateral, or for statements of any of the Originator,
the Receivables Seller or the Credit Borrowers, oral or written, or for the
validity, sufficiency or enforceability of the Purchaser Claims, the Credit
Claims, the Purchaser Documents, the Loan Documents, the Trustee's, the
Securitization Company's, the Liquidity Agent's, the Liquidity Provider's and
the Receivable Purchaser's interest in the Purchased Property or the Credit
Lenders' interest in the Credit Collateral. The Credit Lenders and the
Receivables Purchaser have entered into their respective agreements with the
Credit Borrowers, the Receivables Seller and the Servicer as applicable, based
upon their own independent investigations. None of the Credit Lenders, the
Credit Lenders' Agent, the Trustee, the Securitization Company Agent, the
Liquidity Agent, the Liquidity Providers or the Receivables Purchaser makes any
warranty or representation to the other nor does it rely upon any representation
of the other parties with respect to matters identified or referred to in this
Section 2.10.
2.11 Limitation on Liability of Parties to Each Other. Except as
------------------------------------------------
provided in this Agreement, no party shall have any liability (other than the
liability of the Credit Borrowers and other Loan Parties with respect to the
Credit Claims and the liability of the Originator and the Receivables Seller
with respect to the Purchaser Claims) to any other party in connection with this
Agreement except for liability arising from the gross negligence or willful
misconduct of such party or its representatives except with respect to the
Receivables Purchaser which shall be solely liable for its or its
representative's own bad faith and willful misconduct; provided, however, that
any liability of the Receivables Purchaser hereunder is solely the corporate
liability of the Receivables Purchaser and no recourse shall be had for the
payment by the Receivables Purchaser of any other obligation or claim of or
against the Receivables Purchaser arising out of or based on this Agreement,
against any stockholder, employee, officer, director or incorporator of the
Receivables Purchaser.
2.12 Amendments to Financing Arrangements or to this Agreement. The
----------------------------------------------------------
Credit Lenders' Agent agrees to give, concurrently with any written amendment or
modification of the Loan Documents, prompt notice to the Trustee, the
Securitization Company Agent and the Liquidity Agent of the same, and the
Liquidity Agent agrees to use reasonable efforts to, concurrently with any
written amendment or modification of the Purchaser Documents, notify the Credit
Lenders' Agent of the same; provided, however, that in either case, the failure
to do so shall not create a cause of action against any party failing to give
such notice or create any claim or right on behalf of any third party or affect
the validity, enforceability or binding effect of any such amendment or
modification. The Liquidity Agent shall, upon reasonable request of any other
party hereto, provide copies of all such modifications or amendments and copies
of all
18
<PAGE>
other documentation relevant to the Purchased Property or the Credit Collateral.
All modifications or amendments of this Agreement must be in writing and duly
executed by an authorized officer of each party hereto to be binding and
enforceable.
2.13. Marshalling of Assets. Nothing in this Agreement will be
---------------------
deemed to require either the Trustee, the Securitization Company Agent, the
Liquidity Agent, or the Credit Lenders' Agent (i) to proceed against certain
property securing the Credit Claims (or any other obligation or liability under
the Credit Agreements or other Loan Documents) or the Purchaser Claims (or any
other obligation or liability under the Purchaser Documents), as applicable,
prior to proceeding against other property securing such Claim or obligations or
liabilities or against certain persons guaranteeing any such obligations before
proceeding against other persons guaranteeing any such obligations or (ii) to
marshall the Credit Collateral (or any other collateral) or the Purchased
Property (as applicable) upon the enforcement of the Credit Lenders' Agent's or
the Trustee's, the Securitization Company Agent's, the Liquidity Agent's
remedies under the Loan Documents or Purchaser Documents, as applicable.
2.14. Relative Rights. (a) The relative rights of the Credit
---------------
Lenders, each as against the other, shall be determined by agreement among such
parties in accordance with the terms of the Loan Documents. The Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers and
the Receivables Purchaser shall be entitled to rely on the power and authority
of the Credit Lenders' Agent to act on behalf of all of the Credit Lenders to
the extent the provisions hereof require or authorize the Credit Lenders' Agent
so to act.
(b) The Credit Lenders' Agent and Credit Lenders shall be entitled
to rely on the power and authority of (x) the Trustee and the Securitization
Company Agent to act on behalf of the Receivables Purchaser to the extent the
provisions hereof require or authorize the Trustee and the Securitization
Company Agent so to act and (y) the Trustee and the Liquidity Agent to act on
behalf of the Liquidity Providers to the extent the provisions hereof require or
authorize the Trustee and the Liquidity Agent so to act.
2.15. Effect Upon Loan Documents and Purchaser Documents. By
--------------------------------------------------
executing this Agreement, the Originator, the Credit Borrowers, the other Loan
Parties, and the Receivables Seller agree to be bound by the provisions hereof
(i) as they relate to the relative rights of the Credit Lenders and Credit
Lenders' Agent with respect to the property of the Credit Borrowers and other
Loan Parties; and (ii) as they relate to the relative rights of the Receivables
Purchaser and the Liquidity Providers as creditors of the Receivables Seller.
The Originator or Credit Borrowers, as applicable, acknowledges that the
provisions of this Agreement shall not give the Originator any substantive
rights as against the Credit Lenders' Agent or the Credit Lenders. The
Receivables Seller and the Originator acknowledge that the provisions of this
Agreement shall not give the Receivables Seller or the Originator any
substantive rights as against the Trustee, the Securitization Company Agent, the
Liquidity Agent, the Liquidity Providers or the Receivables Purchaser. Each of
the Originator or Credit Borrowers, as applicable, and the Receivables Seller
further acknowledges that the provisions of this Agreement shall not give any
19
<PAGE>
such party any substantive rights as against the other and that nothing in this
Agreement shall amend, modify, change or supersede the terms of the Purchaser
Documents as between the Originator and the Receivables Seller. Each of the
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers, the Receivables Purchaser, the Credit Lenders and the Credit Lenders'
Agent agrees, that, as it affects rights and obligations of the parties to the
Loan Documents and Purchaser Documents, respectively, to the extent the terms
and provisions of the Loan Documents or the Purchaser Documents are inconsistent
with the terms and provisions of this Agreement, the terms and provisions of
this Agreement shall control.
2.16. Nature of the Credit Claims and Modification of Loan Documents.
--------------------------------------------------------------
Each of the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers, the Receivables Seller and the Receivables Purchaser
acknowledges that the Credit Claims and other obligations and liabilities owing
under the Loan Documents are, in part, revolving in nature and that the amount
of such revolving indebtedness which may be outstanding at any time or from time
to time may be increased or reduced and subsequently reborrowed. Subject to
Section 1.2 hereof, the terms of the Loan Documents may be modified, extended or
amended from time to time, and the amount thereof may be increased or reduced,
all without notice to or consent by any of the Trustee, the Securitization
Company Agent, the Liquidity Agent, the Liquidity Providers, the Receivables
Seller, or the Receivables Purchaser and without affecting the provisions of
this Agreement.
2.17. Nature of the Purchaser Claims and Modification of Purchaser
------------------------------------------------------------
Documents. Each of the Originator or Credit Borrowers, as applicable, the
- ---------
Credit Lenders, and the Credit Lenders' Agent acknowledges that the Purchaser
Claims and other obligations and liabilities owing under the Purchaser Documents
are, in part, revolving in nature and that the amount of such revolving
investment which may be outstanding at any time or from time to time may be
increased or reduced and subsequently reinvested. Subject to Section 1.2 hereof,
the terms of the Purchaser Documents may be modified, extended or amended from
time to time, and the amount thereof may be increased or reduced, all without
notice to or consent by the Credit Borrowers, the Credit Lenders or the Credit
Lenders' Agent and without affecting the provisions of this Agreement.
2.18. Further Assurances. Each of the parties agrees to take such
------------------
actions as may be reasonably requested by any other party, whether before,
during or after an Enforcement Period, in order to effect the rules of
distribution and allocation set forth above in this Article 2 and to otherwise
effectuate the agreements made in this Article.
2.19. Filing. To and until the date which is one year and one day
------
after the later of the date the Purchaser Claims shall have been paid in full in
cash and the Purchaser Documents have been terminated, the Credit Lenders,
Credit Lenders' Agent and the Originator or Credit Borrowers, as applicable,
each agree that it shall not consent to or vote for the filing of any petition
in bankruptcy for the Receivables Seller.
20
<PAGE>
2.20. Reports. The Trustee shall deliver to the Credit Lenders'
-------
Agent, promptly following receipt of same, each monthly report delivered to the
Trustee pursuant to section 3.04 of the Pooling and Servicing Agreement.
ARTICLE 3. MISCELLANEOUS.
-------------
3.1. Notices. All notices and other communications provided for
-------
hereunder shall, unless otherwise stated herein, be in writing (including
telecommunications and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto.
All such notices and communications shall be effective upon receipt, or, in the
case of notice by mail, five days after being deposited in the mails, postage
prepaid, or in the case of notice by telex, when telexed against receipt of the
answerback, or in the case of notice by facsimile copy, when verbal confirmation
of receipt is obtained, in each case addressed as aforesaid.
3.2. Agreement Absolute. Each of the Trustee, the Securitization
------------------
Company Agent and the Liquidity Agent shall be deemed to have entered into the
Purchaser Documents in express reliance upon this Agreement and the Credit
Lenders and the Credit Lenders' Agent shall be deemed to have entered into the
Loan Documents in express reliance upon this Agreement. This Agreement shall be
and remain absolute and unconditional under any and all circumstances, and no
acts or omissions on the part of any party to this Agreement shall affect or
impair the agreement of any party to this Agreement, unless otherwise agreed to
in writing by all of the parties hereto. This Agreement shall be applicable both
before and after the filing of any petition by or against the Originator or
Credit Borrowers, as applicable, or the Receivables Seller under the Bankruptcy
Code and all references herein to the Originator and/or Credit Borrowers or the
Receivables Seller shall be deemed to apply to a debtor-in-possession for such
party and all allocations of payments between the Credit Lenders, the Trustee,
the Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and the Receivables Purchaser shall, subject to any court order to the contrary,
continue to be made after the filing of such petition on the same basis that the
payments were to be applied prior to the date of the petition.
3.3. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of each of the parties hereto and their respective
successors and assigns. The successors and assigns for the Originator or Credit
Borrowers, as applicable, and the Receivables Seller shall include a debtor-in-
possession or trustee of or for such party. The successors and assigns for the
Credit Lenders, the Receivables Purchaser, the Credit Lenders' Agent, the
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers, as the case may be, shall include any successor Credit Lenders,
Receivables Purchaser, Credit Lenders' Agent, the Trustee, the Securitization
Company Agent, the Liquidity Agent, as the case may be, appointed under the
terms of the Loan Documents or the Purchaser Documents, as applicable or under
the terms of any refinancing, replacement or refunding of either. Each of the
Receivables Purchaser, the Credit Lenders' Agent, the Trustee, the
Securitization Company Agent and the
21
<PAGE>
Liquidity Agent agrees not to transfer any interest it may have in the Loan
Documents or the Purchaser Documents unless such transferee has been notified of
the existence of this Agreement and has agreed to be bound hereby.
3.4. Beneficiaries. The terms and provisions of this Agreement shall
-------------
be for the sole benefit of the parties hereto and for the successors and assigns
of the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers, the Credit Lender's Agent and the Receivables Purchaser,
and no other Person shall have any right, benefit, or priority by reason of this
Agreement.
3.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF NEW YORK.
3.6. Section Titles. The article and section headings contained in
--------------
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
3.7. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
3.8. Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
3.9. Limited Recourse. Notwithstanding any other provision of this
----------------
Agreement, the duties of the Receivables Purchaser under this Agreement are
solely the corporate duties of the Receivables Purchaser. No recourse shall be
had for the payment of any amount owing in respect of any claim arising out of
or based upon this Agreement against any shareholder, employee, officer,
director, agent or incorporator of the Receivables Purchaser.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CITICORP NORTH AMERICA, INC.,
as Securitization Company Agent
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
BANQUE PARIBAS, NEW YORK BRANCH,
as Liquidity Agent
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
BANQUE PARIBAS,
as Credit Lenders' Agent and Credit Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
23
<PAGE>
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION, as Trustee
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Receivables Seller
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
MAIL-WELL I CORPORATION,
as Servicer, Originator and a Credit
Borrower
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
24
<PAGE>
WISCO ENVELOPE CORP., as Originator
By:_________________________________
Name:
Title:
Address:
1509 North Washington Street
Tullahoma, TN 37388
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
PAVEY ENVELOPE AND TAG CORP.,
as Originator
By:_________________________________
Name:
Title:
Address:
25 Linden Avenue East
Jersey City, NJ 07305
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
MAIL-WELL WEST, INC., as Originator
By:_________________________________
Name:
Title:
Address:
221 North 48th Street
Phoenix, AZ 85063
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
25
<PAGE>
WISCO II, L.L.C., as Originator
By:_________________________________
Name:
Title:
Address:
1509 North Washington Street
Tullahoma, TN 37388
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
MAIL-WELL CANADA HOLDINGS, INC.,
as Originator
By:_________________________________
Name:
Title:
Address:
23 Inverness Way East
Englewood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
GRAPHIC ARTS CENTER, INC., as Originator
By:_________________________________
Name:
Title:
Address:
2000 North West Wilson Street
Portland, OR 97209
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
26
<PAGE>
WISCO III, L.L.C., as Originator
By:_________________________________
Name:
Title:
Address:
23 Inverness Way East
Englewood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
SUPREMEX INC., as Credit Borrower and
Originator
By:_________________________________
Name:
Title:
Address:
Innova Montreal
345 Montee de Liesse - St. Laurent, Quebec
H4T IP7
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
INNOVA ENVELOPE INC., as Originator
By:_________________________________
Name:
Title:
Address:
56 Steelcase Road West
Markham, Ontario L3R 1B2
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
27
<PAGE>
ARAB BANKING CORPORATION (B.S.C.),
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
BANK OF AMERICA ILLINOIS, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
CREDIT LYONNAIS NEW YORK BRANCH,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
28
<PAGE>
NATIONAL BANK OF CANADA, as Credit Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
NATIONSBANK OF TEXAS, N.A.,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
PARIBAS BANK OF CANADA, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
29
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE BANK OF NOVA SCOTIA, as Credit Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
30
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE FUJI BANK, LIMITED, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
31
<PAGE>
CERES FINANCE LTD., as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
STRATA FUNDING LTD., as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V., as Credit Lender
By: ABN Trust Company (Netherlands),
its Managing Director
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
32
<PAGE>
THE BANK OF NEW YORK. as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
33
<PAGE>
SCHEDULE 1.1(A)
MORTGAGED PROPERTIES
--------------------
I. Mortgaged Properties Acquired Pursuant to the G-P Envelope Acquisition
Agreement.
A. Mortgaged Fee Properties
1. Chestertown, Maryland 225 Talbot Blvd.
2. Chicago, Illinois 5445 N. Elston Ave.
3. Cleveland, Ohio 4500 Tiedeman Road
4. Denver, Colorado (3301) Kalamath St.
5. Jacksonville, Florida 5406 W. First St.
6. Oklahoma City, Oklahoma 4901 N.W. Fourth St.
7. Phoenix, Arizona 221 N. 48th Ave.
8. Pittsburgh, Pennsylvania 7301 Penn Ave.
9. Tullahoma, Tennessee 1509 N. Washington St.
B. Mortgaged Leasehold Property Interests
1. Albuquerque, New Mexico
Standard Commercial Net/Net/Net Business Center Lease dated
June 1, 1993, made and entered into by and between I&J Investments, as
lessor, and Mail Well Envelope Company, a Delaware corporation, as
lessee. No Survey is required for this Property.
2. Cambridge, Maryland
Lease Agreement dated effective as of January 22, 1988, made and
entered into by and between The County Commissioners of Dorchester
County, as lessor, and M-W Envelope Company, Inc., a Delaware
corporation, as lessee, as amended, modified or extended by (i) that
certain Notice of Intention to Lease 33,750 Square Feet in the
Dorchester County Shell Building dated July 5, 1988, and (ii) that
certain Amendment to Lease Agreement dated March 16, 1993.
<PAGE>
3. Denver, Colorado
Agreement dated March 19, 1963, made and entered into by and
between Richard B. Tucker, Carl L. Tucker and Robert Best, as lessors,
and Pak-Well Paper Industries, Inc., a Colorado corporation, as
lessee, as amended, modified or extended by (i) that certain Addendum
to Lease dated effective as of January 20, 1964, (ii) that certain
Agreement dated effective as of September 15, 1968, and (iii) that
certain Agreement dated April 1, 1975, made and entered into by and
between Richard B. Tucker and Robert Best, as lessors, and Mail-Well
Corporation, a Delaware corporation, as lessee. A portion of the
leased premises were subleased pursuant to that certain Sublease
Agreement dated as of May 23, 1980, made and entered into by and
between Nekoosa Envelopes, Inc., a Delaware corporation, as sublessor,
and Petro-Lewis Corporation, a Colorado corporation, as sublessee, and
consented to by Richard B. Tucker and Robert Best, and as amended,
modified, or extended by that certain Addendum to Sublease Agreement
dated July 31, 1980, and as assigned by that certain Agreement to
Assign Sublease dated as of June 23, 1987, made and entered into by
and between FPCO Oil & Gas Co., a Colorado corporation, as assignor,
and Central Bancorporation, Inc., a Colorado corporation, as assignee,
and consented to by Nekoosa Envelopes, Inc., and Richard Tucker and
Charlotte Tucker, and as further consented to, among other things, by
that certain Agreement and Consent to Assignment dated August 5, 1987,
made and entered into by and between Richard B. Tucker and Charlotte
Tucker (successor-in-interest to Robert Best), as lessors, Nekoosa
Envelopes, Inc., as sublessor, FPCO Oil & Gas Co. (successor-in-
interest to Petro-Lewis Corporation), as Assignor, and Central
Bancorporation, Inc., as assignee, and as amended, modified or
extended by that certain letter agreement dated March 26, 1992, by
that certain amendment dated May 6, 1993 and that certain amendment
dated May 13, 1993.
4. Honolulu, Hawaii
Lease dated as of March 22, 1991, made and entered into by and
between PMLW Partnership, a Hawaii general partnership, as lessor, and
Mail-Well Envelope Company, a Delaware corporation, as lessee. No
Survey is required for this Property.
5. Jersey City, New Jersey
Agreement of Lease dated January 7, 1991, made and entered into
by and between Pavey Associates, a New Jersey partnership, as lessor,
and Pavey Envelope and Tag Corp., a New Jersey corporation, as lessee,
as amended, modified or extended by (i) that certain First Amendment
to Lease dated as of
<PAGE>
August 15, 1991, and (ii) that certain Second Amendment to Lease dated
February 21, 1994.
6. Kankakee, Illinois
Lease dated August 15, 1984, made and entered into by and between CMD
Realty Management Company, an Illinois corporation, as agent for The
Prudential Insurance Company of America, as lessor, and Nekoosa Envelopes,
Inc., a Delaware corporation, as lessee.
7. Milwaukie, Oregon (2515 Mail-Well Drive)
Lease dated March 1, 1988, made and entered into by and between W. R.
Lake, Jr., Janet M. Lake, Susan L. Howell, Thomas L. Howell, Theodora R.
Feldman, and United States National Bank of Oregon, Trustee, and Garthe
Brown, Trustee, as lessors, and Mail-Well Envelope Company, a Delaware
corporation, as lessee.
8. Milwaukie, Oregon (2700 Mail-Well Drive)
Standard Industrial Lease-Net dated April 13, 1989, made and entered
into by and between Lincoln Property Company, N.C., Inc., as manager and
agent for Lincoln Milwaukie Associates, Ltd., as lessor, and Mail-Well
Envelope Company, Inc., as lessee, as amended, modified or extended by (i)
that certain Lease Extension Agreement extending the termination date from
February 28, 1990 to July 31, 1991, among other things, (ii) that certain
Rent Waiver Agreement dated effective as of July 11, 1990, (iii) that
certain Lease Extension Agreement dated effective as of April 2, 1991, made
and entered into by and between CP-McLaughlin Properties, Inc., as lessor,
and Mail-Well Envelope Company, Inc., as lessee, and (iii) Amendment to
Lease dated June 19, 1992.
9. Oakland, California
Standard Industrial/Commercial Single-Tenant Lease-Net dated July 1,
1992, made and entered into by and between Cotton Properties, as lessor,
and Mail-Well Envelope Company, as lessee, as amended, modified or extended
by that certain letter agreement dated August 22, 1993, and as said letter
agreement and the Lease were further amended by that certain letter
agreement dated September 9, 1993.
<PAGE>
10. Salt Lake City, Utah
Lease Agreement dated August 1, 1973, made and entered into by and
between Price Ventures, Inc., a Utah corporation d/b/a Timesquare Park, as
lessor, and Rockmont Envelope Company of Utah, Inc., a Utah corporation, as
lessee, as amended, modified or extended by (i) that certain letter
agreement dated November 30, 1987, (ii) that certain letter agreement dated
November 24, 1992, (iii) that certain Amendment to Lease dated as of
September 26, 1973, (iv) that certain Amendment to Lease dated as of
November 6, 1973, (v) that certain Amendment to Lease dated as of November
20, 1973, and (vi) that certain Addendum to Lease dated as of December 22,
1975.
II. Mortgaged Properties Acquired Pursuant to the AEC Acquisition Agreement.
A. Mortgaged Fee Properties
1. Nashville, Tennessee 540 Brick Church Park Dr.
2. Chicago, Illinois 3001 N. Rockwell St.
3. Chicago, Illinois 4400 West Ohio St.
4. Santa Fe Springs, California 13341 Cambridge St.
5. O'Fallon, Missouri 601 Cannonball Lane
6. San Antonio, Texas 232 Iowa St.
7. Omaha, Nebraska 915 North 43rd Avenue
8. Seattle, Washington 401 Andover Park East
9. Dallas, Texas* 14001 Inwood Road
*(Leased until 1/5/95)
B. Mortgaged Leasehold Property Interests
1. Agency Lease Agreement dated April 1, 1988, by and between Erie
County Industrial Development Agency and American Envelope Company, as
evidenced by a Memorandum of Lease dated as of April 1, 1988, filed in
the Erie County Clerk's Office on April 7, 1988 under Liber 9846, Page
338.
III. Mortgaged Properties Acquired Pursuant to the Supremex Acquisition
Agreement.
A. Mortgaged Fee Properties
1. Markham, Ontario 56 Steelcase Road West
<PAGE>
B. Leasehold Property Interests
1. Dartmouth, Nova Scotia 110 Simmonds Drive
2. Montreal, Quebec 7355 Notre Dame est
3. Montreal, Quebec 345 Montee de Liesse
4. Ottawa, Ontario 270 McLaren
5. Mississagua, Ontario 5300 Tomken Road
6. Brantford, Ontario 46 Plant Farm Boulevard
7. Winnipeg, Manitoba 33 Plymouth Street
8. Regina, Saskatchewan 199 North Leonard Street
9. Edmonton, Alberta 16242 117th Avenue
10. Calgary, Alberta 6143 - 4th Street S.E.
11. Delta, British Columbia 1308 Cleveden Avenue
IV. Mortgaged Properties Acquired Pursuant to the Graphic Arts Center, Inc.
Securities Purchase Agreement.
A. Mortgaged Fee Properties
1. Portland, Oregon 2000 N.W. Wilson St.
B. Mortgaged Leasehold Property Interests
1. Portland, Oregon 2116 N.W. 20th Avenue
2. South San Francisco, California 560 Forbes Boulevard
3. Pasadena, California 2181 East Foothill Boulevard
V. Mortgaged Properties Acquired Pursuant to the Quality Park Products, Inc.
Acquisition Agreement.
A. Mortgaged Fee Properties
1. Atlanta, Georgia 3350 Hamilton Boulevard, S.W.
B. Leasehold Property Interests
1. Beresford, South Dakota 100 Quality Park Drive
2. St. George, Utah 3287 East Deseret Drive
<PAGE>
SCHEDULE 1.1(B)
PERMITTED LIENS
---------------
LIEN PRIORITY
---- --------
1. New Jersey Secretary of State Subordinated to Banks
Financing Statement No. 1380846 -
Pavey Associates c/o Sidney Strauss,
as Secured Party, and Pavey Envelope
and Tag Corp., as Debtor, and
subordinated to the Agent's Liens
pursuant to the Landlord Consent,
Subordination and Estoppel Certificate
dated as of February 21, 1994 by Pavey
Associates.
2. New Jersey Hudson County Financing Subordinated to Banks
Statement No. 1991-0053 - Pavey
Associates c/o Sidney Strauss, as
Secured Party, and Pavey Envelope and
Tag Corp., as Debtor, and subordinated
to the Agent's Liens pursuant to
Landlord Consent, Subordination and
Estoppel Certificate dated as of
February 21, 1994 by Pavey Associates.
3. British Columbia Personal Property
Registration No. 5065160 - N.E.L.
National Equipment Leasing Ltd., as
Holder, and Classic Envelope Company
Ltd., as Grantor, dated as of February
14, 1994, granting security interest
in general collateral, packaging
system and Ricoh fax machine.
4. British Columbia Personal Property
Registration No. 5759580 - Didde Web
Press Corporation, as Holder, and
Classic Envelope Plus Ltd., as
Grantor, dated as of May 1, 1995,
granting a security interest in
general collateral, two offsets, two
ink-tower assemblies, one substructure
along with Didde Corp. parts,
attachments and accessories
<PAGE>
5. British Columbia Personal Property
Registration No. 5819540 - Ted's
Truck, Trailer and Auto Repairs Ltd.,
as Holder, and Classic Envelope Plus
Ltd., as Grantor, dated as of June 2,
1995, granting a security interest in
vehicle collateral, G.M.C. 7000 (1985)
(amount of lien: $1,219.57)
6. Oregon Secretary of State Nos. P69874
and S32748 - Scitex America Corp., as
Secured Party, and Graphic Arts
Center, as Debtor, dated as of
September 9, 1991, and December 14,
1994, respectively, granting a
security interest in specific
equipment.
7. New York County, New York City Tax
Lien No. 000751197-01 - New York City
Department of Finance, as Secured
Party, and Graphic Arts Center, Inc.,
as Debtor, dated as of April 10, 1995,
in the amount of $10, 084.37.
8. Conditional Sales Contract and
Security Agreement with Graphic
International, Inc. dated as of June
8, 1995 pursuant to which Graphic Arts
Center, Inc. will purchase a
Heidleberg 102SP+L six color press for
$1,071,000.
9. Pledge by Graphic Arts Center, Inc. of
$50,000 cash collateral to secure
letter of credit issued by First
Interstate Bank of Oregon, N.A.
10. Minnesota Secretary of State Financing
Statements Nos. 1686797, 1652844,
1651819, 1650982, 1804336, 1740712 -
Hewlett Packard Company, as Secured
Party, and Quality Park Products,
Inc., as Debtor, granting a security
interest in leased equipment.
<PAGE>
SCHEDULE 5.5
GECC EQUIPMENT
Equipment Location and Owner
--------- ------------------
1. W&D 102 Folding Machine St. Louis-the Borrower
2. S.W. Web Folding Machine Allentown-the Borrower
3. W&D 527 Quick Change Tullahoma-Wisco II
4. W&D 102 Folding Machine Chicago-Mail-Well I
5. W&D 249 Folding Machine St. Paul-Mail I Corp.
6. 8-Color Komori Press Portland-GAC
<PAGE>
SCHEDULE 7.6
LITIGATION AND JUDGMENTS
------------------------
1. Skrudland Photo, Inc. v. Mail-Well Corporation, d/b/a/ Mail-Well Envelope,
-------------------------------------------------------------------------
No. 94-15915 - 34th District Court, Travis County, Texas.
Plaintiff sued for breach of contract and deceptive trade practices,
arising out of the sale of allegedly defective through-the-mail photo
envelopes by Mail-Well to it. Mail-Well has filed an Answer and
Counterclaim of $38,886.08 arising out of unpaid invoices. Discovery is
proceeding. Mail-Well has retained experts to consult on the issues of
damages and liability. The trial date previously set for November, 1996
has been vacated. The Company intends to vigorously defend this case.
Plaintiff has made no realistic settlement demands.
2. Taleb H. Hamad v. Graphic Arts Center, Inc., No. 96-216-FR, U.S. District
-------------------------------------------
Court, District of Oregon
Plaintiff filed his Complaint on February 12, 1996 alleging employment
discrimination based on his national origin. Defendant answered the
Complaint on March 4, 1996, denying the substantive allegations contained
in it. Mail-Well intends to vigorously defend this case.
3. Kay L. Bird v. Graphic Arts Center, Inc., No. 9602-00897, Circuit Court of
----------------------------------------
Oregon, County of Multonmah.
Plaintiff filed her Complaint on February 2, 1996 alleging employment
discrimination based on her sex. Defendant answered the Complaint on March
7, 1996, denying the substantive allegations contained in it. Plaintiff's
deposition has been taken and a motion for Summary Judgment (on the entire
case) has been filed by Defendant. Plaintiff has moved to extend the
discovery cut-off date, as well as the time for filing a Brief in
Opposition to Defendant's Motion for Summary Judgment. Accepts at
settlement have been unproductive. The Company intends to vigorously defend
this case.
4. Eli Y. Leslie v. Mail-Well Corporation, No. 96-01226-CA, Circuit Court,
--------------------------------------
Fourth Judicial Circuit, in and for Duval County, Florida.
Plaintiff filed his Complaint on March 12, 1996 alleging negligence for
damages arising out of his trip and fall at Defendant's facility.
Defendant answered the Complaint denying the substantive allegations
contained in it. Depositions of most, if not all witnesses, have been
taken. At a recent mediation, there was talk about settling this claim in
the range of $30,000. A trial date has been ordered to be held on January
6, 1997. The Company intends to vigorously defend this case, if it does
not settle in the near future. The Company has insurance for this accident
after a $100,000 deductible has been satisfied.
<PAGE>
5. Richard E. Summer v. Mail-Well Corporation, No. 96-06705, District Court,
------------------------------------------
Judicial District, Dallas County, Texas.
Plaintiff filed his Complaint on July 2, 1996 alleging wrongful termination
in retaliation for filing a worker's compensation claim. The Complaint was
filed in a jurisdiction known for high jury verdicts for claims of this
nature. Defendant answered the Complaint denying the substantive
allegations contained in it. Discovery has yet to commence by either side.
Mail-Well plans to vigorously defend this case.
6. Sanford Rothbard v. Pavey Envelope & Tag Corp., Docket No. HUD-L-10491-94,
----------------------------------------------
Superior Court of New Jersey Law Division, Hudson County.
Plaintiff filed a Complaint on December 19, 1995 alleging wrongful
termination and breach of contract. Several depositions have been taken,
discovery is almost complete, and Mail-Well is preparing to file a Motion
for Summary Judgment. Mail-Well intends to vigorously defend this case.
The claims of this Plaintiff are also covered by escrow, which should be
sufficient to cover the costs associated with trial or settlement of this
case. Therefore, it is unlikely that an outcome unfavorable to the Company
in excess of $100,000 will occur.
7. Michael Honnlee v. Mail-Well, Inc., Claim No. 29-21607, Phoenix, Arizona
----------------------------------
Plaintiff was injured in a car accident on November 8, 1994, when the
vehicle he was driving was struck by a truck driven by a Mail-Well
employee, within the course and scope of his employment. Plaintiff
retained counsel who recently presented Mail-Well with a litigation demand
of $110,000. Defendant has offered $65,000 to settle the case, which offer
was refused. It does not appear at this time that the Plaintiff's alleged
injuries are genuine and related to the accident. Mail-Well has insurance
for this accident after a $100,000 deductible has been satisfied.
<PAGE>
SCHEDULE 7.10
TO THE CREDIT AGREEMENT
EXISTING DEBT
-------------
<TABLE>
<CAPTION>
================================================================================
DEBTOR CREDITOR DESCRIPTION AMOUNT
------ -------- ----------- ------
(estimated as at
October 16, 1996)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
SUPREMEX INC. Domtar Inc. Interest free loan for Can. $833.65
purchase of equipment
-----------------------------------------------------------
Domtar Inc. Interest free loan for Can. $39,048
purchase of equipment
-----------------------------------------------------------
INNOVA ENVELOPE INC. DuPont Forgivable loan re: film Can. $73,000
processing equipment
- --------------------------------------------------------------------------------
SUPREMEX INC. National Bank Irrevocable standby letter Can. $34,000
of Canada of credit in favor of
Mississauga Hydro
- --------------------------------------------------------------------------------
National Bank Letter of Credit in favor Can.$280,000
of Canada of Toronto-Dominion Bank
- --------------------------------------------------------------------------------
CLASSIC ENVELOPE Canadian Maximum Can. $200,000 $0
PLUS LTD. Imperial Bank or 65% of Accounts
of Commerce Receivable Line of credit
- --------------------------------------------------------------------------------
GAC Scitex America Equipment Lease $180,734
Corp.
- --------------------------------------------------------------------------------
Scitex America Two Separate $203,535
Corp. Equipment Leases
- --------------------------------------------------------------------------------
Pennbrook Lease of Real $2,852,410
Development/ Property
Pfleuger
Partners
- --------------------------------------------------------------------------------
First Interstate Letter of Credit $50,000
Bank of Oregon,
N.A.
- --------------------------------------------------------------------------------
Quality Park Hewlett-Packard Master Lease
Products, Inc. Company Agreement
No. 4126-43685
Equipment Schedule 710 $ 42,746.76/1/
Equipment Schedule 7E0 $ 41,894.25/1/
Equipment Schedule 7G0 $ 21,230.79/1/
Equipment Schedule 7H0 $ 12,434.35/1/
Subtotal $118,306.15/1/
================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
================================================================================================
<S> <C> <C> <C>
Quality Park Hewlett-Packard Master Installment
Products, Inc. Company Sales Agreement
No. 4126-43685
Equipment Schedule 720 $ 94,814.22/1/
Equipment Schedule 730 $ 22,967.56/1/
Equipment Schedule 7D0 $ 42,873.32/1/
Equipment Schedule 7F0 $ 4,436.66/1/
Subtotal $165,181.76/1/
- ------------------------------------------------------------------------------------------------
Quality Park Hewlett-Packard Installment Financing $ 50,668.46/1/
Products, Inc. Company Agreement No. 4124-
03489B
- ------------------------------------------------------------------------------------------------
Quality Park Paper Recycling Contract of Canadian Sale $ 18,399.97/1/
Products, Inc.
- ------------------------------------------------------------------------------------------------
Debt arising in connection with Capital Lease Obligations permitted by this Agreement.
- ------------------------------------------------------------------------------------------------
Unfunded liabilities under the Plans listed on Schedule 7.13.
================================================================================================
</TABLE>
__________________________
/1/ Estimated as at September 30, 1996.
<PAGE>
SCHEDULE 7.11
TAXES
-----
A. Tax claims asserted against the Loan Parties.
--------------------------------------------
1. GAC and the City of New York ("NYC") are presently in dispute over the
characterization of payments made to certain highly compensated sales
persons for fiscal year 1992. NYC has characterized the payments as
distributions on equity and has claimed $10,168.19 in underpaid taxes.
None of the highly compensated individuals are equity holders of GAC.
GAC has paid the $10,618.19 provisionally, under protest and is
seeking a return of such amount. This payment has been expensed on
the books of GAC.
If GAC does not ultimately prevail in this dispute, GAC may be
required to make future payments to NYC totaling approximately $20,000
for fiscal years 1993 and 1994.
B. Audits.
------
The following Audits are ongoing:
IRS: Federal Income Tax
Period: 1994
<PAGE>
SCHEDULE 7.13
PLANS
-----
List of Pension and Welfare Plans
- ---------------------------------
1. Mail-Well Corporation Employee Stock Ownership Plan.
2. Mail-Well Corporation 401(k) Savings Retirement Plan.
3. Mail-Well Corporation Severance Plan for Salaried Employees.
4. Mail-Well Corporation Section 125 ("Cafeteria") Plan - Pre-tax premium only
arrangement.
5. Mail-Well Corporation Flexible Health Care Plan.
6. Mail-Well Corporation Life and Disability Insurance Plan.
7. Mail-Well Corporation Educational Assistance Program.
8. Pension Plan for Hourly Employees of Mail-Well Corporation (MWEC).
9. Pension Plan for Hourly Employees of Portland and Oakland.
10. Pension Plan for Hourly Employees of Mail-Well Corporation (AEC).
11. Pavey Envelope and Tag Corporation Employees' Retirement Plan.
12. The Paper Industry Union-Management Pension Fund for and on behalf of the
United Paperworks International Union, Local 318, AFL-CIO of 30-48 Linden
Place, Flushing, New York. (Pavey employees)
13. Local 807 Labor-Management Health and Pension Fund, for and on behalf of
Truck Drivers Local Union No. 807, affiliated with the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
(Pavey employees)
14. Pension Plan for Employees Represented by United Paperworkers International
Union Local 286. (American Envelope employees)
15. Midwest Pension Plan. (American Envelope employees)
<PAGE>
16. Pension Plan for Markham Bargaining Employees of Innova Envelope Inc.,
amended and restated as at January 1, 1992, registration number 0219485.
17. Pension Plan for Non-Bargaining Employees of Innova Envelope Inc., amended
and restated as at January 1, 1992, registration number 0991356.
18. Pension Plan for Brantford Bargaining Employees of Innova Envelope Inc.,
amended and restated as at January 1, 1994, registration number 0389395.
19. Unwritten group Registered Retirement Savings Plan ("RRSP") Program for
some of the employees of the Supreme Envelope division and for all the
employees of Unique Envelope.
20. Supreme Envelope (Montreal) Profit Sharing Plan.
21. Supremex Management Incentive Plan.
22. Informal, unwritten bonus plans are in place for either all or some of the
employees at the following locations:
(a) 345 Montee de Liesse, St. Laurent
(b) 110 Simmonds Drive, Dartmouth
(c) 270 MacLaren, Ottawa
(d) 33 Plymouth Street, Winnipeg
(e) 199 North Leonard Street, Regina
(f) 16242 - 117th Avenue, Edmonton
(g) Unit 3, 6143 - 4th Street S.E., Calgary
23. GAC 401(k) Profit Sharing Plan (Non-union employees)
24. GAC 401(k) Profit Sharing Plan (Union employees)
25. GACSC 401(k) Profit Sharing Plan (Non-union employees)
26. GAC Medical Benefit Trust Fund - Mechanism for funding Health Plan
benefits, a "voluntary employees beneficiary association" ("VEBA")
27. GAC/GACSC Section 125 ("cafeteria") Plan - pre-tax premium only arrangement
28. GCIU Supplemental Retirement and Disability Fund (Graphic Communications
International Union ("GCIU") union employees)
<PAGE>
29. Oregon Printing Industries Retirement Trust - only employees participating
in the Plan on or before April 30, 1988 are eligible
30. Graphic Arts Center, Inc. Executive Life Insurance Plan and Trust Agreement
and Executive Life Insurance Funding Agreement with Frank M. Stammers
31. Local 292-M Inter/Local Pension Fund - GAC is responsible (under Article 27
of the GCIU Collective Bargaining Agreement for lithographic employees)
only to forward to the Trustees of this Fund payroll withholding for
employees who elect to contribute from their compensation to this Fund.
32. "Vantage Program" - a "preferred provider" arrangement required under
Section 29.6 of the GCIU Collective Bargaining Agreement for the Bindery,
Shipping, and Mailing employees.
33. GAC 1993 Stock Option Plan
34. GAC 1995 Leveraged Incentive Plan (the "LIP")-Based on GAC's EBITDA for a
fiscal year, a certain percentage of GAC's EBITDA will be put in a pool to
be allocated to participating officers (the "Distributable Value Pool").
The President determines which officers shall participate in the Plan and
how much of the pool an individual officer will receive.
35. Management Incentive Plan for fiscal year 1995. Participants share a
portion of EBITDA, after EBITDA exceeds 80% of plan. The incentive pay pool
is 4% of the quarterly EBITDA in excess of 80% of each quarter's EBITDA
plan. Payments are made quarterly. Participants are middle level managers
of GAC. Participants can be nominated by any officer of GAC. Determination
of participation is made by unanimous consent of the officers of GAC. It is
a one year plan.
36. Quality Park Products Management Incentive Bonus Plan
37. IAM National Pension Fund
38. I.P.P. and GCIU of North America Employer Retirement Fund
39. GCIU Employer Retirement Fund
40. Graphic Arts Industry Joint Pension Fund
41. GCIU Local 1B Health and Welfare Fund A (Medical, Vision, Weekly Accident
and Sickness, Life Insurance)
42. GCIU Local 1B Health and Welfare Fund B (Dental)
<PAGE>
43. Quality Park Products, Inc. Severance Pay Plan
The present value of vested benefits exceeds the fair market value of plan
- --------------------------------------------------------------------------
assets allocable to such benefits under the following plans (but does not exceed
- -----------------------------------------------------------
the limitations set forth in the last sentence of Section 7.13):
1. Pavey Envelope and Tag Corporation Employees' Retirement Plan.
2. Pension Plan for Employees Represented by United Paperworkers International
Union Local 286. (American Envelope employees)
<PAGE>
SCHEDULE 7.15
HOLDINGS COMMON STOCK; OPTIONS, ETC.
------------------------------------
A.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Stock Number Percentage
Certificate Par of of
Stock Issuer Owner Class of Stock No(s) Value Shares Outstanding
------------ ----- -------------- ----------- ----- ------ ------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Mail-Well I Corporation Mail-Well Inc. Common 001 $ .01 1,000 100%
- -----------------------------------------------------------------------------------------------------------------------------------
Mail-Well West, Inc. Mail-Well I Common 001 $0.01 1,000 100%
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Pavey Envelope and Tag Mail-Well I Common 003 $1.00 3,000 100%
Corp. Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
WISCO Envelope Corp. Mail-Well I Common 001 No 1,000 100%
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Mail-Well Canada Mail-Well I Common 001 $0.01 1,000 100%
Holdings, Inc. Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
WISCO II, L.L.C. Mail-Well I Limited Liability 001 N/A N/A 1% of
Corporation Company Membership Membership
Interests Interest
- -----------------------------------------------------------------------------------------------------------------------------------
WISCO Envelope Corp. Limited Liability
Company Membership 002 N/A N/A 99% of
Interests Membership
Interests
- -----------------------------------------------------------------------------------------------------------------------------------
WISCO III, L.L.C. Mail-Well I Limited Liability 001 N/A N/A 1% of
Corporation Company Membership Membership
Interests Interest
- -----------------------------------------------------------------------------------------------------------------------------------
WISCO Envelope Corp. Limited Liability
Company Membership 002 N/A N/A 99% of
Interests Membership
Interests
- -----------------------------------------------------------------------------------------------------------------------------------
Graphic Arts Center, Inc. Mail-Well I Common 001 $0.01 1,000 100%
Corporation
- -----------------------------------------------------------------------------------------------------------------------------------
Supremex, Inc. Mail-Well Canada Common C-2 None 66 100%
Holdings, Inc.
Common C-3 None 34 100%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
B. Subscriptions, Warrants, Calls, Options, Etc.
Pursuant to The Mail-Well Holdings, Inc. 1994 stock Option
Plan, options to purchase 97,700 shares of Common Stock have been
granted to approximately 40 employees and 18,200 shares of Common
Stock have been granted to approximately 18 GAC employees.
<PAGE>
SCHEDULE 7.22
BANK ACCOUNTS
-------------
1. First National Bank of Tullahoma - Account No. 6013429 (Depository
Account).
2. Bank One, Arizona N.A. - Account No. 111642 (Lockbox Account).
3. First Security Bank of Utah - Account No. 0600007959 (Lockbox Account).
4. Traders National Bank - Account No. 0138142 (Depository Account).
5. Norwest Bank Colorado, National Association - Denver
a. Account No. 1018026204 (Lockbox Account)
b. Account No. 1018026652 (Concentration Account)
c. Account No. 1018026212 (Mastercard/Visa Account)
d. Account No. 1018026474 (Health Benefits)
e. Account No. 6062501426 (Accounts Payable)
f. Account No. 6062501434 (Managers Account)
g. Account No. 1013036547 (Mail-Well Holdings 1994 Stock Option Plan
Escrow Account)
6. Norwest Bank Colorado, National Association - Grand Junction
a. Account No. 8012700220 (Payroll Account)
b. Account No. 8012700212 (A/P Account)
c. Account No. 8012700327 (Freight Account)
d. Account No. 6062501442 (Payroll Account)
e. Account No. 6062503212 (American A/P)
f. Account No. 6062503044 (American Payroll)
7. Bank of Hawaii - Account No. 007043732 (Lockbox Account).
8. Bank of America - Account No. 7505639 (Lockbox Account).
9. First Union Bank of Florida - Account No. 2090000617809 (Depository
Account).
<PAGE>
10. Texas Commerce Bank National Association
a. Account No. 00101440395 (Mail-Well Holdings, Inc. - Equity
Subscription Account)
b. Account No. 00101440403 (Mail-Well Corporation - Supremex Closing
Account)
11. U.S. Bank (Oregon) - Account No. 0100027903 (Lockbox Account).
12. Midlantic National Bank
a. Account No. 1405173202 (Lockbox Account)
b. Account No. 1403182940 (Operating Account)
13. First Hawaiian Bank, Pearlridge Branch - Account No. 81050783 (Payroll
Account).
14. Society National Bank - Account No. 2166894408 (Lockbox Account).
15. Republic Bank of New York
a. Account No. 230026206 (Depository Account)
b. Account No. 230026214 (Payroll Account)
16. Boatmen's First National Bank of Oklahoma - Account No. 070108366101
(Lockbox Account).
17. Wells Fargo Bank - Account No. 1000005471 (Lockbox Account).
18. Meridian Bank - Account No. 43281135 (Lockbox Account).
19. Commerce Bank - Account No. 0203063415 (Lockbox Account).
20. First National Bank of Omaha - Account No. 22652740 (Lockbox Account).
21. Marine Midland Bank - Account No. 875000703 (Lockbox Account).
22. Bank of America - Account No. 7511019 (Lockbox Account).
23. Wells Fargo Bank
a. Account No. 4159-341771 (Lockbox Account)
b. Account No. 552-001-0626 (Lockbox Account)
c. Account No. 300125972 (Lockbox Account)
24. Nations Bank of Tennessee, N.A. - Account No. 00102341477 (Lockbox
Account).
<PAGE>
25. NationsBank of Texas, N.A.
a. Account No. 1293323185 (Mail-Well Holdings Equity Subscription
Account)
b. Account No. 1293323177 (Mail-Well Corporation Closing Account)
26. PNC Bank
a. Account No. 1001-34-8249 (Lockbox Account)
b. Account No. 1-40511323-3 (Lockbox Account)
27. Banque Nationale du Canada
a. Account No. 000000011022
b. Account No. 000000020722
c. Account No. 000000051524
d. Account No. 060002988878P
28. Royal Bank
a. Account No. 00001-1366178
b. Account No. 03012-0000273
c. Account No. 03510-1081025
d. Account No. 05259-1102763
e. Account No. 06857-1101559
f. Account No. 07981-1091867
g. Account No. 07981-1091875
h. Account No. 00001-4048336
i. Account No. 03012-4025482
j. Account No. 03510-4012373
k. Account No. 05259-4045985
l. Account No. 06857-4003984
m. Account No. 07981-4033569
n. Account No. 07981-4043501
<PAGE>
SCHEDULE 7.27
EMPLOYEE MATTERS
----------------
(a) COLLECTIVE BARGAINING AGREEMENTS
--------------------------------
GCIU Local 292M, expires on June 30, 1997.
GCIU Local 292M dated as of October 17, 1991, expires on April 30, 1997.
Allentown, PA - United Independent Union, Local No. 7. Agreement expires
September 30, 2000.
Atlanta, GA - Graphic Communications International Union, Local 527-S, AFL-
CIO-CLC, June 1, 1993 through May 31, 1999.
Chicago, IL (Ohio Street Facility) - International Union of Allied
Production and Novelty Workers Local No. 10. Agreement expires January 31,
1999.
Cleveland, OH - International Association of Machinists and Aerospace
Workers, District No. 54. Agreement expires June 12, 1998.
Honolulu, HI - Hawaii Printing and Graphic Communications Union, Local 501-
M. Agreement expires November 30, 1997.
Jersey City, NJ - United Paperworkers International Union, Local 318.
Agreement expires March 31, 2001.
Jersey City, NJ - International Brotherhood of Teamsters, Local 807.
Agreement expires March 31, 1998.
Omaha, NE - Graphic Communications Union, Local 543-M. Agreement expires
July 31, 1997.
Philadelphia, PA - United Paper Workers International Union, Local 286.
Agreement expires September 30, 1997.
Pittsburgh, PA - United Paperworkers International Union, Local 296.
Agreement expires October 31, 1999.
<PAGE>
Portland, OR - Graphic Communications Union, District Council No. 2. Also
covers employees at Oakland, CA. Agreement expired May 31, 1996.
San Antonio, TX - Graphic Communications Union, Local 737-S. Agreement
expires March 31, 1998.
Santa Fe Springs, CA - Graphic Communications Union, District Council No.
2. Agreement expires June 30, 1997.
Seattle, WA - Graphic Communications International Union, Local 767-M.
Agreement expires July 31, 1998.
Seattle, WA - Graphic Communications Union, District Council No. 2.
Agreement expires July 31, 1998.
St. Louis, MO - Graphic Communications International Union, Local 505.
Agreement expires August 31, 1997.
St. Paul, MN - District Lodge #77 of the International Association of
Machinists and Aerospace Workers, AFL-CIO, effective April 1, 1995 through
November 15, 1996.
St. Paul, MN - Twin Cities Printing Trades Union, Local No. 29, charted by
the Graphic Communications International Union, effective April 1, 1995
through November 15, 1996.
St. Paul, MN - Graphic Communications International Union Local #1B, Twin
Cities, effective April 1, 1995 through November 15, 1996.
Markham, Ontario, Canada - Communications, Energy and Paperworkers Union of
Canada and its Local 301. Agreement expired December 31, 1994, the renewal
of which is presently in process of negotiation which is expected to go to
arbitration in August, 1995.
Montreal, Quebec, Canada - "Working with Us", The Employee Manual, which
covers hourly paid production and warehouse employees. The manual does not
constitute a formal collective agreement, but is negotiated with the
employees and is valid up to August 31, 1996.
Mississauga, Canada - A manual similar to the above is in the process of
being prepared for application at this location.
<PAGE>
Brantford Plant, Canada - The Canadian Autoworkers Union and its Local 397.
Agreement expires September 30, 1996.
Regina, Saskatchewan, Canada - Communications, Energy and Paperworkers
Union of Canada. Agreement expires October 31, 1996.
Alberta, Canada - Informal system regarding wages and benefits, but does
not constitute a collective agreement in place. Informal proposal will
remain in effect until November 1995.
Vancouver, British Columbia, Canada - Pulp, Paper and Woodworkers of
Canada, Local No. 5. Agreement expired October 31, 1994, was renewed and
amended January 27, 1995, and expires August 31, 1996.
(b) Petitions for certification of union election: None.
(c) Strikes, work slowdowns, work stoppages, or threatened controversies: In
mid to late October of 1994 AEC management observed union organizers
speaking with employees at AEC's Kruysman facility in New York City. No
petition for certification has been filed, nor has there been further union
organizing activity.
(d) Employment contracts other than collective bargaining agreements:
Employment Contract between Classic Envelope Plus Ltd. and Barry John
Sikora dated June 1, 1994.
Employment Contract between Innova Envelope Inc. and Frederick Vernon Moore
dated June 1, 1994.
Verbal consulting agreement between Supremex and its Subsidiaries and Guy
Paquin.
Verbal consulting agreement between Joel Robert Yanow and Supremex. A
written agreement will be executed prior to closing.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Ronald J. Rebeck.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Ralph A. Benton.
<PAGE>
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Douglas A. Mahoney.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Hans J. Loeffler.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and James E. Bettinger.
Deferred Compensation Arrangement between Quality Park Products, Inc. and
Ken Templin.
<PAGE>
SCHEDULE 9.5
INVESTMENTS
-----------
1. $4,000,000 was contributed to Supremex by Mail-Well on the Second
Restatement Date.
2. Mail-Well Corporation Investment in Mail-Well Holdings Deferred Coupon
Notes. Recorded as an Intercompany Receivable in the amount of $5,203,000
as of June 30, 1995.
<PAGE>
EXHIBIT 10.38
================================================================================
SUPREMEX INC.
as Borrower
and
MAIL-WELL I CORPORATION
and
INNOVA ENVELOPE INC.,
as Guarantors
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of November 15, 1996
U.S. $45,000,000 Term Loans A Facility
U.S. $20,000,000 Term Loans B Facility
Cdn. $10,000,000 Revolving Credit Loans Facility
BANQUE PARIBAS
as Agent
and
THE LENDERS NAMED HEREIN
==============================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C> <C>
- ------------------------------------------------------------------------------------
ARTICLE 1 - Definitions............................................................... 2
Section 1.1 Definitions........................................................ 2
Section 1.2 Other Definitional Provisions......................................21
Section 1.3 Accounting Terms and Determinations................................21
Section 1.4 Financial Covenants and Reporting..................................22
ARTICLE 2 - Loans 22
Section 2.1 Loans and Commitments..............................................22
Section 2.2 Notes..............................................................24
Section 2.3 Repayment of Loans.................................................25
Section 2.4 Interest...........................................................27
Section 2.5 Borrowing Procedure................................................27
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans.......28
Section 2.7 Mandatory Prepayments..............................................28
Section 2.8 Minimum Amounts....................................................29
Section 2.9 Certain Notices....................................................29
Section 2.10 Use of Proceeds....................................................30
Section 2.11 Fees...............................................................31
Section 2.12 Computations.......................................................31
Section 2.13 Reduction or Termination of Revolving Credit Commitments...........32
Section 2.14 Letters of Credit..................................................32
Section 2.15 Bankers' Acceptances...............................................35
ARTICLE 3 - Payments..................................................................39
Section 3.1 Method of Payment..................................................39
Section 3.2 Pro Rata Treatment.................................................40
Section 3.3 Sharing of Payments, Etc...........................................41
Section 3.4 Non-Receipt of Funds by the Agent..................................41
Section 3.5 Withholding Taxes..................................................41
Section 3.6 Withholding Tax Exemption..........................................42
ARTICLE 4 - Yield Protection and Illegality...........................................43
Section 4.1 Additional Costs...................................................43
Section 4.2 Limitation on Types of Loans.......................................44
Section 4.3 Illegality.........................................................44
Section 4.4 Treatment of Affected Loans........................................45
Section 4.5 Compensation.......................................................45
Section 4.6 Capital Adequacy...................................................46
Section 4.7 Additional Interest on Eurodollar Loans............................46
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 5 - Security..................................................................47
Section 5.1 Collateral....................................................47
Section 5.2 Guaranties....................................................48
Section 5.3 New Subsidiaries..............................................48
Section 5.4 New Mortgaged Properties......................................49
Section 5.5 Release of Collateral.........................................49
Section 5.6 Setoff........................................................50
ARTICLE 6 - Conditions Precedent......................................................50
Section 6.1 Initial Extension of Credit...................................50
Section 6.2 All Extensions of Credit......................................55
Section 6.3 Term Loans B..................................................55
Section 6.4 Closing Certificates..........................................59
ARTICLE 7 - Representations and Warranties............................................60
Section 7.1 Corporate Existence...........................................60
Section 7.2 Financial Statements..........................................60
Section 7.3 Corporate Action; No Breach...................................61
Section 7.4 Operation of Business.........................................61
Section 7.5 Intellectual Property.........................................61
Section 7.6 Litigation and Judgments......................................61
Section 7.7 Rights in Properties; Liens...................................62
Section 7.8 Enforceability................................................62
Section 7.9 Approvals.....................................................62
Section 7.10 Debt..........................................................62
Section 7.11 Taxes.........................................................63
Section 7.12 Margin Securities.............................................63
Section 7.13 ERISA; Canadian Plans.........................................63
Section 7.14 Disclosure....................................................64
Section 7.15 Capitalization................................................64
Section 7.16 Agreements....................................................65
Section 7.17 Compliance with Laws..........................................65
Section 7.18 Investment Company Act........................................65
Section 7.19 Public Utility Holding Company Act............................65
Section 7.20 Environmental Matters.........................................65
Section 7.21 Labor Disputes and Acts of God................................66
Section 7.22 Bank Accounts.................................................67
Section 7.23 Outstanding Securities........................................67
Section 7.24 Subordination.................................................67
Section 7.25 Related Transactions Documents................................67
Section 7.26 Solvency......................................................68
Section 7.27 Employee Matters..............................................68
Section 7.28 Insurance.....................................................68
Section 7.29 No Default under Mail-Well Credit Agreement...................68
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE 8 - Affirmative Covenants.....................................................68
ARTICLE 9 - Negative Covenants........................................................69
ARTICLE 10 - Financial Covenants......................................................69
ARTICLE 11 - Default..................................................................70
Section 11.1 Events of Default.............................................70
Section 11.2 Remedies......................................................73
Section 11.3 Cash Collateral...............................................74
Section 11.4 Performance by the Agent......................................74
Section 11.5 Judgment Currency.............................................74
ARTICLE 12 - The Agent................................................................75
Section 12.1 Appointment, Powers and Immunities............................75
Section 12.2 Rights of Agent as a Lender...................................75
Section 12.3 Defaults......................................................76
Section 12.4 INDEMNIFICATION...............................................76
Section 12.5 Independent Credit Decisions..................................77
Section 12.6 Several Commitments...........................................77
Section 12.7 Successor Agent...............................................77
ARTICLE 13 - Miscellaneous............................................................78
Section 13.1 Expenses......................................................78
Section 13.2 INDEMNIFICATION...............................................78
Section 13.3 Limitation of Liability.......................................79
Section 13.4 No Duty.......................................................80
Section 13.5 No Fiduciary Relationship.....................................80
Section 13.6 Equitable Relief..............................................80
Section 13.7 No Waiver; Cumulative Remedies................................80
Section 13.8 Successors and Assigns........................................81
Section 13.9 Survival......................................................85
Section 13.10 ENTIRE AGREEMENT..............................................85
Section 13.11 Amendments....................................................85
Section 13.12 Maximum Interest Rate.........................................86
Section 13.13 Notices.......................................................87
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SERVICE OF PROCESS............................................87
Section 13.15 Counterparts..................................................88
Section 13.16 Severability..................................................88
Section 13.17 Headings......................................................88
Section 13.18 Construction..................................................88
Section 13.19 Independence of Covenants.....................................88
Section 13.20 Confidentiality...............................................88
Section 13.21 WAIVER OF JURY TRIAL..........................................89
</TABLE>
iv
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 13.22 Approvals and Consent.........................................89
Section 13.23 Agent for Services of Process.................................89
Section 13.24 Assignment and Assumptions....................................89
Section 13.25 Amendment and Restatement.....................................90
Section 13.26 Supplements to Certain Schedules..............................90
Section 13.27 Intercreditor Agreements......................................90
</TABLE>
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit Description of Exhibit Section
- ------- ---------------------- -------
<S> <C> <C>
A Form of Assignment and Acceptance 1.1
B Form of Revolving Credit Loans Note
C Form of Term Loans A Note 1.1 and 2.2
D Form of Term Loans B Note 1.1 and 2.2
E Form of Notice of Borrowings, Conversions,
Continuations or Prepayments 2.9
</TABLE>
INDEX TO SCHEDULES
------------------
<TABLE>
<CAPTION>
Schedule Description of Schedule
- -------- -----------------------
<C> <S>
1.1(a) Mortgaged Properties
1.1(b) Permitted Liens
7.6 Litigation and Judgments
7.10 Existing Debt
7.11 Taxes
7.13 Plans
7.15 Capitalization; Options, Etc.
7.22 Bank Accounts
7.27 Employee Matters
7.28 Insurance
</TABLE>
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
-------------------------------------
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of November 15,
1996, is among SUPREMEX INC., a corporation incorporated under the Canada
Business Corporations Act (the "Borrower"), MAIL-WELL I CORPORATION, a Delaware
--------
corporation f/k/a Mail-Well Corporation ("Mail-Well"), INNOVA ENVELOPE INC., a
---------
corporation f/k/a Innova Envelope (1995) Inc. continued under the laws of the
Province of Ontario (Canada) ("Innova"), each of the banks or other lending
------
institutions which is a party hereto (as evidenced by the signature pages of
this Agreement) or which may from time to time become a party hereto or any
successor or assignee thereof (individually, a "Lender" and, collectively, the
------
"Lenders"), and BANQUE PARIBAS, a bank organized under the laws of France acting
- --------
through its Houston agency, as agent for itself and the other Lenders (in such
capacity, together with its successors in such capacity, the "Agent").
-----
RECITALS:
--------
A. Mail-Well, Inc., a Delaware corporation f/k/a Mail-Well Holdings,
Inc. ("Holdings"), owns all of the issued and outstanding shares of capital
--------
stock of Mail-Well.
B. Mail-Well previously entered into that certain Second Amended and
Restated Credit Agreement dated as of July 31, 1995, by and among Mail-Well, the
Second Restatement Lenders (as defined herein) and the Mail-Well Agent (as
defined herein) (as amended by that certain First Amendment to Second Amended
and Restated Credit Agreement dated as of September 11, 1995, and that certain
Second Amendment to Second Amended and Restated Credit Agreement dated as of
April 22, 1996, the "Second Restated Agreement") pursuant to which the Second
-------------------------
Restatement Lenders renewed, extended and increased certain credit facilities
available to Mail-Well.
C. The Borrower and Mail-Well entered into that certain Credit
Agreement dated as of July 31, 1995, among the Borrower, Mail-Well, the Original
Supremex Lenders (as defined herein) and Banque Paribas as agent (as amended by
that certain First Amendment to Credit Agreement dated as of September 11, 1995,
and that certain Second Amendment to Second Amended and Restated Credit
Agreement dated as of April 22, 1996, the "Original Supremex Credit Agreement")
----------------------------------
pursuant to which the Original Supremex Lenders extended certain term credit
facilities and a revolving credit facility to the Borrower.
D. Pursuant to that certain Third Amended and Restated Credit
Agreement dated as of November 15, 1996, among Mail-Well, Wisco Envelope Corp.,
Pavey Envelope and Tag Corp., Mail-Well West, Inc., Wisco II, L.L.C., Supremex
Holdings, Graphic Arts Center, Inc., Wisco III, L.L.C., the Mail-Well Lenders
(as defined herein) and the Mail-Well Agent (as the same may be amended,
modified, supplemented, renewed, extended or restated from time to time, the
"Mail-Well Credit Agreement"), the parties thereto are, concurrently herewith,
- ---------------------------
amending and restating the Second Restated Agreement.
E. The Borrower and Mail-Well have requested that the Original
Supremex Credit Agreement be amended and restated (i) to combine the Borrower's
existing "Term Loans A" and "Term Loans B" facilities into a single $45,000,000
term loan facility, (ii) to provide for an
<PAGE>
additional $20,000,000 term loan facility to finance the prospective PNG
Acquisition (as defined herein) by the Borrower, (iii) to eliminate the concept
of a borrowing base in connection with the Revolving Credit Loans, (iv) to allow
for the incorporation and organization of Mail-Well Trade Receivables
Corporation, a Colorado corporation ("MTRC") and a wholly owned, special purpose
----
corporation subsidiary of Mail-Well, and a $100,000,000 accounts receivable
securitization facility for MTRC in connection with which Mail-Well and its
Subsidiaries (including the Borrower) will sell certain of their Receivables (as
defined herein) to MTRC on the Restatement Date (as defined herein) and from
time to time thereafter, and (v) to amend the Original Supremex Credit Agreement
in certain other aspects.
F. The Borrower, Mail-Well, Innova, the Lenders identified on the
signature pages of this Agreement (including, without limitation, certain of the
Original Supremex Lenders) and the Agent desire to amend and restate the
Original Supremex Credit Agreement (i) to provide for the matters referred to in
Recital E preceding and (ii) to allow for the matters referred to in Recital D
- --------- ---------
preceding.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE
Definitions
-----------
Section 1.1 Definitions. Defined terms that are used herein but
-----------
are not defined herein shall have the meanings therefor specified in the Mail-
Well Credit Agreement. In addition, as used in this Agreement, the following
terms have the following meanings:
"Acceptance Fee" means the fee payable at the time of the acceptance
--------------
of Bankers' Acceptances established by multiplying the face amount of such
Bankers' Acceptances by the Applicable Margin and by multiplying the product so
obtained by a fraction having a numerator equal to the number of days in the
term of such Bankers' Acceptances and a denominator of 365.
"Additional Costs" means as specified in Section 4.1(a).
---------------- --------------
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
------------------------
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of 1%) determined by the Agent to be equal to the Eurodollar
Rate for such Eurodollar Loan for such Interest Period divided by 1 minus the
Reserve Requirement for such Eurodollar Loan for such Interest Period.
"Agent" means as specified in the introductory paragraph of this
-----
Agreement.
"Aggregate Commitment Percentage" means, as to any Lender, the
-------------------------------
percentage equivalent of a fraction, the numerator of which is the sum of the
outstanding Revolving Credit Loans Commitment of such Lender (or, if such
Revolving Credit Loans Commitment has terminated or expired, the outstanding
principal amount of its Revolving Credit Loans and its Letter of Credit
2
<PAGE>
Liabilities and its Bankers' Acceptance Liabilities), plus the outstanding
-----
principal amount of the Term Loans of such Lender, and the denominator of which
is the sum of the aggregate outstanding Revolving Credit Loans Commitments of
all Lenders (or, if the Revolving Credit Loans Commitments have terminated or
expired, the aggregate outstanding principal amount of all Revolving Credit
Loans and all Letter of Credit Liabilities and all Bankers' Acceptance
Liabilities), plus the aggregate outstanding principal amount of the Term Loans
----
of all Lenders.
"Agreement" means this Amended and Restated Credit Agreement and any
---------
and all amendments, modifications, supplements, renewals, extensions or
restatements hereof.
"Applicable Lending Office" means for each Lender and each Type of
-------------------------
Loan, the Lending Office of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan below its name on the signature pages hereof
(or, with respect to a Lender that becomes a party to this Agreement pursuant to
an assignment made in accordance with Section 13.8, in the Assignment and
------------
Acceptance executed by it) or such other office of such Lender (or of an
Affiliate of such Lender) as such Lender may from time to time specify to the
Borrower and the Agent as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means (a) from the Restatement Date to the first
-----------------
Calculation Date, 0.50% with respect to Prime Rate Loans and 2.00% with respect
to Eurodollar Loans, and (b) for periods from each Calculation Date to the next
Calculation Date, the rate per annum set forth in the table below that
corresponds to the ratio of (i) Total Debt as of the date of the relevant
financial statement referred to below to (ii) EBITDA for the four fiscal
quarters of Mail-Well then most recently ended as of the date of such financial
statement:
<TABLE>
<CAPTION>
Ratio of Total Applicable Margin Applicable Margin
Debt to EBITDA for Eurodollar Loans for Prime Rate Loans
-------------- --------------------- ---------------------
<S> <C> <C>
Greater than or equal to 3.25 to 1.00 2.50% 1.00%
Greater than or equal to 2.75 to 1.00 2.00% 0.50%
and less than 3.25 to 1.00
Less than 2.75 to 1.00 1.75% 0.25%
</TABLE>
The Applicable Margin shall change on each Calculation Date and shall be
calculated on the basis of the financial statements delivered by Mail-Well
pursuant to Section 8.1(b) of the Mail-Well Credit Agreement and the certificate
delivered by Mail-Well pursuant to Section 8.1(e) of the Mail-Well Credit
Agreement; provided, that if Mail-Well fails to deliver to the Agent such
--------
financial statements or certificate on or before the relevant Calculation Date,
the Applicable Margin for all Prime Rate Loans and Eurodollar Loans shall be
1.00% and 2.50%, respectively, per annum for the period from such Calculation
Date until the date such statements and certificate are received by the Agent,
after which the Applicable Margin shall be determined as otherwise provided
herein.
(b) As used in the definition of "Acceptance Fee", (i) from the
Restatement Date to the first Calculation Date, 2.00%, and (ii) for periods from
each Calculation Date to the next Calculation Date, the rate per annum set forth
in the table below that corresponds to the ratio of (A) Total Debt as of the
date of the relevant financial statement referred to below to (B) EBITDA
3
<PAGE>
for the four fiscal quarters of Mail-Well then most recently ended as of the
date of such financial statement:
<TABLE>
<CAPTION>
Ratio of Total Applicable Margin
Debt to EBITDA for Acceptance Fee
-------------- -------------------
<S> <C>
Greater than or equal to 3.25 to 1.00 2.50%
Greater than or equal to 2.75 to 1.00 2.00%
and less than 3.25 to 1.00
Less than 2.75 to 1.00 1.75%
</TABLE>
(c) Notwithstanding anything to the contrary contained in this
Agreement, for purposes of calculating "EBITDA," as such term is used in this
definition of "Applicable Margin," the financial attributes of the Persons
acquired or attributable to the businesses or assets acquired (as applicable)
pursuant to all New Acquisitions shall be included for the 12-month period
immediately prior to the date of determination of "EBITDA" (excluding any pro
forma adjustments thereto).
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and its Assignee and accepted by the Agent pursuant to Section
-------
13.8(e), in substantially the form of Exhibit A hereto.
- ------- ---------
"Assignee" means as specified in Section 13.8(b).
-------- ---------------
"Assigning Lender" means as specified in Section 13.8(b).
---------------- ---------------
"Bankers' Acceptance" means a non-interest bearing draft or bill of
-------------------
exchange in form acceptable to the Agent in Cdn. Dollars drawn by the Borrower
upon a Revolving Credit Lender and accepted by such Revolving Credit Lender
pursuant to Section 2.15.
------------
"Bankers' Acceptance Liabilities" means, at any time, the aggregate
-------------------------------
amount of all fixed and contingent liabilities of the Revolving Credit Lenders
under Bankers' Acceptances.
"Bankruptcy Code" means as specified in Section 11.1(e).
--------------- ---------------
"Borrower" means as specified in the initial paragraph of this
--------
Agreement.
"Borrower Security Agreement" means, individually and collectively,
---------------------------
(a) the Security Agreement, Demand Debenture, Debenture Pledge Agreement,
Securities Pledge Agreement, General Assignment under Section 427 of the Bank
Act, Application for Credit and Promise to give Security under Section 427 of
the Bank Act, Agreement as to Loans and Advances and Security therefor under
Section 427 of the Bank Act, Hypothec on Movables and each other agreement,
document or instrument executed by the Borrower as security for the Obligations
or any part thereof dated the Closing Date executed by the Borrower in favor of
the Agent for the benefit of the Agent and the Lenders, (b) the amendments
and/or restatements of the agreements, documents and instruments referred to in
clause (a) preceding dated the Restatement Date, and (c) and any and all
- ----------
amendments, modifications, supplements, renewals, extensions or restatements of
any of the foregoing.
4
<PAGE>
"Borrower Subordinated Debt" means any and all current or future Debt
--------------------------
of the Borrower or its Subsidiaries which is subordinated to all or any portion
of the Obligations or the Mail-Well Obligations.
"Business Day" means (a) any day on which commercial banks are not
------------
authorized or required to close in Houston, Texas, or Toronto, Ontario, and (b)
with respect to all borrowings, payments, Conversions, Continuations, Interest
Periods and notices in connection with Eurodollar Loans, any day which is a
Business Day described in clause (a) above and which is also a day on which
----------
dealings in Dollar deposits are carried out in the London interbank market.
"Calculation Date" means the date occurring each quarter during the
----------------
term of this Agreement which is 15 days after the date on which quarterly
financial statements of Mail-Well are required by Section 8.1(b) of the Mail-
Well Credit Agreement to be delivered to the Agent.
"Canadian Five Year Rule" means that the Borrower shall not be
-----------------------
obligated, under any circumstances other than the circumstances of the
acceleration of the maturity of the Term Loans upon the occurrence of an Event
of Default, to pay more than 25% of the principal amount of the Term Loans
within five years and one day from the date of the making of the Term Loans,
whether from scheduled payments or mandatory prepayments from asset sales,
insurance proceeds, stock offerings, excess cash flow, debt issuances or
otherwise.
"Canadian Reference Lenders" means Paribas Bank of Canada, The
--------------------------
Bank of Nova Scotia and National Bank of Canada.
"Cdn. Dollars" and "Cdn. $" mean lawful money of Canada.
------------ ------
"CDOR Rate" means, on any day, the annual rate of interest which is
---------
the rate determined as being the arithmetic average (rounded upwards, if
necessary, to the nearest 0.01%) of the 30-day discount rates applicable to Cdn.
Dollar bankers' acceptances appearing on the "Reuters Screen CDOR Page" (as
defined in the International Swap Dealer Association, Inc. definitions, as
modified and amended from time to time) as of 10:00 a.m. on such day, or, if
such day is not a Business Day, then on the immediately preceding Business Day;
provided, however, if such rates do not appear on the Reuters Screen CDOR Page
- -------- -------
as contemplated, then the CDOR Rate on any day shall be calculated as the
arithmetic average of the 30-day discount rates applicable to Cdn. Dollar
bankers' acceptances quoted by the Canadian Reference Lenders as of 10:00 a.m.
on such day, or if such day is not a Business Day, then on the immediately
preceding Business Day.
"Classic" means Classic Envelope Plus Ltd., a corporation
-------
incorporated under the Companies Act (British Columbia).
"Classic Shareholders' Agreement" means that certain Shareholders'
-------------------------------
Agreement made as of the 1st day of June, 1994, among Supremex Target, Barry
John Sikora and Classic.
"Closing Date" means July 31, 1995, the date of the Original
------------
Supremex Credit Agreement.
5
<PAGE>
"Collateral" means all Property of any nature whatsoever upon which a
----------
Lien is created or purported to be created by any Loan Document as security for
the Obligations or any portion thereof.
"Commitments" means the Term Loans A Commitments, the Term Loans B
-----------
Commitments and the Revolving Credit Loans Commitments.
"Commitment Percentage" means, as to any Lender and as to any of its
---------------------
Commitments or Loans or Letters of Credit or Bankers' Acceptances (as may be
applicable based upon the context in which such term is used), the percentage
equivalent of a fraction, the numerator of which is the aggregate amount of the
applicable Commitment of such Lender or the outstanding principal amount of the
applicable Loans or Letters of Credit or Bankers' Acceptances (as applicable) of
such Lender, and the denominator of which is the aggregate amount of such
applicable Commitments of all Lenders or the aggregate outstanding principal
amount of the applicable Loans or Letters of Credit or Bankers' Acceptances (as
applicable) of all Lenders, as adjusted from time to time in accordance with
Section 13.8.
- ------------
"Concentration Accounts" means concentration deposit accounts (or, if
----------------------
the Borrower and its Subsidiaries so desire, a single concentration deposit
account) into which all proceeds of Collateral (including, without limitation,
sales of accounts receivable by the Borrower and its Subsidiaries) shall be
deposited maintained by the Borrower and/or its Subsidiaries with a bank or
banks selected by the Borrower or such Subsidiary and reasonably acceptable to
the Agent, and "Concentration Account" means any of such Concentration Accounts.
---------------------
"Continue," "Continuation" and "Continued" shall refer to the
-------- ------------ ---------
continuation pursuant to Section 2.6 of a Eurodollar Loan as a Eurodollar Loan
-----------
of the same Type from one Interest Period to the next Interest Period.
"Contract Rate" means as specified in Section 13.12(a).
------------- ----------------
"Convert," "Conversion" and "Converted" shall refer to a conversion
------- ---------- ---------
pursuant to Section 2.6 or Article 4 of one Type of Loan into the other Type of
----------- ---------
Loan.
"Current Date" means a date occurring no more than 30 days prior to
------------
the Restatement Date or such earlier date which is reasonably acceptable to the
Agent.
"Default" means an Event of Default or the occurrence of an event or
-------
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, any
------------
Reimbursement Obligation or any other amount payable by Mail-Well or the
Borrower under this Agreement or any other Loan Document which is not paid when
due (whether at stated maturity, by acceleration or otherwise), a rate per annum
during the period commencing on the due date until such amount is paid in full
equal to the sum of two percent plus the Prime Rate as in effect from time to
time plus the Applicable Margin for Prime Rate Loans; provided, however, that if
-------- -------
such amount in default is principal of a Eurodollar Loan and the due date is a
day other than the last day of an
6
<PAGE>
Interest Period therefor, the "Default Rate" for such principal shall be, for
the period from and including the due date and to but excluding the last day of
the Interest Period therefor, two percent plus the interest rate for such
Eurodollar Loan for such Interest Period as provided in Section 2.4(a) hereof
--------------
and, thereafter, the rate provided for above in this definition.
"Deposit Account" means a deposit account maintained by the Borrower
---------------
with a bank selected by the Borrower and reasonably acceptable to the Agent.
"Discount" means, with respect to any issue of Bankers' Acceptances
--------
with the same maturity date, the amount by which the face value of such Bankers'
Acceptances exceeds the Discounted Proceeds of such Bankers' Acceptances.
"Discounted Proceeds" means, with respect to any Bankers' Acceptance
-------------------
to be accepted by a Revolving Credit Lender on any day, an amount (rounded to
the nearest whole cent, with one-half of one cent being rounded up), calculated
on such day by multiplying (a) the face amount of such Bankers' Acceptance by
(b) the price where the price is determined by dividing one by the sum of one
plus the product of (i) such Revolving Credit Lender's Discount Rate (expressed
as a decimal) and (ii) a fraction the numerator of which is the number of days
remaining in the term of such Bankers' Acceptance and the denominator of which
is 365, with the price as so determined being rounded up or down to the fifth
decimal place and 0.000005 being rounded up.
"Discount Rate" means, with respect to any issue of Bankers'
-------------
Acceptances with the same maturity date, the CDOR Rate.
"Dollars" and "$" mean lawful money of the U.S.
------- -
"Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
-----------------
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) acceptable to the Agent and
approved by Mail-Well, which approval by Mail-Well shall not be unreasonably
withheld, conditioned or delayed; provided, however, that, with respect to any
-------- -------
assignment of the Revolving Credit Loans, the Letters of Credit, the Bankers'
Acceptances and/or the Revolving Credit Loans Commitments, an "Eligible
Assignee" must be a bank resident in Canada.
"Equity Issuance" means any issuance by Holdings, Mail-Well or the
---------------
Borrower of any Capital Stock of Holdings, Mail-Well or the Borrower,
respectively.
"Eurodollar Loans" means Loans that bear interest at rates based
----------------
upon the Eurodollar Rate or the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest
---------------
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of 1%) quoted by the Reference Lender at approximately 11:00 a.m.
London time (or as soon thereafter as practicable) two Business Days prior to
the first day of such Interest Period for the offering by the Reference Lender
to leading banks in the London interbank market of Dollar deposits in
immediately
7
<PAGE>
available funds having a term comparable to such Interest Period and
in an amount comparable to the principal amount of the Eurodollar Loan made by
the Reference Lender to which such Interest Period relates. If the Reference
Lender is not participating in any Eurodollar Loans during any Interest Period
therefor (whether as a result of Section 4.4 or for any other reason), the
-----------
Eurodollar Rate and the Adjusted Eurodollar Rate for such Loans for such
Interest Period shall be determined by reference to the amount of the Loans
which the Reference Lender would have made had it been participating in such
Loans.
"Event of Default" has the meaning specified in Section 11.1.
---------------- ------------
"Excess Cash Flow" means, for any period, without duplication, the
----------------
total of the following of the Borrower and its Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP: (a) Consolidated
Net Income of the Borrower and its Subsidiaries, plus (b) depreciation and
----
amortization expense and other non-cash items to the extent deducted in
determining Consolidated Net Income of the Borrower and its Subsidiaries, minus
-----
(c) non-cash income to the extent included in determining Consolidated Net
Income of the Borrower and its Subsidiaries, plus (d) income and franchise taxes
----
to the extent deducted in determining Consolidated Net Income of the Borrower
and its Subsidiaries; minus (e) cash payments of taxes, plus (f) taxes
----- ----
previously paid that have been refunded in cash, minus (g) actual Capital
-----
Expenditures of the Borrower and its Subsidiaries, minus (h) principal payments
-----
(including prepayments) made on the Term Loans A and the Term Loans B and the
"Term Loans A" and the "Term Loans B" as such terms are defined in the Original
Supremex Credit Agreement.
"Excess Cash Flow Prepayment Date" means the 30th day of each April,
--------------------------------
commencing on April 30, 1997, and continuing on the 30th day of each April of
each subsequent year.
"Excess Insurance Proceeds" means any and all proceeds of any
-------------------------
Insurance Recovery which the Borrower or its Subsidiary (as applicable) (a) has
elected to not apply to the repair, construction or replacement of the Property
affected or to the purchase of other, similar Property for use in its business
or (b) has not both (i) elected to apply to the repair, construction or
replacement of the Property affected or to the purchase of other, similar
Property for use in its business within 90 days of the event giving rise to the
Insurance Recovery and (ii) actually applied to such repair, construction,
replacement or purchase (A) within 180 days after the earliest to occur of the
receipt of such proceeds by the Borrower, any of its Subsidiaries or the Agent,
with respect to an Insurance Recovery relating to other than real Property or
the reconstruction of a plant, or (B) commencing within 180 days after the
earliest to occur of the receipt of such proceeds by the Borrower, any of its
Subsidiaries or the Agent and continuing in a reasonably prompt and diligent
fashion thereafter, with respect to an Insurance Recovery relating to real
Property or the reconstruction of a plant.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
------------------
upwards, if necessary, to the nearest one-sixteenth of one percent (1/16 of 1%))
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (a) if the day for
--------
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such
8
<PAGE>
rate on such transactions on the next preceding Business Day as so published on
the next succeeding Business Day and (b) if such rate is not so published on
such next succeeding Business Day, the Federal Funds Rate for any day shall be
the average rate charged to the Reference Lender on such day on such
transactions as determined by the Agent.
"GAC" means Graphic Arts Center, Inc., a Delaware corporation and
---
a wholly-owned Subsidiary of Mail-Well.
"Holdings" means as specified in Recital A of this Agreement
-------- ---------
"Holdings Common Stock" means the common stock of Holdings, par
---------------------
value $0.01 per share.
"Holdings Guaranty" means the Third Amended and Restated Guaranty
-----------------
Agreement dated the Restatement Date executed by Holdings in favor of the Agent
for the benefit of the Agent, the Lenders and/or the Mail-Well Lenders, and any
and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Holdings Security Agreement" means the Third Amended and Restated
---------------------------
Security Agreement dated the Restatement Date executed by Holdings in favor of
the Agent for the benefit of the Agent, the Lenders, the Mail-Well Lenders
and/or the Equipment Lease Facility Lenders, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Innova" means as specified in the initial paragraph of this
------
Agreement.
"Insurance Recovery" means, with respect to any Property of the
------------------
Borrower or any of its Subsidiaries and any single occurrence or related
occurrences with respect thereto, the receipt or constructive receipt by the
Borrower or any of its Subsidiaries, or the payment by an insurance company to
the Agent, of proceeds of any such Property or casualty insurance in an amount
or aggregate amount (as applicable) in excess of Cdn. $500,000.
"Intercreditor Agreement" means that certain Amended and Restated
-----------------------
Intercreditor Agreement dated as of the Restatement Date among the Lenders, the
Mail-Well Lenders and the Equipment Lease Facility Lenders, and any and all
amendments, modifications, supplements, renewals, extensions or restatements
thereof.
"Interest Period" means, with respect to any Eurodollar Loan, each
---------------
period commencing on the date such Loan is made or Converted from a Prime Rate
Loan or (if Continued) the last day of the next preceding Interest Period with
respect to such Loan, and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as the Borrower may
select as provided in Section 2.9 hereof, except that each such Interest Period
-----------
which commences on the last Business Day of a calendar month (or on any day for
which there is no numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the appropriate subsequent
calendar month. Notwithstanding the foregoing: (a) each Interest Period which
would otherwise end on a day which is not a Business Day shall end
9
<PAGE>
on the next succeeding Business Day (or, if such succeeding Business Day falls
in the next succeeding calendar month, on the next preceding Business Day); (b)
any Interest Period which would otherwise extend beyond an applicable Maturity
Date shall end on such Maturity Date; (c) no more than seven Interest Periods
for Eurodollar Loans shall be in effect at the same time; (d) no Interest Period
shall have a duration of less than one month and, if the Interest Period for any
Eurodollar Loans would otherwise be a shorter period, such Loans shall not be
available hereunder; and (e) no Interest Period for a Term Loan may commence
before and end after any principal repayment date unless, after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans having Interest
Periods that end after such principal payment date shall be equal to or less
than the amount of the applicable Term Loans scheduled to be outstanding
hereunder after such principal payment date.
"Issuing Bank" means Banque Paribas or, if Banque Paribas is not
------------
acceptable to an intended beneficiary of a Letter of Credit as the issuer of
such Letter of Credit, such other Lender which is a commercial bank as the
Borrower may designate from time to time which agrees to be the issuer of such
Letter of Credit.
"Lender" and "Lenders" means as specified in the initial paragraph of
------ -------
this Agreement. Notwithstanding anything to the contrary contained in this
Agreement, each Lender which has any Revolving Credit Loans Commitment or holds
any Revolving Credit Loans, Letter of Credit Liabilities or Bankers' Acceptance
Liabilities must be a bank resident in Canada.
"Letter of Credit" means any standby letter of credit issued by the
----------------
Issuing Bank for the account of the Borrower pursuant to the Original Supremex
Credit Agreement or this Agreement.
"Letter of Credit Agreement" means, with respect to each Letter of
--------------------------
Credit to be issued by the Issuing Bank therefor, the letter of credit
application and reimbursement agreement which such Issuing Bank requires to be
executed by the Borrower in connection with the issuance of such Letter of
Credit.
"Letter of Credit Liabilities" means, at any time, the aggregate
----------------------------
undrawn face amounts of all outstanding Letters of Credit and all unreimbursed
drawings under Letters of Credit
"Loans" means the Term Loans and the Revolving Credit Loans, and
-----
"Loan" means any of the Term Loans or the Revolving Credit Loans.
----
"Loan Documents" means this Agreement, the Notes, the Security
--------------
Documents, the Agent's Letter, the Letters of Credit, the Letter of Credit
Agreements, the Bankers' Acceptances, any Interest Rate Protection Agreement
between Mail-Well or the Borrower and any Lender and all other agreements,
documents and instruments now or hereafter executed and/or delivered pursuant to
or in connection with any of the foregoing, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Loan Party" means Holdings, Mail-Well, Wisco, Pavey, Mail-Well West,
----------
Wisco II, Supremex Holdings, GAC, Wisco III, the Borrower, Innova and each of
the Subsidiaries (other than an Unrestricted Subsidiary) of Mail-Well
(including, without limitation, each New Loan
10
<PAGE>
Party) and any other Person who is or becomes a party to any agreement, document
or instrument that Guarantees or secures payment or performance of the
Obligations or any part thereof.
"Mail-Well" means as specified in the initial paragraph of this
---------
Agreement.
"Mail-Well Acquisition Loans" means the "Acquisition Loans" as such
---------------------------
term is defined in the Mail-Well Credit Agreement.
"Mail-Well Acquisition Loans Commitment Expiration Date" means the
------------------------------------------------------
"Acquisition Loans Commitment Expiration Date" as such term is defined in the
Mail-Well Credit Agreement.
"Mail-Well Agent" means the "Agent" as such term is defined in
---------------
the Mail-Well Credit Agreement.
"Mail-Well Closing Date" means the "Closing Date" as such term is
----------------------
defined in the Mail-Well Credit Agreement.
"Mail-Well Commitments" means the "Commitments" as such term is
---------------------
defined in the Mail-Well Credit Agreement.
"Mail-Well Credit Agreement" means as specified in Recital D of
-------------------------- ---------
this Agreement.
"Mail-Well Guaranty" means the Amended and Restated Guaranty Agreement
------------------
dated the Restatement Date executed by Mail-Well in favor of the Agent for the
benefit of the Agent, the Lenders and/or the Equipment Lease Facility Lenders,
and any and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Mail-Well Indenture" means the "Borrower Indenture" as such term
-------------------
is defined in the Mail-Well Credit Agreement.
"Mail-Well Lenders" means the "Lenders" as such term is defined
-----------------
in the Mail-Well Credit Agreement.
"Mail-Well Loans" means the "Loans" as such term is defined in
---------------
the Mail-Well Credit Agreement.
"Mail-Well Loan Documents" means the "Loan Documents" as such
------------------------
term is defined in the Mail-Well Credit Agreement.
"Mail-Well Loan Party" means any "Loan Party" as such term is
--------------------
defined in the Mail-Well Credit Agreement.
"Mail-Well Notes" means the "Notes" as such term is defined in
---------------
the Mail-Well Credit Agreement.
11
<PAGE>
"Mail-Well Obligations" means the "Obligations" as such term is
---------------------
defined in the Mail-Well Credit Agreement.
"Mail-Well Revolving Credit Loans" means the "Revolving Credit Loans"
--------------------------------
as such term is defined in the Mail-Well Credit Agreement.
"Mail-Well Security Agreement" means the Third Amended and Restated
----------------------------
Security Agreement dated the Restatement Date executed by Mail-Well in favor of
the Agent for the benefit of the Agent, the Lenders, the Mail-Well Lenders
and/or the Equipment Lease Facility Lenders, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Mail-Well Subordinated Debt" means the "Borrower Subordinated Debt"
---------------------------
as such term is defined in the Mail-Well Credit Agreement.
"Mail-Well Subordinated Debt Documents" means the "Borrower
-------------------------------------
Subordinated Debt Documents" as such term is defined in the Mail-Well Credit
Agreement.
"Mail-Well Term Loans" means the "Term Loans" as such term is
--------------------
defined in the Mail-Well Credit Agreement.
"Mail-Well West" means Mail-Well West, Inc., a Delaware
--------------
corporation and a wholly-owned Subsidiary of Mail-Well.
"Material Adverse Effect" means any material adverse effect, or the
-----------------------
occurrence of any event or the existence of any condition that could reasonably
be expected to have a material adverse effect, on (a) the prospects, business or
financial condition of Holdings and its Subsidiaries, taken as a whole, or of
Holdings on an individual basis, (b) the prospects, business or financial
condition of Mail-Well and its Subsidiaries, taken as a whole, or of Mail-Well
or the Borrower on an individual basis, (c) the ability of Holdings, Mail-Well,
the Borrower or its Subsidiaries to pay and perform the Obligations, the Mail-
Well Obligations or the Equipment Lease Facility Obligations when due, or (d)
the validity or enforceability of any of the Loan Documents or the Mail-Well
Loan Documents, any Lien created or purported to be created by any of the Loan
Documents or the Mail-Well Loan Documents or the rights and remedies of the
Agent or the Lenders under any of the Loan Documents or the Mail-Well Loan
Documents.
"Maturity Date" means the Term Loans A Maturity Date, the Term Loans B
-------------
Maturity Date or the Revolving Credit Loans Maturity Date, as applicable.
"Maximum Rate" means, with respect to any Lender, the maximum non-
------------
usurious interest rate, if any, that any time or from time to time may be
contracted for, taken, reserved, charged or received with respect to the
particular Obligations as to which such rate is to be determined, payable to
such Lender pursuant to this Agreement or any other Loan Document, under laws
applicable to such Lender which are presently in effect or, to the extent
allowed by law, under such applicable laws which may hereafter be in effect and
which allow a higher maximum non-usurious interest rate than applicable laws now
allow. The Maximum Rate shall be calculated
12
<PAGE>
in a manner that takes into account any and all fees, payments and other charges
in respect of the Loan Documents that constitute interest under applicable law.
Each change in any interest rate provided for herein based upon the Maximum Rate
resulting from a change in the Maximum Rate shall take effect without notice to
Mail-Well or the Borrower at the time of such change in the Maximum Rate. For
purposes of determining the Maximum Rate under Texas law, the applicable rate
ceiling shall be the indicated rate ceiling described in, and computed in
accordance with, Article 5069-1.04, Vernon's Texas Civil Statutes; provided,
--------
however, that, to the extent permitted by applicable law, the Agent shall have
- -------
the right to change the applicable rate ceiling from time to time in accordance
with applicable law.
"Mortgaged Properties" means, collectively, the "Mortgaged Properties"
--------------------
as such term is defined in the Mail-Well Credit Agreement and the fee-owned
Properties and leasehold interests in the Properties of the Borrower and its
Subsidiaries listed on Schedule 1.1(a) hereof which are or are to be subject to
---------------
the Mortgages, and any such after-acquired Properties which become subject to a
Mortgage pursuant to Section 5.4 hereof.
-----------
"Mortgages" means each deed of trust, leasehold deed of trust,
---------
mortgage, debenture, leasehold mortgage, collateral assignment of leases or
other real estate security document executed and delivered pursuant to or in
connection with the Original Supremex Credit Agreement or this Agreement
(including, without limitation, any such agreement or document executed pursuant
to Section 5.4), by Mail-Well, the Borrower or any other Loan Party or Mail-Well
-----------
Loan Party in favor of the Agent for the benefit of the Agent, the Lenders, the
Mail-Well Lenders and/or the Equipment Lease Facility Lenders with respect to
any Mortgaged Property, and any and all amendments, modifications, supplements,
renewals or restatements thereof (including, without limitation, any and all
modification agreements relating thereto).
"MTRC" means as specified in Recital E of this Agreement.
---- ---------
"Net Proceeds" means, with respect to any Equity Issuance, (a) the
------------
gross amount of cash or cash equivalents received from such Equity Issuance,
exclusive of the proceeds of sales of Capital Stock of Holdings to employees or
directors of Holdings or its Subsidiaries in connection with the provision of
compensation or benefits to such employees or directors for their activities as
employees or directors, respectively, minus (b) the reasonable out-of-pocket
-----
costs and expenses incurred by the issuer in connection with such Equity
Issuance (including reasonable underwriting fees paid to a Person other than an
Affiliate of Mail-Well) excluding any fees or expenses paid to an Affiliate of
Mail-Well.
"Notes" means the Term Loans A Notes, the Term Loans B Notes and the
-----
Revolving Credit Loans Notes, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof and all substitutions
therefor (including promissory notes issued by the Borrower pursuant to Section
-------
13.8), and "Note" means any of such promissory notes.
- ---- ----
"Obligations" means any and all (a) indebtedness, liabilities and
-----------
obligations of the Loan Parties, or any of them, to the Agent, the Issuing Bank
and the Lenders, or any of them, evidenced by and/or arising pursuant to any of
the Loan Documents, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated,
13
<PAGE>
joint, several or joint and several, including, without limitation, (i) the
obligations of the Loan Parties to repay the Loans, the Reimbursement
Obligations and the Bankers' Acceptances, to pay interest on the Loans, the
Reimbursement Obligations and the Bankers' Acceptances (including, without
limitation, interest accruing after any, if any, bankruptcy, insolvency,
reorganization or other similar filing) and to pay all fees, indemnities, costs
and expenses (including attorneys' fees) provided for in the Loan Documents and
(ii) the indebtedness constituting the Loans, the Reimbursement Obligations and
the Bankers' Acceptances and such fees, indemnities, costs and expenses, and (b)
indebtedness, liabilities and obligations of the Borrower under any and all
Interest Rate Protection Agreements that it may enter into with any Lender.
"Original Supremex Lenders" means the parties to the Original Supremex
-------------------------
Credit Agreement who were "Lenders" as defined therein.
"Original Supremex Credit Agreement" means as specified in
----------------------------------
Recital C of this Agreement.
- ---------
"Outstanding Credit" means, at any particular time, the sum of (a) the
------------------
outstanding principal amount of the Revolving Credit Loans (inclusive of the
Swingline Advances), (b) the Letter of Credit Liabilities, and (c) the Bankers'
Acceptance Liabilities.
"Pavey" means Pavey Envelope and Tag Corp., a New Jersey
-----
corporation and a wholly-owned Subsidiary of Mail-Well.
"Payor" means as specified in Section 3.4.
----- -----------
"Permitted Liens" means:
---------------
(a) Liens disclosed on Schedule 1.1(b) hereto;
---------------
(b) Liens securing the Obligations in favor of the Agent (for the
benefit of the Agent and the Lenders) pursuant to the Loan Documents,
Liens securing the Mail-Well Obligations in favor of Banque Paribas as
agent (for the benefit of itself and the Mail-Well Lenders) pursuant
to the Mail-Well Loan Documents and Liens securing the Equipment Lease
Facility Guaranty in favor of the Equipment Lease Facility Lenders
pursuant to the Mail-Well Loan Documents and the Equipment Lease
Facility Documents;
(c) Encumbrances consisting of easements, zoning restrictions or
other restrictions on the use of real Property or, as to the real
Property referred to in clause (ii) below only, imperfections to title
-----------
that (i) as to any Mortgaged Property, do not (individually or in the
aggregate) materially affect the value of the Property encumbered
thereby or materially impair the ability of Mail-Well or any of its
Subsidiaries to use such Property in its businesses, and none of which
is violated in any material respect by existing or proposed structures
or land use, and (ii) as to any real Property other than Mortgaged
Property, were entered into in the ordinary course of business and
could not have a Material Adverse Effect;
14
<PAGE>
(d) Liens for taxes, assessments or other governmental charges
that are not delinquent or which are being contested in good faith and for
which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords or other similar statutory Liens securing obligations that are
not yet due and are incurred in the ordinary course of business or which
are being contested in good faith and for which adequate reserves have been
established;
(f) Liens resulting from good faith deposits to secure payment of
workmen's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, contracts (other than for payment of Debt) or leases, all in the
ordinary course of business;
(g) Purchase-money Liens on any Property hereafter acquired or
the assumption after the Closing Date of any Lien on Property existing at
the time of such acquisition (and not created in contemplation of such
acquisition), or a Lien incurred after the Closing Date in connection with
any conditional sale or other title retention agreement or Capital Lease
Obligation; provided that:
--------
(i) any Property subject to the foregoing is acquired by
Mail-Well or any of its Subsidiaries in the ordinary course of its
respective business and the Lien on the Property attaches concurrently
or within 90 days after the acquisition thereof;
(ii) the Debt secured by any Lien so created, assumed or
existing shall not exceed the lesser of the cost or fair market value
at the time of acquisition of the Property covered thereby;
(iii) each such Lien shall attach only to the Property so
acquired and the proceeds thereof; and
(iv) the Debt secured by all such Liens shall not exceed
$12,000,000 at any time outstanding in the aggregate;
(h) Easements, rights-of-way, restrictions and other Liens and
imperfections to title that are approved by the Agent and are listed on
Exhibit B to any Mortgage; and
---------
(i) Any extension, renewal or replacement of any of the foregoing,
provided that Liens permitted hereunder shall not be extended or spread to
cover any additional indebtedness or Property;
provided, however, that (A) none of the Permitted Liens (except those in favor
- -------- -------
of the Agent) may attach or relate to the Capital Stock of or any other
ownership interest in Mail-Well or any Subsidiary of Mail-Well, (B) none of the
Permitted Liens referred to in clause (a) preceding may have a priority equal or
----------
prior to the Liens in favor of the Agent as security for the Obligations,
15
<PAGE>
and (c) none of the Permitted Liens, other than the Permitted Liens referred to
in clauses (b) and (d) preceding, may attach or relate to any accounts or
----------- ---
inventory of any Loan Party.
"PNG" means PNG Products Inc. Pac National Group and PNG Enveloppe
---
Internationale Inc.
"PNG Acquisition" means the acquisition of substantially all of the assets
---------------
of PNG by the Borrower pursuant to the PNG Acquisition Agreement.
"PNG Acquisition Agreement" means that certain Asset Purchase Agreement
-------------------------
dated as of October 15, 1996, among the Borrower and PNG.
"PNG Acquisition Date" means the date (if any) upon which the PNG
--------------------
Acquisition shall be consummated by the parties thereto in accordance with the
PNG Acquisition Documents and this Agreement, which date must be prior to the
Term Loans B Commitment Expiration Date.
"PNG Acquisition Documents" means the PNG Acquisition Agreement and each
-------------------------
other material agreement, document or instrument executed or delivered in
connection with or pursuant to the PNG Acquisition.
"Prime Rate" means, at any time, (a) with respect to the Obligations other
----------
than the Revolving Credit Loans, the Reimbursement Obligations and the Bankers'
Acceptances, the rate of interest per annum then most recently established by
The Chase Manhattan Bank as its highest commercial prime rate then in effect,
which rate may not be the lowest rate of interest charged by The Chase Manhattan
Bank to its commercial borrowers and (b) with respect to the Revolving Credit
Loans, the Reimbursement Obligations and the Bankers' Acceptances, the rate of
interest per annum determined by the Agent to be the greater of (i) the rate of
interest per annum then most recently established by Paribas Bank of Canada as
its highest commercial reference rate then in effect for determining interest
rates on commercial loans in Cdn. Dollars made in Canada by Paribas Bank of
Canada or (ii) the rate of interest per annum equal to the CDOR Rate. Each
change in any interest rate provided for herein based upon the Prime Rate
resulting from a change in the Prime Rate shall take effect without notice to
the Borrower at the time of such change in the Prime Rate.
"Prime Rate Loans" means Loans that bear interest at rates based upon the
----------------
Prime Rate.
"Principal Office" means the principal office of the Agent in Houston,
----------------
Texas, presently located at 1200 Smith Street, Suite 3100, Houston, Texas.
"Property" means property of all kinds, real, personal or mixed, tangible
--------
or intangible (including, without limitation, all rights relating thereto),
whether owned or acquired on or after the Closing Date.
"Quarterly Date" means the last day of each March, June, September and
--------------
December of each year, the first of which shall be the first such day after the
Closing Date.
16
<PAGE>
"Reference Lender" means Banque Paribas.
----------------
"Register" means as specified in Section 13.8(d).
-------- ---------------
"Registered Note" means as specified in Section 2.2(b).
--------------- --------------
"Registered Note Register" means as specified in Section 13.8(h).
------------------------ ---------------
"Regulatory Change" means, with respect to any Lender, any change after the
-----------------
Closing Date in any U.S. federal or state, Canadian federal or provincial or
foreign laws or regulations (including Regulation D) or the adoption or making
after such date of any interpretations, directives or requests applying to a
class of lenders including such Lender of or under any U.S. federal or state,
Canadian federal or provincial or foreign laws or regulations (whether or not
having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.
"Reimbursement Obligation" means the obligation of the Borrower to
------------------------
reimburse the Issuing Bank for any drawing under a Letter of Credit.
"Related Transactions" means, collectively, (a) the Supremex Acquisition,
--------------------
(b) the execution and delivery of the Related Transactions Documents, (c) the
PNG Acquisition, and (d) the payment of all fees, costs and expenses associated
with the foregoing.
"Related Transactions Documents" means the Supremex Acquisition Documents,
------------------------------
the PNG Acquisition Documents and all other agreements, documents and
instruments executed and/or delivered pursuant to or in connection with any of
the foregoing.
"Required Lenders" means, at any date of determination, Lenders having in
----------------
the aggregate at least 66 2/3% (in equivalent Dollar amount as to any one or
more of the following) of the sum of the aggregate outstanding Revolving Credit
Loans Commitments (or, if the Revolving Credit Loans Commitments have terminated
or expired, the aggregate outstanding principal amount of the Revolving Credit
Loans, the aggregate Letter of Credit Liabilities and the aggregate Bankers'
Acceptance Liabilities), plus the aggregate outstanding principal amount of the
----
Term Loans A, plus the aggregate outstanding Term Loans B Commitments, plus the
---- ----
aggregate outstanding principal amount of the Term Loans B.
"Required Payment" means as specified in Section 3.4.
---------------- -----------
"Reserve Requirement" means, for any Eurodollar Loan of any Lender for any
-------------------
Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
Lender by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which the
17
<PAGE>
Eurodollar Rate or the Adjusted Eurodollar Rate is to be determined or (b) any
category of extensions of credit or other assets which include Eurodollar Loans.
"Restatement Date" means November 15, 1996, the date of this Agreement.
----------------
"Revolving Credit Lender" means, as of any date of determination, a Lender
-----------------------
which has a Revolving Credit Loans Commitment.
"Revolving Credit Loans" means as specified in Section 2.1(c).
---------------------- --------------
"Revolving Credit Loans Commitment" means, as to any Lender, the obligation
---------------------------------
of such Lender to make or continue Revolving Credit Loans, to incur or
participate in Letter of Credit Liabilities and to create Bankers' Acceptances
hereunder in an aggregate principal amount at any one time outstanding up to but
not exceeding the amount set forth opposite the name of such Lender on the
signature pages hereto under the heading "Revolving Credit Loans Commitment" or,
if such Lender is a party to an Assignment and Acceptance, the amount set forth
in the most recent Assignment and Acceptance of such Lender, as the same may be
reduced or terminated pursuant to Section 2.13 or 11.2, and "Revolving Credit
------------ ---- ----------------
Loans Commitments" means such obligations of all Lenders. As of the Restatement
- -----------------
Date, the aggregate principal amount of the Revolving Credit Loans Commitments
is Cdn. $10,000,000. Each Lender which has a Revolving Credit Loans Commitment
must be a bank resident in Canada.
"Revolving Credit Loans Notes" means the promissory notes made by the
----------------------------
Borrower evidencing the Revolving Credit Loans, in the form of Exhibit B hereto,
---------
and also includes such promissory notes issued in registered form pursuant to
Section 2.2(b).
- --------------
"Revolving Credit Loans Maturity Date" means March 31, 2003.
------------------------------------
"Second Restated Agreement" means as specified in Recital B of this
------------------------- ---------
Agreement.
"Security Documents" means the Mail-Well Security Agreement, the Borrower
------------------
Security Agreement, the Mortgages, the Holdings Security Agreement, the Holdings
Guaranty, the Mail-Well Guaranty, the Subsidiary Security Agreements and the
Subsidiary Guaranties, as they may be amended, modified, supplemented, renewed,
extended or restated from time to time, and any and all other agreements, deeds
of trust, mortgages, chattel mortgages, security agreements, pledges,
guaranties, assignments of proceeds, assignments of income, assignments of
contract rights, assignments of partnership interests, assignments of royalty
interests, assignments of performance or other collateral assignments,
completion or surety bonds, standby agreements, subordination agreements,
undertakings and other agreements, documents, instruments and financing
statements now or hereafter executed and/or delivered by any Loan Party in
connection with or as security or assurance for the payment or performance of
the Obligations or any part thereof.
"Subsidiary Guaranty" means the Guaranty Agreement or an amendment or
-------------------
restatement thereof, as applicable, dated the Restatement Date executed by each
Subsidiary of Mail-Well, other than the Borrower, MTRC and Classic, in favor of
the Agent for the benefit of the Agent,
18
<PAGE>
the Lenders and/or the Mail-Well Lenders, and any guaranty executed pursuant to
Section 5.3 hereof, and any and all amendments, modifications, supplements,
- -----------
renewals, extensions or restatements thereof.
"Subsidiary Security Agreement" means the Security Agreement or an
-----------------------------
amendment or restatement thereof, as applicable, dated the Restatement Date
executed by each Subsidiary of Mail-Well, other than the Borrower, Classic and
MTRC, and, with respect to Supremex Holdings, the Securities Pledge Agreement
executed by Supremex Holdings, in favor of the Agent for the benefit of the
Agent, the Lenders, the Mail-Well Lenders and/or the Equipment Lease Facility
Lenders, and any security agreement executed pursuant to Section 5.3 hereof, and
-----------
any and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Supremex Acquisition" means the acquisition by Supremex Acquisition
--------------------
Company of all of the issued and outstanding Capital Stock, and certain stock
options relating to Capital Stock, of Supremex Target pursuant to the Supremex
Acquisition Agreement and the acquisition by Supremex Acquisition Company of the
remaining outstanding stock options relating to the Capital Stock of Supremex
Target pursuant to the Supremex Option Purchase Agreements.
"Supremex Acquisition Agreement" means the Share Purchase Agreement dated
------------------------------
as of July 20, 1995, among Supremex Acquisition Company, Supremex Target, the
shareholders of Supremex Target, the holders of stock options with respect to
the Capital Stock of Supremex Target and the agents named therein and the
unsecured Guaranty dated the Closing Date executed by Mail-Well pursuant to
which it guarantees the obligations of Supremex Acquisition Company under such
agreement.
"Supremex Acquisition Company" means 3159051 Canada Inc., a corporation
----------------------------
incorporated under the Canada Business Corporations Act and (prior to the
Supremex Amalgamation) a wholly-owned Subsidiary of Supremex Holdings.
"Supremex Acquisition Documents" means the Supremex Acquisition Agreement,
------------------------------
the Supremex Option Purchase Agreements and each other material agreement,
document or instrument executed or delivered in connection with or pursuant to
the Supremex Acquisition Agreement or the Supremex Option Purchase Agreements.
"Supremex Amalgamation" means the amalgamation of Supremex Acquisition
---------------------
Company, Supremex Target and Innova into a corporation incorporated under the
Canadian Business Corporations Act under the name "Supremex Inc."
"Supremex Amalgamation Agreement" means that certain Amalgamation Agreement
-------------------------------
dated the Closing Date by and among Supremex Acquisition Company, Supremex
Target and Innova.
"Supremex Amalgamation Documents" means the Supremex Amalgamation Agreement
-------------------------------
and each other agreement, document or instrument executed or delivered in
connection with or pursuant to the Supremex Amalgamation.
"Supremex Holdings" means Mail-Well Canada Holdings, Inc., a Delaware
-----------------
corporation.
19
<PAGE>
"Supremex Option Purchase Agreements" means the six Option Purchase
-----------------------------------
Agreements dated July 20, 1995, between Supremex Acquisition Company and certain
employees of Supremex Target who held certain stock options granted by Supremex
Target.
"Supremex Target" means Supremex Inc., a corporation incorporated under the
---------------
Canada Business Corporations Act.
"Swingline Advances" means as specified in Section 2.1(c).
------------------ --------------
"Term Loans" means the Term Loans A and the Term Loans B.
----------
"Term Loans A" means as specified in Section 2.1(a).
------------ --------------
"Term Loans A Commitment" means, as to any Lender, the obligation of such
-----------------------
Lender to make or continue Term Loans A hereunder in an aggregate principal
amount up to but not exceeding the amount set forth opposite the name of such
Lender on the signature pages hereto under the heading "Term Loans A
Commitment", as the same may be terminated pursuant to Section 11.2, and "Term
------------ ----
Loans A Commitments" means such obligations of all Lenders. As of the
- -------------------
Restatement Date, the aggregate principal amount of the Term Loans A Commitments
is $45,000,000.
"Term Loans A Maturity Date" means March 31, 2003.
--------------------------
"Term Loans A Notes" means the promissory notes made by the Borrower
------------------
evidencing the Term Loans A, in the form of Exhibit C hereto, and also includes
---------
such promissory notes issued in registered form pursuant to Section 2.2(b).
--------------
"Term Loans B" means as specified in Section 2.1(b).
------------ --------------
"Term Loans B Commitment" means, as to any Lender, the obligation of such
-----------------------
Lender to make or continue Term Loans B hereunder in an aggregate principal
amount up to but not exceeding the amount set forth opposite the name of such
Lender on the signature pages hereto under the heading "Term Loans B
Commitment", as the same may be terminated pursuant to Section 11.2, and "Term
------------ ----
Loans B Commitments" means such obligations of all Lenders. As of the
- -------------------
Restatement Date, the aggregate principal amount of the Term Loans B Commitments
is $20,000,000.
"Term Loans B Commitment Expiration Date" means December 31, 1996.
---------------------------------------
"Term Loans B Funding Date" means the date (if any) upon which the Term
-------------------------
Loans B are advanced to the Borrower in accordance with Section 2.1(b),which
--------------
date shall be concurrently with the PNG Acquisition Date.
"Term Loans B Maturity Date" means March 31, 2003.
--------------------------
20
<PAGE>
"Term Loans B Notes" means the promissory notes made by the Borrower
------------------
evidencing the Term Loans B, in the form of Exhibit D hereto, and also includes
---------
such promissory notes issued in registered form pursuant to Section 2.2(b).
--------------
"Type" means any type of Loan (i.e., a Prime Rate Loan or Eurodollar Loan).
----
"UCP" means as specified in Section 2.14(b).
--- ---------------
"Wisco" means WISCO Envelope Corp., a Tennessee corporation and a wholly-
-----
owned Subsidiary of Mail-Well.
"Wisco II" means Wisco II, L.L.C., a Delaware limited liability company and
--------
a Wholly-Owned Subsidiary of Mail-Well.
"Wisco III" means Wisco III, L.L.C., a Delaware limited liability company
---------
and a Wholly-Owned Subsidiary of Mail-Well.
Section 1.2 Other Definitional Provisions. All definitions contained in
-----------------------------
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Terms
used herein that are defined in the UCC, unless otherwise defined herein, shall
have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations.
-----------------------------------
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP consistent with such accounting principles
applied in the preparation of the audited financial statements referred to in
Section 7.2(a). All financial information delivered to the Agent pursuant to
- --------------
Section 8.1 of the Mail-Well Credit Agreement shall be prepared in accordance
with GAAP applied on a basis consistent with such accounting principles applied
in the preparation of the audited financial statements referred to in Section
-------
7.2(a) or in accordance with Section 8.7 of the Mail-Well Credit Agreement.
- ------
(b) The Borrower shall deliver to the Lenders at the same time as the
delivery of any annual, quarterly or monthly financial statement under Section
8.1 of the Mail-Well Credit Agreement (i) a description, in reasonable detail,
of any material variation between the application of GAAP employed in the
preparation of the next preceding annual, quarterly or monthly financial
statements as to which no objection has been made in accordance with the last
sentence of Section 1.3 (a) preceding and (ii) reasonable estimates of the
---------------
difference between such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance with
the covenants set forth in this Agreement (including Article 10 of the Mail-Well
Credit Agreement), neither Mail-Well nor the Borrower will change the last day
of its fiscal year from within six days before
21
<PAGE>
or after December 31, or the last days of the first three fiscal quarters in
each of its fiscal years from within six days before or after March 31, June 30
and September 30, respectively, in each case as exists as of the Restatement
Date, except to fix the last day of the first, second and third fiscal quarters
of Mail-Well at March 31, June 30 and September 30, respectively.
Section 1.4 Financial Covenants and Reporting. The financial covenants
---------------------------------
contained in Article 10 of the Mail-Well Credit Agreement shall be calculated in
accordance with Section 1.4 of the Mail-Well Credit Agreement.
ARTICLE 2
Loans
-----
Section 2.1 Loans and Commitments.
---------------------
(a) (i) Prior Term Loans A. Pursuant to Section 2.1(a) of the Original
------------------
Supremex Credit Agreement and subject to the terms and conditions of the
Original Supremex Credit Agreement and after giving effect to Section
-------
13.24, each Lender that now or hereafter holds a Term Loans A Commitment or
-----
its predecessor in interest made a term loan to the Borrower in a single
disbursement on the Closing Date in an amount equal to its pro rata share
(based upon its commitment percentage thereof) of $25,000,000.
(ii) Prior Term Loans B. Pursuant to Section 2.1(b) of the Original
------------------
Supremex Credit Agreement and subject to the terms and conditions of the
Original Supremex Credit Agreement and after giving effect to Section
-------
13.24, each Lender that now or hereafter holds a Term Loans A Commitment or
its predecessor in interest made a term loan to the Borrower in a single
disbursement on the Closing Date in an amount equal to its pro rata share
(based upon its commitment percentage thereof) of $25,000,000.
(iii) Term Loans A. Such term loans referred to in subsection (i)
------------ --------------
and (ii) above of this Section 2.1(a) made by the Lenders that now or
---- --------------
hereafter hold Term Loans A Commitments or their predecessor in interest to
the Borrower, i.e., the "Term Loans A" and the "Term Loans B" made under
the Original Supremex Credit Agreement, are hereinafter collectively called
the "Term Loans A". The Term Loans A Commitments have previously
------------
terminated. As of the Restatement Date and after giving effect to the
prepayments to be made by the Borrower in accordance with Section 2.7(f),
--------------
the aggregate unpaid principal amount of the Term Loans A made pursuant to
the Original Supremex Credit Agreement is $40,000,000, which amount shall
be deemed to be outstanding as Term Loans A under this Agreement.
(b) Term Loans B. Subject to the terms and conditions of this Agreement,
------------
each Lender that now or hereafter holds a Term Loans B Commitment severally
agrees to make a term loan to the Borrower in a single disbursement on the Term
Loans B Funding Date in an amount not to exceed its Term Loans B Commitment.
(Such term loans referred to in this Section 2.1(b) hereafter made by the
--------------
Lenders that now or hereafter hold Term Loans B Commitments to the Borrower on
the Term Loans B Funding Date are hereinafter collectively called the "Term
----
Loans
- -----
22
<PAGE>
B".) The Term Loans B Commitments shall terminate upon the earlier to
- -----
occur of (i) the making of the Term Loans B or (ii) the Term Loans B Commitment
Expiration Date.
(c) Revolving Credit Loans. Pursuant to Section 2.1(c) of the Original
----------------------
Supremex Credit Agreement and subject to the terms and conditions of the
Original Supremex Credit Agreement and after giving effect to Section 13.24,
-------------
each Lender that now or hereafter holds a Revolving Credit Loans Commitment or
its predecessor in interest made one or more revolving credit loans to the
Borrower from time to time from and including and after the Closing Date up to
but not exceeding an amount equal to (in aggregate amount at any time
outstanding) its pro rata share (based upon its commitment percentage thereof)
of Cdn. $20,000,000. Subject to the terms and conditions of this Agreement,
each such Lender severally agrees to make one or more revolving credit loans in
Cdn. Dollars to the Borrower from time to time from and including the
Restatement Date to but excluding the Revolving Credit Loans Maturity Date up to
but not exceeding the amount of such Lender's Revolving Credit Loans Commitment
as then in effect; provided, however, that, for purposes of determining such
-------- -------
Lender's Revolving Credit Loans Commitment at any time for purposes of this
Section 2.1(c), an amount equal to the result of such Lender's Commitment
- --------------
Percentage of its Revolving Credit Loans Commitment multiplied by the aggregate
principal amount of the Swingline Advances outstanding at such time shall be
deemed to be outstanding and advanced by such Lender as Revolving Credit Loans.
(Such revolving credit loans referred to in this Section 2.1(c) made by the
--------------
Lenders that now or hereafter hold Revolving Credit Loans Commitments to the
Borrower from and including and after the Closing Date and now or hereafter made
by such Lenders to the Borrower from and including and after the Restatement
Date, inclusive of the Swingline Advances previously, now or hereafter made by
Paribas Bank of Canada and, except as otherwise provided herein, inclusive of
the borrowings previously, now or hereafter made by the Borrower under Section
-------
2.15 in the form of Bankers' Acceptances, are hereinafter collectively called
- ----
the "Revolving Credit Loans".) Subject to the foregoing limitations and the
----------------------
other terms and conditions of this Agreement, the Borrower may borrow, repay and
reborrow the Revolving Credit Loans hereunder prior to the Revolving Credit
Loans Maturity Date. Notwithstanding anything to the contrary contained in this
Agreement, the Borrower may from time to time request, and Paribas Bank of
Canada may at its discretion from time to time advance (but shall in no event be
obligated to advance), Revolving Credit Loans which are to be funded solely by
Paribas Bank of Canada (the "Swingline Advances"); provided, however, that (i)
------------------ -------- -------
the aggregate principal amount of the Swingline Advances outstanding at any time
shall not exceed Cdn. $2,000,000 and the aggregate principal amount of the
Revolving Credit Loans outstanding at any time (inclusive of the Swingline
Advances) shall not exceed the Revolving Credit Loans Commitments, (ii) all
Swingline Advances shall be and shall remain as Prime Rate Loans and (iii)
Paribas Bank of Canada shall give the Agent and each Lender written notice of
the aggregate outstanding principal amount of the Swingline Advances on a
monthly basis. Furthermore, upon one Business Day's prior written notice given
by Paribas Bank of Canada to the Agent, the Borrower and the other Lenders at
any time and from time to time (including, without limitation, at any time
following the occurrence of a Default or an Event of Default), each Lender
(including, without limitation, Paribas Bank of Canada) severally agrees, as
provided in the second sentence of this Section 2.1(c), and notwithstanding
--------------
anything to the contrary contained in this Agreement, any Default or Event of
Default or the inability or failure of Mail-Well, the Borrower or any of their
respective Subsidiaries to satisfy any condition precedent to funding any of the
Loans contained in Article 6 (which conditions precedent shall not
---------
23
<PAGE>
apply to this sentence), to make a Revolving Credit Loan, in the form of a Prime
Rate Loan, in an amount equal to its Commitment Percentage of the Revolving
Credit Loans Commitments of the aggregate principal amount of the Swingline
Advances then outstanding, and the proceeds of such Revolving Credit Loans shall
be promptly paid by the Agent to Paribas Bank of Canada and applied as a
repayment of the aggregate principal amount of the Swingline Advances then
outstanding. As of the Restatement Date, the aggregate unpaid principal amount
of the Revolving Credit Loans, Swingline Advances and Bankers' Acceptances made
or accepted pursuant to the Original Supremex Credit Agreement is $_________,
$__________ and $_________, respectively, and the aggregate outstanding
principal amount of the Letters of Credit issued pursuant to the Original
Supremex Credit Agreement is $_____________, all of which amounts shall be
deemed to be outstanding as Revolving Credit Loans, Swingline Advances, Bankers'
Acceptances and Letters of Credit, respectively, under this Agreement.
(d) Borrowing, Continuation and Conversion of Loans. Subject to the terms
-----------------------------------------------
and conditions of this Agreement, the Borrower may borrow the Loans as Prime
Rate Loans or Eurodollar Loans and, until the applicable Maturity Date, the
Borrower may Continue Eurodollar Loans or Convert Loans of one Type into Loans
of the other Type; provided; however, that notwithstanding anything to the
-------- -------
contrary contained in this Agreement or any other Loan Document, the Borrower
may borrow the Revolving Credit Loans only as Prime Rate Loans or Bankers'
Acceptances and may not Convert Prime Rate Loans consisting of Revolving Credit
Loans into Eurodollar Loans.
(e) Lending Offices. Loans of each Type made by each Lender shall be made
---------------
and maintained at such Lender's Applicable Lending Office for Loans of such
Type.
Section 2.2 Notes.
-----
(a) Unregistered Notes. The Term Loans A made by each Lender shall be
------------------
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit C hereto, dated the Restatement Date, payable to the order of such
---------
Lender in a principal amount equal to its Term Loans A Commitment as originally
in effect and otherwise duly completed. The Term Loans B made by each Lender
shall be evidenced by a single promissory note of the Borrower in substantially
the form of Exhibit D hereto, dated the Restatement Date, payable to the order
---------
of such Lender in a principal amount equal to its Term Loans B Commitment as
originally in effect and otherwise duly completed. The Revolving Credit Loans
made by each Lender shall be evidenced by a single promissory note of the
Borrower in substantially the form of Exhibit B hereto, dated the Restatement
---------
Date, payable to the order of such Lender in a principal amount equal to its
Revolving Credit Loans Commitment as originally in effect and otherwise duly
completed. Each Lender is hereby authorized by the Borrower to endorse on the
schedule (or a continuation thereof) attached to each Note of such Lender, to
the extent applicable, the date, amount and Type of and the Interest Period for
each Loan made by such Lender to the Borrower hereunder (or under the Original
Supremex Credit Agreement) and the amount of each payment or prepayment of
principal of such Loan received by such Lender, provided that any failure by
such Lender to make any such endorsement shall not affect the obligations of the
Borrower under such Note or this Agreement in respect of such Loan.
24
<PAGE>
(b) Registered Notes. Any Lender that is not a U.S. Person and that could
----------------
become completely exempt from withholding of U.S. Taxes in respect of payment of
any Obligations due to such Lender hereunder relating to any of its Term Loans
if such Term Loans were in registered form for U.S. Federal income tax purposes
may request the Borrower (through the Agent), and the Borrower agrees thereupon,
to exchange such Lender's Note evidencing its Term Loans for a promissory note
registered as provided in Section 13.8(h) hereof (a "Registered Note").
--------------- ---------------
Registered Notes may not be exchanged for Notes that are not in registered form.
Section 2.3 Repayment of Loans.
------------------
(a) The Borrower shall pay to the Agent for the account of each applicable
Lender the outstanding principal amount of the Term Loans A (and the outstanding
principal amount of the Term Loans A shall be due and payable) in 26
installments (aggregating $45,000,000 in principal amount) in the following
amounts on the following dates:
<TABLE>
<CAPTION>
Payment Date Principal Installment
------------ ---------------------
<S> <C>
December 31, 1996 $ 562,500
March 31, 1997 $ 562,500
June 30, 1997 $ 562,500
September 30, 1997 $ 562,500
December 31, 1997 $ 562,500
March 31, 1998 $ 562,500
June 30, 1998 $ 562,500
September 30, 1998 $ 562,500
December 31, 1998 $ 562,500
March 31, 1999 $ 562,500
June 30, 1999 $ 562,500
September 30, 1999 $ 562,500
December 31, 1999 $ 562,500
March 31, 2000 $ 562,500
June 30, 2000 $ 562,500
September 30, 2000 $ 562,500
December 31, 2000 $ 562,500
March 31, 2001 $ 562,500
June 30, 2001 $ 562,500
September 30, 2001 $ 562,500
December 31, 2001 $5,625,000
March 31, 2002 $5,625,000
June 30, 2002 $5,625,000
September 30, 2002 $5,625,000
December 31, 2002 $5,625,000
March 31, 2003 $5,625,000
</TABLE>
In addition, the Borrower shall pay to the Agent for the account of each
applicable Lender all outstanding principal of the Term Loans A (and all
outstanding principal of the Term Loans A shall be due and payable) on the Term
Loans A Maturity Date.
25
<PAGE>
(b) The Borrower shall pay to the Agent for the account of each applicable
Lender the principal amount of the Term Loans B outstanding as of the Term Loans
B Commitment Expiration Date (and the principal amount of the Term Loans B
outstanding as of the Term Loans B Commitment Expiration Date shall be due and
payable) in 26 installments (aggregating in principal amount the aggregate
principal amount of the Term Loans B outstanding as of the Term Loans B
Commitment Expiration Date) payable on the following dates, each of which
installments shall be in an amount equal to the product of (i) the aggregate
principal amount of the Term Loans B outstanding as of the Term Loans B
Commitment Expiration Date multiplied by (ii) the fraction set forth opposite
-------------
such date in the following table:
<TABLE>
<CAPTION>
Payment Date Principal Installment
------------ ---------------------
<S> <C>
December 31, 1996 0.0125
March 31, 1997 0.0125
June 30, 1997 0.0125
September 30, 1997 0.0125
December 31, 1997 0.0125
March 31, 1998 0.0125
June 30, 1998 0.0125
September 30, 1998 0.0125
December 31, 1998 0.0125
March 31, 1999 0.0125
June 30, 1999 0.0125
September 30, 1999 0.0125
December 31, 1999 0.0125
March 31, 2000 0.0125
June 30, 2000 0.0125
September 30, 2000 0.0125
December 31, 2000 0.0125
March 31, 2001 0.0125
June 30, 2001 0.0125
September 30, 2001 0.0125
December 31, 2001 0.125
March 31, 2002 0.125
June 30, 2002 0.125
September 30, 2002 0.125
December 31, 2002 0.125
March 31, 2003 0.125
</TABLE>
In addition, the Borrower shall pay to the Agent for the account of each
applicable Lender all outstanding principal of the Term Loans B (and all
outstanding principal of the Term Loans B shall be due and payable) on the Term
Loans B Maturity Date.
(c) The Borrower shall pay to the Agent for the account of each applicable
Lender the outstanding principal of the Revolving Credit Loans (and the
outstanding principal of the Revolving Credit Loans shall be due and payable) on
the Revolving Credit Loans Maturity Date.
26
<PAGE>
Section 2.4 Interest.
--------
(a) Interest Rate. The Borrower shall pay to the Agent for the account of
-------------
each Lender interest on the unpaid principal amount of each Loan made by such
Lender for the period commencing on the date of such Loan to but excluding the
date such Loan shall be paid in full, at the following rates per annum:
(i) during the periods such Loan is a Prime Rate Loan, the Prime Rate
plus the Applicable Margin; and
----
(ii) during the periods such Loan is a Eurodollar Loan, the Eurodollar
Rate plus the Applicable Margin.
----
(b) Payment Dates. The Borrower shall pay to the Agent for the
-------------
account of the Original Supremex Lenders all interest accrued to the Restatement
Date and not previously paid with respect to all "Loans", as such term is
defined in the Original Supremex Credit Agreement. In addition, accrued
interest on the Loans shall be due and payable as follows:
(i) in the case of Prime Rate Loans, on each Quarterly Date;
(ii) in the case of each Eurodollar Loan, on the last day of the
Interest Period with respect thereto and, in the case of an Interest Period
greater than three months, at three-month intervals after the first day of
such Interest Period;
(iii) upon the payment or prepayment of any Loan or the Conversion of
any Loan to a Loan of the other Type (but only on the principal amount so
paid, prepaid or Converted); and
(iv) on the Maturity Date for such Loan.
(c) Default Interest. Notwithstanding the foregoing, the Borrower
----------------
shall pay to the Agent for the account of each Lender interest at the applicable
Default Rate on any principal of any Loan made by such Lender, any Reimbursement
Obligation and (to the fullest extent permitted by law) any other amount payable
by the Borrower under this Agreement or any other Loan Document to or for the
account of such Lender, which is not paid in full when due (whether at stated
maturity, by acceleration or otherwise), for the period from and including the
due date thereof to but excluding the date the same is paid in full. Interest
payable at the Default Rate shall be payable from time to time on demand by the
Agent. Notwithstanding the foregoing, however, the Borrower shall not be
obligated to pay any interest with respect to the Loans or other Obligations in
excess of the rate specified herein prior to a Default if and to the extent that
such interest at the Default Rate is prohibited by applicable law.
Section 2.5 Borrowing Procedure. The Borrower shall give the Agent notice
-------------------
of each borrowing hereunder in accordance with Section 2.9. Not later than
-----------
11:00 a.m. (Houston, Texas time) on the date specified for each borrowing
hereunder, each Lender will make available the amount of the Loan to be made by
it on such date to the Agent, at the Principal Office, in
27
<PAGE>
immediately available funds, for the account of the Borrower. The amount so
received by the Agent shall, subject to the terms and conditions of this
Agreement, be made available to the Borrower by wire transfer of immediately
available funds to the Deposit Account no later than 1:00 p.m.
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans.
-----------------------------------------------------------
Subject to Section 2.7, the Borrower shall have the right from time to time to
-----------
prepay the Loans, to Convert all or part of a Loan of one Type into a Loan of
another Type or to Continue Eurodollar Loans; provided that: (a) the Borrower
--------
shall give the Agent notice of each such prepayment, Conversion or Continuation
as provided in Section 2.9, (b) Eurodollar Loans may only be Converted on the
-----------
last day of the Interest Period, (c) except for Conversions of Eurodollar Loans
into Prime Rate Loans, no Conversions or Continuations shall be made while a
Default has occurred and is continuing, (d) optional prepayments requested by
the Borrower to be applied to the Term Loans A or the Term Loans B shall be
applied to the Term Loans A and the Term Loans B as provided in the following
sentence, (e) a Revolving Credit Loan consisting of a Swingline Advance may not
be Converted to a Eurodollar Loan, and (f) no Conversions or Continuations of
Bankers' Acceptances shall be made prior to the scheduled maturity therefor
except with the prior written consent of the Revolving Credit Lenders, which
consent shall only be granted upon such terms and conditions, with respect to
timing, breakage costs or otherwise, as the Revolving Credit Lenders shall
determine. Optional prepayments of the Term Loans A or the Term Loans B shall
be applied to the unpaid principal amounts of the Term Loans A and the Term
Loans B pro rata in accordance with the respective unpaid principal amounts of
such Loans and shall be applied to the then remaining installments of principal
of the Term Loans A and the Term Loans B pro rata.
Section 2.7 Mandatory Prepayments.
---------------------
(a) Excess Cash Flow. Subject to Section 2.7(e), the Borrower shall,
---------------- --------------
on each Excess Cash Flow Prepayment Date, pay to the Agent, as a prepayment of
the Term Loans A and the Term Loans B, an aggregate amount equal to 50% of
Excess Cash Flow for the fiscal year of the Borrower then most recently ended,
as reflected in the audited annual financial statements of the Borrower and its
Subsidiaries for such fiscal year. Concurrently with the making of any such
payment, the Borrower shall deliver to the Agent a certificate of a Responsible
Officer of the Borrower demonstrating its calculation of the amount required to
be paid.
(b) Insurance Recovery. Subject to Section 2.7(e), the Borrower
------------------ --------------
shall, upon the receipt of any Excess Insurance Proceeds, pay (or cause to be
paid) to the Agent, as a prepayment of the Term Loans A and the Term Loans B, an
aggregate amount equal to such Excess Insurance Proceeds.
(c) Equity Issuances. Subject to Section 2.7(e), Mail-Well and/or the
---------------- --------------
Borrower (as applicable) shall, on each day that Holdings or any of its
Subsidiaries (including, without limitation, Mail-Well or the Borrower) receives
any Net Proceeds from any Equity Issuance, pay to the Agent, as a prepayment of
the Term Loans A, the Term Loans B, the Mail-Well Term Loans A and the Mail-Well
Acquisition Loans, an aggregate amount equal to 50% of the Net Proceeds from
such Equity Issuance; provided, if and to the extent that the application of any
--------
such
28
<PAGE>
prepayment (or any portion thereof) to the Term Loans would result in
noncompliance with the Canadian Five Year Rule, then such prepayment (or portion
thereof) shall be applied by Mail-Well to the Mail-Well Term Loans and the Mail-
Well Acquisition Loans and not to the Term Loans.
(d) Application of Mandatory Prepayments. All prepayments pursuant to
------------------------------------
Section 2.7(a) or 2.7(b) preceding shall be allocated to the unpaid principal
- -------------- ------
amounts of the Term Loans A and the Term Loans B pro rata in accordance with the
respective unpaid principal amounts of such Loans, and shall be applied to the
then remaining installments of principal of the Term Loans A and the Term Loans
B pro rata. All prepayments pursuant to Section 2.7(c) preceding, if such
--------------
prepayment is required to be made prior to the Mail-Well Acquisition Loans
Commitment Expiration Date, shall be allocated to the unpaid principal amounts
of the Mail-Well Term Loans and (if and to the extent that such prepayments or
any portion thereof are to be applied to the Term Loans), the Term Loans A and
Term Loans B pro rata in accordance with the respective unpaid principal amounts
of such loans until such loans have been paid in full and then shall be
allocated to the unpaid principal amount of the Mail-Well Acquisition Loans and,
if such prepayment is required to be made on or after the Mail-Well Acquisition
Loans Commitment Expiration Date, shall be allocated to the unpaid principal
amounts of the Mail-Well Term Loans and the Mail-Well Acquisition Loans and (if
and to the extent that such prepayments or any portion thereof are to be applied
to the Term Loans) the Term Loans A and the Term Loans B pro rata in accordance
with the respective unpaid principal amounts of such loans, and shall be applied
to the remaining installments of principal of such loans pro rata.
(e) Canadian Five Year Rule. Notwithstanding anything to the contrary
-----------------------
contained in this Agreement, the Borrower shall not be obligated to make any
prepayment of the principal of the Term Loans if and to the extent that such
prepayment would result in noncompliance with the Canadian Five Year Rule;
provided, however, that the aggregate amount which would be required to be
- -------- -------
applied as a prepayment of the principal of the Term Loans but for this Section
-------
2.7(e) shall be reinvested in the ordinary course of business of the Borrower.
- ------
Section 2.8 Minimum Amounts. Except for Conversions and prepayments
---------------
pursuant to Section 2.7 and Article 4, each borrowing, each Conversion and each
----------- ---------
prepayment of principal of the Loans (exclusive of the Swingline Advances which
may be in any amount) shall be in an amount at least equal to (a) $1,000,000 or
an integral multiple in excess thereof, or (b) with respect to the Revolving
Credit Loans other than Bankers' Acceptances, Cdn. $250,000 or an integral
multiple of Cdn. $100,000 in excess thereof, or (c) with respect to Bankers'
Acceptances, Cdn. $300,000 or an integral multiple of Cdn. $300,000 in excess
thereof (borrowings, prepayments or Conversions of or into Loans of different
Types or, in the case of Eurodollar Loans, having different Interest Periods at
the same time hereunder shall be deemed separate borrowings, prepayments and
Conversions for purposes of the foregoing, one for each Type or Interest
Period).
Section 2.9 Certain Notices. Notices by the Borrower to the Agent of
---------------
terminations or reductions of Commitments, of borrowings, Conversions,
Continuations and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the Agent not
later than 11:00 a.m. (Houston, Texas, time) or, with respect to Bankers'
Acceptances, 9:00 a.m. (Houston, Texas, time) on the Business Day prior to the
date
29
<PAGE>
of the relevant termination, reduction, borrowing, Conversion, Continuation or
prepayment or the first day of such Interest Period specified below:
<TABLE>
<CAPTION>
Number of
Notice Business Days Prior
------ -------------------
<S> <C>
Borrowing of Term Loans which are Prime Rate Loans 1
Borrowing of Term Loans which are Eurodollar Loans 3
Borrowing of Revolving Credit Loans which are
Prime Rate Loans 1
Borrowing of Bankers' Acceptances 2
Conversions or Continuations of Loans 3
Prepayments of Term Loans 5
Prepayments of Revolving Credit Loans 1
</TABLE>
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 2.8 hereof)
-----------
and Type of the Loans to be borrowed (including, with respect to any Revolving
Credit Loans, whether any such Loans shall consist of Swingline Advances),
Converted, Continued or prepaid (and, in the case of a Conversion, the Type of
Loans to result from such Conversion) and the date of borrowing, Conversion,
Continuation or prepayment (which shall be a Business Day). Notices of
borrowings, Conversions, Continuations or prepayments shall be in the form of
Exhibit E hereto, appropriately completed as applicable. Each such notice of
- ---------
the duration of an Interest Period shall specify the Loans to which such
Interest Period is to relate. The Agent shall promptly notify the Lenders of
the contents of each such notice. In the event the Borrower fails to select the
Type of Loan, or the duration of any Interest Period for any Eurodollar Loan,
within the time period and otherwise as provided in this Section 2.9, such Loan
-----------
(if outstanding as Eurodollar Loan) will be automatically Converted into a Prime
Rate Loan on the last day of preceding Interest Period for such Loan or (if
outstanding as a Prime Rate Loan) will remain as, or (if not then outstanding)
will be made as, a Prime Rate Loan. The Borrower may not borrow any Eurodollar
Loans, Convert any Loans into Eurodollar Loans or Continue any Loans as
Eurodollar Loans if the interest rate for such Eurodollar Loans would exceed the
Maximum Rate.
Section 2.10 Use of Proceeds.
---------------
(a) The Borrower represents and warrants to the Agent and the Lenders
that the proceeds of any Term Loans B shall be used by the Borrower to partially
finance the PNG Acquisition and to pay transaction costs associated with the PNG
Acquisition.
(b) The Borrower represents and warrants to the Agent and the Lenders
that the proceeds of the Revolving Credit Loans, Bankers' Acceptances and
Letters of Credit to be made on and after the Restatement Date shall be used by
the Borrower to partially finance the PNG Acquisition, to pay transaction costs
associated with the PNG Acquisition and for working capital and general
corporate purposes of the Borrower and its Wholly-Owned Subsidiaries in the
ordinary course of business.
30
<PAGE>
(c) None of the proceeds of any Loan have been or will be used to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended, or to purchase or carry any
margin stock (within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System).
Section 2.11 Fees.
----
(a) Mail-Well and the Borrower jointly and severally agree to pay to
the Agent for the account of each Lender a commitment fee on the daily average
unused or unfunded amount of such Lender's Revolving Credit Loans Commitment and
Term Loans B Commitment, for the period from and including the Restatement Date
to and including the Revolving Credit Loans Maturity Date with respect to the
Revolving Credit Loans Commitment and for the period from and including the
Restatement Date to and including the Term Loans B Commitment Expiration Date
with respect to the Term Loans B Commitment, at the rate of one-half of one
percent (.50%) per annum based on a 360 day year and the actual number of days
elapsed, which accrued commitment fees shall be payable in arrears on each
Quarterly Date beginning on December 31, 1996 and on the Revolving Credit Loans
Maturity Date (with respect to the Revolving Credit Loans Commitment) or the
Term Loans B Commitment Expiration Date (with respect to the Term Loans B
Commitment). For purposes of this Section 2.11(a), the outstanding principal
---------------
amount of the Swingline Advances shall be deemed to be unused and unfunded
amounts under the Revolving Credit Loans Commitments.
(b) Mail-Well agrees to pay to the Agent such additional fees as are
specified in the Agent's Letter, which fees shall be payable in such amounts and
on such dates as are specified therein.
(c) The Borrower agrees to pay to Paribas Bank of Canada for the account of
the Revolving Credit Lenders an Acceptance Fee on each Bankers' Acceptance
issued pursuant hereto immediately upon the acceptance of each such Bankers'
Acceptance.
(d) On the Restatement Date, the Borrower agrees to pay (i) to the Agent
for the account of the Original Supremex Lenders, the accrued but unpaid
commitment fees referred to in Section 2.11(a) of the Original Supremex Credit
Agreement, (ii) to the Agent for the account of the Original Supremex Lenders,
the accrued but unpaid fees referred to in the first sentence of Section 2.14(c)
of the Original Supremex Credit Agreement relating to Letters of Credit, and
(iii) to the Issuing Bank, the accrued but unpaid fees referred to in the third
sentence of Section 2.14(c) of the Original Supremex Credit Agreement relating
to Letters of Credit.
Section 2.12 Computations. Interest and fees payable by Mail-Well and/or
------------
the Borrower hereunder and under the other Loan Documents on all Loans, other
than Prime Rate Loans and Bankers' Acceptance Liabilities, shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable unless, in the case of interest, such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365
31
<PAGE>
or 366 days, as the case may be. Interest and fees payable by Mail-Well
and/or the Borrower hereunder and under the other Loan Documents on Prime Rate
Loans shall be computed on the basis of a year of 365 or 366 days, as the case
may be, and interest and fees payable by the Borrower hereunder on Bankers'
Acceptance Liabilities shall be computed on the basis of a year of 365 days.
For purposes of the Interest Act (Canada), the annual rate of interest
applicable to the Revolving Credit Loans and Reimbursement Obligations and other
Obligations relating thereto to which each of the applicable interest rates
under this Agreement is equivalent is the stated rate multiplied by the actual
number of days in the year and divided by 365.
Section 2.13 Reduction or Termination of Revolving Credit Commitments. The
--------------------------------------------------------
Borrower shall have the right to terminate or reduce in part the unused portion
of the Revolving Credit Loans Commitments at any time and from time to time
(exclusive of any unused portion of the Revolving Credit Loans Commitments that
may be required to be advanced by the Lenders to refinance Swingline Advances
then outstanding), provided that (a) the Borrower shall give notice of each such
--------
termination or reduction as provided in Section 2.9 and (b) each partial
-----------
reduction shall be in an aggregate amount at least equal to Cdn. $1,000,000. The
Revolving Credit Loans Commitments may not be reinstated after they have been
terminated or reduced.
Section 2.14 Letters of Credit.
-----------------
(a) Subject to the terms and conditions of this Agreement, the
Borrower may utilize the Revolving Credit Loans Commitments by requesting that
the Issuing Bank issue Letters of Credit; provided, that the aggregate amount of
--------
outstanding Letter of Credit Liabilities shall not at any time exceed Cdn.
$8,000,000. Upon the date of issue of each Letter of Credit, the Issuing Bank
shall be deemed, without further action by any party hereto, to have sold to
each Lender, and each Lender shall be deemed, without further action by any
party hereto, to have purchased from the Issuing Bank, a participation to the
extent of such Lender's Commitment Percentage in such Letter of Credit.
(b) The Borrower shall give the Issuing Bank (with a copy to the
Agent) at least five Business Days irrevocable prior notice (effective upon
receipt) specifying the date of each Letter of Credit and the nature of the
transactions to be supported thereby. Upon receipt of such notice the Issuing
Bank shall promptly notify each applicable Lender of the contents thereof and of
such Lender's Commitment Percentage of the amount of the proposed Letter of
Credit. Each Letter of Credit shall have an expiration date that does not
exceed one year from the date of issuance and that does not extend beyond the
Revolving Credit Loans Maturity Date, shall be payable in Cdn. Dollars, shall
support a transaction entered into in the ordinary course of the Borrower's
business, shall be satisfactory in form and substance to the Issuing Bank, and
shall be issued pursuant to such agreements, documents and instruments
(including a Letter of Credit Agreement) as the Issuing Bank may reasonably
require, none of which shall be inconsistent with this Section 2.14. Each
------------
Letter of Credit shall (i) provide for the payment of drafts presented for, on
or thereunder by the beneficiary in accordance with the terms thereof, when such
drafts are accompanied by the documents (if any) described in the Letter of
Credit and (ii) to the extent not inconsistent with the terms hereof or any
applicable Letter of Credit Agreement, be subject to the Uniform Customs and
Practice for Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500 (together with any subsequent revision thereof
approved by a Congress of the International Chamber of Commerce and adhered to
by the Issuing Bank, the "UCP"), and shall,
---
32
<PAGE>
as to matters not governed by the UCP, be governed by, and construed and
interpreted in accordance with, the laws of the State of Texas.
(c) Mail-Well and the Borrower jointly and severally agree to pay to
the Agent for the account of each Lender, in arrears on each Quarterly Date
beginning on December 31, 1996 and on the Revolving Credit Loans Maturity Date,
a nonrefundable letter of credit fee with respect to each Letter of Credit
issued in an amount equal to (i) the rate per annum equal to the Applicable
Margin (for Revolving Credit Loans) for Eurodollar Loans in effect on the date
of issuance of such Letter of Credit (with respect to the fee due on the first
Quarterly Date after issuance) or on the first day of the applicable quarterly
or other period beginning after the calendar quarter during which the issuance
of such Letter of Credit occurred (with respect to the fee due on each
subsequent Quarterly Date or on the Revolving Credit Loans Maturity Date) minus
-----
one-eighth of one percent (0.125%), multiplied by (ii) the daily average face
amount of the Letter of Credit in effect during the applicable period. The
Agent agrees to pay to each Lender, promptly after receiving any payment of
letter of credit fees referred to above in this Section 2.14 (c), such Lender's
----------------
Commitment Percentage of such fees. Mail-Well and the Borrower jointly and
severally agree to pay to the Issuing Bank for its own account, in arrears on
each Quarterly Date beginning on December 31, 1996 and on the Revolving Credit
Loans Maturity Date, if such Letter of Credit was outstanding at any time during
any portion of the quarterly period (or, with respect to the December 31, 1996
Quarterly Date, the period from the Restatement Date through such Quarterly
Date) immediately preceding such Quarterly Date or the Revolving Credit Loans
Maturity Date, a nonrefundable letter of credit fee with respect to each Letter
of Credit issued by the Issuing Bank hereunder in an amount equal to (A) one-
eighth of one percent (0.125%) per annum, multiplied by (B) the daily average
face amount of the Letter of Credit in effect during such period. In addition
to the foregoing fees, Mail-Well and the Borrower shall jointly and severally
pay or reimburse the Issuing Bank for such normal and customary costs and
expenses, including, without limitation, administrative, issuance, amendment,
payment and negotiation charges, as are incurred or charged by the Issuing Bank
in issuing, effecting payment under, amending or otherwise administering any
Letter of Credit.
(d) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment or other drawing under such Letter of Credit, the Issuing
Bank shall promptly notify the Borrower and each Lender as to the amount to be
paid as a result of such demand or drawing and the respective payment date. If
at any time the Issuing Bank shall make a payment to a beneficiary of a Letter
of Credit pursuant to a drawing under such Letter of Credit, each Lender will
pay to the Issuing Bank, immediately upon the Issuing Bank's demand at any time
commencing after such payment until reimbursement therefor in full by the
Borrower, an amount equal to such Lender's Commitment Percentage of such
payment, together with interest on such amount for each day from the date of
such payment to the date of payment by such Lender of such amount at a rate of
interest per annum equal to the Federal Funds Rate.
(e) The Borrower shall be irrevocably and unconditionally obligated to
immediately reimburse the Issuing Bank for any amounts paid by the Issuing Bank
upon any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind. The Issuing Bank will pay to each
such Lender such Lender's Commitment Percentage of all amounts received from or
on behalf of the Borrower for application in payment, in whole or in part, of
the
33
<PAGE>
Reimbursement Obligation in respect of any Letter of Credit, but only to the
extent such Lender has made payment to the Issuing Bank in respect of such
Letter of Credit pursuant to Section 2.14 (d). Outstanding Reimbursement
----------------
Obligations shall bear interest at the Default Rate and such interest shall be
payable on demand.
(f) The Reimbursement Obligations of the Borrower under this Agreement
and the other Loan Documents shall be absolute, unconditional and irrevocable,
and shall be performed strictly in accordance with the terms of this Agreement
and the other Loan Documents under all circumstances whatsoever, including,
without limitation, the following circumstances:
(i) Any lack of validity or enforceability of any Letter of
Credit or any other Loan Document;
(ii) Any amendment or waiver of or any consent to departure from
any Loan Document;
(iii) The existence of any claim, setoff, counterclaim, defense
or other right which any Loan Party or other Person may have at any time
against any beneficiary of any Letter of Credit, the Agent, the Issuing
Bank, the Lenders or any other Person, whether in connection with this
Agreement or any other Loan Document or any unrelated transaction;
(iv) Any statement, draft or other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(v) Payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or other document that does not comply with
the terms of such Letter of Credit, provided, that such payment shall not
--------
have constituted gross negligence or willful misconduct of the
Issuing Bank; and
(vi) Any other circumstance whatsoever, whether or not similar
to any of the foregoing, provided that such other circumstance or event
shall not have been the result of the gross negligence or willful
misconduct of the Issuing Bank.
(g) The Borrower assumes all risks of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of such Letter of
Credit. Neither the Agent, the Issuing Bank, the Lenders nor any of their
respective officers or directors shall have any responsibility or liability to
the Borrower or any other Person for: (a) the failure of any draft to bear any
reference or adequate reference to any Letter of Credit, or the failure of any
documents to accompany any draft at negotiation, or the failure of any Person to
surrender or to take up any Letter of Credit or to send documents apart from
drafts as required by the terms of any Letter of Credit, or the failure of any
Person to note the amount of any instrument on any Letter of Credit, (b) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
(c) the validity, sufficiency or genuineness of any draft or other document, or
any endorsement(s) thereon, even if any such draft, document or endorsement
should in fact prove to be in any and
34
<PAGE>
all respects invalid, insufficient, fraudulent or forged or any statement
therein is untrue or inaccurate in any respect, (d) the payment by the Issuing
Bank to the beneficiary of any Letter of Credit against presentation of any
draft or other document that does not comply with the terms of the Letter of
Credit, or (e) any other circumstance whatsoever in making or failing to make
any payment under a Letter of Credit; provided, however, that, notwithstanding
-------- -------
the foregoing, the Borrower shall have a claim against the Issuing Bank, and the
Issuing Bank shall be liable to the Borrower, to the extent of any direct, but
not indirect or consequential, damages suffered by the Borrower which the
Borrower proves in a final nonappealable judgment were caused by (i) the Issuing
Bank's willful misconduct or gross negligence in determining whether documents
presented under any Letter of Credit complied with the terms thereof or (ii) the
Issuing Bank's willful failure to pay under any Letter of Credit after
presentation to it of documents strictly complying with the terms and conditions
of such Letter of Credit. The Issuing Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary.
(h) All Letters of Credit issued pursuant to the Original Supremex Credit
Agreement shall be deemed to be Letters of Credit issued pursuant to this
Agreement.
Section 2.15 Bankers' Acceptances.
--------------------
(a) Utilization of Revolving Credit Loans Commitments. Subject to the
-------------------------------------------------
terms and conditions of this Agreement, the Borrower may utilize the Revolving
Credit Loans Commitments by requesting that the Revolving Credit Lenders create
Bankers' Acceptances.
(b) Commitments. Subject to the terms and conditions of this
-----------
Agreement, each Revolving Credit Lender severally agrees from time to time to
accept one or more drafts constituting Bankers' Acceptances drawn on it by the
Borrower from time to time from and including the Restatement Date to but
excluding the Revolving Credit Loans Maturity Date.
(c) Notices, Terms, etc. Each Bankers' Acceptance (i) shall be preceded
-------------------
by a written notice in the form of Exhibit E hereto received by the Agent not
---------
later than 9:00 a.m. (Houston, Texas, time) two Business Days prior to the
proposed date of acceptance of the Bankers' Acceptance, (ii) shall be
denominated in Cdn. Dollars, (iii) shall be in the minimum aggregate face of
Cdn. $300,000 or an integral multiple of Cdn. $300,000 in excess thereof, (iv)
shall have a term of 30 to 90 days (taking into account the mandatory
prepayments to be made under Section 2.7), without days of grace, (v) shall
-----------
mature on a Business Day on or before the Revolving Credit Loans Maturity Date,
and (vi) may, at each Revolving Credit Lender's option, be purchased by such
Revolving Credit Lender for its own account or sold or traded in the money
market, either directly or through stock brokers or dealers.
(d) Discount. Upon the issue of Bankers' Acceptances which are
--------
purchased by a Revolving Credit Lender for its own account, the Borrower shall
be entitled to be credited by Paribas Bank of Canada on behalf of such Revolving
Credit Lender with the Discounted Proceeds thereof, less the Acceptance Fee.
However, the full face value of Bankers' Acceptances, without Discount, shall be
used when calculations are made to determine the amount of Bankers' Acceptance
Liabilities. The Revolving Credit Lenders may at any time and from time to time
sell,
35
<PAGE>
rediscount or otherwise dispose of such Bankers' Acceptance upon such terms and
conditions as the Revolving Credit Lenders may determine in their sole
discretion and the Revolving Credit Lenders shall be entitled to retain all
proceeds received from such sale, rediscount or other disposition (whether the
amount of such proceeds is more, less or the same as the proceeds advanced to
the Borrower or its order as a result of the Revolving Credit Lender's purchase
of the Bankers' Acceptance).
(e) Conversion or Continuation. Upon the issue of each Bankers' Acceptance
--------------------------
as a result of the conversion of an outstanding Revolving Credit Loan into
Bankers' Acceptances or as a result of the renewal or continuation of
outstanding Bankers' Acceptances, the Borrower shall, concurrently with such
conversion or renewal or continuation, pay in advance out of its own funds to
Paribas Bank of Canada for the account of the Revolving Credit Lenders an amount
equal to the Discount applicable to such issue, to be applied against the
principal of the Revolving Credit Loan being so converted or renewed, plus the
Acceptance Fee for the converted, renewed or continued Bankers' Acceptances.
(f) Execution of Bankers' Acceptances. Drafts of the Borrower to be
---------------------------------
accepted as Bankers' Acceptances hereunder shall be signed by a duly authorized
officer or duly authorized officers of the Borrower. Notwithstanding that any
person whose signature appears on any Bankers' Acceptance as one of such
officers may no longer be an authorized signatory for the Borrower at the date
of issue of a Bankers' Acceptance, such signature shall nevertheless be valid
and sufficient for all purposes as if such authority had remained in force at
the time of such issue and any such Bankers' Acceptance so signed shall be
binding on the Borrower.
(g) Delivery of Bankers' Acceptances.
--------------------------------
(i) The Borrower shall deliver to each Revolving Credit Lender for
acceptance, at or before 10:00 a.m. on the Business Day preceding the date
of issue of any Bankers' Acceptances, an appropriate number of signed and
endorsed forms of Bankers' Acceptances in order to allow each Revolving
Credit Lender to accept such instruments in the aggregate and face amounts
and for the maturities chosen by the Borrower, subject to Section 2.15(c)).
---------------
In this respect, the Revolving Credit Lenders will deliver from time to
time to the Borrower blank forms of Bankers' Acceptances to be signed and
returned by the Borrower in order to maintain an adequate supply of such
instruments for acceptance hereunder. No Revolving Credit Lender shall be
responsible or liable for its failure to accept a Bankers' Acceptance as
required hereunder if the cause of such failure is, in whole or in part,
due to the failure of the Borrower to provide duly executed and endorsed
drafts to such Revolving Credit Lender on a timely basis nor shall any
Revolving Credit Lender be liable for any damage, loss or other claim
arising by reason of any loss or improper use of any such instrument except
a loss or improper use arising by reasons of the gross negligence or wilful
misconduct of such Revolving Credit Lender.
(ii) Each Revolving Credit Lender will maintain a record with
respect to Bankers' Acceptances (A) received by it from the Borrower in
blank hereunder, (B) voided by it for any reason, (C) accepted by it
hereunder, and (D) canceled at their respective
36
<PAGE>
maturities. The Revolving Credit Lenders agree to provide such records to
the Borrower promptly upon request.
(h) Bankers' Acceptances.
--------------------
(i) If Bankers' Acceptances are outstanding hereunder, the
Borrower shall, prior to the date of maturity of the then current Bankers'
Acceptances, select and irrevocably notify the Agent of the term to apply
to any renewal or continuation thereof or of the intention of the Borrower
to repay or convert such borrowing at the maturity of the related Bankers'
Acceptances, such notice to be given in accordance with Section 2.15(c).
---------------
The Agent, promptly following receipt of a notice in respect of Bankers'
Acceptances as aforesaid, shall so advise the Revolving Credit Lenders and
shall also advise each Revolving Credit Lender of the term (which shall be
identical for all Revolving Credit Lenders) and the aggregate face amount
of the Bankers' Acceptances to be accepted by it. The aggregate face
amount of the Bankers' Acceptances to be accepted by a Revolving Credit
Lender shall be determined by the Agent by reference to the respective
Commitments Percentages of the Revolving Credit Loans Commitments of the
Revolving Credit Lenders, except that, if the face amount of a Bankers'
Acceptance which would otherwise be accepted by a Revolving Credit Lender
would not be Cdn. $100,000 or a whole multiple thereof, such face amount
shall be increased or reduced by the Agent in its sole discretion to Cdn.
$100,000 or the nearest whole multiple of that amount, as appropriate.
(ii) If the Borrower chooses to renew or continue a borrowing
outstanding by way of Bankers' Acceptances in the form of Bankers'
Acceptances, the term of the new Bankers' Acceptances shall commence on and
include the maturity date of the relative Bankers' Acceptances being
renewed. If the Borrower fails to so notify the Agent as provided in
clause (i) of this Section 2.15(h) preceding, the Borrower shall be deemed
---------- ---------------
to have notified the Agent of its intention to convert the relevant
borrowing by way of Bankers' Acceptances into a Revolving Credit Loan.
(iii) The Borrower shall, by not later than 11:00 a.m. (Houston,
Texas time) on the maturity date of each Bankers' Acceptance, pay to
Paribas Bank of Canada for the account of the Revolving Credit Lenders an
amount equal to the face amount of all Bankers' Acceptances accepted by the
Revolving Credit Lenders and maturing on that day, by effecting such
payment out of its own funds to Paribas Bank of Canada for the account of
the Revolving Credit Lenders, by converting such Bankers' Acceptance into
another form of borrowing hereunder or by renewing or continuing such
Bankers' Acceptance in accordance with the provisions hereof.
(iv) If the Borrower fails to provide payment of the face
amount of a Bankers' Acceptance on its maturity date as required pursuant
to clause (iii) of this Section 2.15(h) preceding, then the Cdn. Dollar
------------ ---------------
amount of such failed payment shall be deemed for all purposes of this
Agreement to be and shall be treated in all respects as a borrowing by way
of a Revolving Credit Loan constituting a Prime Rate Loan as and from such
maturity date.
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<PAGE>
(i) Acceptance Fee. The Borrower authorizes and directs Paribas Bank of
--------------
Canada and the Revolving Credit Lenders to deduct the amount of the Acceptance
Fee from the Discounted Proceeds of Bankers' Acceptances purchased by a
Revolving Credit Lender for its own account, upon the issue of each Bankers'
Acceptance.
(j) Alternate Basis of Borrowing. If at any time during the term of this
----------------------------
Agreement, a Revolving Credit Lender determines in good faith (which
determination shall be final, conclusive and binding upon the Borrower) that, by
reasons of circumstances or changes affecting the market for Bankers'
Acceptances, (i) it is no longer possible to establish the Discount Rate in
respect to Bankers' Acceptances, or (ii) the market for Bankers' Acceptances no
longer exists, is too weak for its normal use by such Revolving Credit Lender or
is not capable in the normal course of business to absorb Bankers' Acceptances
accepted by such Revolving Credit Lender, then the Agent shall, on behalf of the
Revolving Credit Lender affected by such event or circumstances (the "Affected
--------
Lender"), immediately notify the Borrower of the Affected Lender's determination
- ------
in writing with an indication of the Revolving Credit Loans affected by such
determination. For so long as the circumstances referred to in clause (i) or
----------
(ii) preceding shall continue, the Affected Lender shall not be obligated to
- ----
make any further borrowings available by way of Bankers' Acceptances and
thereafter, until notice to the contrary is given to the Borrower by the Agent,
the Affected Lender shall only be obligated to make other forms of borrowings
available to the Borrower hereunder.
(k) Waiver of Claim. The Borrower shall have no right to raise or set up
---------------
as against any of the Revolving Credit Lenders any defense or right of action,
indemnification or set-off or compensation or any similar defense or claim of
any nature whatsoever which the Borrower may have had at any time or may have in
the future with respect to any holder of one or more Banker's Acceptance(s)
issued hereunder.
(l) Eligible Assignees.
------------------
(i) The Borrower acknowledges and agrees that each Revolving
Credit Lender may, from time to time, arrange for Eligible Assignees to
meet, in whole or in part, such Revolving Credit Lender's obligations of
accepting Bankers' Acceptances hereunder, in which case such Eligible
Assignees' forms for Bankers' Acceptances may be used. The Borrower agrees
that, in the event of a default in the payment of any Bankers' Acceptance
accepted by such Eligible Assignee and in the event of payment by such
Eligible Assignee of the amount outstanding under the Bankers Acceptance so
accepted, the Borrower shall immediately reimburse the said amount to such
Eligible Assignee directly, with interest thereon at a rate equivalent to
the rate applicable to the Prime Rate Loans. A failure to reimburse an
Eligible Assignee as provided hereinabove shall constitute an Event of
Default hereunder.
(ii) The Borrower irrevocably and unconditionally authorizes each
Revolving Credit Lender, on behalf and for the account of the Borrower, to
complete, in the space provided for the Revolving Credit Lender's name, the
name of such Eligible Assignee accepting the Bankers' Acceptance.
38
<PAGE>
(iii) Each Revolving Credit Lender agrees that in the event an
Eligible Assignee executes in whole or in part such Revolving Credit
Lender's obligation of accepting Bankers' Acceptances hereunder, the costs
of borrowing shall not be any greater for the Borrower than if such
Revolving Credit Lender had itself accepted the Bankers' Acceptances so
accepted.
(iv) The Borrower recognizes that each Revolving Credit Lender
may, at its discretion, enter into compensatory agreements with an Eligible
Assignee pursuant to which such Revolving Credit Lender may assume certain
obligations and liabilities in respect of such Eligible Assignee. If the
Borrower fails to make a payment to any such Eligible Assignee, as provided
in clause (i) preceding of this Section 2.15(1), the Borrower shall, as a
---------- ---------------
separate and distinct obligation, pay to such Revolving Credit Lender, on
demand, an amount equal to the amount owing to such Eligible Assignee
pursuant to Section 2.15(1). The Borrower recognizes and agrees that the
---------------
foregoing obligation of the Borrower shall be entitled to the security of
the Security Documents.
(m) Maintenance of Records. Paribas Bank of Canada shall open and maintain
----------------------
on its books accounts and records evidencing the Revolving Credit Loans
(including the Bankers' Acceptances) made available to the Borrower by each
Revolving Credit Lender under the Revolving Credit Loans Commitments. Paribas
Bank of Canada shall record therein the amount of such borrowings and each
payment of principal and interest on such borrowings, shall record the Bankers'
Acceptances accepted, paid and canceled by each Revolving Credit Lender and all
other amounts becoming due to each Revolving Credit Lender in connection with
the Revolving Credit Loans Commitments under the Loan Documents, including
standby fees, Acceptance Fees and administration fees, breakage costs and all
payments on account thereof. Such accounts and records maintained by Paribas
Bank of Canada on behalf of the Revolving Credit Lenders will constitute, in the
absence of manifest error, prima facie evidence of the indebtedness of the
----- -----
Borrower to the Revolving Credit Lenders, the date the Revolving Credit Lenders
made each Revolving Credit Loan (including the Bankers' Acceptances) available
to the Borrower under the Revolving Credit Loans Commitments and the amounts the
Borrower has paid from time to time to the Revolving Credit Lenders on account
thereof.
(n) All Bankers' Acceptances accepted pursuant to the Original Supremex
Credit Agreement shall be deemed to be Bankers' Acceptances accepted pursuant to
this Agreement.
ARTICLE 3
Payments
--------
Section 3.1 Method of Payment. All payments of principal, interest, fees
-----------------
and other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Agent at the Principal Office for the
account of each Lender's Applicable Lending Office in Dollars or Cdn. Dollars
(as applicable) and in immediately available funds, without setoff, deduction or
counterclaim, not later than 11:00 a.m. (Houston, Texas time) on the date on
which such payment shall become due (each such payment made after such time on
such due date to be deemed to have been made on the next succeeding Business
Day; provided, however, that
-------- -------
39
<PAGE>
Paribas Bank of Canada will act as collection agent on behalf of the Agent with
respect to principal, interest and fees relating to the Revolving Credit Loans,
the Letters of Credit and the Revolving Credit Loans Commitments). The Borrower
shall, at the time of making each such payment, specify to the Agent the sums
payable by the Borrower under this Agreement and the other Loan Documents to
which such payment is to be applied (and in the event that the Borrower fails to
so specify, or if an Event of Default has occurred and is continuing, the Agent
may apply such payment to the Obligations in such order and manner as the Agent
may elect, subject to Section 3.2.) Upon the occurrence and during the
------------
continuation of an Event of Default, all proceeds of any Collateral, and all
funds from time to time on deposit in any Concentration Account or any deposit
account, may be applied by the Agent to the Obligations in such order and manner
as the Agent may elect, subject to Section 3.2. Notwithstanding the foregoing,
------------
however, (a) if an Event of Default has occurred and is continuing, the Agent
and the Lenders agree among themselves that, subject to the terms of the
Intercreditor Agreement, all such payments, proceeds and funds shall be applied
pro rata to the outstanding principal amount of the Loans and unreimbursed
drawings under Letters of Credit (based upon the outstanding principal amount of
the Term Loans A, the outstanding principal amount of the Term Loans B, the
outstanding principal amount of the Revolving Credit Loans and the aggregate
unreimbursed drawings under Letters of Credit as a percentage of the sum of the
aggregate outstanding principal amount of all of the Loans plus the aggregate
unreimbursed drawings under Letters of Credit) and (b) all payments (including
prepayments) of principal and interest on or with respect to the Revolving
Credit Loans shall be first applied to the Swingline Advances until all
principal and interest with respect to the Swingline Advances are paid in full
whether or not an Event of Default has occurred and is continuing. Each payment
received by the Agent under this Agreement or any other Loan Document for the
account of a Lender shall be paid promptly to such Lender, in immediately
available funds, for the account of such Lender's Applicable Lending Office.
Whenever any payment under this Agreement or any other Loan Document shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of the payment of interest and commitment
fee, as the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided in
------------------
this Agreement and except to the extent that payments of principal and interest
with respect to the Revolving Credit Loans constituting Swingline Advances are
to be paid solely to Paribas Bank of Canada: (a) each Loan shall be made by the
Lenders under Section 2.1, each payment of commitment fees under Section 2.11
----------- ------------
(a) shall be made for the account of the Lenders, and each termination or
- ---
reduction of the Commitments under Section 2.13 shall be applied to the
------------
appropriate Commitments of the Lenders, pro rata according to the respective
unused Commitments; (b) the making, Conversion and Continuation of Loans of a
particular Type (other than Conversions provided for by Section 4.4) shall be
-----------
made pro rata among the Lenders holding Loans of such Type according to the
amounts of their respective appropriate Commitments; (c) each payment and
prepayment by the Borrower of principal of or interest on Loans of a particular
Type shall be made to the Agent for the account of the Lenders holding Loans of
such Type pro rata in accordance with the respective unpaid principal amounts of
such Loans held by such Lenders; (d) Interest Periods for Loans of a particular
Type shall be allocated among the Lenders holding Loans of such Type pro rata
according to the respective principal amounts held by such Lenders; and (e) the
Lenders (other than the Issuing Bank) shall purchase participations in the
40
<PAGE>
Letters of Credit pro rata in accordance with their Commitment Percentages of
the aggregate Revolving Credit Loans Commitments.
Section 3.3 Sharing of Payments, Etc. Subject to the terms of the
------------------------
Intercreditor Agreement, if a Lender shall obtain payment of any principal of or
interest on any of the Obligations due to such Lender hereunder through the
exercise of any right of setoff, banker's lien, counterclaim or similar right,
or otherwise, it shall promptly purchase from the other Lenders participations
in the Obligations held by the other Lenders in such amounts, and make such
adjustments from time to time as shall be equitable to the end that all the
Lenders shall share pro rata in accordance with the unpaid principal and
interest on the Obligations then due to each of them. To such end, all of the
Lenders shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
Lender so purchasing a participation in the Obligations by the other Lenders may
exercise all rights of setoff, banker's lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Obligations in the amount of such participation. Nothing contained
herein shall require any Lender to exercise any such right or shall affect the
right of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness or obligation of the Borrower.
Section 3.4 Non-Receipt of Funds by the Agent. Unless the Agent shall have
---------------------------------
been notified by a Lender or the Borrower (the "Payor") prior to the date on
-----
which such Lender is to make payment to the Agent of the proceeds of a Loan to
be made by it hereunder or the Borrower is to make a payment to the Agent for
the account of one or more of the Lenders, as the case may be (such payment
being herein called the "Required Payment"), which notice shall be effective
----------------
upon receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to the Federal Funds Rate for such period.
Section 3.5 Withholding Taxes. All payments by Mail-Well or the Borrower
-----------------
of principal of and interest on the Loans and of all fees and other amounts
payable under the Loan Documents shall be made free and clear of, and without
deduction by reason of, any present or future taxes, duties, imposts,
assessments or other charges levied or imposed by any Governmental Authority
(other than taxes on the overall net income of the Agent or any Lender). If any
such taxes, duties, imposts, assessments or other charges are so levied or
imposed, Mail-Well and/or the Borrower (as applicable depending upon which of
such Person(s) was obligated with respect to the original payment) will (a) make
additional payments in such amounts so that every net payment of principal of
and interest on the Loans and of all other amounts payable by it under the Loan
Documents, after withholding or deduction for or on account of any such present
or future taxes, duties, imposts, assessments or other charges (including any
tax imposed on or measured
41
<PAGE>
by net income of the Agent or a Lender attributable to payments made to or on
behalf of the Agent or a Lender pursuant to this Section 3.5 and any penalties
-----------
or interest attributable to such payments), will not be less than the amount
provided for herein or therein absent such withholding or deduction (provided
--------
that Mail-Well and the Borrower shall have no obligation to pay such additional
amounts to the Agent or any Lender to the extent that such taxes, duties,
imposts, assessments or other charges are levied or imposed by reason of the
failure of the Agent or such Lender to comply with the provisions of Section
-------
3.6), (b) make such withholding or deduction, and (c) remit the full amount
- ---
deducted or withheld to the relevant Governmental Authority in accordance with
applicable law. The Borrower shall furnish promptly to the Agent for
distribution to each affected Lender, as the case may be, upon request of such
Lender, official receipts evidencing any such payment, withholding or reduction.
Mail-Well and the Borrower will indemnify the Agent and each Lender (without
duplication) against, and reimburse the Agent and each Lender for, all present
and future taxes, duties, imposts, assessments or other charges (including
interest and penalties) levied or collected (whether or not legally or correctly
imposed, assessed, levied or collected), excluding, however, any taxes imposed
on the overall net income of the Agent or such Lender, on or in respect of this
Agreement, any of the Loan Documents or the Obligations or any portion thereof
(the "reimbursable taxes"). Any such indemnification shall be on an after-tax
------------------
basis, taking into account any such reimbursable taxes imposed on the amounts
paid as indemnity. Without prejudice to the survival of any other term or
provision of this Agreement, the obligations of Mail-Well and the Borrower under
this Section 3.5 shall survive the repayment of the Loans, the Letter of Credit
-----------
Liabilities, the Bankers' Acceptance Liabilities and the other Obligations and
the termination of the Commitments.
Section 3.6 Withholding Tax Exemption. Each Lender that is not
-------------------------
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Restatement Date or the date
upon which it becomes a party to this Agreement and if it is legally able to do
so, deliver to the Borrower (on behalf of Mail-Well and the Borrower) and the
Agent two duly completed copies of U.S. Internal Revenue Service Form 1001, 4224
or W-8, as appropriate, certifying in any case that such Lender is entitled to
receive payments from Mail-Well and the Borrower under any Loan Document without
deduction or withholding of any U.S. federal income taxes. Each Lender which so
delivers a Form 1001, 4224 or W-8 further undertakes to deliver to Borrower (on
behalf of Mail-Well and the Borrower) and the Agent two additional copies of
such form (or a successor form) on or before the date such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by the Borrower or the Agent,
in each case certifying that such Lender is entitled to receive payments from
Mail-Well and the Borrower under any Loan Document without deduction or
withholding of any U.S. federal income taxes, unless an event (including without
limitation any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required which renders all
such forms inapplicable or which would prevent such Lender from duly completing
and delivering any such form with respect to it and such Lender advises the
Borrower and the Agent that it is not capable of receiving such payments without
any deduction or withholding of U.S. federal income tax.
42
<PAGE>
ARTICLE 4
Yield Protection and Illegality
-------------------------------
Section 4.1 Additional Costs.
----------------
(a) The Borrower shall pay directly to each Lender from time to time,
promptly upon the request of such Lender, the costs incurred by such Lender
which such Lender determines are attributable to its making or maintaining of
any Eurodollar Loans or creating any Bankers' Acceptances hereunder or its
obligation to make or create any of such Loans or Bankers' Acceptances,
respectively, hereunder, or any reduction in any amount receivable by such
Lender hereunder in respect of any such Loans or Bankers' Acceptances or
obligations (such increases in costs and reductions in amounts receivable being
herein called "Additional Costs"), resulting from any Regulatory Change which:
----------------
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans or
its Bankers' Acceptances (other than taxes imposed on the overall net
income of such Lender or its Applicable Lending Office for any of such
Loans by the jurisdiction in which such Lender has its principal office or
such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirement relating to any extensions of
credit or other assets of, or any deposits with or other liabilities or
commitments of, such Lender (including any of such Loans or any deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1 hereof,
-----------
but excluding the Reserve Requirement to the extent it is included in the
calculation of the Adjusted Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement or the
Notes or any of such extensions of credit or liabilities or commitments or
Bankers' Acceptances.
Each Lender will notify the Borrower (with a copy to the Agent) of any event
occurring after the Closing Date which will entitle such Lender to compensation
pursuant to this Section 4.1 (a) as promptly as practicable after it obtains
-----------
knowledge thereof and determines to request such compensation, and (if so
requested by the Borrower) will designate a different Applicable Lending Office
for the Eurodollar Loans of such Lender if such designation will avoid the need
for, or reduce the amount of, such compensation and will not, in the sole
opinion of such Lender, violate any law, rule or regulation or be in any way
disadvantageous to such Lender, provided that such Lender shall have no
--------
obligation to so designate an Applicable Lending Office located in the U.S.
Each Lender will furnish the Borrower with a certificate setting forth the basis
and the amount of each request of such Lender for compensation under this
Section 4.1(a). If any Lender requests compensation from the Borrower under this
- --------------
Section 4.1(a), the Borrower may, by notice to such Lender (with a copy to the
- --------------
Agent), suspend the obligation of such Lender to make or Continue making, or
Convert Prime Rate Loans into, Eurodollar Loans until the Regulatory Change
giving rise to such request ceases to be in effect (in which case the provisions
of Section 4.4 hereof shall be applicable).
-----------
43
<PAGE>
(b) Without limiting the effect of the foregoing provisions of this
Section 4.1, in the event that, by reason of any Regulatory Change, any Lender
- -----------
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Borrower (with a copy to the Agent), the obligation of such Lender
to make or Continue making, or Convert Prime Rate Loans into, Eurodollar Loans
hereunder shall be suspended until such Regulatory Change ceases to be in effect
(in which case the provisions of Section 4.4 hereof shall be applicable).
-----------
(c) Determinations and allocations by any Lender for purposes of this
Section 4.1 of the effect of any Regulatory Change on its costs of maintaining
- -----------
its obligation to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans or Bankers' Acceptances, and of the
additional amounts required to compensate such Lender in respect of any
Additional Costs, shall be conclusive in the absence of manifest error, provided
that such determinations and allocations are made on a reasonable basis.
Section 4.2 Limitation on Types of Loans. Anything herein to the contrary
----------------------------
notwithstanding, if with respect to any Eurodollar Loans for any Interest Period
therefor:
(a) The Agent determines (which determination shall be conclusive
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" in Section 1.1
-----------
hereof are not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for such Loans
as provided in this Agreement; or
(b) Required Lenders determine (which determination shall be
conclusive absent manifest error) and notify the Agent that the relevant
rates of interest referred to in the definition of "Eurodollar Rate" or
"Adjusted Eurodollar Rate" in Section 1.1 hereof on the basis of which the
-----------
rate of interest for such Loans for such Interest Period is to be
determined do not accurately reflect the cost to the Lenders of making or
maintaining such Loans for such Interest Period;
then the Agent shall give the Borrower prompt notice thereof and, so long as
such condition remains in effect, the Lenders shall be under no obligation to
make Eurodollar Loans or to Convert Prime Rate Loans into Eurodollar Loans and
the Borrower shall, on the last day(s) of the then current Interest Period(s)
for the outstanding Eurodollar Loans, either prepay such Loans or Convert such
Loans into Prime Rate Loans in accordance with the terms of this Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
or create Bankers' Acceptances hereunder or (b) maintain Eurodollar Loans or
Bankers' Acceptances hereunder, then such Lender shall promptly notify the
Borrower (with a copy to the Agent) thereof and such Lender's obligation to make
or maintain
44
<PAGE>
Eurodollar Loans and to Convert Prime Rate Loans into Eurodollar Loans or to
create Bankers' Acceptances hereunder shall be suspended until such time as such
Lender may again make and maintain Eurodollar Loans or create Bankers'
Acceptances (in which case the provisions of Section 4.4 hereof shall be
-----------
applicable).
Section 4.4 Treatment of Affected Loans. If the obligation of any Lender
---------------------------
to make or Continue, or to Convert Prime Rate Loans into, Eurodollar Loans is
suspended pursuant to Section 4.1 or 4.3 hereof, such Lender's Eurodollar Loans
----------- ---
shall be automatically Converted into Prime Rate Loans on the last day(s) of the
then current Interest Period(s) for the Eurodollar Loans (or, in the case of a
Conversion required by Section 4.1(b) or 4.3 hereof, on such earlier date as
-------------- ---
such Lender may specify to the Borrower with a copy to the Agent) and, unless
and until such Lender gives notice as provided below that the circumstances
specified in Section 4.1 or 4.3 hereof which gave rise to such Conversion no
----------- ---
longer exist:
(a) To the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Prime Rate Loans; and
(b) All Loans which would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made as or Converted into Prime Rate
Loans and all Loans of such Lender which would otherwise be Converted into
Eurodollar Loans shall be Converted instead into (or shall remain as) Prime
Rate Loans.
If such Lender gives notice to the Borrower (with a copy to the Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof which gave rise to the
----------- ---
Conversion of such Lender's Eurodollar Loans pursuant to this Section 4.4 no
-----------
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Lender's
Prime Rate Loans shall be automatically Converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding Eurodollar Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
Section 4.5 Compensation. The Borrower shall pay to the Agent for the
------------
account of each Lender, promptly upon the request of such Lender through the
Agent, such amount or amounts as shall be sufficient (in the reasonable opinion
of such Lender) to compensate it for any loss, cost or expense incurred by it as
a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Loan or
a Bankers' Acceptance for any reason (including, without limitation, the
acceleration of the outstanding Loans pursuant to Section 11.2) on a date
------------
other than the last day of an Interest Period for such Loan or the
scheduled maturity date for such Bankers' Acceptance, respectively; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 6
---------
to be satisfied) to borrow,
45
<PAGE>
Convert or prepay a Eurodollar Loan or a Bankers' Acceptance on the date
for such borrowing, Conversion or prepayment specified in the relevant
notice of borrowing, prepayment or Conversion under this Agreement.
Section 4.6 Capital Adequacy. If, after the Closing Date, any Lender shall
----------------
have determined that the adoption or implementation of any applicable law, rule
or regulation regarding capital adequacy (including, without limitation, any
law, rule or regulation implementing the Basle Accord), or any change therein,
or any change in the interpretation or administration thereof by any central
bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on such Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, within ten Business Days after demand by
such Lender (with a copy to the Agent), the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender (or its parent)
for such reduction. A certificate of such Lender claiming compensation under
this Section 4.6 and setting forth the additional amount or amounts to be paid
-----------
to it hereunder shall be conclusive absent manifest error, provided that the
--------
determination thereof is made on a reasonable basis. In determining such amount
or amounts, such Lender may use any reasonable averaging and attribution
methods.
Section 4.7 Additional Interest on Eurodollar Loans. The Borrower shall
---------------------------------------
pay, directly to each Lender from time to time, additional interest on the
unpaid principal amount of each Eurodollar Loan held by such Lender, from the
date of the making of such Eurodollar Loan until such principal amount is paid
in full, at an interest rate per annum determined by such Lender in good faith
equal to the positive remainder (if any) of (a) the Adjusted Eurodollar Rate
applicable to such Eurodollar Loan minus (b) the Eurodollar Rate applicable to
-----
such Eurodollar Loan. Each payment of additional interest pursuant to this
Section 4.7 shall be payable by the Borrower on each date upon which interest is
- -----------
payable on such Eurodollar Loan pursuant to Section 2.4(b); provided, however,
-------------- -------- -------
that the Borrower shall not be obligated to make any such payment of additional
interest until the first Business Day after the date when the Borrower has been
informed (i) that such Lender is subject to a Reserve Requirement and (ii) of
the amount of such Reserve Requirement (after which time the Borrower shall be
obligated to make all such payments of additional interest, including, without
limitation, such payments of additional interest that otherwise would have been
payable by the Borrower on or prior to such time had the Borrower been earlier
informed).
46
<PAGE>
ARTICLE 5
Security
--------
Section 5.1 Collateral. To secure the full and complete payment and
----------
performance of the Obligations, the Loan Parties will, and will cause Holdings
and each of Mail-Well's Subsidiaries, other than Unrestricted Subsidiaries and
other than MTRC, to, grant to the Agent for the benefit of the Agent and the
Lenders a perfected, first priority Lien (except for Permitted Liens, if any,
which are expressly permitted by the Loan Documents to have priority over the
Liens in favor of the Agent) on all of their rights, titles and interests in and
to the following Property, whether now owned or hereafter acquired, pursuant to
the Security Documents; provided, however, that Classic shall not be obligated
-------- -------
to grant such Liens on its Property so long as the appropriate minority
shareholders of Classic have not approved the granting of such Liens as is
required as a condition thereto by the Classic Shareholders' Agreement:
(a) all Capital Stock of Mail-Well and certain other Property of
Holdings as specified in the Holdings Security Agreement and all Capital
Stock of the Subsidiaries of Mail-Well owned by Mail-Well or any Subsidiary
of Mail-Well, including, without limitation, Capital Stock of Unrestricted
Subsidiaries and other Subsidiaries of Mail-Well; and
(b) all other Property of Mail-Well and its Subsidiaries other
than (i) Unrestricted Subsidiaries and (ii) MTRC, including, without
limitation, the Mortgaged Properties and all accounts (including, without
limitation, Receivables), inventory (including, without limitation,
Inventory), equipment (other than equipment which is, concurrently
herewith, being sold by Mail-Well and its Subsidiaries and immediately
leased back by Mail-Well and its Subsidiaries pursuant to the Equipment
Lease Facility Documents), contract rights, general intangibles,
instruments, chattel paper, Permits, Intellectual Property and intercompany
Debt, but excluding the Mail-Well ESOP Loan Documents, immaterial leases,
intangibles prohibiting liens and certificated vehicles (provided, however,
-------- -------
that (A) the Agent may, in its discretion and given applicable mortgage tax
considerations, determine that certain real Properties of Mail-Well or its
Subsidiaries located in the States of New York and Tennessee shall not be
required to secure the Obligations or any portion thereof if, in the
Agent's judgment, the effect thereof is not materially adverse to the
Lenders and (B) the real Properties acquired by Mail-Well pursuant to the
Quality Park Acquisition and located at 2520 Como Avenue, St. Paul,
Minnesota and 3350 Hamilton Boulevard, Atlanta, Georgia shall not be
required to secure the Obligations).
If required by the Agent, the pledge of the Capital Stock of Supremex and
Classic shall be appropriately registered in the share registries of the issuers
of such Capital Stock. None of the Capital Stock to be pledged in accordance
with this Section 5.1 shall be subject to any transfer restriction,
-----------
shareholders' agreement or other restriction except for such restrictions, if
any, as may be reasonably acceptable to the Agent.
47
<PAGE>
Section 5.2 Guaranties. The Loan Parties shall cause Holdings and each
----------
Subsidiary of Mail-Well in existence on the Restatement Date (before and after
giving effect to the Related Transactions), other than (a) Unrestricted
Subsidiaries and (b) MTRC, to guaranty the payment and performance of the
Obligations pursuant to the Holdings Guaranty, the Mail-Well Guaranty or the
Subsidiary Guaranties, as the case may be (except that the Borrower, as primary
obligor with respect to the Obligations, shall not be required to guaranty the
payment and performance of the Obligations); provided, however, that Classic
-------- -------
shall not be obligated to execute a Subsidiary Guaranty so long as the
appropriate minority shareholders of Classic have not approved such guaranty as
is required as a condition thereto by the Classic Shareholders' Agreement.
Section 5.3 New Subsidiaries. Contemporaneously with the creation or
----------------
acquisition of any Subsidiary of Mail-Well after the Restatement Date, the Loan
Parties shall:
(a) grant or cause to be granted to the Agent, for the benefit of
the Agent and the Lenders, the Mail-Well Lenders and the Equipment Lease
Facility Lenders as security for the payment and performance of the
Obligations, the Mail-Well Obligations and the Secured Equipment Lease
Facility Obligations, a perfected, first priority security interest in all
Capital Stock or other ownership interests in or indebtedness of such
Subsidiary owned by Mail-Well or owned by any such Subsidiary (other than
an Unrestricted Subsidiary) of Mail-Well (to the extent such Capital Stock
or other ownership interests or indebtedness are already not so pledged to
the Agent, and deliver or cause to be delivered to the Agent all
certificates and instruments evidencing such Capital Stock or other
ownership interests or indebtedness together with stock powers or other
instruments of transfer or endorsements as the Agent may request, all in
form and substance reasonably satisfactory to the Agent);
(b) cause each such Subsidiary (other than an Unrestricted
Subsidiary) to guaranty the payment and performance of the Obligations, the
Mail-Well Obligations and the Secured Equipment Lease Facility Obligations
by executing and delivering to the Agent a Subsidiary Guaranty; and
(c) cause each such Subsidiary (other than an Unrestricted
Subsidiary) to execute and deliver to the Agent a Subsidiary Security
Agreement and such other Security Documents (including, without limitation,
financing statements) as the Agent may reasonably request to grant the
Agent, for the benefit of the Agent and the Lenders, the Mail-Well Lenders
and the Equipment Lease Facility Lenders as security for the Obligations,
the Mail-Well Obligations and the Secured Equipment Lease Facility
Obligations, respectively, a perfected, first priority Lien (except for
Permitted Liens, if any, which are expressly permitted by the Loan
Documents to have priority over the Liens in favor of the Agent) on all
Property of such Subsidiary, excluding immaterial leases, intangibles
prohibiting liens and certificated vehicles;
provided, however, that, notwithstanding anything to the contrary contained in
- -------- -------
this Section 5.3, (i) no Canadian Subsidiary of the Borrower shall be obligated
-----------
to execute a Subsidiary Guaranty guaranteeing payment or performance of the
Mail-Well Obligations or the Secured Equipment Lease Facility Obligations as
otherwise required in clause (b) preceding, and (ii) no Canadian
----------
48
<PAGE>
Subsidiary of Supremex shall be obligated to execute a Subsidiary Security
Agreement or other Security Documents securing payment or performance of the
Mail-Well Obligations or the Secured Equipment Lease Facility Obligations as
otherwise required in clause (c) preceding. None of the Capital Stock to be
----------
pledged in accordance with this Section 5.3 shall be subject to any transfer
-----------
restriction, shareholders' agreement or other restriction except for such
restrictions, if any, as may be reasonably acceptable to the Agent.
Section 5.4 New Mortgaged Properties. The Loan Parties will, and will
------------------------
cause each of their Subsidiaries, other than (a) Unrestricted Subsidiaries and
(b) MTRC, to, contemporaneously with (i) the acquisition of any fee real
Property or (ii) the execution of any lease of real Property where Inventory of
Mail-Well or any of such Subsidiaries in excess of $1,000,000 is or will be
located or covering any plant or storage site, execute, acknowledge and deliver
to the Agent a Mortgage or an amendment or modification to an existing Mortgage
covering (A) all fee real Property acquired by Mail-Well or any of such
Subsidiaries subsequent to the Closing Date and (B) all of Mail-Well's or any of
such Subsidiaries' rights and interests as lessee, in, to and under each such
real estate lease entered into subsequent to the Closing Date, together with
evidence reasonably satisfactory to the Agent and its counsel, including,
without limitation, if requested by the Agent, a commitment for a mortgagee
policy of title insurance in favor of the Agent, in form and substance
reasonably satisfactory to the Agent, that the Mortgage creates a valid, first
priority Lien on the fee estate or leasehold estate, as the case may be, in
favor of the Agent for the benefit of the Agent and the Lenders (except for
Permitted Liens, if any, which are expressly permitted by the Loan Documents to
have priority over the Liens in favor of the Agent), together with appraisals
and surveys if requested by the Agent; provided, however, that, with respect to
-------- -------
the acquisition of any fee real Property having a fair market value of less than
$500,000, Mail-Well and such Subsidiaries shall not be required to execute,
acknowledge or deliver such documents unless or until fee real Property or
Properties having an aggregate fair market value of $500,000 or more would be
covered by any such new Mortgage or amendment or modification to an existing
Mortgage. Following the date of each such acquisition of Property, if requested
by the Agent, the Loan Parties shall, and shall cause each of such Subsidiaries
with an interest in such Properties to, (i) deliver or cause to be delivered to
the Agent, a mortgagee policy of title insurance insuring the Liens of the
Mortgage covering such fee real Property in an amount reasonably satisfactory to
the Agent on standard form policies (except for Permitted Liens, if any, which
are expressly permitted by the Loan Documents to have priority over the Liens in
favor of the Agent) and (ii) provide the Agent with a current environmental
assessment of such Property in form and substance reasonably satisfactory to the
Agent. In addition, with respect to each such leasehold estate, the Loan
Parties will, and will cause each of such Subsidiaries to, use their best
efforts to obtain either (A) waivers of landlord's Liens from each lessor or (B)
landlord agreements from each lessor, in form and substance reasonably
satisfactory to the Agent.
Section 5.5 Release of Collateral. Upon any sale, transfer or other
---------------------
disposition of Collateral that is expressly permitted under Section 9.8 of the
Mail-Well Credit Agreement and upon five Business Days prior written request by
the Borrower, the Agent shall execute at Mail-Well's and the Borrower's expense
such documents as may be necessary to evidence the release by the Agent of its
Liens on such Collateral; provided, however, that (a) the Agent shall not be
-------- -------
required to release any Lien on any Collateral if a Default shall have occurred
and be continuing, (b) the Agent shall not be required to execute any such
document on terms which, in the Agent's
49
<PAGE>
opinion, would expose the Agent to liability or create any obligation not
reimbursed by Mail-Well and the Borrower or entail any consequences other than
the release of such Lien without recourse or warranty, and (c) such release
shall not in any manner discharge, affect or impair any of the Obligations or
any of the Agent's Liens on any Collateral retained by Holdings or Mail-Well or
any of its Subsidiaries, including, without limitation, its Liens on the
proceeds of any such sale, transfer or other disposition. The Loan Parties
represent and warrant to the Agent and the Lenders that none of the "GECC
Equipment", as such term is defined in the Mail-Well Credit Agreement, is, or
was previously, owned by any Loan Party, and that such equipment is being leased
by one or more of the Loan Parties as lessee from General Electric Capital
Corporation as owner and lessor. The Lenders authorize the Agent to confirm in
writing (in the form of a release or otherwise, as the Agent may determine) that
the GECC Equipment and the proceeds thereof do not constitute Collateral and to
release the Agent's Lien on the Mail-Well ESOP Loan Documents, the Equipment
Lease Facility Equipment and, concurrently with each transfer of such
Receivables to MTRC in accordance with the terms and provisions of the Accounts
Receivable Securitization Facility Documents, the Receivables. Without limiting
the generality of the foregoing, each Lender hereby acknowledges and agrees that
the Agent has executed and delivered, or will execute and deliver, a letter
agreement to and in favor of Paribas Properties, Inc. and the "Equity Lenders"
and the "Financing Lenders", as such terms are defined in the Equipment Lease
Facility Documents, pursuant to which the Agent (as among the Agent, the
Lenders, the Mail-Well Lenders, Paribas Properties, Inc. and such "Equity
Lenders" and "Financing Lenders" only) disclaims any security interest in the
Equipment Lease Facility Equipment.
Section 5.6 Setoff. If an Event of Default shall have occurred and be
------
continuing, each Lender is hereby authorized at any time and from time to time,
without notice to Mail-Well, the Borrower or any other Loan Party (any such
notice being hereby expressly waived by the Loan Parties), to set off and apply
any and all deposits (general or special, time or demand, provisional or final)
at any time held and other indebtedness at any time owing by such Lender to or
for the credit or the account of any Loan Party against any and all of the
Obligations of the Loan Parties (or any one or more of them) now or hereafter
existing under this Agreement, any of such Lender's Notes or any other Loan
Document, irrespective of whether or not the Agent or such Lender shall have
made any demand under this Agreement, any of such Lender's Note or any such
other Loan Document and although such Obligations may be unmatured. Each Lender
agrees promptly to notify the Borrower (with a copy to the Agent) after any such
setoff and application, provided that the failure to give such notice shall not
--------
affect the validity of such setoff and application. The rights and remedies of
each Lender hereunder are in addition to other rights and remedies (including,
without limitation, other rights of setoff) which such Lender may have.
ARTICLE 6
Conditions Precedent
--------------------
Section 6.1 Initial Extension of Credit. Each of the obligation of each
---------------------------
Lender to make its initial Loan under this Agreement, the obligation of the
Issuing Bank to issue the initial Letter of Credit under this Agreement and the
obligation of the Revolving Credit Lenders to create the initial Bankers'
Acceptance under this Agreement are subject to the conditions precedent that the
Agent shall have received, on or before the date of the making of such initial
Loan, the issuance
50
<PAGE>
of such initial Letter of Credit or the creation of such initial Bankers'
Acceptance, respectively, all of the following in form and substance
satisfactory to the Agent and, in the case of actions to be taken, evidence that
the following required actions have been taken to the satisfaction of the Agent:
(a) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery and performance by such Loan Party of the Loan
Documents and the Related Transactions Documents (as defined in the Mail-Well
Credit Agreement) to which it is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency certified by
----------------------
the Secretary or an Assistant Secretary of each Loan Party certifying the
name of each officer of such Loan Party (i) who is authorized to sign the
Loan Documents to which such Loan Party is or is to be a party (including any
certificates contemplated therein), together with specimen signatures of each
such officer, and (ii) who will, until replaced by other officers duly
authorized for that purpose, act as its representative for the purposes of
signing documents and giving notices and other communications in connection
with the Loan Documents and the transactions contemplated thereby;
(c) Articles or Certificates of Incorporation, etc.. The articles or
-----------------------------------------------
certificates of incorporation or amalgamation, certificate of formation,
certificate of limited partnership, partnership agreement or other applicable
constitutional document of each Loan Party certified by a Secretary or an
Assistant Secretary or other appropriate officer of such Loan Party as being
accurate and complete copies thereof;
(d) Bylaws. The bylaws of each Loan Party certified by the Secretary
------
or an Assistant Secretary of such Loan Party;
(e) Governmental Certificates. Certificates of appropriate officials
-------------------------
as to the existence and good standing, status or compliance, as applicable,
of each Loan Party in their respective jurisdictions of incorporation or
organization and any and all jurisdictions where such Loan Party is qualified
to do business as a foreign corporation or other entity, each such
certificate to be dated as of a Current Date;
(f) Term Loans A Notes. The Term Loans A Notes duly completed and
------------------
executed by the Borrower;
(g) Term Loans B Notes. The Term Loans B Notes duly completed and
------------------
executed by the Borrower;
(h) Revolving Credit Loans Notes. The Revolving Credit Loans Notes
----------------------------
duly completed and executed by the Borrower;
(i) Holdings Guaranty. The Holdings Guaranty executed by Holdings;
-----------------
51
<PAGE>
(j) Mail-Well Guaranty. The Mail-Well Guaranty executed by Mail-Well;
------------------
(k) Subsidiary Guaranties. A Subsidiary Guaranty executed by each of
---------------------
the Subsidiaries of Mail-Well, other than (i) the Borrower and Classic, (ii)
Unrestricted Subsidiaries, and (iii) MTRC;
(l) Holdings Security Agreement. The Holdings Security Agreement
---------------------------
executed by Holdings;
(m) Mail-Well Security Agreement. The Mail-Well Security Agreement
----------------------------
executed by Mail-Well;
(n) Borrower Security Agreement. The Borrower Security Agreement
---------------------------
executed by the Borrower;
(o) Subsidiary Security Agreements. A Subsidiary Security Agreement
------------------------------
executed by each of the Subsidiaries of Mail-Well, other than (i) the Borrower
and Classic, (ii) Unrestricted Subsidiaries, and (iii) MTRC;
(p) Mortgages. Mortgages covering all of the Mortgaged Properties
---------
owned by Mail-Well or any of its Subsidiaries listed on Schedule 1.1(a) hereof
---------------
executed by Mail-Well or such Subsidiary (as applicable) or, with respect to
such Mortgaged Properties as to which a Mortgage was previously executed,
amendments and restatements of or other modifications to such Mortgages
previously executed;
(q) Insurance Policies. Copies of all insurance policies required by
------------------
this Agreement and the other Loan Documents, together with loss payable
endorsements naming the Agent as loss payee under all such casualty insurance
policies and the Agent as an additional insured party under all such liability
policies;
(r) Stock Certificates. The stock certificates representing all of the
------------------
issued and outstanding Capital Stock of Mail-Well and each of its Subsidiaries
(other than the Capital Stock of Classic not owned by the Borrower) accompanied
by appropriate stock powers signed in blank;
(s) Financing Statements. UCC-1 financing statements and all other
--------------------
requisite filing documents (or amendments to such financing statements or other
documents previously filed) executed by the Loan Parties necessary to perfect
the Liens created pursuant to the Security Documents;
(t) Lien Releases, etc. Duly executed (i) releases or assignments of
------------------
Liens and UCC-3 financing statements and other Lien releases in recordable form,
(ii) with respect to leased Mortgaged Properties, waivers and consents of the
landlords thereof and their lenders, and (iii) with respect to fee owned
Mortgaged Properties, mortgagee policies of title insurance issued in favor of
the Agent or endorsements thereto or title opinions (as the Agent may require),
in each case as may be necessary to reflect that the Liens created by
52
<PAGE>
the Security Documents are first priority Liens (except for Permitted Liens, if
any, which are expressly permitted by the Loan Documents to have priority over
the Liens in favor of the Agent); each such mortgagee policy of title insurance
(or commitment therefor or endorsement thereto, as applicable) or title opinion
shall (i) have been issued at the expense of Mail-Well or a Subsidiary of Mail-
Well, (ii) contain no exceptions or exclusions except for those approved by the
Agent, (iii) have been issued and, with respect to title insurance, underwritten
by companies acceptable to the Agent, (iv) with respect to title insurance,
contain such endorsements as may be required by the Agent, (v) with respect to
title insurance, be in an amount satisfactory to the Agent, and (vi) be
otherwise in form and substance satisfactory to the Agent;
(u) Lien Searches. Lien searches in the names of Mail-Well and each
-------------
Subsidiary of Mail-Well (and in all names under which it has done business
within the last five years) in each state or province where each such Person
maintains an office or has Property, showing no financing statements or other
Lien instruments of record except for Permitted Liens;
(v) Letter of Credit Agreement. With respect to any issuance of a
--------------------------
Letter of Credit, a Letter of Credit Agreement in the form required by the
Issuing Bank with respect thereto executed by the Borrower;
(w) Solvency Certificate. A certificate executed by a Responsible
--------------------
Officer of Holdings (with respect to Holdings) and Mail-Well (with respect to
Mail-Well and its Subsidiaries) demonstrating that, both concurrently with and
after giving effect to the Loans and the Related Transactions (as defined in the
Mail-Well Credit Agreement), each of Holdings, Mail-Well and the Subsidiaries of
Mail-Well are Solvent on a consolidated and consolidating basis, and
contribution agreements between and among Mail-Well and its Subsidiaries to
evidence applicable rights of contribution;
(x) Prepayment of Certain Loans. The Borrower shall have, as of the
---------------------------
Restatement Date and concurrently with the execution and delivery of this
Agreement, (i) prepaid the principal amount of the Term Loans A in the amount of
$_______ such that, after giving effect thereto, the aggregate outstanding
principal amount of the Term Loans A equals $45,000,000, and (ii) prepaid the
principal amount of the Revolving Credit Loans in the amount of Cdn. $______
such that, after giving effect thereto, the Outstanding Credit is Cdn.
$10,000,000;
(y) Consummation of Related Transactions, etc. All conditions
-----------------------------------------
precedent to (A) the making of the Mail-Well Loans under the Mail-Well Credit
Agreement, (B) the advancement of funds under the Equipment Lease Facility, and
(C) the advancement of funds under the Accounts Receivable Securitization
Facility, shall have been satisfied, and each of the Equipment Lease Facility
and the Accounts Receivable Securitization Facility shall have been funded in
accordance with the Related Transaction Documents relating thereto and in
compliance with all conditions and requirements contained therein without waiver
or exception except as may have been consented to by the Agent in writing;
53
<PAGE>
(z) Consents. Copies of all material consents necessary for the
--------
execution, delivery and performance by each of the Loan Parties of the Loan
Documents and the Related Transactions Documents (as defined in the Mail-
Well Credit Agreement) to which it is a party, which consents shall be
certified by a Responsible Officer of Mail-Well or the Borrower as true and
correct copies of such consents as of the Restatement Date;
(aa) Payment of Interest, Fees and Expenses. Mail-Well and the
--------------------------------------
Borrower shall have paid all fees accrued to the Restatement Date and not
previously paid with respect to the loans, letters of credit and bankers'
acceptances outstanding under the Original Supremex Credit Agreement, and
to Mail-Well and the Borrower shall have paid all fees due on or before the
Restatement Date as specified in this Agreement or in the Agent's Letter
and all fees and expenses of or incurred by the Agent and its counsel to
the extent billed on or before the Restatement Date and payable pursuant to
this Agreement;
(bb) Compliance with Laws. The Loan Parties shall have complied
--------------------
with all Governmental Requirements necessary to consummate the transactions
contemplated by this Agreement, the other Loan Documents and the Related
Transactions Documents (as defined in the Mail-Well Credit Agreement);
(cc) No Prohibitions. No Governmental Requirement shall prohibit
---------------
the consummation of the transactions contemplated by this Agreement, any
other Loan Document or any Related Transactions Document (as defined in the
Mail-Well Credit Agreement), and no order, judgment or decree of any
Governmental Authority or arbitrator shall, and no litigation or other
proceeding shall be pending or threatened which would, enjoin, prohibit,
restrain or otherwise adversely affect the consummation of the transactions
contemplated by this Agreement, the other Loan Documents and the Related
Transactions Documents (as defined in the Mail-Well Credit Agreement) or
otherwise have a Material Adverse Effect;
(dd) Bank Accounts. If and to the extent required by the Agent or
-------------
the Required Lenders, Mail-Well and its Subsidiaries shall have established
Concentration Accounts (or, if Mail-Well and its Subsidiaries so desire, a
single Concentration Account) into which proceeds of all Collateral,
including, without limitation, proceeds of sales of accounts, are deposited
directly, as received, which Concentration Account(s) shall be governed by
an agreement or agreements between Mail-Well and/or its Subsidiaries (as
applicable), the Agent and the depository bank(s) in form and substance
satisfactory to the Agent;
(ee) Financial Statements. Copies of each of the financial
--------------------
statements referred to in Section 7.2;
-----------
(ff) Opinions of Counsel. Favorable opinions of Bracewell &
-------------------
Patterson, L.L.P., counsel for the Loan Parties, Cassels Brock & Blackwell,
Canadian counsel for the Loan Parties, and Stikeman, Elliott, Canadian
counsel for the Agent, and such other counsel as may be acceptable to the
Agent, in form and substance satisfactory to the Agent with respect to
Holdings and the Borrower and its Subsidiaries and with respect to the
54
<PAGE>
Loan Documents and the Related Transactions (as defined in the Mail-Well
Credit Agreement) as the Agent may require; and
(gg) Intercreditor Agreement. The Intercreditor Agreement shall
-----------------------
have been executed by the Lenders, the Mail-Well Lenders and the Equipment
Lease Facility Lenders.
Mail-Well and the Borrower shall deliver, or cause to be delivered, to the Agent
sufficient counterparts of each agreement, document or instrument to be received
by the Agent under this Section 6.1 to permit the Agent to distribute a copy of
-----------
the same to each of the Lenders. Upon the request of the Borrower, the Agent
shall inform the Borrower in writing as to the status of satisfaction of the
conditions precedent set forth in this Section 6.1 and each of the additional
-----------
conditions precedent set forth in this Article 6.
---------
Section 6.2 All Extensions of Credit . The obligation of each Lender to
-------------------------
make any Loan (including the initial Loan) and the obligation of the Issuing
Bank to issue any Letter of Credit (including the initial Letter of Credit) and
the obligation of the Revolving Credit Lenders to create any Bankers'
Acceptances (including the initial Bankers' Acceptance) under this Agreement are
subject to the satisfaction of each of the conditions precedent set forth in
Section 6.1 and each of the following additional conditions precedent:
- -----------
(a) No Default. No Default shall have occurred and be continuing,
----------
or would result from such Loan, Letter of Credit or Bankers' Acceptance;
(b) Representations and Warranties. All of the representations
------------------------------
and warranties of Mail-Well and the Borrower and the other Loan Parties
contained in Article 7 hereof and in the other Loan Documents shall be
---------
true and correct on and as of the date of such Loan or Letter of Credit
with the same force and effect as if such representations and warranties
had been made on and as of such date; and
(c) Additional Documentation. The Agent shall have received such
------------------------
additional approvals, opinions, agreement, documents and instruments as
the Agent may reasonably request.
Each notice of borrowing with respect to the making of any Loans or request for
the issuance of a Letter of Credit or acceptance of a Bankers' Acceptance given
by the Borrower hereunder shall constitute a representation and warranty by
Mail-Well and the Borrower and the other Loan Parties that the conditions
precedent set forth in Sections 6.2(a) and (b) have been satisfied (both as of
--------------- ---
the date of such notice and, unless the Borrower otherwise notifies the Agent
prior to the date of such borrowing or Letter of Credit or Bankers' Acceptance,
as of the date of such borrowing or Letter of Credit or Bankers' Acceptance)
Section 6.3 Term Loans B. The obligation of each Lender to make any of
------------
the Term Loans B is subject to the conditions precedent that the Agent shall
have received, on or before the advance of such Term Loans B, all of the
following in form and substance reasonably satisfactory to the Agent (except as
otherwise provided in this Section 6.3 below) and, in the case of actions
-----------
55
<PAGE>
to be taken, evidence that the following required actions have been taken to the
satisfaction of the Agent:
(a) Resolutions. Resolutions of the Board of Directors of each Loan
-----------
Party that is a party to any PNG Acquisition Documents or Loan Documents to
be executed in connection with the Term Loans B certified by its Secretary
or an Assistant Secretary which authorize the PNG Acquisition, the
borrowing of the Term Loans B (with respect to the resolutions of the Board
of Directors of the Borrower) and the execution, delivery and performance
by such Loan Party of the Loan Documents to be executed and/or delivered by
it in connection therewith (as applicable);
(b) Incumbency Certificate. A certificate of incumbency certified by
----------------------
the Secretary or an Assistant Secretary of each Loan Party that is a party
to any PNG Acquisition Documents or Loan Documents to be executed in
connection with the Term Loans B certifying the name of each officer of
such Loan Party who is authorized to sign the Loan Documents to be executed
and/or delivered in connection with the PNG Acquisition;
(c) Articles or Certificates of Incorporation, etc. Copies of any
----------------------------------------------
amendments to the articles or certificates of incorporation or other
applicable constitutional document of each Loan Party since the Restatement
Date, certified by the appropriate Governmental Authority of such Loan
Party's jurisdiction of incorporation;
(d) Bylaws. A true and correct copy of any amendments to the bylaws
------
of each Loan Party since the Restatement Date, in each case certified by
the Secretary or an Assistant Secretary of such Loan Party;
(e) Additional Security Documents. If requested by the Agent, such
-----------------------------
security agreements, financing statements and assignments executed by the
Borrower as the Agent may request in connection with the Property acquired
pursuant to the PNG Acquisition, all of which documents shall be within the
power and authority of the Borrower and shall be enforceable in accordance
with their respective terms, except as may be limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement
of creditors' rights and general principles of equity;
(f) Mortgages. Mortgages covering all the material real Properties
---------
or interests therein (including leasehold interests) acquired pursuant to
the PNG Acquisition, and such lease agreements, surveys, appraisals,
environmental reports, agreements of landlords and their lenders relating
to leased Properties, information relating to zoning and mortgagee policies
of title insurance as the Agent may require in connection therewith
(consistent with the requirements for real Properties contained in the
Original Supremex Credit Agreement);
(g) Endorsements to Mortgagee Title Policies. Endorsements to
----------------------------------------
existing policies of title insurance as the Agent may reasonably require;
(h) Lien Releases. Payoff letters in form and substance reasonably
-------------
acceptable to the Agent or duly executed releases or assignments of Liens
and financing statements
56
<PAGE>
in recordable form as may be necessary to reflect that the Liens created by
the Security Documents affecting the assets acquired in connection with the
PNG Acquisition are first priority Liens (except for Permitted Liens, if
any, which are expressly permitted by the Loan Documents to have priority
over the Liens in favor of the Agent);
(i) Lien Searches. Lien searches in the name of PNG in each province
-------------
or other jurisdiction where such Person maintains an office or has
Property, showing no financing statements or other Lien instruments of
record except for Permitted Liens or Liens being released concurrently with
the PNG Acquisition;
(j) Acquisition Documents. Copies of all PNG Acquisition Documents,
---------------------
and confirmation that the Loan Parties will not, in connection with the PNG
Acquisition, assume or incur any indebtedness, liabilities or obligations
other than those that are reasonably acceptable to the Agent;
(k) Consummation of the PNG Acquisition. All of the PNG Acquisition
-----------------------------------
Documents shall have been duly and validly executed and delivered by each
of the parties thereto and shall constitute the legal, valid and binding
obligations of the parties thereto, enforceable against such parties in
accordance with their respective terms (except as may be limited by
bankruptcy, insolvency or other laws of general application relating to the
enforcement of creditor's rights); and the PNG Acquisition shall have been
consummated contemporaneously with the making of the Term Loans B (and in
compliance with all conditions and requirements contained therein without
waiver or exception except as may have been consented to by the Borrower in
the exercise of its prudent business judgment), and the Borrower shall have
informed the Agent of the purchase price (whether payable in cash,
property, assumption of Debt or other form of consideration) payable in
connection with the PNG Acquisition, which purchase price shall not exceed
Cdn. $29,000,000;
(l) Consents, etc. All approvals, authorizations, consents and
-------------
waivers of any Governmental Authority or other Person necessary or
appropriate for the execution, delivery and performance by each of the Loan
Parties and other parties thereto of the PNG Acquisition Documents to which
it is a party, including, without limitation, (i) all such approvals,
authorizations, consents and waivers disclosed in the PNG Acquisition
Documents (including those required in connection with the assignment of
material contracts) and (ii) any such approvals, authorizations, consents
or waivers reasonably required by the Agent in connection with the
Mortgaged Properties acquired in connection with the PNG Acquisition and
the granting of a security interest to the Agent in each material contract
acquired or assumed by any Loan Party in connection with the PNG
Acquisition, shall have been obtained by the Borrower except to the extent
the same may have been waived by the Borrower in the exercise of its
prudent business judgment and none of which approvals, authorizations,
consents or waivers which has not been obtained will, individually or in
the aggregate with all such approvals, authorizations, consents or waivers
which have not been obtained in connection with the PNG Acquisition,
materially adversely affect the assets or business being acquired pursuant
to the PNG Acquisition Documents;
57
<PAGE>
(m) Permits. The Borrower shall have obtained all material Permits
-------
that are necessary to ensure that they are able to conduct their businesses
and Properties acquired pursuant to the PNG Acquisition substantially in
accordance with all Governmental Requirements;
(n) Regulatory Approvals. All filings, consents or approvals with or
--------------------
of Governmental Authorities necessary to consummate the PNG Acquisition
shall have been made and/or obtained, as applicable, including, without
limitation, all filings (if any) required under the Investments Canada Act
and Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the lapse of
all waiting periods with respect thereto;
(o) No Prohibitions. No Governmental Requirement shall prohibit or
---------------
adversely affect the consummation of the transactions contemplated by this
Agreement or the other Loan Documents or the PNG Acquisition, and no
action, suit, investigation, proceeding, order, judgment or decree of,
before or by any Governmental Authority, arbitrator or other Person shall,
and no such action, suit, investigation, proceeding, order, judgment or
decree shall be pending or threatened which would, enjoin, prohibit,
restrain or otherwise adversely affect the consummation of the transactions
contemplated by this Agreement or the other Loan Documents and the PNG
Acquisition Documents or otherwise have a Material Adverse Effect;
(p) Financial Statements; No Material Adverse Effect or Change. The
----------------------------------------------------------
financial statements (relating to PNG and the assets to be acquired
pursuant to the PNG Acquisition) delivered or to be delivered pursuant to
the PNG Acquisition Documents (which financial statements shall be audited
if and to the extent available), and such other financial statements, pro
forma financial statements and financial projections as of and for such
periods as the Agent may reasonably request, shall have been delivered to
the Agent and the Lenders, and such financial statements, to the knowledge
of the Loan Parties, shall be true and correct in all material respects and
shall fairly and accurately present the financial condition and results of
operations of the Persons specified therein as of and for the periods
indicated therein; as of the proposed date of the making of the Term Loans
B and both before and after giving effect to the Term Loans B and the PNG
Acquisition, no Material Adverse Effect shall have occurred or could
reasonably be expected to occur as a result of or in connection with the
PNG Acquisition and no material adverse change shall have occurred with
respect to the financial condition, business, operations, capitalization,
liabilities or prospects of the Borrower or its Subsidiaries since June 30,
1996;
(q) Disbursement Instructions. Disbursement instructions from the
-------------------------
Borrower to the Agent with respect to the disbursement of the proceeds of
the Term Loans B;
(r) Legal Opinions. Favorable opinions (or comfort letters with
--------------
respect to clause (ii) succeeding) of: (i) counsel for the Loan Parties, in
-----------
form and substance satisfactory to the Agent with respect to the PNG
Acquisition and the Loan Documents to be executed and/or delivered in
connection therewith and (ii) such other counsel as may be acceptable to
the Agent regarding the form and enforceability of the Mortgages in the
58
<PAGE>
jurisdictions where any real Property acquired in connection with the PNG
Acquisition is located;
(s) Reliance Letters. Copies of all legal opinions issued in
----------------
connection with the PNG Acquisition and (except if and to the extent that
the Borrower is not able to obtain such letters after exercising its
reasonable efforts to do so) letters from counsel that issued such opinions
stating that such opinions may be relied upon by the Agent and the Lenders;
(t) Representations and Warranties. All representations and
------------------------------
warranties made by the Loan Parties in the PNG Acquisition Documents and,
to the knowledge of the Loan Parties after due inquiry, all representations
and warranties made by all other Persons in the PNG Acquisition Documents
shall be true and correct in all material respects on and as of each date
made or deemed made and as of the Term Loans B Funding Date; and the PNG
Acquisition Documents shall set forth the entire agreement and
understanding of the parties thereto relating to the subject matter
thereof, and there shall be no other agreements, arrangements or
understandings, written or oral, relating to the matters covered thereby;
and
(u) Satisfaction of Conditions Precedent. As of the Term Loans B
------------------------------------
Funding Date, all conditions precedent to the PNG Acquisition Documents
shall have been fulfilled or (with the prior consent of the Borrower in the
exercise of its prudent business judgment) waived, and there shall not have
been any breach of any material term or condition contained in the PNG
Acquisition Documents; after giving effect to the PNG Acquisition, the
Borrower will have acquired and become the owner of all of the Property to
be acquired thereby free and clear of any Liens, except Permitted Liens; in
connection with the PNG Acquisition, the Loan Parties shall not have
assumed any liabilities other than those reflected or reserved against in
the applicable pro forma financial statements delivered to the Agent or
contingent liabilities under the PNG Acquisition Documents which are not
required to be reflected or reserved against in accordance with GAAP.
Each notice of borrowing with respect to the making of any Term Loans B given by
the Borrower shall constitute a representation and warranty by the Borrower and
the other Loan Parties that all conditions precedent set forth in this Section
-------
6.3 have been satisfied (both as of the date of such notice and, unless the
- ---
Borrower otherwise notifies the Agent prior to the date of such borrowing, as of
the date of such borrowing). Notwithstanding the first sentence of this Section
-------
6.3, the documents or other matters referred to in clauses (m), (o), (s) and (t)
- --- ------- --- --- --- ---
shall not be required to be in form and substance satisfactory to the Agent.
Section 6.4 Closing Certificates. Mail-Well and the Borrower shall,
--------------------
concurrently with the execution and delivery of this Agreement, execute and
deliver to the Agent a Closing Certificate in form and substance satisfactory to
the Agent certifying as to the satisfaction of each of the conditions precedent
set forth in Section 6.1 and 6.2 which are required to be satisfied on or before
----------- ---
the Restatement Date. Mail-Well and the Borrower shall, concurrently with any
advance of any of the Term Loans B, execute and deliver to the Agent a Closing
Certificate in form and substance satisfactory to the Agent certifying as to the
satisfaction of each of the conditions precedent set forth in Sections 6.2 and
------------
6.3 which are required to be satisfied on or before the
- ---
59
<PAGE>
Term Loans B Funding Date, which subsequent Closing Certificate shall
incorporate any supplements to certain schedules hereto prepared by the Borrower
in accordance with Section 13.26.
-------------
ARTICLE 7
Representations and Warranties
------------------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby jointly and severally represents and warrants to the Agent and
the Lenders that the following statements are and, after giving effect to the
Related Transactions, will be true, correct and complete:
Section 7.1 Corporate Existence. Each Loan Party (a) is a corporation,
-------------------
or, with respect to Wisco II and Wisco III, a limited liability company, duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority to own its Properties and carry on its business as now being or as
proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
Each Loan Party has the power and authority and legal right to execute, deliver
and perform its obligations under the Loan Documents and the Related
Transactions Documents to which it is or may become a party. Prior to the
Closing Date, the Borrower did not engage in any business or incur any
liabilities except for activities, expenses and liabilities incident to its
organization and to the carrying out of the transactions contemplated by the
Original Supremex Credit Agreement.
Section 7.2 Financial Statements.
---------------------
(a) Mail-Well has delivered to the Agent and the Lenders (i) its
audited consolidated balance sheet and statements of income, cash flow and
retained earnings for the fiscal year ended December 31, 1995 and (ii) its
unaudited consolidated balance sheet and statements of income, cash flow and
retained earnings for the period ended June 30, 1996. To the knowledge of Mail-
Well and the Borrower, such financial statements are true and correct, have been
prepared in accordance with GAAP and fairly and accurately present, on a
consolidated basis, the financial condition of Mail-Well and its consolidated
Subsidiaries as of the respective dates indicated therein and the results of
operations for the respective periods indicated therein. There has not been, as
of the Restatement Date, any material adverse change in the business, condition
(financial or otherwise), operations, prospects or Properties of Mail-Well or
any of its consolidated Subsidiaries since the effective dates of the most
recent financial statements referred to in this Section 7.2(a).
--------------
(b) Neither the Borrower nor any of its Subsidiaries has any
contingent liabilities, liabilities for taxes, unusual forward or long-term
commitments or unrealized or unanticipated losses from any unfavorable
commitments except as referred to or reflected in the Pro Formas.
(c) The Projections represent, as of the Restatement Date, the good
faith estimate of Mail-Well and the Borrower and their senior management
concerning the probable financial
60
<PAGE>
condition and performance of the Borrower and its Subsidiaries based on
assumptions believed to be reasonable at the time made.
Section 7.3 Corporate Action; No Breach. The execution, delivery and
---------------------------
performance by each Loan Party of the Loan Documents and Related Transactions
Documents to which it is or may become a party and compliance with the terms and
provisions hereof and thereof have been duly authorized by all requisite
corporate or other entity action on the part of the Loan Parties and do not and
will not (a) violate or conflict with, or result in a breach of, or require any
consent under (i) the articles or certificates of incorporation or bylaws (or,
with respect to Wisco II and Wisco III, certificate of formation) of any Loan
Party, (ii) any Governmental Requirement or any order, writ, injunction or
decree of any Governmental Authority or arbitrator, or (iii) any material
agreement, document or instrument to which any Loan Party is a party or by which
any Loan Party or any of its Property is bound or subject, or (b) constitute a
default under any such material agreement, document or instrument, or result in
the creation or imposition of any Lien (except under the Security Documents as
provided in Article 5) upon any of the revenues or Property of any Loan Party.
---------
Section 7.4 Operation of Business. The Loan Parties possess all Permits,
---------------------
franchises, licenses and authorizations necessary to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted except where the failure to so possess would not cause a Material
Adverse Effect. None of such Persons is in material violation of any such
Permits, franchises, licenses or authorizations.
Section 7.5 Intellectual Property. The Loan Parties own or possess (or
---------------------
will be licensed or have the full right to use) all Intellectual Property which
is necessary for the operation of their respective businesses as presently
conducted and as proposed to be conducted, without any known conflict with the
rights of others. The consummation of the transactions contemplated by this
Agreement, the other Loan Documents and the Related Transactions Documents will
not materially alter or impair, individually or in the aggregate, any of such
rights of such Persons. No product of the Loan Parties infringes upon any
Intellectual Property owned by any other Person, and no claim or litigation is
pending or, to the knowledge of Mail-Well or the Borrower, threatened against
any Loan Party or any such Person contesting its right to use any product or
material which could have a Material Adverse Effect. There is no violation by
any Loan Party of any right of such Loan Party with respect to any material
Intellectual Property owned or used by such Loan Party.
Section 7.6 Litigation and Judgments. Each material action, suit,
------------------------
investigation or proceeding before or by any Governmental Authority or
arbitrator pending or, to the knowledge of Mail-Well or the Borrower, threatened
against or affecting any Loan Party, or that relates to any of the Related
Transactions as of the Restatement Date is, and as of the Term Loans B Funding
Date will be, disclosed on Schedule 7.6 (as such Schedule may be supplemented in
------------
accordance with Section 13.26). None of such actions, suits, investigations or
-------------
proceedings could, if adversely determined, have a Material Adverse Effect. As
of the Restatement Date and as of the Term Loans B Funding Date, there are and
will be, respectively, no outstanding judgments against any Loan Party except
for such judgments as may be disclosed on Schedule 7.6 (as such Schedule may be
------------
supplemented in accordance with Section 13.26) which do not, with respect to
-------------
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all such judgments affecting the Loan Parties, exceed $1,000,000 in aggregate
amount. No Loan Party has received any opinion or memorandum or legal advice
from legal counsel to the effect that it is exposed to any liability or
disadvantage that could have a Material Adverse Effect.
Section 7.7 Rights in Properties; Liens. Each of the Loan Parties has
---------------------------
good and indefeasible title to or, except as expressly stated to the contrary on
Schedule 1.1(a) hereto or on Schedule 1.1(a) to the Mail-Well Credit Agreement,
- --------------
valid leasehold interests in its Properties and assets, real and personal,
including the Properties, assets and leasehold interests reflected in the
financial statements described in Section 7.2(a) and the Pro Formas, and none of
--------------
the Properties or leasehold interests of any Loan Party or any of its
Subsidiaries is subject to any Lien, except Permitted Liens and, with respect to
Holdings, Liens permitted by Section 8(b) of the Holdings Guaranty.
Section 7.9 Enforceability. The Loan Documents and the Related
--------------
Transactions Documents have been, or, with respect to the Loan Documents to be
executed in connection with the making of any Term Loans B, will be on or before
the Term Loans B Funding Date, duly and validly executed and delivered by each
of the Loan Parties that is a party thereto and constitute, or will constitute
upon such execution and delivery, the legal, valid and binding obligations of
the Loan Parties, enforceable against the Loan Parties in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors' rights and general
principles of equity.
Section 7.9 Approvals. No authorization, approval or consent of, and no
---------
filing or registration with or notice to, any Governmental Authority or third
party is or will be necessary for the execution, delivery or performance by any
Loan Party of any of the Loan Documents or Related Transactions Documents to
which it is a party or may become a party or for the validity or enforceability
thereof, except for such consents, approvals and filings as have been, or, with
respect to the Loan Documents to be executed in connection with the making of
any Term Loans B, will be on or before the Term Loans B Funding Date, validly
obtained or made and are (or, as applicable, will be on before the Term Loans B
Funding Date) in full force and effect. The consummation of the Related
Transactions does not require the consent or approval of any other Person,
except such consents and approvals (a) as have been, or, with respect to the
Loan Documents to be executed in connection with the making of any Term Loans B,
will be on or before the Term Loans B Funding Date, validly obtained and are
(or, as applicable, will be one before the Term Loans B Funding Date) in full
force and effect or (b) as to which the failure to obtain is not, individually
or in the aggregate, material. None of the Loan Parties has failed to obtain
any material governmental consent, approval, license, Permit, franchise or other
governmental authorization necessary for the ownership of any of its Properties
or the conduct of its business.
Section 7.10 Debt. As of the Restatement Date and as of the Term Loans B
----
Funding Date, the Borrower and its Subsidiaries have and will have no Debt
except for (a) the Obligations, (b) the Debt disclosed on the most recent
balance sheets referred to in Schedule 7.2(a), (c) the Debt disclosed on
---------------
Schedule 7.10 hereto, and (d) Debt incurred after the Restatement Date which is
- -------------
permitted in accordance with Section 9.1 of the Mail-Well Credit Agreement.
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Section 7.11 Taxes. The Loan Parties have filed all tax returns (federal,
-----
state, provincial and local) required to be filed, including all income,
franchise, employment, Property and sales tax returns, and have paid all of
their respective liabilities for taxes, assessments, governmental charges and
other levies that are due and payable. Except as may be disclosed on Schedule
--------
7.11 (as such Schedule may be supplemented in accordance with Section 13.26),
- ---- -------------
neither Mail-Well nor the Borrower is aware of any pending investigation of any
Loan Party or, immediately prior to the consummation of the PNG Acquisition,
PNG, by any taxing authority or of any pending but unassessed tax liability of
any Loan Party or, immediately prior to the PNG Acquisition, PNG, other than
with respect to (a) ad valorem or other real property taxes not in excess of
Cdn. $250,000 as to any such Person and (b) other taxes in an aggregate amount
as to any such Person which could not, if an adverse determination is made with
respect to such taxes, materially and adversely affect such Person, which (as to
each of clauses (a) and (b) preceding) are currently being contested in good
----------- ---
faith by appropriate proceedings diligently conducted by or on behalf of such
Person and as to which, if required by GAAP, such Person has established
adequate reserves. No tax Liens have been, or, immediately prior to the
consummation of the PNG Acquisition, with respect to PNG except as may be
disclosed on Schedule 7.11 (as such Schedule may be supplemented in accordance
-------------
with Section 13.26, will have been as of the Term Loans B Funding Date, filed
-------------
with respect to any Loan Party or PNG, respectively, and, except as disclosed on
Schedule 7.11 (as such Schedule may be supplemented in accordance with Section
- ------------- -------
13.26), no claims are being, or, immediately prior to the consummation of the
- -----
PNG Acquisition, with respect to PNG, will have been as of the Term Loans B
Funding Date, asserted against any Loan Party or PNG, respectively, with respect
to any taxes. Except as disclosed on Schedule 7.11 (as such Schedule may be
-------------
supplemented in accordance with Section 13.26), as of the Restatement Date and
-------------
as of the Term Loans B Funding Date, none of the U.S. income tax returns of the
Loan Parties and, to the knowledge of Mail-Well and the Borrower immediately
prior to the PNG Acquisition, PNG, are or will be under audit. The charges,
accruals and reserves on the books of the Loan Parties in respect of taxes or
other governmental charges are in accordance with GAAP.
Section 7.12 Margin Securities. None of the Loan Parties or any of their
-----------------
respective Subsidiaries is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T, U or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Loan will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
Section 7.13 ERISA; Canadian Plans. Neither any Loan Party nor any ERISA
---------------------
Affiliate maintains or contributes to, or has any obligation under, any Pension
Plan or Canadian Pension Plan other than the Pension Plans and Canadian Pension
Plans identified on Schedule 7.13 (as such Schedule may be supplemented in
-------------
accordance with Section 13.26). Each Plan and Canadian Plan of each Loan Party
-------------
is in compliance in all material respects with all applicable provisions of
ERISA and the Code or of Canadian Pension and Benefits Law, as the case may be.
Neither a Reportable Event nor a Prohibited Transaction has occurred within the
last 60 months with respect to any Plan. No event has occurred or investment
has been made which could render any Loan Party, Canadian Plan or funding agent
thereof liable for any tax or penalty under Canadian Pension and Benefits Law.
No notice of intent to terminate a Pension Plan or Canadian Pension Plan has
been filed, nor has any Pension Plan or Canadian Pension Plan been terminated.
No
63
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circumstances exist which constitute grounds entitling the PBGC or a Canadian
Pension Authority to institute proceedings to terminate, or appoint a trustee to
administer, a Pension Plan or Canadian Pension Plan, nor has the PBGC or a
Canadian Pension Authority instituted any such proceedings. Neither any of the
Loan Parties nor any ERISA Affiliate has completely or partially withdrawn from
a Multiemployer Plan. Each Loan Party and each ERISA Affiliate have met their
minimum funding requirements under ERISA and the Code or under Canadian Pension
and Benefits Law with respect to all of their Plans or Canadian Plans subject to
such requirements, and, as of the Restatement Date and the Term Loans B Funding
Date except as specified on Schedule 7.13 (as such Schedule may be supplemented
-------------
in accordance with Section 13.26), the present value of all vested benefits
-------------
under each funded Plan or funded Canadian Plan (exclusive of any Multiemployer
Plan) does not and will not exceed the fair market value of all such Plan or
Canadian Plan assets allocable to such benefits, as determined on the most
recent valuation date of such Plan or Canadian Plan and in accordance with ERISA
or Canadian Pension and Benefits Law, as the case may be. Neither any of the
Loan Parties nor any ERISA Affiliate has incurred any liability to the PBGC
under ERISA or to the PBGF. No litigation is pending or threatened concerning
or involving any Plan or Canadian Plan. There are no unfunded or unreserved
liabilities (on either a going-concern basis or a wind-up basis) relating to any
Plan or Canadian Plan that could, individually or in the aggregate, have a
Material Adverse Effect if such Loan Party were required to fund or reserve such
liability in full. As of the Restatement Date and the Term Loans B Funding
Date, no funding waivers have been or will have been requested or granted under
Section 412 of the Code with respect to any Plan. No unfunded or unreserved
liability for benefits under any Plan or Plans or Canadian Plan or Canadian
Plans (exclusive of any Multiemployer Plans) exceeds Cdn. $1,500,000 with
respect to any such Plan or Canadian Plan or Cdn. $3,000,000 with respect to all
such Plans or Canadian Plans in the aggregate as of the Restatement Date and the
Term Loans B Funding Date, on either a going-concern basis or a wind-up basis.
Section 7.14 Disclosure. No written statement, information, report,
----------
representation or warranty made by any Loan Party in any Loan Document or
Related Transaction Document or furnished to the Agent or any Lender by any Loan
Party in connection with the Loan Documents or the Related Transactions
Documents or any transaction contemplated hereby or thereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
any Loan Party which has had a Material Adverse Effect, and there is no fact
known to any Loan Party which might in the future have a Material Adverse
Effect, except as may have been disclosed in writing to the Agent and the
Lenders.
Section 7.15 Capitalization.
--------------
(a) On or about the Restatement Date and on and as of the Term Loans B
Funding Date, the authorized Capital Stock, the par value per share and the
number of shares of each class of Capital Stock issued and outstanding with
respect to each of Supremex and each of its Subsidiaries and the legal and
beneficial owners of all of such Capital Stock are as specified on Schedule
--------
7.15.
- ----
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<PAGE>
(b) On and as of the Restatement Date and the Term Loans B Funding
Date, Supremex has no Subsidiaries other than Innova and Classic.
(c) All of the issued and outstanding Capital Stock of Supremex and
its Subsidiaries has been validly issued and is fully paid and nonassessable.
Except as described on Schedule 7.15 (as such Schedule may be supplemented in
-------------
accordance with Section 13.26), there are no outstanding subscriptions, options,
-------------
warrants, calls or rights (including preemptive rights) to acquire, and no
outstanding securities or instruments convertible into, Capital Stock of
Supremex or any of its Subsidiaries.
Section 7.16 Agreements. None of the Loan Parties is a party to any
----------
indenture, loan, credit agreement, stock purchase agreement or any lease or
other agreement, document or instrument, or subject to any charter or corporate
restriction, that could have a Material Adverse Effect. None of the Loan
Parties is in default in any respect in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any
agreement, document or instrument binding on it or its Properties, except for
instances of noncompliance that, individually or in the aggregate, could not
have a Material Adverse Effect.
Section 7.17 Compliance with Laws. None of the Loan Parties is in
--------------------
violation of any Governmental Requirement, except for instances of non-
compliance that, individually or in the aggregate, could not have a Material
Adverse Effect.
Section 7.18 Investment Company Act. None of the Loan Parties is an
----------------------
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.19 Public Utility Holding Company Act. None of the Loan Parties
----------------------------------
is a "holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 7.20 Environmental Matters.
---------------------
(a) Except for instances of noncompliance with or exceptions to any of
the following representations and warranties that could not have, individually
or in the aggregate, a Material Adverse Effect:
(i) The Loan Parties and all of their respective Properties and
operations are in full compliance with all Environmental Laws. The Loan
Parties are not aware of, nor has any Loan Party received written notice
of, any past, present or future conditions, events, activities, practices
or incidents which may interfere with or prevent the compliance or
continued compliance by any Loan Party with all Environmental Laws;
(ii) The Loan Parties have obtained all Permits that are required
under applicable Environmental Laws, and all such Permits are in good
standing and all such Persons are in compliance with all of the terms and
conditions thereof;
65
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(iii) No Hazardous Materials exist on, about or within or have been
(to the knowledge of the Loan Parties) or are being used, generated,
stored, transported, disposed of on or Released from any of the Properties
of the Loan Parties except in compliance with applicable Environmental
Laws. The use which the Loan Parties make and intend to make of their
respective Properties will not result in the use, generation, storage,
transportation, accumulation, disposal or Release of any Hazardous Material
on, in or from any of their Properties except in compliance with applicable
Environmental Laws;
(iv) Neither the Loan Parties nor any of their respective
currently or previously owned or leased Properties or operations is subject
to any outstanding or, to the best knowledge of the Loan Parties,
threatened order from or agreement with any Governmental Authority or other
Person or subject to any judicial or administrative proceeding with respect
to (A) any failure to comply with Environmental Laws, (B) any Remedial
Action, or (C) any Environmental Liabilities;
(v) There are no conditions or circumstances associated with the
currently or previously owned or leased Properties or operations of the
Loan Parties that could reasonably be expected to give rise to any
Environmental Liabilities or claims resulting in any Environmental
Liabilities. None of the Loan Parties is subject to, or has received
written notice of any claim from any Person alleging that any of the Loan
Parties is or will be subject to, any Environmental Liabilities;
(vi) None of the Properties of the Loan Parties is a treatment
facility (except for the recycling of Hazardous Materials generated onsite
and the treatment of liquid wastes subject to the Clean Water Act or other
applicable Environmental Law of Canada), storage facility (except for
temporary storage of Hazardous Materials generated onsite prior to their
disposal offsite) or disposal facility requiring a permit under the
Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq.,
------
regulations thereunder or any comparable provision of state or Canadian
federal or provincial law. The Loan Parties and their Subsidiaries are
compliance with all applicable financial responsibility requirements of all
Environmental Laws; and
(viii) None of the Loan Parties has failed to file any notice
required under applicable Environmental Law reporting a Release.
(b) No Lien arising under any Environmental Law that could have,
individually or in the aggregate, a Material Adverse Effect has attached to any
Property or revenues of any Loan Party.
Section 7.21 Labor Disputes and Acts of God. Neither the business nor the
------------------------------
Properties of any Loan Party are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy or other casualty (whether or not
covered by insurance) that is having or could have a Material Adverse Effect.
66
<PAGE>
Section 7.22 Bank Accounts. As of the Restatement Date and as of the Term
-------------
Loans B Funding Date, Schedule 7.22 (as such Schedule may be supplemented in
-------------
accordance with Section 13.26) sets forth the account numbers and location of
-------------
all bank accounts (including lock box and special accounts) of the Borrower and
its Subsidiaries and the identity of the Loan Party that owns each of such
accounts.
Section 7.23 Outstanding Securities. As of the Restatement Date and as of
----------------------
the Term Loans B Funding Date, all outstanding securities (as defined in the
Securities Act of 1933, as amended, or any successor thereto, and the rules and
regulations of the Securities and Exchange Commission thereunder) of the Loan
Parties have been or will have been, respectively, offered, issued, sold and
delivered in compliance with all applicable Governmental Requirements (except
for the offering and issuance of Capital Stock of Pavey, the Borrower, Innova
and Classic as to which no such representation or warranty is made).
Section 7.24 Subordination. The obligations guaranteed by Mail-Well under
-------------
the Mail-Well Guaranty consisting of Mail-Well's guaranty of payment of the
Loans and all other Obligations constitute "Senior Indebtedness" (as such term
is defined in the Mail-Well Indenture), and the Agent and the Lenders, as
beneficiaries of the Mail-Well Guaranty, shall be entitled to all of the rights
of a holder of "Senior Indebtedness" (as such term is defined in the Mail-Well
Indenture) pursuant to the Mail-Well Indenture as if Mail-Well were the primary
obligor with respect to such obligations guaranteed by Mail-Well.
Section 7.25 Related Transactions Documents.
------------------------------
(a) All representations and warranties made by the Loan Parties in the
Related Transactions Documents and, to the knowledge of the Loan Parties after
due inquiry, all representations and warranties made by all other Persons in
such Related Transactions Documents, are (or will be, with respect to the
Related Transactions Documents relating to the PNG Acquisition) true and correct
in all material respects on and as of the Restatement Date and on and as of the
Term Loans B Funding Date, with respect to the Related Transactions Documents
relating to the PNG Acquisition. No rights of cancellation or rescission and,
to the knowledge of the Loan Parties, no defaults or defenses exist (or will
exist, with respect to the Related Transactions Documents relating to the PNG
Acquisition then being consummated) with respect to any of such Related
Transactions Documents. Mail-Well and the Borrower have delivered (or will
deliver, with respect to the Related Transactions Documents relating to the PNG
Acquisition then being consummated) to the Agent complete and correct copies of
all such Related Transactions Documents, including all schedules and exhibits
thereto. Such Related Transactions Documents set forth the entire agreements
and understandings of the parties thereto relating to the subject matter
thereof, and there are no other agreements, arrangements or understandings,
written or oral, relating to the matters covered thereby.
(b) On and as of the Restatement Date and on and as of the Term Loans
B Funding Date, with respect to the PNG Acquisition then being consummated, all
conditions precedent to such Related Transactions pursuant to the Related
Transactions Documents relating thereto have been (or will be, with respect to
the Related Transactions Documents relating to the PNG Acquisition then being
consummated) fulfilled or (with the prior written consent of the Agent)
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waived, such Related Transactions Documents have not been (or will not be, with
respect to the Related Transactions Documents relating to the PNG Acquisition
then being consummated) amended or otherwise modified (except as permitted by
this Agreement), and there has been (or will be, with respect to the Related
Transactions Documents relating to the PNG Acquisition then being consummated)
no breach of any material term or condition contained in such Related
Transactions Documents. As of the Term Loans B Funding Date, the Borrower will
have acquired and become the owner of all of the Property contemplated to be
acquired pursuant to the PNG Acquisition Agreement on such date, free and clear
of any Liens, except Permitted Liens.
Section 7.26 Solvency. Each of Holdings, Mail-Well and each of the
--------
Subsidiaries of Mail-Well, as separate corporate entities and on a consolidated
basis, are Solvent, both before and after giving effect to the Loans and the
Related Transactions.
Section 7.27 Employee Matters. Except as set forth on Schedule 7.27 (as
---------------- -------------
such Schedule may be supplemented in accordance with Section 13.26), as of the
-------------
Restatement Date and as of the Term Loans B Funding Date (a) none of the Loan
Parties or any of their respective Subsidiaries, or any of their respective
employees, is subject to any collective bargaining agreement, and (b) no
petition for certification or union election is pending with respect to the
employees of any Loan Party, and no union or collection bargaining unit has
sought such certification or recognition with respect to the employees of any of
the Loan Parties. There are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Loan Parties after due
inquiry, threatened against, any of the Loan Parties or their respective
employees which could have, either individually or in the aggregate, a Material
Adverse Effect. Except as set forth on Schedule 7.27 (as such Schedule may be
-------------
supplemented in accordance with Section 13.26), as of the Restatement Date and
-------------
as of the Term Loans B Funding Date, none of the Loan Parties or any of the
their Subsidiaries is subject to an employment contract.
Section 7.28 Insurance. Schedule 7.28 (as such Schedule may be
--------- -------------
supplemented in accordance with Section 13.26), sets forth a complete and
-------------
accurate description of all policies of insurance that will be in effect as of
the Restatement Date and as of the Term Loans B Funding Date for Holdings and
Mail-Well and its Subsidiaries. To the extent such policies have not been
replaced, no notice of cancellation has been received for such policies and
Mail-Well and its Subsidiaries are in compliance with all of the terms and
conditions of such policies.
Section 7.29 No Default under Mail-Well Credit Agreement. As of and
-------------------------------------------
immediately prior to the Restatement Date, no "Default" (as such term is defined
in the Original Supremex Credit Agreement, this Agreement, the Second Restated
Agreement or the Mail-Well Credit Agreement) has occurred and is continuing.
ARTICLE 8
Affirmative Covenants
---------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby jointly and severally covenants and agrees that, as long as the
Obligations or the Mail-Well Obligations or any part thereof are outstanding or
any Lender or Mail-Well Lender has any Commitment
68
<PAGE>
hereunder or any Mail-Well Commitment under the Mail-Well Credit Agreement,
respectively, or any Letter of Credit or Bankers' Acceptance or letter of credit
remains outstanding hereunder or under the Mail-Well Credit Agreement,
respectively, such Loan Party will perform and observe, or cause to be performed
and observed by the other applicable Loan Party(ies) (as such covenants or
agreements may provide) each and every of the covenants and other agreements
contained in Article 8 of the Mail-Well Credit Agreement in accordance with all
of the terms and provisions of Article 8 of the Mail-Well Credit Agreement as if
such terms and provisions were, and such terms and provisions are hereby,
incorporated herein by reference and as if it were a "Loan Party" as such term
is defined in the Mail-Well Credit Agreement.
ARTICLE 9
Negative Covenants
------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby jointly and severally covenants and agrees that, as long as the
Obligations or the Mail-Well Obligations or any part thereof are outstanding or
any Lender or Mail-Well Lender has any Commitment hereunder or any Mail-Well
Commitment under the Mail-Well Credit Agreement, respectively, or any Letter of
Credit or Bankers' Acceptance or letter of credit remains outstanding hereunder
or under the Mail-Well Credit Agreement, respectively, such Loan Party will
perform and observe, or cause to be performed and observed by the other
applicable Loan Party(ies) (as such covenants or agreements may provide) each
and every of the covenants and other agreements contained in Article 9 of the
Mail-Well Credit Agreement in accordance with the terms and provisions of
Article 9 of the Mail-Well Credit Agreement as if such terms and provisions
were, and such terms and provisions are hereby, incorporated herein by reference
and as if it were a "Loan Party" as such term is defined in the Mail-Well Credit
Agreement.
ARTICLE 10
Financial Covenants
-------------------
Each of the Loan Parties which is now or hereafter a party to this
Agreement hereby joint and severally covenants and agrees that, as long as the
Obligations or the Mail-Well Obligations or any part thereof are outstanding or
any Lender or Mail-Well Lender has any Commitment hereunder or any Mail-Well
Commitment under the Mail-Well Credit Agreement, respectively, or any Letter of
Credit or Bankers' Acceptance or letter of credit remains outstanding hereunder
or under the Mail-Well Credit Agreement, respectively, such Loan Party will
perform and observe, or cause to be performed and observed by the other
applicable Loan Party(ies) (as such covenants or agreements may provide) each
and every of the covenants and other agreements contained in Article 10 of the
Mail-Well Credit Agreement in accordance with all of the terms and provisions of
Article 10 of the Mail-Well Credit Agreement as if such terms and provisions
were, and such terms and provisions are hereby, incorporated herein by reference
and as if it were a "Loan Party" as such term is defined in the Mail-Well Credit
Agreement.
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ARTICLE 11
Default
-------
Section 11.1 Events of Default. Each of the following shall be deemed an
-----------------
"Event of Default":
- -----------------
(a) Mail-Well or the Borrower shall fail to pay, repay or prepay
when due any amount of principal of any Loan or any amount of any
Reimbursement Obligation or Bankers' Acceptance owing to the Agent or any
Lender pursuant to this Agreement or any other Loan Document, or Mail-Well,
the Borrower or any other Loan Party shall fail to pay within five days
after the due date thereof any interest, fee or other amount or other
Obligation owing by it to the Agent or any Lender pursuant to this
Agreement or any other Loan Document.
(b) Any representation or warranty made or deemed made by Mail-
Well, the Borrower or any Loan Party in any Loan Document or in any
certificate, report, notice or financial statement furnished at any time in
connection with this Agreement or any other Loan Document shall be false,
misleading or erroneous in any material respect when made or deemed to have
been made.
(c) Any Loan Party shall fail to perform, observe or comply with
any covenant, agreement or term contained in Section 5.1 hereof or in
-----------
Section 8.1(i), 8.1(l), 8.2 (other than the last sentence of Section 8.2),
8.6, 8.7, 8.8, 8.9, 8.10, 8.15, Article 9 or Article 10 of the Mail-Well
Credit Agreement (as provided in Articles 8, 9 and 10 hereof); any Loan
--------------------
Party shall fail to perform, observe or comply with any covenant, agreement
or term contained in Section 5.3 hereof or in Section 8.1 (other than
-----------
Sections 8.1(i) or 8.1(l)), 8.4, 8.5 or 8.13 of the Mail-Well Credit
Agreement (as provided in Article 8 hereof) and such failure is not
---------
remedied or waived within ten days after such failure commenced; the
Borrower shall fail to perform, observe or comply with any covenant,
agreement or term contained in the Borrower Security Agreement other than
in Section 4.05, 4.08, 4.11(b), 4.11(c), 4.12 or 4.16 thereof; Mail-Well
shall fail to perform, observe or comply with any covenant, agreement or
term contained in the Mail-Well Security Agreement other than in Section
4.05, 4.08, 4.11(b), 4.11(c), 4.12 or 4.16 thereof; any Subsidiary of Mail-
Well shall fail to perform, observe or comply with any covenant, agreement
or term contained in its Subsidiary Security Agreement other than in
Section 4.05, 4.08, 4.11(b), 4.11(c), 4.12 or 4.15 thereof; Holdings shall
fail to perform, observe or comply with any covenant, agreement or term
contained in the Holdings Security Agreement other than in Section 4.05,
4.08, 4.11(b), 4.11(c), 4.12 or 4.16 thereof; Mail-Well, the Borrower or
any Subsidiary shall fail to perform, observe or comply with any covenant,
agreement or term contained in Section 2.1(e), 2.1(f) or 4.1(c) of any
Mortgage executed by it; Holdings shall fail to perform, observe or comply
with any covenant, agreement or term contained in the Holdings Guaranty
other than in Section 7(a) thereof; Mail-Well shall fail to perform,
observe or comply with any covenant, agreement or term contained in the
Mail-Well Guaranty other than in Section 7(a) thereof; any Subsidiary of
Mail-Well shall fail to perform, observe or comply with any covenant,
agreement or term contained in its
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Subsidiary Guaranty, subject to any grace period applicable to such
covenant, agreement or term in this Agreement to the extent this Agreement
is incorporated therein by reference; or any Loan Party shall fail to
perform, observe or comply with any other covenant, agreement or term
contained in this Agreement or any other Loan Document (other than
covenants to pay the Obligations) and such failure is not remedied or
waived within the earlier to occur of 30 days after such failure commenced
or, if a different grace period is expressly made applicable in such other
Loan Documents, such applicable grace period.
(d) Any of the Loan Parties shall admit in writing its inability
to, or be generally unable to, pay its debts as such debts become due.
(e) Any Loan Party shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver, custodian,
trustee, examiner, liquidator or the like of itself or of all or any
substantial part of its Property, (ii) make a general assignment for the
benefit of its creditors, (iii) commence a voluntary case under the United
States Bankruptcy Code or the Bankruptcy and Insolvency Act (Canada)
(individually and collectively, as now or hereafter in effect, the
"Bankruptcy Code"), (iv) institute any proceeding or file a petition
---------------
seeking to take advantage of any other law relating to bankruptcy,
insolvency, reorganization, liquidation, dissolution, winding-up or
composition or readjustment of debts, (v) fail to controvert in a timely
and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Bankruptcy Code, or (vi) take
any corporate or other action for the purpose of effecting any of the
foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval or consent of any of the Loan Parties in any court of
competent jurisdiction, seeking (i) its reorganization, liquidation,
dissolution, arrangement or winding-up, or the composition or readjustment
of its debts, (ii) the appointment of a receiver, custodian, trustee,
examiner, liquidator or the like of any of the Loan Parties or of all or
any substantial part of its Property, or (iii) similar relief in respect of
any of the Loan Parties under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, and such
proceeding or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be entered and
continue unstayed and in effect, for a period of 60 or more days; or an
order for relief against any of the Loan Parties shall be entered in an
involuntary case under the Bankruptcy Code.
(g) Any of the Loan Parties shall fail to discharge within a
period of 30 days after the commencement thereof any attachment,
sequestration, forfeiture or similar proceeding or proceedings involving an
aggregate amount in excess of $2,500,000 against any of its Properties.
(h) A final judgment or judgments for the payment of money in
excess of $2,500,000 in the aggregate shall be rendered by a court or
courts against the Loan Parties or any of them on claims not covered by
insurance or as to which the insurance carrier has
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denied responsibility and the same shall not be discharged, or a stay of
execution thereof shall not be procured, within 30 days from the date of
entry thereof and the Loan Parties shall not, within said period of 30
days, or such longer period during which execution of the same shall have
been stayed, appeal therefrom and cause the execution thereof to be stayed
during such appeal.
(i) Any of the Loan Parties shall fail to pay when due any
principal of or interest on any Debt (other than the Obligations) having
(either individually or in the aggregate) a principal amount of at least
$5,000,000, or the maturity of any such Debt shall have been accelerated,
or any such Debt shall have been required to be prepaid prior to the stated
maturity thereof, or any event shall have occurred (and shall not have been
waived or otherwise cured) that permits (or, with the giving of notice or
lapse of time or both, would permit) any holder or holders of such Debt or
any Person acting on behalf of such holder or holders to accelerate the
maturity thereof or require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Loan Party
or any of its shareholders, or any Loan Party shall deny that it has any
further liability or obligation under any of the Loan Documents, or any
Lien created by the Loan Documents shall for any reason cease to be a
valid, first priority perfected Lien (except for Permitted Liens, if any,
which are expressly permitted by the Loan Documents to have priority over
the Liens in favor of the Agent) upon any of the Collateral purported to be
covered thereby.
(k) Any of the following events shall occur or exist with respect
to any Loan Party or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan or any event or investment which could render any Loan
Party, Canadian Plan or funding agent thereof liable for any tax or penalty
under Canadian Pension and Benefits Law; (ii) any Reportable Event with
respect to any Pension Plan; (iii) the filing under Section 4041 of ERISA
or under Canadian Pension and Benefits Law of a notice of intent to
terminate any Pension Plan or Canadian Pension Plan or the termination of
any Pension Plan or Canadian Pension Plan; (iv) any event or circumstance
that might constitute grounds entitling the PBGC or a Canadian Pension
Authority under Canadian Pension and Benefits Law to institute proceedings
under Section 4042 of ERISA or under Canadian Pension and Benefits Law for
the termination of, or for the appointment of a trustee to administer, any
Pension Plan or Canadian Pension Plan, or the institution by the PBGC or a
Canadian Pension Authority under Canadian Pension and Benefits Law of any
such proceedings; (v) any "accumulated funding deficiency" (as defined in
Section 406 of ERISA or Section 412 of the Code), whether or not waived,
shall exist with respect to any Plan; or (vi) complete or partial
withdrawal under Section 4201 or 4204 of ERISA from a Plan or the
reorganization, insolvency or termination of any Pension Plan or Canadian
Pension Plan; and in each case above, such event or condition, together
with all other events or conditions, if any, have subjected or could in the
reasonable opinion of Required Banks subject any Loan Party or any ERISA
Affiliate to any tax, penalty or other liability to a Plan, a Multiemployer
Plan, the PBGC, a Canadian Plan, the PBGF or otherwise (or any
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combination thereof) which in the aggregate exceed or could reasonably
be expected to exceed Cdn. $5,000,000.
(l) The occurrence of a Change of Control.
(m) The occurrence of any "Event of Default" as such term is
defined in the Mail-Well Credit Agreement.
Section 11.2 Remedies. If any Event of Default shall occur and be
--------
continuing, the Agent may (subject to Section 13.11 with respect to clauses (a)
------------- -----------
and (b) below) and, if directed by the Required Lenders, the Agent shall do any
---
one or more of the following:
(a) Acceleration. Declare all outstanding principal of and
------------
accrued and unpaid interest on the Loans and all other amounts payable by
Mail-Well, the Borrower and/or any other Loan Party under the Loan
Documents immediately due and payable, and the same shall thereupon become
immediately due and payable, without notice, demand, presentment, notice of
dishonor, notice of acceleration, notice of intent to accelerate, protest
or other formalities of any kind, all of which are hereby expressly waived
by Mail-Well, the Borrower and the other Loan Parties;
(b) Termination of Commitments. Terminate the Commitments
--------------------------
(including, without limitation, the obligation of the Issuing Bank to issue
Letters of Credit) without notice to Mail-Well, the Borrower or any other
Loan Party;
(c) Judgment. Reduce any claim to judgment;
--------
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted
-----------
to the Agent for the benefit of the Agent and the Lenders to secure payment
and performance of the Obligations in accordance with the terms of the Loan
Documents; or
(e) Rights. Exercise any and all rights and remedies afforded by
------
the laws of the State of Texas, Canada or any other jurisdiction, by any of
the Loan Documents, by equity or otherwise;
provided, however, that upon (i) the occurrence of an Event of Default under
- -------- -------
Section 11.1(e) or Section 11.1(f), the Commitments of all of the Lenders
- --------------- ---------------
(including, without limitation, the obligation of the Issuing Bank to issue
Letters of Credit and the obligations of the Revolving Credit Lenders to accept
Bankers' Acceptances) shall immediately and automatically terminate, and the
outstanding principal of and accrued and unpaid interest on the Loans and all
other amounts payable by Mail-Well, the Borrower and/or any other Loan Party
under the Loan Documents shall thereupon become immediately and automatically
due and payable, and (ii) upon the occurrence of an Event of Default under
clause (iv) of Section 11.1(n) or under Section 11.1(o), the outstanding
- ----------- --------------- ---------------
principal of and accrued and unpaid interest on the Loans and all other amounts
payable by Mail-Well, the Borrower and/or any other Loan Party under the Loan
Documents shall thereupon become immediately and automatically due and payable,
all (with respect to each of clause (i) and (ii) preceding) without notice,
---------- ----
demand, presentment, notice of
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dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived by each
of Mail-Well, the Borrower and the other Loan Parties which is now or hereafter
a party to this Agreement.
Section 11.3 Cash Collateral. If an Event of Default shall have occurred
---------------
and be continuing, Mail-Well and the Borrower shall, if requested by the Agent
or the Required Lenders, pledge to the Agent as security for the Obligations an
amount in immediately available funds equal to the then outstanding Letter of
Credit Liabilities and Bankers' Acceptance Liabilities, such funds to be held in
a cash collateral account satisfactory to the Agent without any right of
withdrawal by Mail-Well or the Borrower or any other Loan Party.
Section 11.4 Performance by the Agent. If any Loan Party shall fail to
------------------------
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of the Required Lenders, perform or
attempt to perform such covenant or agreement on behalf of such Loan Party. In
such event, Mail-Well and the Borrower shall, at the request of the Agent,
promptly pay any amount expended by the Agent or the Lenders in connection with
such performance or attempted performance to the Agent at the Principal Office,
together with interest thereon at the applicable Default Rate from and including
the date of such expenditure to but excluding the date such expenditure is paid
in full. Notwithstanding the foregoing, it is expressly agreed that neither the
Agent nor any Lender shall have any liability or responsibility for the
performance of any obligation of Mail-Well or the Borrower or any other Loan
Party under this Agreement or any of the other Loan Documents.
Section 11.5 Judgment Currency. If, for the purpose of obtaining judgment
-----------------
in any court in any jurisdiction with respect to this Agreement or any other
Loan Document or the Collateral, it becomes necessary to convert into the
currency of such jurisdiction (herein called the "Judgment Currency") any amount
-----------------
due hereunder in any currency other than the Judgment Currency, then conversion
shall be made at the rate of exchange prevailing on the Business Day before the
day on which judgment is given. For this purpose, "rate of exchange" means the
----------------
rate at which the Agent is able, on the relevant date, to sell the currency of
the amount due hereunder in Toronto, Ontario against the Judgment Currency. In
the event that there is a change in the rate of exchange prevailing between the
Business Day before the day on which the judgment is given and the date of
payment of the amount due, Mail-Well and the Borrower jointly and severally
agree that they will, on the date of payment, pay such additional amounts (if
any) as may be necessary to ensure that the amount paid on such date is the
amount in the Judgment Currency which, when converted at the rate of exchange
prevailing on the date of payment, is the amount then due under this Agreement
in Cdn. Dollars or Dollars, as the case may be. Any additional amount due under
this Section 11.5 will be due as a separate indebtedness and shall not be
------------
affected by judgment being obtained for any other sums due under or in respect
of this Agreement or any other Loan Document.
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ARTICLE 12
The Agent
---------
Section 12.1 Appointment, Powers and Immunities. Each Lender hereby
----------------------------------
irrevocably appoints and authorizes the Agent to act as its agent hereunder and
under the other Loan Documents with such powers as are specifically delegated to
the Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Neither the Agent
nor any of its Affiliates, officers, directors, employees, attorneys or agents
shall be liable for any action taken or omitted to be taken by any of them
hereunder or otherwise in connection with this Agreement or any of the other
Loan Documents except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the preceding sentence, the
Agent (a) may treat the payee of any Note as the holder thereof until the Agent
receives written notice of the assignment or transfer thereof signed by such
payee and in form satisfactory to the Agent, (b) shall have no duties or
responsibilities except those expressly set forth in this Agreement and the
other Loan Documents, and shall not by reason of this Agreement or any other
Loan Document be a trustee or fiduciary for any Lender, (c) shall not be
required to initiate any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Lenders,
(d) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder, (e) may consult with legal counsel
(including counsel for any Loan Party), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and (f) shall incur no liability under or in respect of
any Loan Document by acting upon any notice, consent, certificate or other
instrument or writing reasonably believed by it to be genuine and signed or sent
by the proper party or parties. As to any matters not expressly provided for by
this Agreement, the Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with instructions signed by the
Required Lenders, and such instructions of the Required Lenders and any action
taken or failure to act pursuant thereto shall be binding on all of the Lenders;
provided, however, that the Agent shall not be required to take any action which
- -------- -------
exposes the Agent to liability or which is contrary to this Agreement or any
other Loan Document or applicable law.
Section 12.2 Rights of Agent as a Lender. With respect to its
---------------------------
Commitments, the Loans made by it and the Notes issued to it, Banque Paribas
(and any successor acting as Agent) in its capacity as a Lender hereunder shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not acting as the Agent, and the term "Lender" or
"Lenders" shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, own
securities of, and generally engage in any kind of banking, trust or other
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business with, the Loan Parties or any of their Affiliates and any other Person
who may do business with or own securities of the Loan Parties or any of their
Affiliates, all as if it were not acting as the Agent and without any duty to
account therefor to the Lenders. Without limiting the generality of the
foregoing, an Affiliate of the Agent purchased 24,397 shares of Holdings Common
Stock on or about December 19, 1994. Each Lender acknowledges the potential
conflict of interest (a) between Banque Paribas (i) as a Lender holding
disproportionate interests in the various Commitments and Loans and (ii) as the
Agent under this Agreement and (b) between Banque Paribas (or an Affiliate of
Banque Paribas) (i) as a stockholder of Holdings and (ii) as the Agent under
this Agreement, and each Lender expressly consents to, and waives any claim
based upon, such potential conflicts of interest.
Section 12.3 Defaults. The Agent shall not be deemed to have knowledge or
--------
notice of the occurrence of a Default (other than the non-payment of principal
of or interest on the Loans or of commitment fees) unless the Agent has received
notice from a Lender or Mail-Well or the Borrower specifying such Default and
stating that such notice is a "Notice of Default". In the event that the Agent
receives such a notice of the occurrence of a Default, the Agent shall give
prompt notice thereof to the Lenders (and shall give each Lender prompt notice
of each such non-payment). The Agent shall (subject to Section 12.1) take such
------------
action with respect to such Default as shall be directed by the Required
Lenders, provided that unless and until the Agent shall have received such
--------
directions, the Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall seem
advisable and in the best interest of the Lenders.
Section 12.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY THE
---------------
AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF MAIL-WELL
------------- ----
AND THE BORROWER AND THE OTHER LOAN PARTIES UNDER SECTIONS 13.1 AND 13.2),
------------- ----
RATABLY IN ACCORDANCE WITH ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF THE
AGGREGATE COMMITMENT PERCENTAGES), ANY AND ALL LIABILITIES (INCLUDING, WITHOUT
LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO OR ARISING
OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY
THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, FURTHER,
--------
THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT
CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE LENDERS THAT THE
AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES),
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES,
SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
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<PAGE>
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT (EXCEPT TO THE
EXTENT THE SAME ARE CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION 12.4, EACH
------------
LENDER AGREES TO REIMBURSE THE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE
(CALCULATED ON THE BASIS OF THE AGGREGATE COMMITMENT PERCENTAGES) OF ANY AND ALL
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE AGENT IN
CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION,
MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL
PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS OR
RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE AGENT IS NOT
PROMPTLY REIMBURSED FOR SUCH EXPENSES BY MAIL-WELL, THE BORROWER OR ANOTHER LOAN
PARTY.
Section 12.5 Independent Credit Decisions. Each Lender agrees that it has
----------------------------
independently and without reliance on the Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
credit analysis of Holdings, Mail-Well, the Borrower and the other Loan Parties
and its own decision to enter into this Agreement and that it will,
independently and without reliance upon the Agent or any other Lender, and based
upon such documents and information as it shall deem appropriate at the time,
continue to make its own analysis and decisions in taking or not taking action
under this Agreement or any of the other Loan Documents. The Agent shall not be
required to keep itself informed as to the performance or observance by any Loan
Party of this Agreement or any other Loan Document or to inspect the Properties
or books of any Loan Party. Except for notices, reports and other documents and
information expressly required to be furnished to the Lenders by the Agent
hereunder or under the other Loan Documents, the Agent shall not have any duty
or responsibility to provide any Lender with any credit or other financial
information concerning the affairs, financial condition or business of any Loan
Party (or any of their Affiliates) which may come into the possession of the
Agent or any of its Affiliates.
Section 12.6 Several Commitments. The Commitments and other obligations
-------------------
of the Lenders under this Agreement are several. The default by any Lender in
making a Loan in accordance with its Commitment shall not relieve the other
Lenders of their obligations under this Agreement. In the event of any default
by any Lender in making any Loan or accepting any Bankers' Acceptance, each
nondefaulting Lender shall be obligated to make its Loan or accept its Bankers'
Acceptance but shall not be obligated to advance or accept the amount which the
defaulting Lender was required to advance or accept hereunder. In no event
shall any Lender be required to advance or accept an amount or amounts with
respect to any of the Loans or Bankers' Acceptance which would in the aggregate
exceed such Lender's Commitment with respect to such Loans or Bankers'
Acceptance. No Lender shall be responsible for any act or omission of any other
Lender.
Section 12.6 Successor Agent. Subject to the appointment and acceptance
---------------
of a successor Agent as provided below, the Agent may resign at any time by
giving notice thereof to the
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Lenders and the Borrower and the Agent may be removed at any time with cause by
the Required Lenders. Upon any such resignation or removal, the Required Lenders
will have the right, after notice to and consultation with the Borrower and with
the prior written consent of the Borrower (which consent shall not be
unreasonably withheld, conditioned or delayed) if (but only if) no Default has
then occurred and is continuing, to appoint another Lender as a successor Agent.
If no successor Agent shall have been so appointed by the Required Lenders and
shall have accepted such appointment within 30 days after the retiring Agent's
giving of notice of resignation or the Required Lenders' removal of the retiring
Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the U.S. or any state thereof or of a foreign country if acting through its U.S.
branch and having combined capital and surplus of at least $100,000,000. Upon
the acceptance of its appointment as successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges,
immunities and duties of the resigning or removed Agent, and the resigning or
removed Agent shall be discharged from its duties and obligations under this
Agreement and the other Loan Documents. After any Agent's resignation or removal
as Agent, the provisions of this Article 12 shall continue in effect for its
----------
benefit in respect of any actions taken or omitted to be taken by it while it
was the Agent.
ARTICLE 13
Miscellaneous
-------------
Section 13.1 Expenses. Whether or not the transactions contemplated
--------
hereby are consummated, each of Mail-Well and the Borrower hereby jointly and
severally agrees, on demand, to pay or reimburse the Agent and each of the
Lenders for paying: (a) all reasonable out-of-pocket costs and expenses of the
Agent in connection with the preparation, negotiation, execution and delivery of
this Agreement and the other Loan Documents, and any and all amendments,
modifications, renewals, extensions and supplements thereof and thereto, and the
syndication of the Loans, including, without limitation, the reasonable fees and
expenses of legal counsel for the Agent, (b) all reasonable out-of-pocket costs
and expenses of the Agent and the Lenders in connection with any Default, the
exercise of any right or remedy and the enforcement of this Agreement or any
other Loan Document or any term or provision hereof or thereof, including,
without limitation, the reasonable fees and expenses of legal counsel for the
Agent and the Lenders, (c) all transfer, stamp, documentary or other similar
taxes, assessments or charges levied by any Governmental Authority in respect of
this Agreement or any of the other Loan Documents, (d) all costs, expenses,
assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any Lien contemplated by this Agreement
or any other Loan Document, and (e) all reasonable out-of-pocket costs and
expenses incurred by the Agent in connection with due diligence, computer
services, copying, appraisals, environmental audits, collateral audits, field
exams, insurance, consultants and search reports. Without incurring any
liability for its failure to do so and without affecting its right to be paid
for such costs and expenses, the Agent will, prior to the occurrence of a
Default, endeavor to advise the Borrower of any such costs and expenses to be
incurred and which are individually in excess of $5,000.
Section 13.2 INDEMNIFICATION. EACH OF MAIL-WELL, THE BORROWER AND EACH
---------------
OTHER LOAN PARTY SHALL JOINTLY AND SEVERALLY INDEMNIFY
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THE AGENT AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM, AND HOLD EACH OF THEM
HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, (INCLUDING, WITHOUT
LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' AND
CONSULTANTS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY
OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) THE RELATED
TRANSACTIONS, (D) ANY BREACH BY ANY LOAN PARTY OF ANY REPRESENTATION, WARRANTY,
COVENANT OR OTHER AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (E) THE USE
OR PROPOSED USE OF ANY LOAN, LETTER OF CREDIT OR BANKERS' ACCEPTANCE, (F) ANY
AND ALL TAXES, LEVIES, DEDUCTIONS AND CHARGES IMPOSED ON THE AGENT, THE ISSUING
BANK OR ANY LENDER IN RESPECT OF ANY LETTER OF CREDIT OR BANKERS' ACCEPTANCE,
(G) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL OR CLEANUP OF
ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY OF THE
PROPERTIES OF ANY LOAN PARTY, EXCEPT TO THE EXTENT THAT THE LOSS, DAMAGE OR
CLAIM IS THE DIRECT RESULT OF AN INTENTIONAL AND AFFIRMATIVE ACT BY THE PERSON
TO BE INDEMNIFIED THAT CONSTITUTES GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
SUCH PERSON, OR (H) ANY INVESTIGATION, LITIGATION OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION OR OTHER
PROCEEDING RELATING TO ANY OF THE FOREGOING; BUT EXCLUDING ANY OF THE FOREGOING
TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PERSON
TO BE INDEMNIFIED. WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY
OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION 13.2 SHALL BE INDEMNIFIED FROM AND
------------
HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, (INCLUDING, WITHOUT
LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,
DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS' FEES) ARISING
OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER TERM OR PROVISION OF THIS
AGREEMENT, THE OBLIGATIONS OF MAIL-WELL, THE BORROWER AND THE OTHER LOAN PARTIES
UNDER THIS SECTION 13.2 SHALL SURVIVE THE REPAYMENT OF THE LOANS.
------------
Section 13.3 Limitation of Liability. None of the Agent, any Lender or
-----------------------
any Affiliate, officer, director, employee, attorney or agent thereof shall be
liable for any error of judgment or act done in good faith, or be otherwise
liable or responsible under any circumstances whatsoever (including such
Person's negligence), except for such Person's gross negligence or willful
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misconduct. None of the Agent, any Lender or any Affiliate, officer, director,
employee, attorney or agent thereof shall have any liability with respect to,
and each of Mail-Well, the Borrower and each other Loan Party hereby waives,
releases and agrees not to sue any of them upon, any claim for any special,
indirect, incidental or consequential damages suffered or incurred by Mail-Well,
the Borrower or any other Loan Party in connection with, arising out of or in
any way related to this Agreement or any of the other Loan Documents, or any of
the transactions contemplated by this Agreement or any of the other Loan
Documents. Each of Mail-Well, the Borrower and each other Loan Party hereby
waives, releases and agrees not to sue the Agent or any Lender or any of their
respective Affiliates, officers, directors, employees, attorneys or agents for
exemplary or punitive damages in respect of any claim in connection with,
arising out of or in any way related to this Agreement or any of the other Loan
Documents, or any of the transactions contemplated by this Agreement or any of
the other Loan Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers and other
-------
professional Persons and consultants retained by the Agent and the Lenders shall
have the right to act exclusively in the interests of the Agent and the Lenders
and shall have no duty of disclosure, duty of loyalty, duty of care or other
duty or obligation of any type or nature whatsoever to any Loan Party or any of
its shareholders or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between (a) each
-------------------------
Loan Party and (b) each Lender is solely that of debtor and creditor, and
neither the Agent nor any Lender has any fiduciary or other special relationship
with Mail-Well, the Borrower or any other Loan Party, and no term or condition
of any of the Loan Documents shall be construed so as to deem the relationship
between (i) Mail-Well and the Borrower and (ii) any Lender, or any other Loan
Party and any Lender, to be other than that of debtor and creditor. No joint
venture or partnership is created by this Agreement among the Lenders or among
Mail-Well, the Borrower or any other Loan Party and the Lenders.
Section 13.6 Equitable Relief. Each of the Loan Parties recognizes that,
----------------
in the event it or any other Loan Party fails to pay, perform, observe or
discharge any or all of the Obligations, any remedy at law may prove to be
inadequate relief to the Agent and the Lenders. Each of the Loan Parties
therefore agrees that the Agent and the Lenders, if the Agent or the Lenders so
request, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
the Agent or any Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power or privilege under this Agreement or
any other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any right, power or privilege under this Agreement or any
other Loan Document preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
provided for in this Agreement and the other Loan Documents are cumulative and
not exclusive of any rights and remedies provided by law.
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Section 13.8 Successors and Assigns.
----------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither Mail-
Well nor the Borrower nor any other Loan Party may assign or transfer any of its
rights or obligations under this Agreement or any other Loan Document without
the prior written consent of the Agent and the Lenders. Any Lender may sell
participations in all or a portion of its rights and obligations under this
Agreement and the other Loan Documents (including, without limitation, all or a
portion of its Commitments and the Loans owing to it); provided, however, that
-------- -------
(i) such Lender's obligations under this Agreement and the other Loan Documents
(including, without limitation, its Commitments) shall remain unchanged, (ii)
such Lender shall remain solely responsible to Mail-Well and the Borrower for
the performance of such obligations, (iii) such Lender shall remain the holder
of its Notes for all purposes of this Agreement, (iv) Mail-Well and the Borrower
shall continue to deal solely and directly with such Lender in connection with
such Lender's rights and obligations under this Agreement and the other Loan
Documents, and (v) such Lender shall not sell a participation that conveys to
the participant the right to vote or give or withhold consents under this
Agreement or any other Loan Document, other than (if and to the extent that such
Lender so agrees) the right to vote upon or consent to (A) any increase of such
Lender's Commitments (other than an increase resulting from an assignment to or
in favor of such Lender from another Lender in accordance with this Agreement),
(B) any reduction of the principal amount of, or interest to be paid on, the
Loans of such Lender, (C) any reduction of any commitment fee or other amount
payable to such Lender under any Loan Document if and to the extent that such
reduction would decrease the fee or other amount payable to the participant, (D)
any postponement of any date for the payment of any amount payable in respect of
the Loans of such Lender, (E) any release of a material portion of the
Collateral from the Liens created by the Security Documents and not otherwise
expressly authorized by the Loan Documents, and (F) any release of any Loan
Party from liability under the Loan Documents.
(b) Each of the Loan Parties and each of the Lenders agree that any
Lender (the "Assigning Lender") may at any time assign to one or more Eligible
----------------
Assignees all, or a proportionate part of all, of its rights and obligations
under this Agreement and the other Loan Documents (including, without
limitation, its Commitments, Loans, Letters of Credit and Bankers' Acceptances)
(each an "Assignee"); provided, however, that (i) subject to the penultimate
-------- -------- -------
sentence of this Section 13.8(b), each such assignment may be of a varying
---------------
percentage of the Assigning Lender's rights and obligations under this Agreement
and the other Loan Documents and may relate to some but not all of such rights
and/or obligations, (ii) except in the case of an assignment of all of a
Lender's rights and obligations under this Agreement and the other Loan
Documents, the amount of the Commitments and Loans of the Assigning Lender being
assigned pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment), when aggregated with
the amount of the "Commitments" and "Loans" (as such terms are defined in the
Mail-Well Credit Agreement) then being assigned in connection with the Mail-Well
Credit Agreement, shall in no event be less than the lesser of (A) an aggregate
amount equal to $5,000,000 (calculated based upon the sum of the Revolving
Credit Loans Commitment assigned (or, if such Commitment has terminated or
expired, the aggregate outstanding principal amount of the Revolving Credit
Loans, the Letter of Credit Liabilities and the Bankers' Acceptances assigned),
plus the aggregate outstanding principal amount of the Term
- ----
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Loans assigned, plus the "Revolving Credit Loans Commitment" (as defined in the
----
Mail-Well Credit Agreement) assigned (or, if such commitment has terminated or
expired, the aggregate outstanding principal amount of the "Revolving Credit
Loans" and "Letter of Credit Liabilities" (as such terms are defined in the
Mail-Well Credit Agreement) assigned, plus the aggregate outstanding principal
----
amount of the Mail-Well Term Loans assigned), plus the Acquisition Loans
----
Commitment (as defined in the Mail-Well Credit Agreement) assigned (or, if such
commitment has terminated or expired, the aggregate outstanding principal amount
of the Mail-Well Acquisition Loans assigned), or (B) an aggregate amount equal
to five percent of the sum of the aggregate outstanding Revolving Credit Loans
Commitments (or, if such Commitments have terminated or expired, the aggregate
outstanding principal amount of the Revolving Credit Loans, the Letter of Credit
Liabilities and the Bankers' Acceptances), plus the aggregate outstanding
----
principal amount of the Term Loans, plus the aggregate outstanding "Revolving
----
Credit Loans Commitments" (as defined in the Mail-Well Credit Agreement) (or, if
such commitment has terminated or expired, the aggregate outstanding principal
amount of the "Revolving Credit Loans" and "Letter of Credit Liabilities" (as
such terms are defined in the Mail-Well Credit Agreement), plus the aggregate
----
outstanding principal amount of the Mail-Well Term Loans, plus the aggregate
----
outstanding Acquisition Loan Commitments (as defined in the Mail-Well Credit
Agreement) (or, if such commitments have terminated or expired, the aggregate
outstanding principal amount of the Mail-Well Acquisition Loans), and (iii) the
parties to each such assignment shall execute and deliver to the Agent for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with the Notes subject to such assignment, and a processing
and recordation fee of $2,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof, or, if so specified in such Assignment and Acceptance, the
date of acceptance thereof by the Agent, (1) the Assignee thereunder shall be a
party hereto as a "Lender" and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and under the Loan
Documents, and (2) the Assigning Lender thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement and the other Loan Documents (and, in the case
of an Assignment and Acceptance covering all or the remaining portion of a
Lender's rights and obligations under the Loan Documents, such Lender shall
cease to be a party thereto, provided that all of such Lender's rights under
Article 4, Section 13.1 and Section 13.2 accrued through the date of assignment
- --------- ------------ ------------
shall continue). Notwithstanding anything to the contrary contained in this
Section 13.8, each Assigning Lender shall, in connection with any assignment of
- ------------
its Term Loans A or Term Loans B (or any commitment relating thereto or any
portion thereof or interest therein) to an assignee and concurrently with each
such assignment, also assign to such assignee the same percentage of the Term
Loans B or Term Loans A, respectively, the Mail-Well Term Loans and the
"Financing Loans" (as defined in the Equipment Lease Facility Documents) then
owned by such Assigning Lender (if, but only if, such Assigning Lender then
holds any such other Loans or loans or commitments therefor) as the percentage
of the Term Loans A or Term Loans B, respectively, owned by such Assigning
Lender then being assigned. (For example, in the event that an Assigning Lender
proposes to assign 50% of its Term Loans A to an assignee, such Assigning Lender
shall also, concurrently therewith, assign 50% of each of its Term Loans B, its
Mail-Well Term Loans and its "Financing Loans" (as defined in the Equipment
Lease
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Facility Documents) to such assignee.) Furthermore, and notwithstanding anything
to the contrary contained in this Agreement, each Lender which has any Revolving
Credit Loans Commitment or owns or holds any Revolving Credit Loans or any
Reimbursement Obligations or Bankers' Acceptances must be resident in Canada.
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; (ii) such Assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition of any Loan Party or the performance or observance by any Loan Party
of its obligations under the Loan Documents; (iii) such Assignee confirms that
it has received a copy of the other Loan Documents, together with copies of the
financial statements referred to in Section 7.2 and such other documents and
-----------
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent or such Assigning Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under this Agreement and the other Loan Documents; (v) such Assignee confirms
that it is an Eligible Assignee; (vi) such Assignee appoints and authorizes the
Agent to take such action as agent on its behalf and exercise such powers under
the Loan Documents as are delegated to the Agent by the terms thereof, together
with such powers as are reasonably incidental thereto; and (vii) such Assignee
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be
performed by it as a Lender.
(d) The Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the Commitments of,
and principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for
- ---------
all purposes, absent manifest error, and Mail-Well, the Borrower, the Agent and
the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes under the Loan Documents. The Register shall
be available for inspection by the Borrower or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible Assignee,
together with the Notes subject to such assignment, the Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
Exhibit A hereto, (i) accept such Assignment and Acceptance, (ii) record the
- ---------
information contained therein in the Register, and (iii) give prompt written
notice thereof to the Borrower. Within five Business Days after its receipt of
such notice the Borrower, at its expense, shall execute and deliver to the Agent
in exchange for each surrendered Note evidencing particular Loans, a new Note
evidencing each such Loans payable to the order of such Eligible
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Assignee in an amount equal to such Loans assigned to it and, if the Assigning
Lender has retained any Loans, a new Note evidencing each such Loans payable to
the order of the Assigning Lender in the amount of such Loans retained by it
(each such promissory note shall constitute a "Note" for purposes of the Loan
Documents). Such new Notes shall be dated the effective date of such Assignment
and Acceptance and shall otherwise be in substantially the form of Exhibits B, C
---------- -
and D hereto, as applicable.
-
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 13.8, disclose
------------
to the Assignee or participant or proposed Assignee or participant any
information relating to Holdings, Mail-Well, the Borrower, any other Loan Party
or any of their respective Subsidiaries furnished to such Lender by or on behalf
of Holdings, Mail-Well, the Borrower, any other Loan Party or any of their
respective Subsidiaries; provided that each such actual or proposed Assignee or
--------
participant shall agree to be bound by the provisions of Section 13.20.
-------------
(g) Any Lender may assign and pledge all or any of the Notes held by it
to any Federal Reserve Bank or the U.S. Treasury as collateral security pursuant
to Regulation A of the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System and/or Federal Reserve
Bank; provided, that, any payment made by the Borrower for the benefit of such
--------
assigning and/or pledging Lender in accordance with the terms of the Loan
Documents shall satisfy the Borrower's obligations under the Loan Documents in
respect thereof to the extent of such payment. No such assignment and/or pledge
shall release the assigning and/or pledging Lender from its obligations
hereunder.
(h) The Borrower shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of the Borrower, shall
------------------------
be kept by the Agent on behalf of the Borrower at no extra charge to the
Borrower at the address to which notices to the Agent are to be sent hereunder)
on which it enters the name of the registered owner of each of the Term Loans
evidenced by a Registered Note. Notwithstanding anything to the contrary
contained in this Section 13.8, a Registered Note and the Term Loans evidenced
------------
thereby may be assigned or otherwise transferred in whole or in part only by
registration of such assignment or transfer of such Registered Note and the Term
Loans evidenced thereby on the Registered Note Register (and each Registered
Note shall expressly so provide). Any assignment or transfer of all or part of
such Term Loans and the Registered Note evidencing the same shall be registered
on the Registered Note Register only upon surrender for registration of
assignment or transfer of the Registered Note evidencing such Term Loans, duly
endorsed by (or accompanied by a written instrument of assignment or transfer
duly executed by) the registered noteholder thereof, and thereupon one or more
new Registered Notes in the same aggregate principal amount shall be issued to
the designated assignee(s) or transferee(s). Prior to the due presentment for
registration of transfer of any Registered Note, the Borrower and the Agent
shall treat the Person in whose name such Term Loans and the Registered Note(s)
evidencing the same are registered as the owner thereof for the purpose of
receiving all payments thereon and for all other purposes, notwithstanding any
notice to the contrary. The Registered Note Register shall be available for
inspection by the Borrower and any Lender at any reasonable time upon reasonable
prior notice.
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Section 13.9 Survival. All representations and warranties made or deemed
--------
made in this Agreement or any other Loan Document or in any document, statement
or certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents and the
making of the Loans, and no investigation by the Agent or any Lender or any
closing shall affect the representations and warranties or the right of the
Agent or any Lender to rely upon them. Without prejudice to the survival of any
other obligation of Mail-Well, the Borrower or any other Loan Party hereunder,
the obligations of Mail-Well, the Borrower and the other Loan Parties under
Article 4 and Sections 13.1 and 13.2 shall survive repayment of the Loans and
- --------- ------------- ----
Reimbursement Obligations and Bankers' Acceptances and termination of the
Commitments.
Section 13.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER
----------------
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 13.11 Amendments. No amendment or waiver of any provision of this
----------
Agreement, the Notes or any other Loan Document to which Mail-Well, the Borrower
or any other Loan Party is a party, nor any consent to any departure by Mail-
Well, the Borrower or any other Loan Party therefrom, shall in any event be
effective unless the same shall be agreed or consented to by the Required
Lenders and Mail-Well, the Borrower or such other Loan Party, respectively, in
writing, and each such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, that no
--------
amendment, waiver or consent shall, unless in writing and signed by all of the
Lenders and Mail-Well and the Borrower, do any of the following: (a) increase
the Commitments of the Lenders or subject the Lenders to any additional
obligations; (b) reduce the principal of, or interest on, the Loans or any fees
or other amounts payable hereunder; (c) postpone any date fixed for any payment
(including, without limitation, any mandatory prepayment) of principal of, or
interest on, the Loans or any fees or other amounts payable hereunder; (d) waive
any of the conditions precedent specified in Article 6; (e) change the
---------
Commitment Percentages or the aggregate unpaid principal amount of the Loans or
the number or interests of the Lenders which shall be required for the Lenders
or any of them to take any action under this Agreement; (f) change any provision
contained in Section 3.2 or this Section 13.11 or modify the definition of
----------- -------------
"Required Lenders" contained in Section 1.1; or (g) except as expressly
-----------
authorized by this Agreement, release any Collateral from any of the Liens
created by the Security Documents or release any guaranty of all or any portion
of the Obligations; and provided, further, however, that (i) except in the case
-------- ------- -------
of the automatic acceleration of maturity of the Loans and the automatic
termination of the Commitments pursuant to Section 11.2 as a result of the
------------
occurrence of an Event of Default under Section 11.1(e) or Section 11.1(f),
--------------- ---------------
after any acceleration of the maturity of the Loans by the Agent pursuant to
Section 11.2(a) or any termination of the Commitments by the Agent pursuant to
- ---------------
Section 11.2(b) without the consent of the Required Lenders, the acceleration of
- ---------------
the maturity of the Loans may
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be rescinded and the Commitments may be reinstated with the prior written
consent of the Required Lenders, and (ii) no amendment, waiver or consent
relating to Section 12.1, 12.2, 12.3, 12.4 or 12.5 shall require the agreement
------------ ---- ---- ---- ----
of any Loan Party. Notwithstanding anything to the contrary contained in this
Section 13.11, no amendment, waiver or consent shall be made with respect to
- -------------
Article 12 hereof without the prior written consent of the Agent.
- ----------
Section 13.12 Maximum Interest Rate.
---------------------
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the interest
rate (the "Contract Rate") for any Obligation shall exceed the Maximum Rate,
-------------
thereby causing the interest accruing on such Obligation to be limited to the
Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, none of the terms and provisions of this
Agreement or the other Loan Documents shall ever be construed to create a
contract or obligation to pay interest at a rate in excess of the Maximum Rate;
and neither the Agent nor any Lender shall ever charge, receive, take, collect,
reserve or apply, as interest on the Obligations, any amount in excess of the
Maximum Rate. The parties hereto agree that any interest, charge, fee, expense
or other obligation provided for in this Agreement or in the other Loan
Documents which constitutes interest under applicable law shall be, ipso facto
---- -----
and under any and all circumstances, limited or reduced to an amount equal to
the lesser of (i) the amount of such interest, charge, fee, expense or other
obligation that would be payable in the absence of this Section 13.12(b) or (ii)
----------------
an amount, which when added to all other interest payable under this Agreement
and the other Loan Documents, equals the Maximum Rate. If, notwithstanding the
foregoing, the Agent or any Lender ever contracts for, charges, receives, takes,
collects, reserves or applies as interest any amount in excess of the Maximum
Rate, such amount which would be deemed excessive interest shall be deemed a
partial payment or prepayment of principal of the Obligations and treated
hereunder as such; and if the Obligations, or applicable portions thereof, are
paid in full, any remaining excess shall promptly be paid to Mail-Well, the
Borrower or other appropriate Loan Party. In determining whether the interest
paid or payable, under any specific contingency, exceeds the Maximum Rate, Mail-
Well, the Borrower, the other Loan Parties, the Agent and the Lenders shall, to
the maximum extent permitted by applicable law, (i) characterize any
nonprincipal payment as an expense, fee or premium rather than as interest, (ii)
exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the Obligations, or
applicable portions thereof, so that the interest rate does not exceed the
Maximum Rate at any time during the term of the Obligations; provided that, if
-------- ----
the unpaid principal balance is paid and performed in full prior to the end of
the full contemplated term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Rate, the Agent and/or the
Lenders, as appropriate, shall refund to Mail-Well, the Borrower or other
appropriate Loan Party the amount of such excess and, in such event, the Agent
and the Lenders shall not be
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subject to any penalties provided by any laws for contracting for, charging,
receiving, taking, collecting, reserving or applying interest in excess of the
Maximum Rate. In addition to the foregoing, each of Mail-Well, the Borrower and
the other Loan Parties agrees that no provision of this Agreement or any other
Loan Document shall have the effect of imposing on Mail-Well, the Borrower or
any other Loan Party (as applicable) any obligation to pay interest (as such
term is defined in Section 347 of the Criminal Code of Canada) at a rate in
excess of the rate permitted by the laws of Canada, after taking into account
all other amounts which must be taken into account for the purpose of such laws,
and the obligation of Mail-Well, the Borrower and the other Loan Parties to pay
interest under this Agreement and the other Loan Documents is so limited.
(c) Pursuant to Article 15.10(b) of Chapter 15, Subtitle 79, Revised
Civil Statutes of Texas 1925, as amended, Mail-Well, the Borrower and the other
Loan Parties agree that such Chapter 15 (which regulates certain revolving
credit loan accounts and revolving tri-party accounts) shall not govern or in
any manner apply to the Obligations.
Section 13.13 Notices. All notices and other communications provided for
-------
in this Agreement and the other Loan Documents to which Mail-Well, the Borrower
or any other Loan Party is a party shall be given or made by telecopy or in
writing and telecopied, mailed by certified mail return receipt requested or
delivered to the intended recipient at the "Address for Notices" specified below
its name on the signature pages hereof (or, with respect to a Lender that
becomes a party to this Agreement pursuant to an assignment made in accordance
with Section 13.8, in the Assignment and Acceptance executed by it), or, as to
------------
any party, at such other address as shall be designated by such party in a
notice to each other party given in accordance with this Section 13.13. Except
-------------
as may be expressly otherwise provided in this Agreement or any other Loan
Document, all such communications shall be deemed to have been duly given when
transmitted by telecopy or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid; provided,
--------
however, that notices to the Agent shall be deemed given when received by the
- -------
Agent.
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
-----------------------------------------------------
PROCESS. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN LOAN
- -------
DOCUMENTS, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE U.S.
EACH OF THE LOAN PARTIES HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, THE U.S. DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN
HOUSTON, TEXAS, OR DALLAS, TEXAS, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH OF THE LOAN PARTIES HEREBY
IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH LOAN PARTY AT ITS
ADDRESS SET FORTH UNDERNEATH ITS SIGNATURE HERETO. EACH OF THE LOAN PARTIES
HEREBY
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IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORM.
Section 13.15 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.16 Severability. Any provision of this Agreement held by a
------------
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 13.18 Construction. Each of the Loan Parties, the Agent and each
------------
Lender acknowledges that it has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 13.19 Independence of Covenants. All covenants hereunder shall be
-------------------------
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 13.20 Confidentiality. Each Lender agrees to exercise its best
---------------
efforts to keep any information delivered or made available by any Loan Party to
it which is clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by such Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Lender
--------
from disclosing such information (a) to any other Lender, (b) to any Person if
reasonably incidental to the administration of the Loans, Letters of Credit or
Bankers' Acceptances, (c) upon the order of any court or administrative agency,
(d) upon the request or demand of any regulatory agency or authority having
jurisdiction over such Lender, (e) which has been publicly disclosed, (f) in
connection with any litigation to which the Agent, any Lender or their
respective Affiliates may be a party, (g) to the extent reasonably required in
connection with the exercise of any remedy under the Loan Documents, (h) to such
Lender's legal counsel, independent auditors and affiliates, and (i) to any
actual or proposed participant or Assignee of all or part of its rights
hereunder, so long as such actual or proposed participant or Assignee agrees to
be bound by the provisions of this Section 13.20.
-------------
88
<PAGE>
Section 13.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE AGENT OR ANY LENDER IN THE NEGOTIATION, ADMINISTRATION OR
ENFORCEMENT THEREOF.
Section 13.22 Approvals and Consent. Except as may be expressly provided
---------------------
to the contrary in this Agreement or in the other Loan Documents (as
applicable), in any instance under this Agreement or the other Loan Documents
where the approval, consent or exercise of judgment of the Agent or any Lender
is requested or required, (a) the granting or denial of such approval or consent
and the exercise of such judgment shall be within the sole discretion of the
Agent and such Lender, and the Agent and such Lender shall not, for any reason
or to any extent, be required to grant such approval or consent or to exercise
such judgment in any particular manner, regardless of the reasonableness of the
request or the action or judgment of the Agent or such Lender, and (b) no
approval or consent of the Agent or any Lender shall in any event be effective
unless the same shall be in writing and the same shall be effective only in the
specific instance and for the specific purpose for which given.
Section 13.23 Agent for Services of Process. Each of the Loan Parties
-----------------------------
hereby irrevocably designates CT Corporation System with offices at 350 N. St.
Paul Street, Dallas, Texas 75201, to receive for and on behalf of such Loan
Party service of process in the State of Texas. In the event that CT Corporation
System resigns or ceases to serve as such Loan Party's agent for service of
process hereunder, agrees forthwith (a) to designate another agent for service
of process in Houston, Texas and (b) to give prompt written notice to the Agent
of the name and address of such agent. Each of the Loan Parties agrees that the
failure of its agent for service of process to give any notice of any such
service of process to such Loan Party shall not impair or affect the validity of
such service or of any judgment based thereon. If, despite the foregoing, there
is for any reason no agent for service of process of a particular Loan Party
available to be served, then such Loan Party further irrevocably consents to the
service of process by the mailing thereof by the Agent or the Required Lenders
by registered or certified mail, postage prepaid, to such Loan Party at its
address listed on the signature pages hereof. Nothing in this Section 13.23
-------------
shall affect the right of the Agent or the Lenders to serve legal process in any
other manner permitted by law or affect the right of the Agent or any Lender to
bring any action or proceeding against any Loan Party or its Property in the
court of any jurisdiction.
Section 13.24 Assignment and Assumptions. The Lenders hereby agree among
--------------------------
themselves (and each of the Loan Parties hereby consents to such agreement)
that, concurrently with the Restatement Date, there shall be deemed to have
occurred assignments and assumptions with respect to the Debt, Liens, rights and
obligations under this Agreement and the other Loan Documents (including,
without limitation, the Commitments, the Loans, the Letters of Credit and the
Bankers' Acceptances) such that, after giving effect to such assignments and
assumptions, the Commitments and the outstanding Loans, Letters of Credit and
Bankers' Acceptances of each of the Lenders are as stated in this Agreement, and
the Lenders hereby make such assignments and
89
<PAGE>
assumptions. The Lenders shall make all appropriate payments and adjustments
among themselves to effectuate the appropriate purchase price for and other
amounts payable with respect to such assignments and assumptions.
Section 13.25 Amendment and Restatement. This Agreement is and shall be
-------------------------
deemed to be an amendment and restatement of the Original Supremex Credit
Agreement; provided, however, that the Original Supremex Credit Agreement shall
-------- -------
remain in existence as if it had not been amended or restated for purposes of
the defined terms, definitions, representations, warranties and other terms and
provisions of the Original Supremex Credit Agreement referred to herein
(including, without limitation, defined terms and the definitions thereof
referred to in all such terms and provisions) as if such defined terms,
definitions, representations, warranties and other terms and provisions of the
Original Supremex Credit Agreement, without amendment or restatement, were
incorporated herein by reference.
Section 13.26 Supplements to Certain Schedules. The Schedules hereto,
--------------------------------
other than Schedules 1.1(b), 7.10 and 7.15, may be proposed to be supplemented
---------------- ---- ----
by the Borrower concurrently with the making of the Term Loans B as they relate
to (but only as they relate to) the PNG Acquisition if (but only if) (a) the
Agent approves of any such supplement, which approval shall not be unreasonably
withheld, and (b) the supplemental information proposed to be included on any
such Schedule is not, in the judgment of the Agent, adverse in any material
respect to the Agent or the Lenders or the Mail-Well Agent or the Mail-Well
Lenders. Any such supplement proposed by the Borrower and so approved shall be
deemed to be a part of the Schedule to which such supplement relates.
Section 13.27 Intercreditor Agreements. Each of the Lenders hereby (a)
------------------------
agrees to all terms and provisions of each of the Intercreditor Agreement and
the Accounts Receivable Securitization Facility Intercreditor Agreement, (b)
agrees to be bound by all of the terms and provisions of each of the
Intercreditor Agreement and the Accounts Receivable Securitization Facility
Intercreditor Agreement as if it were a direct party and a signatory thereto
(whether or not it is a direct party or a signatory thereto) and (c) grants to
the Agent a special power of attorney to execute and deliver each of the
Intercreditor Agreement and the Accounts Receivable Securitization Facility
Intercreditor Agreement for, on behalf of and in the name of such Lender.
90
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BORROWER:
--------
SUPREMEX INC.
By: /s/ Paul V. Reilly
-----------------------
Name: Paul V. Reilly
Title: Vice President
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
91
<PAGE>
OTHER LOAN PARTIES:
------------------
MAIL-WELL I CORPORATION
By: /s/ Paul V. Reilly
----------------------
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
92
<PAGE>
INNOVA ENVELOPE INC.
By: /s/ Paul V. Reilly
----------------------
Name: Paul V. Reilly
Title: Vice President - Finance
Address for Notices:
-------------------
23 Inverness Way East, #160
Englewood, Colorado 80112
Telecopy No.: 303-397-7400
Telephone No.: 303-790-8023
Attention: Secretary
93
<PAGE>
AGENT:
-----
BANQUE PARIBAS
By: /s/ Pierre-Jean de Filippis
-------------------------------
Name: Pierre-Jean de Filippis
Title: General Manager
By: /s/ Christopher S. Goodwin
------------------------------
Name: Christopher S. Goodwin
Title: Vice President
Address for Notices:
-------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telecopy No.: 713-659-3832
Telephone No.: 713-659-4811
Attention: Corporate Banking Group
94
<PAGE>
LENDERS:
-------
ARAB BANKING CORPORATION (B.S.C.)
Term Loans A
Commitment:
- ----------- By:/s/ Stephen A. Plauche'
--------------------------
Name: Stephen A. Plauche'
$2,936,590.23 Title: Vice President
Term Loans B Address for Notices:
Commitment: ---------------------------------
- ---------- Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
$1,305,151.22 New York, New York 10172
Telecopy No.: 212-583-0921
Telephone No.:
Revolving Credit Loans Attention: Ms. Louise Weiss
Commitment:
- ----------
Cdn. $ -0- with a copy to:
Arab Banking Corporation (B.S.C.)
600 Travis Street, Suite 1900
Houston, Texas 77002
Telecopy No.: 713-227-6507
Telephone No.: 713-227-8444
Attention: Stephen Plauche
Lending Office for Prime Rate Loans:
-----------------------------------
Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
New York, New York 10172-3299
Attention: Ms. Louise Weiss
Lending Office for Eurodollar Loans:
-----------------------------------
Arab Banking Corporation (G.C.I.)
277 Park Avenue, 32nd Floor
New York, New York 10172-3299
Attention: Ms. Louise Weiss
95
<PAGE>
BANQUE PARIBAS
Term Loans A
Commitment: By: /s/ Pierre-Jean de Filippis
- ----------- -------------------------------
Name: Pierre-Jean de Filippis
$6,455,084.51 Title: General Manager
Term Loans B
Commitment: By: /s/ Christopher S. Goodwin
- ---------- ------------------------------
Name: Christopher S. Goodwin
$3,211,645.32 Title: Vice President
Revolving Credit Loans Address for Notices:
Commitment: -------------------
- ----------- Banque Paribas
1200 Smith Street, Suite 3100
Cdn. $ -0- Houston, Texas 77002
Telecopy No.: 713-659-3832
Telephone No.: 713-659-4811
Attention: Corporate Banking Group
Lending Office for Prime Rate Loans:
-----------------------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Leah Hughes
Operations Officer
Lending Office for Eurodollar Loans:
-----------------------------------
Banque Paribas
1200 Smith Street, Suite 3100
Houston, Texas 77002
Attention: Leah Hughes
Operations Officer
96
<PAGE>
BANK OF AMERICA ILLINOIS
Term Loans A
Commitment: By: /s/ Kevin Leader
- ----------- -----------------------
Name: Kevin Leader
$4,894,317.06 Title: Vice President
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- Bank of America Illinois
231 S. LaSalle Street
$2,175,252.02 Chicago, Illinois 60697
Telecopy No.: 312-974-9626
Telephone No.: 312-828-6386
Revolving Credit Loans Attention: Juanita L. Hester
Commitment:
- ----------
With a copy to:
--------------
Cdn. $ -0-
Bank of America
U.S. Div. - S.F. Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attention: Kevin Leader
Lending Office for Prime Rate Loans:
-----------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Juanita L. Hester
Lending Office for Eurodollar Loans:
-----------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Juanita L. Hester
97
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH
Term Loans A
Commitment: By: /s/ Attila Koc
- ----------- ------------------
Name: Attila Koc
$2,936,590.23 Title: Vice President
Term Loans B Addresses for Notices:
Commitment: ---------------------------------
- ---------- Credit Lyonnais
1301 Avenue of the Americas
$1,305,151.22 New York, New York 10019
Telecopy No.: 212-459-3170
Telephone No.: 212-459-7000
Revolving Credit Loans Attention: Mark Koneval
Commitment:
- ----------
Credit Lyonnais
Cdn. $ -0- 2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Telecopy No.: 214-220-2323
Telephone No.: 214-220-2300
Attention: Brian Brown
Lending Office for Prime Rate Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
Lending Office for Eurodollar Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
98
<PAGE>
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC.
Term Loans A
Commitment: By: /s/ Anthony R. Clemente
- ----------- ---------------------------
Name: Anthony R. Clemente
$2,821,316.61 Title: Authorized Signature
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- Merrill Lynch
800 Scudders Mill Road - Area 2C
$1,253,918.50 Plainsboro, New Jersey 08536
Telecopy No.: 609-282-2550
Telephone No.: 609-282-2092
Revolving Credit Loans Attention: Anthony Clemente
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road - Area 2C
Plainsboro, New Jersey 08536
Attention: Anthony Clemente
Lending Office for Eurodollar Loans:
-----------------------------------
Merrill Lynch Senior Floating Rate Fund, Inc.
800 Scudders Mill Road - Area 2C
Plainsboro, New Jersey 08536
Attention: Anthony Clemente
99
<PAGE>
NATIONAL BANK OF CANADA
Term Loans A
Commitment: By: /s/ Larry L. Sears
- ----------- ----------------------
Name: Larry L. Sears
$2,447,158.53 Title: Group Vice President
Term Loans B By: /s/ William Handley
Commitment: -----------------------
- ---------- Name: William Handley
Title: Vice President
$1,087,626.00
Address for Notices:
-----------------------
Revolving Credit Loans National Bank of Canada
Commitment: 2121 San Jacinto, Suite 1850
- ---------- Dallas, Texas 75201
Telecopy No.: 214-871-2015
Cdn. $ -0- Telephone No.: 214-871-1208
Attention: Larry Sears (2 copies requested)
Lending Office for Prime Rate Loans:
-----------------------------------
National Bank of Canada, New York Branch
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
Lending Office for Eurodollar Loans:
-----------------------------------
National Bank of Canada
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
100
<PAGE>
NATIONAL BANK OF CANADA
Term Loans A
Commitment: By: /s/ Mark Daigneault / Alain Aubin
- ----------- ---------------------------------------
Name: Mark Daigneault / Alain Aubin
$ -0- Title: Manager / Senior Manager
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- National Bank of Canada
Tour de la Banque Nationale
$ -0- 600 de la Gauchetiere St. West
Montreal Quebec H3B 4L2
Telecopy No.: 514-394-6073
Telephone No.: 514-394-8726
Revolving Credit Loans Attention: Mark Daigneault
Commitment:
- ----------
Cdn. $3,333,333.33 Lending Office for Prime Rate Loans:
-----------------------------------
National Bank of Canada
Tour de la Banque Nationale
600 de la Gauchetiere St. West
Montreal Quebec H3B 4L2
Telecopy No.: 514-394-8880
Telephone No.: 514-394-6075
Attention: Pierrette Farley
Lending Office for Eurodollar Loans:
-----------------------------------
National Bank of Canada
Tour de la Banque Nationale
600 de la Gauchetiere St. West
Montreal Quebec H3B 4L2
Telecopy No.: 514-394-8880
Telephone No.: 514-394-6075
Attention: Pierrette Farley
101
<PAGE>
NATIONSBANK OF TEXAS, N.A.
Term Loans A
Commitment: By: /s/ Kimberley Knop
- ----------- ----------------------
Name: Kimberley Knop
$2,936,590.23 Title: Vice President
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- NationsBank of Texas, N.A.
901 Main Street
$1,305,151.22 Dallas, Texas 75202
Telecopy No.: 214-508-0980
Telephone No.: 214-508-3363
Revolving Credit Loans Attention: Kimberly Knop
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
Lending Office for Eurodollar Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
102
<PAGE>
PARIBAS BANK OF CANADA
Term Loans A
Commitment: By: /s/ Christopher M. Golding
- ----------- ------------------------------
Name: Christopher M. Golding
$ -0- Title: Assistant Vice President
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- Paribas Bank of Canada
Royal Trust Tower, Suite 4100
$ -0- TD Centre, Toronto, Ontario M5K 1N8
Telecopy No.: 416-947-0086
Telephone No.: 416-365-9600
Revolving Credit Loans Attention: John Ho, Operations
Commitment:
- ----------
Cdn. $3,333,333.34 Lending Office for Prime Rate Loans:
---------------
Paribas Bank of Canada
Royal Trust Tower, Suite 4100
TD Centre, Toronto, Ontario M5K 1N8
Telecopy No.: 416-947-0086
Telephone No.: 416-365-9600
Attention: John Ho, Operations
Lending Office for Eurodollar Loans:
-----------------------------------
Paribas Bank of Canada
Royal Trust Tower, Suite 4100
TD Centre, Toronto, Ontario M5K 1N8
Telecopy No.: 416-947-0086
Telephone No.: 416-365-9600
Attention: John Ho, Operations
103
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY
Term Loans A
Commitment: By: /s/ Richard A. Erbert
- ----------- -------------------------
Name: Richard A. Erbert
$1,957,726.82 Title: Vice President
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- Societe Generale
1111 Bagby, Suite 2020
$870,100.80 Houston, Texas 77002
Telecopy No.: 713-650-0824
Telephone No.: 713-759-6318
Revolving Credit Loans Attention: Dick Erbert
Commitment:
- ----------
with a copy to:
Cdn. $ -0-
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Prime Rate Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Eurodollar Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
104
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
Term Loans A
Commitment: By: /s/ Mary C. Arnold
- ----------- ----------------------
Name: Mary C. Arnold
$2,841,056.45 Title: Vice President
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
$1,262,691.75 Houston, Texas 77002
Telecopy No.: 713-216-6387
Telephone No.: 713-216-5656
Revolving Credit Loans Attention: Mary Arnold
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
Lending Office for Eurodollar Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
105
<PAGE>
THE BANK OF NOVA SCOTIA
Term Loans A
Commitment: By: /s/ A.S. Norsworthy
- ----------- -----------------------
Name: A.S. Norsworthy
$2,447,158.53 Title: Sr. Team Leader - Loan Operations
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
$1,087,626.01 Atlanta, Georgia 30308
Telecopy No.: 404-888-8998
Telephone No.: 404-877-1500
Revolving Credit Loans Attention: F.C.H. Ashby
Commitment:
- ----------
with a copy to:
Cdn. $ -0-
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telecopy No.: 713-752-2425
Telephone No.: 713-759-3432
Attention: Rosine Matthews
Lending Office for Prime Rate Loans:
-----------------------------------
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: Cleve Bushey
Lending Office for Eurodollar Loans:
-----------------------------------
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: Cleve Bushey
106
<PAGE>
THE BANK OF NOVA SCOTIA
Term Loans A
Commitment: By: /s/ A.S. Norsworthy
- ----------- -----------------------
Name: A.S. Norsworthy
$ -0- Title: Sr. Team Leader - Loan Operations
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- The Bank of Nova Scotia
Corporate Banking Quebec
$ -0- 1002 Sherbrooke Street West, #320
Montreal, Canada H3A 3M3
Telecopy No. 514-499-5504
Telephone No.: 514-499-5662
Revolving Credit Loans Attention: Francois De Broux
Commitment:
- ----------
with a copy to:
Cdn. $3,333,333.33
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telecopy No.: 713-752-2425
Telephone No.: 713-759-3432
Attention: Rosine Matthews
Lending Office for Prime Rate Loans:
-----------------------------------
The Bank of Nova Scotia
Scotia Tower
1002 Sherbrooke Street West
Montreal, Canada H3A 3M3
Lending Office for Eurodollar Loans:
-----------------------------------
The Bank of Nova Scotia
Scotia Tower
1002 Sherbrooke Street West
Montreal, Canada H3A 3M3
107
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS
Term Loans A
Commitment: By: /s/ Pamela Rice Boggeman
- ----------- ----------------------------
Name: Pamela Rice Boggeman
$2,841,056.44 Title: Vice President
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- The Boatmen's National Bank of St. Louis
800 Market Street, Mail Station LBP 37-01
$1,262,691.75 St. Louis, Missouri 63101
Telecopy No.: 314-466-6645
Telephone No.: 314-466-7368
Revolving Credit Loans Attention: Pamela Boggeman
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis,
Leveraged Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
Lending Office for Eurodollar Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis,
Leveraged Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
108
<PAGE>
THE CIT GROUP/BUSINESS CREDIT, INC.
Term Loans A
Commitment: By: /s/ Pamela Wozniak
- ----------- ----------------------
Name: Pamela Wozniak
$2,841,056.44 Title: Assistant Secretary
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
$1,262,691.75 Dallas, Texas 75240
Telecopy No.: 972-455-1690
Telephone No.: 972-455-1678
Revolving Credit Loans Attention: Pam Wozniak or Susan Brooks
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
Lending Office for Eurodollar Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
109
<PAGE>
THE FUJI BANK, LIMITED
Term Loans A
Commitment: By: /s/ Nate Ellis
- ----------- ------------------
Name: Nate Ellis
$2,936,590.23 Title: Vice President & Joint Manager
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
$1,305,151.22 Houston, Texas 77010
Telecopy No.: 713-759-0048
Telephone No.: 713-650-7854
Revolving Credit Loans Attention: Nate Ellis
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
Lending Office for Eurodollar Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
110
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
Term Loans A
Commitment: By: /s/ Shuichi Tajima
- ----------- ----------------------
Name: Shuichi Tajima
$2,936,590.23 Title: Deputy General Manager
Term Loans B Address for Notices:
Commitment: -------------------
- ---------- The Long-Term Credit Bank of Japan, Limited,
New York Branch
$1,305,151.22 165 Broadway, 49th Floor
New York, New York 10006
Telecopy No.: 212-608-2371
Telephone No.: 212-335-4550
Revolving Credit Loans Attention: Frank H. Madden
Commitment:
- ----------
Cdn. $ -0- Lending Office for Prime Rate Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
Lending Office for Eurodollar Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
111
<PAGE>
EXHIBIT "A"
Form of Assignment and Acceptance
---------------------------------
<PAGE>
EXHIBIT "A"
ASSIGNMENT AND ACCEPTANCE
-------------------------
Date: _______________, 19__
Reference is made to the Amended and Restated Credit Agreement dated as of
November __, 1996 (as the same may be amended, modified, supplemented, renewed,
extended or restated from time to time, the "Credit Agreement"), among Supremex
----------------
Inc. (the "Borrower"), Mail-Well I Corporation, Innova Envelope Inc., the
--------
Lenders named therein (the "Lenders"), and Banque Paribas, as agent for the
-------
Lenders (in such capacity, the "Agent"). Capitalized terms used herein and not
-----
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement. This Assignment and Acceptance is being executed pursuant to
Section 13.8 of the Credit Agreement.
- ------------
___________________________ (the "Assignor") and ______________________
--------
(the "Assignee") agree as follows:
--------
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the following interests
in and to the Assignor's rights and obligations under the Credit Agreement and
the other Loan Documents as of the Effective Date (as defined below):
(a) a ____% interest in the Revolving Credit Loans Commitments (which
percentage interest represents a Canadian $________ commitment with
respect to the aggregate Revolving Credit Loans Commitments of
Canadian $10,000,000);
(b) a ____% interest in the aggregate outstanding principal amount of the
Term Loans A (which percentage interest represents a $______ interest
in the $________ aggregate principal amount of the Term Loans A
presently outstanding);
(c) a ____% interest in the aggregate outstanding principal amount of the
Term Loans B (which percentage interest represents a $______ interest
in the $________ aggregate principal amount of the Term Loans B
presently outstanding);
After giving effect to this Assignment and Acceptance, the Revolving Credit
Loans Commitment of Assignor will be $__________________ and the outstanding
principal amount of Assignor's interest in the Term Loans A and Term Loans B
will be $_________ and $_________.
2. The Assignor (i) represents that, as of the date hereof, (A) its
Revolving Credit Loans Commitment is Canadian $_______________, (B) the
outstanding principal balance of its Term Loans A is $_______________, (C) the
outstanding principal balance of its Term Loans B is $_______________, and (D)
the outstanding principal balance of its Revolving Credit Loans is Canadian
$_______________, its pro rata share of the Letters of Credit outstanding under
its Revolving Credit Loans Commitment is Canadian $___________, and its pro rata
share of the Bankers' Acceptances outstanding under the Revolving Credit Loans
Commitment is Canadian
ASSIGNMENT AND ACCEPTANCE - PAGE 1
<PAGE>
$________ (all as unreduced by any assignments which have not yet become
effective); (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other Loan Document, other than that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest is free and clear of any adverse claim; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance by any
Loan Party of any of its obligations under the Credit Agreement or any other
Loan Document; and (iv) attaches the Notes held by Assignor and requests that
the Agent exchange such Notes for a new [TERM LOANS A NOTE, TERM LOANS B NOTE
AND REVOLVING CREDIT LOANS NOTE PAYABLE TO THE ORDER OF (A) THE ASSIGNEE IN AN
AMOUNT EQUAL TO (I) IN THE CASE OF THE TERM LOANS A NOTE, THE PRINCIPAL AMOUNT
OF THE TERM LOANS A ASSIGNED TO ASSIGNEE PURSUANT HERETO, (II) IN THE CASE OF
THE TERM LOANS B NOTE, THE PRINCIPAL AMOUNT OF THE TERM LOANS B ASSIGNED TO
ASSIGNEE PURSUANT HERETO, AND (III) IN THE CASE OF REVOLVING CREDIT LOANS NOTE,
THE AMOUNT OF ASSIGNOR'S REVOLVING CREDIT LOANS COMMITMENT ASSUMED BY ASSIGNEE
HEREUNDER, (B) THE ASSIGNOR IN AN AMOUNT EQUAL TO (I) IN THE CASE OF THE TERM
LOANS A NOTE, THE PRINCIPAL AMOUNT OF THE TERM LOANS A RETAINED BY ASSIGNOR,
(II) IN THE CASE OF THE TERM LOANS B NOTE, THE PRINCIPAL AMOUNT OF THE TERM
LOANS B RETAINED BY ASSIGNOR, AND (III) IN THE CASE OF THE REVOLVING CREDIT
LOANS NOTE, THE PRINCIPAL AMOUNT OF THE REVOLVING CREDIT LOANS COMMITMENT
RETAINED BY ASSIGNOR]/1/.
3. The Assignee (i) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (ii) confirms that it
has received a copy of the Credit Agreement, together with copies of the most
recent financial statements delivered pursuant to Section 8.1 thereof, and such
-----------
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Acceptance; (iii)
agrees that it will, independently and without reliance upon the Agent, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Documents; (iv) confirms that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action on the Assignee's behalf and to
exercise such powers under the Loan Documents as are delegated to the Agent by
the terms thereof, together with such powers as are reasonably incidental
thereto; (vi) agrees that it will perform in accordance with their terms all
obligations which by the terms of the Credit Agreement and the other Loan
Documents are required to be performed by it as a Lender; (vii) agrees that it
will keep confidential all information with respect to the Loan Parties
furnished to it by any Loan Party or the Assignor marked as being confidential
(other than information generally available to the public) in accordance with
Section 13.20 of the Credit Agreement; and (viii) attaches the forms prescribed
- -------------
by the Internal Revenue Service of the United States certifying as to the
Assignee's exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement, or a certificate
as to the Assignee's exemption from United States withholding taxes with respect
to all payments to be made to the Assignee under the Credit Agreement, or such
other documents as are necessary to indicate that all such payments
_______________________
/1/ If this Assignment and Acceptance does not relate to all of the Loans,
this language is to be revised accordingly.
ASSIGNMENT AND ACCEPTANCE - PAGE 2
<PAGE>
are subject to such tax at a rate reduced by an applicable tax treaty;/2/ and
(iv) represents and warrants that it is resident in Canada./3/
4. The effective date for this Assignment and Acceptance shall be
___________ ____, 19__ (the "Effective Date")./4/ Following the execution of
--------------
this Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording by the Agent.
5. Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, shall have the rights and
obligations of a Lender thereunder and under the other Loan Documents, (ii) the
Assignee shall be a party to each of the Intercreditor Agreement and the
Accounts Receivable Securitization Facility Intercreditor Agreement as if it
were a signatory thereto, and to the extent provided in this Assignment and
Acceptance, shall have the rights and obligations of a Lender thereunder, and
(iii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations under the
Credit Agreement and the other Loan Documents.
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments under the Credit Agreement and the Notes for periods prior to the
Effective Date directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
8. The Assignee's address for notices and Applicable Lending Office for
purposes of the Credit Agreement (until such address or office are subsequently
changed in accordance with the Credit Agreement) are specified below its name on
the signature pages of this Assignment and Acceptance.
_________________________
/2/ If the Assignee is organized under the laws of a jurisdiction outside the
United States.
/3/ If the Assignee is assuming a Revolving Credit Loans Commitment.
/4/ Such date shall be at least five Business Days after the execution of this
Assignment and Acceptance and delivery thereof to the Agent (unless otherwise
agreed by the Agent).
ASSIGNMENT AND ACCEPTANCE - PAGE 3
<PAGE>
[NAME OF ASSIGNOR]
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
[NAME OF ASSIGNEE]
By: ___________________________________
Name: ___________________________________
Title: ___________________________________
Address for Notices:
-------------------
___________________________________________
___________________________________________
___________________________________________
Fax No. (_____)____________________________
Telephone No. (_____)______________________
Attention:_________________________________
Lending Office for Prime Rate Loans:
-----------------------------------
___________________________________________
___________________________________________
___________________________________________
Lending Office for Eurodollar Loans:
-----------------------------------
___________________________________________
___________________________________________
___________________________________________
ASSIGNMENT AND ACCEPTANCE - PAGE 4
<PAGE>
ACCEPTED BY:
BANQUE PARIBAS, as Agent for the Lenders
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
Date: _______________________________________
APPROVED BY:
MAIL-WELL I CORPORATION
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
ASSIGNMENT AND ACCEPTANCE - PAGE 5
<PAGE>
EXHIBIT "B"
Form of Revolving Credit Loans Note
-----------------------------------
<PAGE>
REVOLVING CREDIT LOANS NOTE
---------------------------
Canadian $3,333,333.34 Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, SUPREMEX INC., a corporation
amalgamated under the Canada Business Corporations Act (the "Borrower"), hereby
--------
promises to pay to the order of BANQUE PARIBAS (the "Lender"), at the Principal
------
Office of the Agent, in lawful money of Canada and in immediately available
funds, the principal amount of THREE MILLION THREE HUNDRED THIRTY THREE THOUSAND
THREE HUNDRED THIRTY THREE AND 34/100 Canadian Dollars (Canadian $3,333,333.34)
or such lesser amount as shall equal the aggregate unpaid principal amount of
the Revolving Credit Loans made or deemed made by the Lender (or its predecessor
in interest) to the Borrower under the Credit Agreement referred to below, on
the dates and in the principal amounts provided in the Credit Agreement, and to
pay interest on the unpaid principal amount of each such Loan, at such office,
in like money and funds, for the period commencing on the date of each such Loan
until each such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
This Note is one of the Revolving Credit Loans Notes referred to in the
Amended and Restated Credit Agreement dated as of November __, 1996, among the
Borrower, Mail-Well I Corporation, Innova Envelope Inc., the Lenders named
therein and Banque Paribas, as agent for the Lenders (such Credit Agreement, as
the same may be amended, modified, supplemented, renewed, extended or restated
from time to time, being referred to herein as the "Credit Agreement"), and
----------------
evidences Revolving Credit Loans made or deemed made by the Lender (or its
predecessor in interest) thereunder. The holder of this Note shall be entitled
to, without limitation, the benefits provided in the Credit Agreement as set
forth therein. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity of this Note upon the happening of certain
stated events and for prepayment of the Revolving Credit Loans prior to the
maturity of this Note upon the terms and conditions specified in the Credit
Agreement. Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS ( WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or
REVOLVING CREDIT LOANS NOTE - Page 1
<PAGE>
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
This Note is issued in replacement of, but not in extinguishment of the
indebtedness evidenced by, those certain Revolving Credit Loans Notes made by
the Borrower and delivered pursuant to the Original Supremex Credit Agreement.
SUPREMEX INC.
By:__________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
REVOLVING CREDIT LOANS NOTE - Page 2
<PAGE>
REVOLVING CREDIT LOANS NOTE
---------------------------
Canadian $3,333,333.34 Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, SUPREMEX INC., a corporation
amalgamated under the Canada Business Corporations Act (the "Borrower"), hereby
--------
promises to pay to the order of BANQUE PARIBAS (the "Lender"), at the Principal
------
Office of the Agent, in lawful money of Canada and in immediately available
funds, the principal amount of THREE MILLION THREE HUNDRED THIRTY THREE THOUSAND
THREE HUNDRED THIRTY THREE AND 34/100 Canadian Dollars (Canadian $3,333,333.34)
or such lesser amount as shall equal the aggregate unpaid principal amount of
the Revolving Credit Loans made or deemed made by the Lender (or its predecessor
in interest) to the Borrower under the Credit Agreement referred to below, on
the dates and in the principal amounts provided in the Credit Agreement, and to
pay interest on the unpaid principal amount of each such Loan, at such office,
in like money and funds, for the period commencing on the date of each such Loan
until each such Loan shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
This Note is one of the Revolving Credit Loans Notes referred to in the
Amended and Restated Credit Agreement dated as of November __, 1996, among the
Borrower, Mail-Well I Corporation, Innova Envelope Inc., the Lenders named
therein and Banque Paribas, as agent for the Lenders (such Credit Agreement, as
the same may be amended, modified, supplemented, renewed, extended or restated
from time to time, being referred to herein as the "Credit Agreement"), and
----------------
evidences Revolving Credit Loans made or deemed made by the Lender (or its
predecessor in interest) thereunder. The holder of this Note shall be entitled
to, without limitation, the benefits provided in the Credit Agreement as set
forth therein. The Credit Agreement, among other things, contains provisions
for acceleration of the maturity of this Note upon the happening of certain
stated events and for prepayment of the Revolving Credit Loans prior to the
maturity of this Note upon the terms and conditions specified in the Credit
Agreement. Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS ( WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or
REVOLVING CREDIT LOANS NOTE - Page 3
<PAGE>
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
This Note is issued in replacement of, but not in extinguishment of the
indebtedness evidenced by, those certain Revolving Credit Loans Notes made by
the Borrower and delivered pursuant to the Original Supremex Credit Agreement.
SUPREMEX INC.
By:__________________________________
Name: Paul V. Reilly
Title: Vice President - Finance
REVOLVING CREDIT LOANS NOTE - Page 4
<PAGE>
EXHIBIT "C"
Form of Term Loans Note
-----------------------
<PAGE>
TERM LOANS A NOTE
-----------------
$_________________ Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, SUPREMEX INC., a corporation
amalgamated under the Canada Business Corporations Act (the "Borrower"), hereby
--------
promises to pay to the order of ___________ _______________________________ (the
"Lender"), at the Principal Office of the Agent, in lawful money of the United
------
States of America and in immediately available funds, the principal amount of
__________________________________________ Dollars ($_____________) on the dates
and in the principal amounts provided in the Credit Agreement referred to below
with respect to the Term Loans A evidenced by this Note, and to pay interest on
the unpaid principal amount of the Term Loans A evidenced by this Note, at such
office, in like money and funds, for the period commencing on the date of such
Loans until such Loans shall be paid in full, at the rates per annum and on the
dates provided in the Credit Agreement.
This Note is one of the Term Loans A Notes referred to in the Amended and
Restated Credit Agreement dated as of November __, 1996, among the Borrower,
Mail-Well I Corporation, Innova Envelope Inc., the Lenders named therein and
Banque Paribas, as agent for the Lenders (such Credit Agreement, as the same may
be amended, modified, supplemented, renewed, extended or restated from time to
time, being referred to herein as the "Credit Agreement"), and evidences the
----------------
Term Loans A made or deemed made by the Lender (or its predecessor in interest)
thereunder. The holder of this Note shall be entitled to, without limitation,
the benefits provided in the Credit Agreement as set forth therein. The Credit
Agreement, among other things, contains provisions for acceleration of the
maturity of this Note upon the happening of certain stated events and for
prepayment of the Term Loans A prior to the maturity of this Note upon the terms
and conditions specified in the Credit Agreement. Capitalized terms used in
this Note have the respective meanings assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
TERMS LOANS A NOTE - Page 1
<PAGE>
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
This Note is issued in replacement of, but not in extinguishment of the
indebtedness evidenced by, those certain Term Loans A Notes (as defined in the
Original Supremex Credit Agreement) and Term Loans B Notes (as defined in the
Original Supremex Credit Agreement) made by the Borrower and delivered pursuant
to the Original Supremex Credit Agreement.
SUPREMEX INC.
By:___________________________
Name: Paul V. Reilly
Title: Vice President
TERM LOANS A NOTE - Page 2
<PAGE>
EXHIBIT "D"
Form of Term Loans B Note
-------------------------
<PAGE>
TERM LOANS B NOTE
-----------------
$_________________ Houston, Texas November __, 1996
FOR VALUE RECEIVED, the undersigned, SUPREMEX INC., a corporation
amalgamated under the Canada Business Corporations Act (the "Borrower"), hereby
--------
promises to pay to the order of ________________________________________ (the
"Lender"), at the Principal Office of the Agent, in lawful money of the United
- -------
States of America and in immediately available funds, the principal amount of
_____________________________________ Dollars ($_____________) or such lesser
amount as shall equal the aggregate unpaid principal amount of the Term Loans B
made by the Lender (or its predecessor in interest) to the Borrower under the
Credit Agreement referred to below, on the dates and in the principal amounts
provided in the Credit Agreement, and to pay interest on the unpaid principal
amount of such Loans, at such office, in like money and funds, for the period
commencing on the date of such Loans until such Loans shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.
This Note is one of the Term Loans B Notes referred to in the Amended and
Restated Credit Agreement dated as of November __, 1996, among the Borrower,
Mail-Well I Corporation, Innova Envelope Inc., the Lenders named therein and
Banque Paribas, as agent for the Lenders (such Credit Agreement, as the same may
be amended, modified, supplemented, renewed, extended or restated from time to
time, being referred to herein as the "Credit Agreement"), and evidences the
----------------
Term Loans B made by the Lender (or its predecessor in interest) thereunder.
The holder of this Note shall be entitled to, without limitation, the benefits
provided in the Credit Agreement as set forth therein. The Credit Agreement,
among other things, contains provisions for acceleration of the maturity of this
Note upon the happening of certain stated events and for prepayment of the Term
Loans B prior to the maturity of this Note upon the terms and conditions
specified in the Credit Agreement. Capitalized terms used in this Note have the
respective meanings assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS NOTE IS PERFORMABLE IN
HARRIS COUNTY, TEXAS.
The Borrower and each surety, guarantor, endorser and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or
TERMS LOANS B NOTE - PAGE 1
<PAGE>
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
THIS NOTE, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT OF THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
SUPREMEX INC.
By:______________________________
Name: Paul V. Reilly
Title: Vice President
<PAGE>
EXHIBIT "E"
Form of Notice of Borrowings, Conversions, Continuation or Prepayments
----------------------------------------------------------------------
<PAGE>
NOTICE OF BORROWINGS, CONVERSIONS,
CONTINUATIONS OR PREPAYMENTS
----------------------------
Date: _______________, 19__
Banque Paribas, as Agent
1200 Smith Street
Suite 3100
Houston, Texas 77002
__________________:
Reference is made to the Amended and Restated Credit Agreement dated as of
November __, 1996 (as the same may be amended, modified, supplemented, renewed,
extended or restated from time to time, the "Credit Agreement"), among Supremex
----------------
Inc. (the "Borrower"), Mail-Well I Corporation, Innova Envelope Inc., the
--------
Lenders named therein (the "Lenders") and Banque Paribas, as Agent for the
-------
Lenders (in such capacity, the "Agent"). Capitalized terms used herein and not
-----
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
The Borrower hereby gives you this Notice, irrevocably, pursuant to Section
-------
2.9 of the Credit Agreement. The Borrower hereby notifies you of the following
- ---
(check and/or complete the applicable item):
____ (a) New Loan.
--------
(i) (A) The Borrower requests a Term Loans B in the amount of
$________ on _____________ __, 1996.
(B) The Term Loans B will be of the following Type: [Prime
Rate Loan] [Eurodollar Loan].
(C) If the Term Loans B will be a Eurodollar Loan, the
Interest Period will be ___________ month[s].
(ii) (A) The Borrower requests a Revolving Credit Loan in the
amount of Canadian $________ on _______________, 199__. Such Revolving
Credit Loan ____ will/____will not consist of Swing Line Advances.
(B) The Revolving Credit Loan will be of the following Type:
[Prime Rate Loan] [Eurodollar Loan].
NOTICE OR BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 1
<PAGE>
(C) If the Revolving Credit Loan will be a Eurodollar Loan,
the Interest Period will be _____ month[s].
____ (b) Bankers' Acceptance. The Borrower requests a Bankers' Acceptance on
-------------------
the following terms:
(i) Aggregate face amount Canadian $___________
(ii) Term _______________ days
(iii) Date of Borrowing ____________________
(iv) Maturity ____________________
____ (c) [Conversion] [Continuation] of Loan
----------------------------------
(i) (A) The Borrower requests a [Conversion] [Continuation] of a
Term Loans A in the amount of $________ on __________, ____.
(B) The Type of Term Loans A to be [Converted] [Continued]
will be a [Prime Rate Loan] [Eurodollar Loan].
(C) The Term Loans A resulting from the [Conversion]
[Continuation] will be a [Prime Rate Loan] [Eurodollar Loan].
(D) If the Term Loans A resulting from the [Conversion]
[Continuation] will be a Eurodollar Loan, the Interest Period for such
Loan will be _____ month[s].
(ii) (A) The Borrower requests a [Conversion] [Continuation] of a
Term Loans B in the amount of $________ on __________, ____.
(B) The Type of Term Loans B to be [Converted] [Continued]
will be a [Prime Rate Loan] [Eurodollar Loan].
(C) The Term Loans B resulting from the [Conversion]
[Continuation] will be a [Prime Rate Loan] [Eurodollar Loan].
(D) If the Term Loans B resulting from the [Conversion]
[Continuation] will be a Eurodollar Loan, the Interest Period for such
Loan will be _____ month[s].
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 2
<PAGE>
(iii) (A) The Borrower requests a [Conversion] [Continuation] of
a Revolving Credit Loan in the amount of Canadian $________ on
__________, ____.
(B) The Type of Revolving Credit Loan to be [Converted]
[Continued] will be a [Prime Rate Loan] [Eurodollar Loan].
(C) The Revolving Credit Loan resulting from the
[Conversion] [Continuation] will be a [Prime Rate Loan] [Eurodollar
Loan].
(D) If the Revolving Credit Loan resulting from the
[Conversion] [Continuation] will be a Eurodollar Loan, the Interest
Period for such Loan will be _____ month[s].
____ (d) Prepayment.
----------
(i) (A) The Borrower will make a prepayment of the principal of
the Term Loans A in the amount of $___________ on ______________,
____.
(B) The Term Loans A to be prepaid will be of the following
Type: [Prime Rate Loan] [Eurodollar Loan].
(C) If the Term Loans A to be prepaid is a Eurodollar Loan,
it has an Interest Period of _____ month[s] that will end on
_____________, ____.
(ii) (A) The Borrower will make a prepayment of the principal of
the Term Loans B in the amount of $___________ on ______________,
____.
(B) The Term Loans B to be prepaid will be of the following
Type: [Prime Rate Loan] [Eurodollar Loan].
(C) If the Term Loans B to be prepaid is a Eurodollar Loan,
it has an Interest Period of _____ month[s] that will end on
_____________, ____.
(iii) (A) The Borrower will make a prepayment of the principal
of the Revolving Credit Loans in the amount of Canadian $_________ on
____________, ____.
(B) The Revolving Credit Loan to be prepaid will be of the
following Type: [Prime Rate Loan] [Eurodollar Loan].
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 3
<PAGE>
(C) If the Revolving Credit Loan to be prepaid is a
Eurodollar Loan, it has an Interest Period of _____ month[s] that will
end on _____________, ____.
SUPREMEX INC.
By:_____________________________
Name:___________________________
Title:__________________________
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS
OR PREPAYMENTS - PAGE 4
<PAGE>
SCHEDULE 1.1(A)
MORTGAGED PROPERTIES
--------------------
I. Mortgaged Properties Acquired Pursuant to the G-P Envelope Acquisition
Agreement.
A. Mortgaged Fee Properties
1. Chestertown, Maryland 225 Talbot Blvd.
2. Chicago, Illinois 5445 N. Elston Ave.
3. Cleveland, Ohio 4500 Tiedeman Road
4. Denver, Colorado (3301) Kalamath St.
5. Jacksonville, Florida 5406 W. First St.
6. Oklahoma City, Oklahoma 4901 N.W. Fourth St.
7. Phoenix, Arizona 221 N. 48th Ave.
8. Pittsburgh, Pennsylvania 7301 Penn Ave.
9. Tullahoma, Tennessee 1509 N. Washington St.
B. Mortgaged Leasehold Property Interests
1. Albuquerque, New Mexico
Standard Commercial Net/Net/Net Business Center Lease dated June
1, 1993, made and entered into by and between I&J Investments, as
lessor, and Mail Well Envelope Company, a Delaware corporation, as
lessee. No Survey is required for this Property.
2. Cambridge, Maryland
Lease Agreement dated effective as of January 22, 1988, made and
entered into by and between The County Commissioners of Dorchester
County, as lessor, and M-W Envelope Company, Inc., a Delaware
corporation, as lessee, as amended, modified or extended by (i) that
certain Notice of Intention to Lease 33,750 Square Feet in the
Dorchester County Shell Building dated July 5, 1988, and (ii) that
certain Amendment to Lease Agreement dated March 16, 1993.
<PAGE>
3. Denver, Colorado
Agreement dated March 19, 1963, made and entered into by and
between Richard B. Tucker, Carl L. Tucker and Robert Best, as lessors,
and Pak-Well Paper Industries, Inc., a Colorado corporation, as
lessee, as amended, modified or extended by (i) that certain Addendum
to Lease dated effective as of January 20, 1964, (ii) that certain
Agreement dated effective as of September 15, 1968, and (iii) that
certain Agreement dated April 1, 1975, made and entered into by and
between Richard B. Tucker and Robert Best, as lessors, and Mail-Well
Corporation, a Delaware corporation, as lessee. A portion of the
leased premises were subleased pursuant to that certain Sublease
Agreement dated as of May 23, 1980, made and entered into by and
between Nekoosa Envelopes, Inc., a Delaware corporation, as sublessor,
and Petro-Lewis Corporation, a Colorado corporation, as sublessee, and
consented to by Richard B. Tucker and Robert Best, and as amended,
modified, or extended by that certain Addendum to Sublease Agreement
dated July 31, 1980, and as assigned by that certain Agreement to
Assign Sublease dated as of June 23, 1987, made and entered into by
and between FPCO Oil & Gas Co., a Colorado corporation, as assignor,
and Central Bancorporation, Inc., a Colorado corporation, as assignee,
and consented to by Nekoosa Envelopes, Inc., and Richard Tucker and
Charlotte Tucker, and as further consented to, among other things, by
that certain Agreement and Consent to Assignment dated August 5, 1987,
made and entered into by and between Richard B. Tucker and Charlotte
Tucker (successor-in-interest to Robert Best), as lessors, Nekoosa
Envelopes, Inc., as sublessor, FPCO Oil & Gas Co. (successor-in-
interest to Petro-Lewis Corporation), as Assignor, and Central
Bancorporation, Inc., as assignee, and as amended, modified or
extended by that certain letter agreement dated March 26, 1992, by
that certain amendment dated May 6, 1993 and that certain amendment
dated May 13, 1993.
4. Honolulu, Hawaii
Lease dated as of March 22, 1991, made and entered into by and
between PMLW Partnership, a Hawaii general partnership, as lessor, and
Mail-Well Envelope Company, a Delaware corporation, as lessee. No
Survey is required for this Property.
5. Jersey City, New Jersey
Agreement of Lease dated January 7, 1991, made and entered into
by and between Pavey Associates, a New Jersey partnership, as lessor,
and Pavey Envelope and Tag Corp., a New Jersey corporation, as lessee,
as amended, modified or extended by (i) that certain First Amendment
to Lease dated as of
<PAGE>
August 15, 1991, and (ii) that certain Second Amendment to Lease dated
February 21, 1994.
6. Kankakee, Illinois
Lease dated August 15, 1984, made and entered into by and
between CMD Realty Management Company, an Illinois corporation,
as agent for The Prudential Insurance Company of America, as
lessor, and Nekoosa Envelopes, Inc., a Delaware corporation, as
lessee.
7. Milwaukie, Oregon (2515 Mail-Well Drive)
Lease dated March 1, 1988, made and entered into by and
between W. R. Lake, Jr., Janet M. Lake, Susan L. Howell, Thomas
L. Howell, Theodora R. Feldman, and United States National Bank
of Oregon, Trustee, and Garthe Brown, Trustee, as lessors, and
Mail-Well Envelope Company, a Delaware corporation, as lessee.
8. Milwaukie, Oregon (2700 Mail-Well Drive)
Standard Industrial Lease-Net dated April 13, 1989, made and
entered into by and between Lincoln Property Company, N.C., Inc.,
as manager and agent for Lincoln Milwaukie Associates, Ltd., as
lessor, and Mail-Well Envelope Company, Inc., as lessee, as
amended, modified or extended by (i) that certain Lease Extension
Agreement extending the termination date from February 28, 1990
to July 31, 1991, among other things, (ii) that certain Rent
Waiver Agreement dated effective as of July 11, 1990, (iii) that
certain Lease Extension Agreement dated effective as of April 2,
1991, made and entered into by and between CP-McLaughlin
Properties, Inc., as lessor, and Mail-Well Envelope Company,
Inc., as lessee, and (iii) Amendment to Lease dated June 19,
1992.
9. Oakland, California
Standard Industrial/Commmercial Single-Tenant Lease-Net
dated July 1, 1992, made and entered into by and between Cotton
Properties, as lessor, and Mail-Well Envelope Company, as lessee,
as amended, modified or extended by that certain letter agreement
dated August 22, 1993, and as said letter agreement and the Lease
were further amended by that certain letter agreement dated
September 9, 1993.
<PAGE>
10. Salt Lake City, Utah
Lease Agreement dated August 1, 1973, made and entered into
by and between Price Ventures, Inc., a Utah corporation d/b/a
Timesquare Park, as lessor, and Rockmont Envelope Company of Utah,
Inc., a Utah corporation, as lessee, as amended, modified or extended
by (i) that certain letter agreement dated November 30, 1987, (ii)
that certain letter agreement dated November 24, 1992, (iii) that
certain Amendment to Lease dated as of September 26, 1973, (iv) that
certain Amendment to Lease dated as of November 6, 1973, (v) that
certain Amendment to Lease dated as of November 20, 1973, and (vi)
that certain Addendum to Lease dated as of December 22, 1975.
II. Mortgaged Properties Acquired Pursuant to the AEC Acquisition Agreement.
A. Mortgaged Fee Properties
1. Nashville, Tennessee 540 Brick Church Park Dr.
2. Chicago, Illinois 3001 N. Rockwell St.
3. Chicago, Illinois 4400 West Ohio St.
4. Santa Fe Springs, California 13341 Cambridge St.
5. O'Fallon, Missouri 601 Cannonball Lane
6. San Antonio, Texas 232 Iowa St.
7. Omaha, Nebraska 915 North 43rd Avenue
8. Seattle, Washington 401 Andover Park East
9. Dallas, Texas* 14001 Inwood Road
*(Leased until 1/5/95)
B. Mortgaged Leasehold Property Interests
1. Agency Lease Agreement dated April 1, 1988, by and between Erie
County Industrial Development Agency and American Envelope Company, as
evidenced by a Memorandum of Lease dated as of April 1, 1988, filed in
the Erie County Clerk's Office on April 7, 1988 under Liber 9846, Page
338.
III. Mortgaged Properties Acquired Pursuant to the Supremex Acquisition
Agreement.
A. Mortgaged Fee Properties
1. Markham, Ontario 56 Steelcase Road West
<PAGE>
B. Leasehold Property Interests
1. Dartmouth, Nova Scotia 110 Simmonds Drive
2. Montreal, Quebec 7355 Notre Dame est
3. Montreal, Quebec 345 Montee de Liesse
4. Ottawa, Ontario 270 McLaren
5. Mississagua, Ontario 5300 Tomken Road
6. Brantford, Ontario 46 Plant Farm Boulevard
7. Winnipeg, Manitoba 33 Plymouth Street
8. Regina, Saskatchewan 199 North Leonard Street
9. Edmonton, Alberta 16242 117th Avenue
10 Calgary, Alberta 6143 - 4th Street S.E.
11. Delta, British Columbia 1308 Cleveden Avenue
IV. Mortgaged Properties Acquired Pursuant to the Graphic Arts Center,
Inc. Securities Purchase Agreement .
A. Mortgaged Fee Properties
1. Portland, Oregon 2000 N.W. Wilson St.
B. Mortgaged Leasehold Property Interests
1. Portland, Oregon 2116 N.W. 20th Avenue
2. South San Francisco,
California 560 Forbes Boulevard
3. Pasadena, California 2181 East Foothill Boulevard
V. Mortgaged Properties Acquired Pursuant to the Quality Park Products,
Inc. Acquisition Agreement.
A. Mortgaged Fee Properties
1. Atlanta, Georgia 3350 Hamilton Boulevard, S.W.
B. Leasehold Property Interests
1. Beresford, South Dakota 100 Quality Park Drive
2. St. George, Utah 3287 East Deseret Drive
<PAGE>
SCHEDULE 1.1(B)
PERMITTED LIENS
---------------
<TABLE>
<CAPTION>
LIEN PRIORITY
---- --------
<S> <C>
1. New Jersey Secretary of State Financing Statement No. Subordinated to Banks
1380846 - Pavey Associates c/o Sidney Strauss, as Secured
Party, and Pavey Envelope and Tag Corp., as Debtor, and
subordinated to the Agent's Liens pursuant to the Landlord
Consent, Subordination and Estoppel Certificate dated as of
February 21, 1994 by Pavey Associates.
2. New Jersey Hudson County Financing Statement No. Subordinated to Banks
1991-0053 - Pavey Associates c/o Sidney Strauss, as
Secured Party, and Pavey Envelope and Tag Corp., as
Debtor, and subordinated to the Agent's Liens pursuant to
Landlord Consent, Subordination and Estoppel Certificate dated
as of February 21, 1994 by Pavey Associates.
3. British Columbia Personal Property Registration No. 5065160 -
N.E.L. National Equipment Leasing Ltd., as Holder, and Classic
Envelope Company Ltd., as Grantor, dated as of February 14,
1994, granting security interest in general collateral, packaging
system and Ricoh fax machine.
4. British Columbia Personal Property Registration No. 5759580 -
Didde Web Press Corporation, as Holder, and Classic Envelope
Plus Ltd., as Grantor, dated as of May 1, 1995, granting a
security interest in general collateral, two offsets, two
ink-tower assemblies, one substructure along with Didde
Corp. parts, attachments and accessories
</TABLE>
<PAGE>
5. British Columbia Personal Property Registration No. 5819540 -
Ted's Truck, Trailer and Auto Repairs Ltd., as Holder, and
Classic Envelope Plus Ltd., as Grantor, dated as of June 2,
1995, granting a security interest in vehicle collateral, G.M.C.
7000 (1985) (amount of lien: $1,219.57)
6. Oregon Secretary of State Nos. P69874 and S32748 - Scitex
America Corp., as Secured Party, and Graphic Arts Center, as
Debtor, dated as of September 9, 1991, and December 14,
1994, respectively, granting a security interest in specific
equipment.
7. New York County, New York City Tax Lien No.
000751197-01 - New York City Department of Finance, as
Secured Party, and Graphic Arts Center, Inc., as Debtor, dated
as of April 10, 1995, in the amount of $10, 084.37.
8. Conditional Sales Contract and Security Agreement with
Graphic International, Inc. dated as of June 8, 1995 pursuant
to which Graphic Arts Center, Inc. will purchase a Heidleberg
102SP+L six color press for $1,071,000.
9. Pledge by Graphic Arts Center, Inc. of $50,000 cash collateral
to secure letter of credit issued by First Interstate Bank of
Oregon, N.A.
10. Minnesota Secretary of State Financing Statements Nos.
1686797, 1652844, 1651819, 1650982, 1804336, 1740712 -
Hewlett Packard Company, as Secured Party, and Quality Park
Products, Inc., as Debtor, granting a security interest in leased
equipment.
<PAGE>
SCHEDULE 7.6
LITIGATION AND JUDGMENTS
------------------------
1. Skrudland Photo, Inc. v. Mail-Well Corporation, d/b/a/ Mail-Well Envelope,
-------------------------------------------------------------------------
No. 94-15915 - 34th District Court, Travis County, Texas.
Plaintiff sued for breach of contract and deceptive trade practices,
arising out of the sale of allegedly defective through-the-mail photo
envelopes by Mail-Well to it. Mail-Well has filed an Answer and
Counterclaim of $38,886.08 arising out of unpaid invoices. Discovery is
proceeding. Mail-Well has retained experts to consult on the issues of
damages and liability. The trial date previously set for November, 1996
has been vacated. The Company intends to vigorously defend this case.
Plaintiff has made no realistic settlement demands.
2. Taleb H. Hamad v. Graphic Arts Center, Inc., No. 96-216-FR, U.S. District
-------------------------------------------
Court, District of Oregon
Plaintiff filed his Complaint on February 12, 1996 alleging employment
discrimination based on his national origin. Defendant answered the
Complaint on March 4, 1996, denying the substantive allegations contained
in it. Mail-Well intends to vigorously defend this case.
3. Kay L. Bird v. Graphic Arts Center, Inc., No. 9602-00897, Circuit Court of
----------------------------------------
Oregon, County of Multonmah.
Plaintiff filed her Complaint on February 2, 1996 alleging employment
discrimination based on her sex. Defendant answered the Complaint on March
7, 1996, denying the substantive allegations contained in it. Plaintiff's
deposition has been taken and a motion for Summary Judgment (on the entire
case) has been filed by Defendant. Plaintiff has moved to extend the
discovery cut-off date, as well as the time for filing a Brief in
Opposition to Defendant's Motion for Summary Judgment. Accepts at
settlement have been unproductive. The Company intends to vigorously defend
this case.
4. Eli Y. Leslie v. Mail-Well Corporation, No. 96-01226-CA, Circuit Court,
--------------------------------------
Fourth Judicial Circuit, in and for Duval County, Florida.
Plaintiff filed his Complaint on March 12, 1996 alleging negligence for
damages arising out of his trip and fall at Defendant's facility.
Defendant answered the Complaint denying the substantive allegations
contained in it. Depositions of most, if not all witnesses, have been
taken. At a recent mediation, there was talk about settling this claim in
the range of $30,000. A trial date has been ordered to be held on January
6, 1997. The Company intends to vigorously defend this case, if it does
not settle in the near future. The Company has insurance for this accident
after a $100,000 deductible has been satisfied.
<PAGE>
5. Richard E. Summer v. Mail-Well Corporation, No. 96-06705, District Court,
------------------------------------------
Judicial District, Dallas County, Texas.
Plaintiff filed his Complaint on July 2, 1996 alleging wrongful termination
in retaliation for filing a worker's compensation claim. The Complaint was
filed in a jurisdiction known for high jury verdicts for claims of this
nature. Defendant answered the Complaint denying the substantive
allegations contained in it. Discovery has yet to commence by either side.
Mail-Well plans to vigorously defend this case.
6. Sanford Rothbard v. Pavey Envelope & Tag Corp., Docket No. HUD-L-10491-94,
----------------------------------------------
Superior Court of New Jersey Law Division, Hudson County.
Plaintiff filed a Complaint on December 19, 1995 alleging wrongful
termination and breach of contract. Several depositions have been taken,
discovery is almost complete, and Mail-Well is preparing to file a Motion
for Summary Judgment. Mail-Well intends to vigorously defend this case.
The claims of this Plaintiff are also covered by escrow, which should be
sufficient to cover the costs associated with trial or settlement of this
case. Therefore, it is unlikely that an outcome unfavorable to the Company
in excess of $100,000 will occur.
7. Michael Honnlee v. Mail-Well, Inc., Claim No. 29-21607, Phoenix, Arizona
----------------------------------
Plaintiff was injured in a car accident on November 8, 1994, when the
vehicle he was driving was struck by a truck driven by a Mail-Well
employee, within the course and scope of his employment. Plaintiff
retained counsel who recently presented Mail-Well with a litigation demand
of $110,000. Defendant has offered $65,000 to settle the case, which offer
was refused. It does not appear at this time that the Plaintiff's alleged
injuries are genuine and related to the accident. Mail-Well has insurance
for this accident after a $100,000 deductible has been satisfied.
<PAGE>
SCHEDULE 7.10
TO THE CREDIT AGREEMENT
EXISTING DEBT
-------------
<TABLE>
<CAPTION>
=======================================================================================================
DEBTOR CREDITOR DESCRIPTION AMOUNT
------ -------- ----------- ------
(estimated as at
October
16, 1996)
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SUPREMEX INC. Domtar Inc. Interest free loan for Can. $833.65
purchase of equipment
-----------------------------------------------------------------------
Domtar Inc. Interest free loan for Can. $39,048
purchase of equipment
- -------------------------------------------------------------------------------------------------------
INNOVA ENVELOPE DuPont Forgivable loan re: film Can. $73,000
INC processing equipment
- -------------------------------------------------------------------------------------------------------
SUPREMEX INC. National Bank of Irrevocable standby letter of Can. $34,000
Canada credit in favor of
Mississauga Hydro
- -------------------------------------------------------------------------------------------------------
National Bank of Letter of Credit in favor of Can. $280,000
Canada Toronto-Dominion Bank
- ------------------------------------------------------------------------------------------------------
CLASSIC Canadian Imperial Maximum Can. $200,000 or $0
ENVELOPE PLUS Bank 65% of Accounts Receivable
LTD. of Commerce Line of credit
- -------------------------------------------------------------------------------------------------------
GAC Scitex America Corp. Equipment Lease $ 180,734
- -------------------------------------------------------------------------------------------------------
Scitex America Corp. Two Separate Equipment $ 203,535
Leases
- -------------------------------------------------------------------------------------------------------
Pennbrook Lease of Real Property $2,852,410
Development/
Pfleuger Partners
- -------------------------------------------------------------------------------------------------------
First Interstate Bank Letter of Credit $ 50,000
of Oregon, N.A.
- -------------------------------------------------------------------------------------------------------
Quality Park , Hewlett-Packard Master Lease Agreement
Products Inc. Company No. 4126-43685
Equipment Schedule 710 $ 42,746.76/1/
Equipment Schedule 7E0 $ 41,894.25/1/
Equipment Schedule 7G0 $ 21,230.79/1/
Equipment Schedule 7H0 $ 12,434.35/1/
Subtotal $118,306.15/1/
- -------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Quality Park Products, Hewlett-Packard Master Installment Sales
Inc. Company Agreement No. 4126-43685
Equipment Schedule 720 $ 94,814.22/1/
Equipment Schedule 730 $ 22,967.56/1/
Equipment Schedule 7D0 $ 42,873.32/1/
Equipment Schedule 7F0 $ 4,436.66/1/
Subtotal $165,181.76/1/
-----------------------------------------------------------------------------------------------------------
Quality Park Hewlett-Packard Installment Financing $ 50,668.46/1/
Products, Inc. Company Agreement No.
4124-03489B
- -------------------------------------------------------------------------------------------------------------
Quality Park Paper Recycling Contract of Canadian Sale $ 18,399.97/1/
Products, Inc.
- -------------------------------------------------------------------------------------------------------------
Debt arising in connection with Capital Lease Obligations permitted by this Agreement.
- -------------------------------------------------------------------------------------------------------------
Unfunded liabilities under the Plans listed on Schedule 7.13.
=============================================================================================================
</TABLE>
____________________________
/1/ Estimated as at September 30, 1996.
<PAGE>
SCHEDULE 7.11
TAXES
-----
A. Tax claims asserted against the Loan Parties.
--------------------------------------------
1. GAC and the City of New York ("NYC") are presently in dispute over the
characterization of payments made to certain highly compensated sales
persons for fiscal year 1992. NYC has characterized the payments as
distributions on equity and has claimed $10,168.19 in underpaid taxes.
None of the highly compensated individuals are equity holders of GAC.
GAC has paid the $10,618.19 provisionally, under protest and is
seeking a return of such amount. This payment has been expensed on the
books of GAC.
If GAC does not ultimately prevail in this dispute, GAC may be
required to make future payments to NYC totaling approximately $20,000
for fiscal years 1993 and 1994.
B. Audits.
------
The following Audits are ongoing:
IRS: Federal Income Tax
Period: 1994
<PAGE>
SCHEDULE 7.13
PLANS
-----
List of Pension and Welfare Plans
- ---------------------------------
1. Mail-Well Corporation Employee Stock Ownership Plan.
2. Mail-Well Corporation 401(k) Savings Retirement Plan.
3. Mail-Well Corporation Severance Plan for Salaried Employees.
4. Mail-Well Corporation Section 125 ("Cafeteria") Plan - Pre-tax premium only
arrangement.
5. Mail-Well Corporation Flexible Health Care Plan.
6. Mail-Well Corporation Life and Disability Insurance Plan.
7. Mail-Well Corporation Educational Assistance Program.
8. Pension Plan for Hourly Employees of Mail-Well Corporation (MWEC).
9. Pension Plan for Hourly Employees of Portland and Oakland.
10. Pension Plan for Hourly Employees of Mail-Well Corporation (AEC).
11. Pavey Envelope and Tag Corporation Employees' Retirement Plan.
12. The Paper Industry Union-Management Pension Fund for and on behalf of the
United Paperworks International Union, Local 318, AFL-CIO of 30-48 Linden
Place, Flushing, New York. (Pavey employees)
13. Local 807 Labor-Management Health and Pension Fund, for and on behalf of
Truck Drivers Local Union No. 807, affiliated with the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
(Pavey employees)
14. Pension Plan for Employees Represented by United Paperworkers International
Union Local 286. (American Envelope employees)
15. Midwest Pension Plan. (American Envelope employees)
<PAGE>
16. Pension Plan for Markham Bargaining Employees of Innova Envelope Inc.,
amended and restated as at January 1, 1992, registration number 0219485.
17. Pension Plan for Non-Bargaining Employees of Innova Envelope Inc., amended
and restated as at January 1, 1992, registration number 0991356.
18. Pension Plan for Brantford Bargaining Employees of Innova Envelope Inc.,
amended and restated as at January 1, 1994, registration number 0389395.
19. Unwritten group Registered Retirement Savings Plan ("RRSP") Program for
some of the employees of the Supreme Envelope division and for all the
employees of Unique Envelope.
20. Supreme Envelope (Montreal) Profit Sharing Plan.
21. Supremex Management Incentive Plan.
22. Informal, unwritten bonus plans are in place for either all or some of the
employees at the following locations:
(a) 345 Montee de Liesse, St. Laurent
(b) 110 Simmonds Drive, Dartmouth
(c) 270 MacLaren, Ottawa
(d) 33 Plymouth Street, Winnipeg
(e) 199 North Leonard Street, Regina
(f) 16242 - 117th Avenue, Edmonton
(g) Unit 3, 6143 - 4th Street S.E., Calgary
23. GAC 401(k) Profit Sharing Plan (Non-union employees)
24. GAC 401(k) Profit Sharing Plan (Union employees)
25. GACSC 401(k) Profit Sharing Plan (Non-union employees)
26. GAC Medical Benefit Trust Fund - Mechanism for funding Health Plan
benefits, a "voluntary employees beneficiary association" ("VEBA")
27. GAC/GACSC Section 125 ("cafeteria") Plan - pre-tax premium only arrangement
28. GCIU Supplemental Retirement and Disability Fund (Graphic Communications
International Union ("GCIU") union employees)
<PAGE>
29. Oregon Printing Industries Retirement Trust - only employees participating
in the Plan on or before April 30, 1988 are eligible
30. Graphic Arts Center, Inc. Executive Life Insurance Plan and Trust Agreement
and Executive Life Insurance Funding Agreement with Frank M. Stammers
31. Local 292-M Inter/Local Pension Fund - GAC is responsible (under Article 27
of the GCIU Collective Bargaining Agreement for lithographic employees)
only to forward to the Trustees of this Fund payroll withholding for
employees who elect to contribute from their compensation to this Fund.
32. "Vantage Program" - a "preferred provider" arrangement required under
Section 29.6 of the GCIU Collective Bargaining Agreement for the Bindery,
Shipping, and Mailing employees.
33. GAC 1993 Stock Option Plan
34. GAC 1995 Leveraged Incentive Plan (the "LIP")-Based on GAC's EBITDA for a
fiscal year, a certain percentage of GAC's EBITDA will be put in a pool to
be allocated to participating officers (the "Distributable Value Pool").
The President determines which officers shall participate in the Plan and
how much of the pool an individual officer will receive.
35. Management Incentive Plan for fiscal year 1995. Participants share a
portion of EBITDA, after EBITDA exceeds 80% of plan. The incentive pay
pool is 4% of the quarterly EBITDA in excess of 80% of each quarter's
EBITDA plan. Payments are made quarterly. Participants are middle level
managers of GAC. Participants can be nominated by any officer of GAC.
Determination of participation is made by unanimous consent of the officers
of GAC. It is a one year plan.
36. Quality Park Products Management Incentive Bonus Plan
37. IAM National Pension Fund
38. I.P.P. and GCIU of North America Employer Retirement Fund
39. GCIU Employer Retirement Fund
40. Graphic Arts Industry Joint Pension Fund
41. GCIU Local 1B Health and Welfare Fund A (Medical, Vision, Weekly Accident
and Sickness, Life Insurance)
42. GCIU Local 1B Health and Welfare Fund B (Dental)
<PAGE>
43. Quality Park Products, Inc. Severance Pay Plan
The present value of vested benefits exceeds the fair market value of plan
- --------------------------------------------------------------------------
assets allocable to such benefits under the following plans (but does not exceed
- -----------------------------------------------------------
the limitations set forth in the last sentence of Section 7.13):
1. Pavey Envelope and Tag Corporation Employees' Retirement Plan.
2. Pension Plan for Employees Represented by United Paperworkers International
Union Local 286. (American Envelope employees)
<PAGE>
SCHEDULE 7.15
HOLDINGS COMMON STOCK; OPTIONS, ETC.
------------------------------------
A.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Stock Number Percentage
Certificate Par of of
Stock Issuer Owner Class of Stock No(s) Value Shares Outstanding
------------ ----- -------------- ----- ----- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Mail-Well I Corporation Mail-Well Inc. Common 001 $ .01 1,000 100%
- ------------------------------------------------------------------------------------------------------------
Mail-Well West, Inc. Mail-Well I Common 001 $0.01 1,000 100%
Corporation
- ------------------------------------------------------------------------------------------------------------
Pavey Envelope and Tag Mail-Well I Common 003 $1.00 3,000 100%
Corp. Corporation
- ------------------------------------------------------------------------------------------------------------
WISCO Envelope Corp. Mail-Well I Common 001 No 1,000 100%
Corporation
- ------------------------------------------------------------------------------------------------------------
Mail-Well Canada Mail-Well I Common 001 $0.01 1,000 100%
Holdings, Inc. Corporation
- ------------------------------------------------------------------------------------------------------------
WISCO II, L.L.C. Mail-Well I Limited 001 N/A N/A 1% of
Corporation Liability Membership
Company Interest
Membership
Interests
WISCO Envelope Limited 002 N/A N/A 99% of
Corp. Liability Membership
Company Interests
Membership
Interests
- ------------------------------------------------------------------------------------------------------------
WISCO III, L.L.C. Mail-Well I Limited 001 N/A N/A 1% of
Corporation Liability Membership
Company Interest
Membership
Interests
WISCO Envelope Limited 002 N/A N/A 99% of
Corp. Liability Membership
Company Interests
Membership
Interests
- ------------------------------------------------------------------------------------------------------------
Graphic Arts Center, Inc. Mail-Well I Common 001 $0.01 1,000 100%
Corporation
- ------------------------------------------------------------------------------------------------------------
Supremex, Inc. Mail-Well Common C-2 None 66 100%
Canada
Holdings, Inc.
Common C-3 None 34 100%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
B. Subscriptions, Warrants, Calls, Options, Etc.
Pursuant to The Mail-Well Holdings, Inc. 1994 stock Option Plan,
options to purchase 97,700 shares of Common Stock have been granted to
approximately 40 employees and 18,200 shares of Common Stock have been
granted to approximately 18 GAC employees.
<PAGE>
SCHEDULE 7.22
BANK ACCOUNTS
-------------
1. First National Bank of Tullahoma - Account No. 6013429 (Depository
Account).
2. Bank One, Arizona N.A. - Account No. 111642 (Lockbox Account).
3. First Security Bank of Utah - Account No. 0600007959 (Lockbox Account).
4. Traders National Bank - Account No. 0138142 (Depository Account).
5. Norwest Bank Colorado, National Association - Denver
a. Account No. 1018026204 (Lockbox Account)
b. Account No. 1018026652 (Concentration Account)
c. Account No. 1018026212 (Mastercard/Visa Account)
d. Account No. 1018026474 (Health Benefits)
e. Account No. 6062501426 (Accounts Payable)
f. Account No. 6062501434 (Managers Account)
g. Account No. 1013036547 (Mail-Well Holdings 1994 Stock Option Plan
Escrow Account)
6. Norwest Bank Colorado, National Association - Grand Junction
a. Account No. 8012700220 (Payroll Account)
b. Account No. 8012700212 (A/P Account)
c. Account No. 8012700327 (Freight Account)
d. Account No. 6062501442 (Payroll Account)
e. Account No. 6062503212 (American A/P)
f. Account No. 6062503044 (American Payroll)
7. Bank of Hawaii - Account No. 007043732 (Lockbox Account).
8. Bank of America - Account No. 7505639 (Lockbox Account).
9. First Union Bank of Florida - Account No. 2090000617809 (Depository
Account).
<PAGE>
10. Texas Commerce Bank National Association
a. Account No. 00101440395 (Mail-Well Holdings, Inc. - Equity
Subscription Account)
b. Account No. 00101440403 (Mail-Well Corporation - Supremex Closing
Account)
11. U.S. Bank (Oregon) - Account No. 0100027903 (Lockbox Account).
12. Midlantic National Bank
a. Account No. 1405173202 (Lockbox Account)
b. Account No. 1403182940 (Operating Account)
13. First Hawaiian Bank, Pearlridge Branch - Account No. 81050783 (Payroll
Account).
14. Society National Bank - Account No. 2166894408 (Lockbox Account).
15. Republic Bank of New York
a. Account No. 230026206 (Depository Account)
b. Account No. 230026214 (Payroll Account)
16. Boatmen's First National Bank of Oklahoma - Account No. 070108366101
(Lockbox Account).
17. Wells Fargo Bank - Account No. 1000005471 (Lockbox Account).
18. Meridian Bank - Account No. 43281135 (Lockbox Account).
19. Commerce Bank - Account No. 0203063415 (Lockbox Account).
20. First National Bank of Omaha - Account No. 22652740 (Lockbox Account).
21. Marine Midland Bank - Account No. 875000703 (Lockbox Account).
22. Bank of America - Account No. 7511019 (Lockbox Account).
23. Wells Fargo Bank
a. Account No. 4159-341771 (Lockbox Account)
b. Account No. 552-001-0626 (Lockbox Account)
c. Account No. 300125972 (Lockbox Account)
24. Nations Bank of Tennessee, N.A. - Account No. 00102341477 (Lockbox
Account).
<PAGE>
25. NationsBank of Texas, N.A.
a. Account No. 1293323185 (Mail-Well Holdings Equity Subscription
Account)
b. Account No. 1293323177 (Mail-Well Corporation Closing Account)
26. PNC Bank
a. Account No. 1001-34-8249 (Lockbox Account)
b. Account No. 1-40511323-3 (Lockbox Account)
27. Banque Nationale du Canada
a. Account No. 000000011022
b. Account No. 000000020722
c. Account No. 000000051524
d. Account No. 060002988878P
28. Royal Bank
a. Account No. 00001-1366178
b. Account No. 03012-0000273
c. Account No. 03510-1081025
d. Account No. 05259-1102763
e. Account No. 06857-1101559
f. Account No. 07981-1091867
g. Account No. 07981-1091875
h. Account No. 00001-4048336
i. Account No. 03012-4025482
j. Account No. 03510-4012373
k. Account No. 05259-4045985
l. Account No. 06857-4003984
m. Account No. 07981-4033569
n. Account No. 07981-4043501
<PAGE>
SCHEDULE 7.27
EMPLOYEE MATTERS
----------------
(a) COLLECTIVE BARGAINING AGREEMENTS
--------------------------------
GCIU Local 292M, expires on June 30, 1997.
GCIU Local 292M dated as of October 17, 1991, expires on April 30, 1997.
Allentown, PA - United Independent Union, Local No. 7. Agreement expires
September 30, 2000.
Atlanta, GA - Graphic Communications International Union, Local 527-S, AFL-
CIO-CLC, June 1, 1993 through May 31, 1999.
Chicago, IL (Ohio Street Facility) - International Union of Allied
Production and Novelty Workers Local No. 10. Agreement expires January 31,
1999.
Cleveland, OH - International Association of Machinists and Aerospace
Workers, District No. 54. Agreement expires June 12, 1998.
Honolulu, HI - Hawaii Printing and Graphic Communications Union, Local 501-
M. Agreement expires November 30, 1997.
Jersey City, NJ - United Paperworkers International Union, Local 318.
Agreement expires March 31, 2001.
Jersey City, NJ - International Brotherhood of Teamsters, Local 807.
Agreement expires March 31, 1998.
Omaha, NE - Graphic Communications Union, Local 543-M. Agreement expires
July 31, 1997.
Philadelphia, PA - United Paper Workers International Union, Local 286.
Agreement expires September 30, 1997.
Pittsburgh, PA - United Paperworkers International Union, Local 296.
Agreement expires October 31, 1999.
<PAGE>
Portland, OR - Graphic Communications Union, District Council No. 2. Also
covers employees at Oakland, CA. Agreement expired May 31, 1996.
San Antonio, TX - Graphic Communications Union, Local 737-S. Agreement
expires March 31, 1998.
Santa Fe Springs, CA - Graphic Communications Union, District Council No.
2. Agreement expires June 30, 1997.
Seattle, WA - Graphic Communications International Union, Local 767-M.
Agreement expires July 31, 1998.
Seattle, WA - Graphic Communications Union, District Council No. 2.
Agreement expires July 31, 1998.
St. Louis, MO - Graphic Communications International Union, Local 505.
Agreement expires August 31, 1997.
St. Paul, MN - District Lodge #77 of the International Association of
Machinists and Aerospace Workers, AFL-CIO, effective April 1, 1995 through
November 15, 1996.
St. Paul, MN - Twin Cities Printing Trades Union, Local No. 29, charted by
the Graphic Communications International Union, effective April 1, 1995
through November 15, 1996.
St. Paul, MN - Graphic Communications International Union Local #1B, Twin
Cities, effective April 1, 1995 through November 15, 1996.
Markham, Ontario, Canada - Communications, Energy and Paperworkers Union of
Canada and its Local 301. Agreement expired December 31, 1994, the renewal
of which is presently in process of negotiation which is expected to go to
arbitration in August, 1995.
Montreal, Quebec, Canada - "Working with Us", The Employee Manual, which
covers hourly paid production and warehouse employees. The manual does not
constitute a formal collective agreement, but is negotiated with the
employees and is valid up to August 31, 1996.
Mississauga, Canada - A manual similar to the above is in the process of
being prepared for application at this location.
<PAGE>
Brantford Plant, Canada - The Canadian Autoworkers Union and its Local 397.
Agreement expires September 30, 1996.
Regina, Saskatchewan, Canada - Communications, Energy and Paperworkers
Union of Canada. Agreement expires October 31, 1996.
Alberta, Canada - Informal system regarding wages and benefits, but does
not constitute a collective agreement in place. Informal proposal will
remain in effect until November 1995.
Vancouver, British Columbia, Canada - Pulp, Paper and Woodworkers of
Canada, Local No. 5. Agreement expired October 31, 1994, was renewed and
amended January 27, 1995, and expires August 31, 1996.
(b) Petitions for certification of union election: None.
(c) Strikes, work slowdowns, work stoppages, or threatened controversies: In
mid to late October of 1994 AEC management observed union organizers
speaking with employees at AEC's Kruysman facility in New York City. No
petition for certification has been filed, nor has there been further union
organizing activity.
(d) Employment contracts other than collective bargaining agreements:
Employment Contract between Classic Envelope Plus Ltd. and Barry John
Sikora dated June 1, 1994.
Employment Contract between Innova Envelope Inc. and Frederick Vernon Moore
dated June 1, 1994.
Verbal consulting agreement between Supremex and its Subsidiaries and Guy
Paquin.
Verbal consulting agreement between Joel Robert Yanow and Supremex. A
written agreement will be executed prior to closing.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Ronald J. Rebeck.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Ralph A. Benton.
<PAGE>
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Douglas A. Mahoney.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Hans J. Loeffler.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and James E. Bettinger.
Deferred Compensation Arrangement between Quality Park Products, Inc. and
Ken Templin.
<PAGE>
SCHEDULE 1.1(A)
MORTGAGED PROPERTIES
--------------------
I. Mortgaged Properties Acquired Pursuant to the G-P Envelope Acquisition
Agreement.
A. Mortgaged Fee Properties
1. Chestertown, Maryland 225 Talbot Blvd.
2. Chicago, Illinois 5445 N. Elston Ave.
3. Cleveland, Ohio 4500 Tiedeman Road
4. Denver, Colorado (3301) Kalamath St.
5. Jacksonville, Florida 5406 W. First St.
6. Oklahoma City, Oklahoma 4901 N.W. Fourth St.
7. Phoenix, Arizona 221 N. 48th Ave.
8. Pittsburgh, Pennsylvania 7301 Penn Ave.
9. Tullahoma, Tennessee 1509 N. Washington St.
B. Mortgaged Leasehold Property Interests
1. Albuquerque, New Mexico
Standard Commercial Net/Net/Net Business Center Lease dated
June 1, 1993, made and entered into by and between I&J Investments, as
lessor, and Mail Well Envelope Company, a Delaware corporation, as
lessee. No Survey is required for this Property.
2. Cambridge, Maryland
Lease Agreement dated effective as of January 22, 1988, made
and entered into by and between The County Commissioners of Dorchester
County, as lessor, and M-W Envelope Company, Inc., a Delaware
corporation, as lessee, as amended, modified or extended by (i) that
certain Notice of Intention to Lease 33,750 Square Feet in the
Dorchester County Shell Building dated July 5, 1988, and (ii) that
certain Amendment to Lease Agreement dated March 16, 1993.
<PAGE>
3. Denver, Colorado
Agreement dated March 19, 1963, made and entered into by and
between Richard B. Tucker, Carl L. Tucker and Robert Best, as lessors,
and Pak-Well Paper Industries, Inc., a Colorado corporation, as
lessee, as amended, modified or extended by (i) that certain Addendum
to Lease dated effective as of January 20, 1964, (ii) that certain
Agreement dated effective as of September 15, 1968, and (iii) that
certain Agreement dated April 1, 1975, made and entered into by and
between Richard B. Tucker and Robert Best, as lessors, and Mail-Well
Corporation, a Delaware corporation, as lessee. A portion of the
leased premises were subleased pursuant to that certain Sublease
Agreement dated as of May 23, 1980, made and entered into by and
between Nekoosa Envelopes, Inc., a Delaware corporation, as sublessor,
and Petro-Lewis Corporation, a Colorado corporation, as sublessee, and
consented to by Richard B. Tucker and Robert Best, and as amended,
modified, or extended by that certain Addendum to Sublease Agreement
dated July 31, 1980, and as assigned by that certain Agreement to
Assign Sublease dated as of June 23, 1987, made and entered into by
and between FPCO Oil & Gas Co., a Colorado corporation, as assignor,
and Central Bancorporation, Inc., a Colorado corporation, as assignee,
and consented to by Nekoosa Envelopes, Inc., and Richard Tucker and
Charlotte Tucker, and as further consented to, among other things, by
that certain Agreement and Consent to Assignment dated August 5, 1987,
made and entered into by and between Richard B. Tucker and Charlotte
Tucker (successor-in-interest to Robert Best), as lessors, Nekoosa
Envelopes, Inc., as sublessor, FPCO Oil & Gas Co. (successor-in-
interest to Petro-Lewis Corporation), as Assignor, and Central
Bancorporation, Inc., as assignee, and as amended, modified or
extended by that certain letter agreement dated March 26, 1992, by
that certain amendment dated May 6, 1993 and that certain amendment
dated May 13, 1993.
4. Honolulu, Hawaii
Lease dated as of March 22, 1991, made and entered into by
and between PMLW Partnership, a Hawaii general partnership, as lessor,
and Mail-Well Envelope Company, a Delaware corporation, as lessee. No
Survey is required for this Property.
5. Jersey City, New Jersey
<PAGE>
Agreement of Lease dated January 7, 1991, made and entered
into by and between Pavey Associates, a New Jersey partnership, as
lessor, and Pavey Envelope and Tag Corp., a New Jersey corporation, as
lessee, as amended, modified or extended by (i) that certain First
Amendment to Lease dated as of August 15, 1991, and (ii) that certain
Second Amendment to Lease dated February 21, 1994.
6. Kankakee, Illinois
Lease dated August 15, 1984, made and entered into by and
between CMD Realty Management Company, an Illinois corporation, as
agent for The Prudential Insurance Company of America, as lessor, and
Nekoosa Envelopes, Inc., a Delaware corporation, as lessee.
7. Milwaukie, Oregon (2515 Mail-Well Drive)
Lease dated March 1, 1988, made and entered into by and
between W. R. Lake, Jr., Janet M. Lake, Susan L. Howell, Thomas L.
Howell, Theodora R. Feldman, and United States National Bank of
Oregon, Trustee, and Garthe Brown, Trustee, as lessors, and Mail-Well
Envelope Company, a Delaware corporation, as lessee.
8. Milwaukie, Oregon (2700 Mail-Well Drive)
Standard Industrial Lease-Net dated April 13, 1989, made and
entered into by and between Lincoln Property Company, N.C., Inc., as
manager and agent for Lincoln Milwaukie Associates, Ltd., as lessor,
and Mail-Well Envelope Company, Inc., as lessee, as amended, modified
or extended by (i) that certain Lease Extension Agreement extending
the termination date from February 28, 1990 to July 31, 1991, among
other things, (ii) that certain Rent Waiver Agreement dated effective
as of July 11, 1990, (iii) that certain Lease Extension Agreement
dated effective as of April 2, 1991, made and entered into by and
between CP-McLaughlin Properties, Inc., as lessor, and Mail-Well
Envelope Company, Inc., as lessee, and (iii) Amendment to Lease dated
June 19, 1992.
9. Oakland, California
Standard Industrial/Commercial Single-Tenant Lease-Net dated
July 1, 1992, made and entered into by and between Cotton Properties,
as lessor, and Mail-Well Envelope Company, as lessee, as amended,
<PAGE>
modified or extended by that certain letter agreement dated August 22,
1993, and as said letter agreement and the Lease were further amended
by that certain letter agreement dated September 9, 1993.
10. Salt Lake City, Utah
Lease Agreement dated August 1, 1973, made and entered into
by and between Price Ventures, Inc., a Utah corporation d/b/a
Timesquare Park, as lessor, and Rockmont Envelope Company of Utah,
Inc., a Utah corporation, as lessee, as amended, modified or extended
by (i) that certain letter agreement dated November 30, 1987, (ii)
that certain letter agreement dated November 24, 1992, (iii) that
certain Amendment to Lease dated as of September 26, 1973, (iv) that
certain Amendment to Lease dated as of November 6, 1973, (v) that
certain Amendment to Lease dated as of November 20, 1973, and (vi)
that certain Addendum to Lease dated as of December 22, 1975.
II. Mortgaged Properties Acquired Pursuant to the AEC Acquisition Agreement.
A. Mortgaged Fee Properties
1. Nashville, Tennessee 540 Brick Church Park Dr.
2. Chicago, Illinois 3001 N. Rockwell St.
3. Chicago, Illinois 4400 West Ohio St.
4. Santa Fe Springs, California 13341 Cambridge St.
5. O'Fallon, Missouri 601 Cannonball Lane
6. San Antonio, Texas 232 Iowa St.
7. Omaha, Nebraska 915 North 43rd Avenue
8. Seattle, Washington 401 Andover Park East
9. Dallas, Texas* 14001 Inwood Road
*(Leased until 1/5/95)
B. Mortgaged Leasehold Property Interests
1. Agency Lease Agreement dated April 1, 1988, by and between
Erie County Industrial Development Agency and American Envelope
Company, as evidenced by a Memorandum of Lease dated as of April
1, 1988, filed in the Erie County Clerk's Office on April 7, 1988
under Liber 9846, Page 338.
III. Mortgaged Properties Acquired Pursuant to the Supremex Acquisition
Agreement.
<PAGE>
A. Mortgaged Fee Properties
1. Markham, Ontario 56 Steelcase
Road West
B. Leasehold Property Interests
1. Dartmouth, Nova Scotia 110
Simmonds Drive
2. Montreal, Quebec 7355 Notre
Dame est
3. Montreal, Quebec 345 Montee
de Liesse
4. Ottawa, Ontario 270
McLaren
5. Mississagua, Ontario 5300
Tomken Road
6. Brantford, Ontario 46 Plant
Farm Boulevard
7. Winnipeg, Manitoba 33 Plymouth
Street
8. Regina, Saskatchewan 199 North
Leonard Street
9. Edmonton, Alberta 16242 117th
Avenue
10. Calgary, Alberta 6143 - 4th
Street S.E.
11. Delta, British Columbia 1308
Cleveden Avenue
IV. Mortgaged Properties Acquired Pursuant to the Graphic Arts Center, Inc.
Securities Purchase Agreement.
A. Mortgaged Fee Properties
1. Portland, Oregon 2000 N.W. Wilson St.
B. Mortgaged Leasehold Property Interests
1. Portland, Oregon 2116 N.W. 20th Avenue
2. South San Francisco, California 560 Forbes Boulevard
<PAGE>
3. Pasadena, California 2181 East Foothill Boulevard
V. Mortgaged Properties Acquired Pursuant to the Quality Park Products, Inc.
Acquisition Agreement.
A. Mortgaged Fee Properties
1. Atlanta, Georgia 3350
Hamilton Boulevard, S.W.
B. Leasehold Property Interests
1. Beresford, South Dakota 100 Quality
Park Drive
2. St. George, Utah 3287 East
Deseret Drive
<PAGE>
SCHEDULE 1.1(B)
PERMITTED LIENS
---------------
LIEN PRIORITY
---- --------
1. New Jersey Secretary of State Subordinated to Banks
Financing Statement No. 1380846 -
Pavey Associates c/o Sidney Strauss,
as Secured Party, and Pavey Envelope
and Tag Corp., as Debtor, and
subordinated to the Agent's Liens
pursuant to the Landlord Consent,
Subordination and Estoppel Certificate
dated as of February 21, 1994 by Pavey
Associates.
2. New Jersey Hudson County Financing Subordinated to Banks
Statement No. 1991-0053 - Pavey
Associates c/o Sidney Strauss, as
Secured Party, and Pavey Envelope and
Tag Corp., as Debtor, and subordinated
to the Agent's Liens pursuant to
Landlord Consent, Subordination and
Estoppel Certificate dated as of
February 21, 1994 by Pavey Associates.
3. British Columbia Personal Property
Registration No. 5065160 - N.E.L.
National Equipment Leasing Ltd., as
Holder, and Classic Envelope Company
Ltd., as Grantor, dated as of February
14, 1994, granting security interest
in general collateral, packaging
system and Ricoh fax machine.
4. British Columbia Personal Property
Registration No. 5759580 - Didde Web
Press Corporation, as Holder, and
Classic Envelope Plus Ltd., as
Grantor, dated as of May 1, 1995,
granting a security interest in
general collateral, two offsets, two
ink-tower assemblies, one substructure
along with Didde Corp. parts,
attachments and accessories
<PAGE>
5. British Columbia Personal Property
Registration No. 5819540 - Ted's
Truck, Trailer and Auto Repairs Ltd.,
as Holder, and Classic Envelope Plus
Ltd., as Grantor, dated as of June 2,
1995, granting a security interest in
vehicle collateral, G.M.C. 7000 (1985)
(amount of lien: $1,219.57)
6. Oregon Secretary of State Nos. P69874
and S32748 - Scitex America Corp., as
Secured Party, and Graphic Arts
Center, as Debtor, dated as of
September 9, 1991, and December 14,
1994, respectively, granting a
security interest in specific
equipment.
7. New York County, New York City Tax
Lien No. 000751197-01 - New York City
Department of Finance, as Secured
Party, and Graphic Arts Center, Inc.,
as Debtor, dated as of April 10, 1995,
in the amount of $10,084.37.
8. Conditional Sales Contract and
Security Agreement with Graphic
International, Inc. dated as of June
8, 1995 pursuant to which Graphic Arts
Center, Inc. will purchase a
Heidleberg 102SP+L six color press for
$1,071,000.
9. Pledge by Graphic Arts Center, Inc. of
$50,000 cash collateral to secure
letter of credit issued by First
Interstate Bank of Oregon, N.A.
10. Minnesota Secretary of State Financing
Statements Nos. 1686797, 1652844,
1651819, 1650982, 1804336, 1740712 -
Hewlett Packard Company, as Secured
Party, and Quality Park Products,
Inc., as Debtor, granting a security
interest in leased equipment.
<PAGE>
SCHEDULE 7.6
LITIGATION AND JUDGMENTS
------------------------
1. Skrudland Photo, Inc. v. Mail-Well Corporation, d/b/a/ Mail-Well Envelope,
-------------------------------------------------------------------------
No. 94-15915 - 34th District Court, Travis County, Texas.
Plaintiff sued for breach of contract and deceptive trade practices,
arising out of the sale of allegedly defective through-the-mail photo
envelopes by Mail-Well to it. Mail-Well has filed an Answer and
Counterclaim of $38,886.08 arising out of unpaid invoices. Discovery is
proceeding. Mail-Well has retained experts to consult on the issues of
damages and liability. The trial date previously set for November, 1996
has been vacated. The Company intends to vigorously defend this case.
Plaintiff has made no realistic settlement demands.
2. Taleb H. Hamad v. Graphic Arts Center, Inc., No. 96-216-FR, U.S. District
-------------------------------------------
Court, District of Oregon
Plaintiff filed his Complaint on February 12, 1996 alleging employment
discrimination based on his national origin. Defendant answered the
Complaint on March 4, 1996, denying the substantive allegations contained
in it. Mail-Well intends to vigorously defend this case.
3. Kay L. Bird v. Graphic Arts Center, Inc., No. 9602-00897, Circuit Court of
----------------------------------------
Oregon, County of Multonmah.
Plaintiff filed her Complaint on February 2, 1996 alleging employment
discrimination based on her sex. Defendant answered the Complaint on March
7, 1996, denying the substantive allegations contained in it. Plaintiff's
deposition has been taken and a motion for Summary Judgment (on the entire
case) has been filed by Defendant. Plaintiff has moved to extend the
discovery cut-off date, as well as the time for filing a Brief in
Opposition to Defendant's Motion for Summary Judgment. Accepts at
settlement have been unproductive. The Company intends to vigorously defend
this case.
4. Eli Y. Leslie v. Mail-Well Corporation, No. 96-01226-CA, Circuit Court,
--------------------------------------
Fourth Judicial Circuit, in and for Duval County, Florida.
Plaintiff filed his Complaint on March 12, 1996 alleging negligence for
damages arising out of his trip and fall at Defendant's facility.
Defendant answered the Complaint denying the substantive allegations
contained in it.
<PAGE>
Depositions of most, if not all witnesses, have been taken. At a recent
mediation, there was talk about settling this claim in the range of
$30,000. A trial date has been ordered to be held on January 6, 1997. The
Company intends to vigorously defend this case, if it does not settle in
the near future. The Company has insurance for this accident after a
$100,000 deductible has been satisfied.
5. Richard E. Summer v. Mail-Well Corporation, No. 96-06705, District Court,
------------------------------------------
Judicial District, Dallas County, Texas.
Plaintiff filed his Complaint on July 2, 1996 alleging wrongful termination
in retaliation for filing a worker's compensation claim. The Complaint was
filed in a jurisdiction known for high jury verdicts for claims of this
nature. Defendant answered the Complaint denying the substantive
allegations contained in it. Discovery has yet to commence by either side.
Mail-Well plans to vigorously defend this case.
6. Sanford Rothbard v. Pavey Envelope & Tag Corp., Docket No. HUD-L-10491-94,
----------------------------------------------
Superior Court of New Jersey Law Division, Hudson County.
Plaintiff filed a Complaint on December 19, 1995 alleging wrongful
termination and breach of contract. Several depositions have been taken,
discovery is almost complete, and Mail-Well is preparing to file a Motion
for Summary Judgment. Mail-Well intends to vigorously defend this case.
The claims of this Plaintiff are also covered by escrow, which should be
sufficient to cover the costs associated with trial or settlement of this
case. Therefore, it is unlikely that an outcome unfavorable to the Company
in excess of $100,000 will occur.
7. Michael Honnlee v. Mail-Well, Inc., Claim No. 29-21607, Phoenix, Arizona
----------------------------------
Plaintiff was injured in a car accident on November 8, 1994, when the
vehicle he was driving was struck by a truck driven by a Mail-Well
employee, within the course and scope of his employment. Plaintiff
retained counsel who recently presented Mail-Well with a litigation demand
of $110,000. Defendant has offered $65,000 to settle the case, which offer
was refused. It does not appear at this time that the Plaintiff's alleged
injuries are genuine and related to the accident. Mail-Well has insurance
for this accident after a $100,000 deductible has been satisfied.
<PAGE>
SCHEDULE 7.10
TO THE CREDIT AGREEMENT
EXISTING DEBT
-------------
===============
DEBTOR CREDITOR DESCRIPTION AMOUNT
------ -------- ----------- ------
(estimated as
at
October 16,
1996)
---------------
SUPREMEX INC. Domtar Inc. Interest free Can. $833.65
loan for
purchase of
equipment
---------------
[_______________] Domtar Inc. Interest free Can. $39,048
loan for
purchase of
equipment
---------------
INNOVA ENVELOPE DuPont Forgivable loan Can. $73,000
INC. re: film
processing
equipment
---------------
SUPREMEX INC. National Bank Irrevocable Can. $34,000
of Canada standby letter
of credit in
favor of
Mississauga
Hydro
---------------
National Bank Letter of Can. $280,000
of Canada Credit in favor
of
Toronto-Dominion Bank
CLASSIC ENVELOPE Canadian Maximum Can. $0
PLUS LTD. Imperial Bank $200,000 or 65%
of Commerce of Accounts
Receivable Line
of credit
---------------
GAC Scitex America Equipment Lease $180,734
Corp.
---------------
Scitex America Two Separate $203,535
Corp. Equipment Leases
---------------
Pennbrook Lease of Real $2,852,410
Development/ Property
Pfleuger
Partners
---------------
First Letter of Credit $50,000
Interstate
Bank of
Oregon, N.A. ---------------
<PAGE>
<TABLE>
Quality Park Hewlett-Packard Master Lease Agreement
Products, Inc. Company No. 4126-43685
<S> <C> <C> <C>
--------------
Equipment Schedule 710 $ 42,746.76/1/
Equipment Schedule 7E0 $ 41,894.25/1/
Equipment Schedule 7G0 $ 21,230.79/1/
Equipment Schedule 7H0 $ 12,434.35/1/
Subtotal $118,306.15/1/
--------------
Quality Park Hewlett-Packard Master Installment Sales
Products, Inc. Company Agreement No. 4126-43685
Equipment Schedule 720 $ 94,814.22/1/
Equipment Schedule 730 $ 22,967.56/1/
Equipment Schedule 7D0 $ 42,873.32/1/
Equipment Schedule 7F0 $ 4,436.66/1/
Subtotal $165,181.76/1/
--------------
Quality Park Hewlett-Packard Installment Financing $ 50,668.46/1/
Products, Inc. Company Agreement No. 4124-
03489B
---------------
Quality Park Paper Recycling Contract of Canadian Sale $ 18,399.97/1/
Products, Inc.
--------------
</TABLE>
Debt arising in connection with Capital Lease Obligations permitted by this
Agreement.
- -------------------------------------------------------------------------------
Unfunded liabilities under the Plans listed on Schedule 7.13.
===============================================================================
_________________________
/1/Estimated as at September 30, 1996.
<PAGE>
SCHEDULE 7.11
TAXES
-----
A. Tax claims asserted against the Loan Parties.
--------------------------------------------
1 GAC and the City of New York ("NYC") are presently in
dispute over the characterization of payments made to certain
highly compensated sales persons for fiscal year 1992. NYC has
characterized the payments as distributions on equity and has
claimed $10,168.19 in underpaid taxes. None of the highly
compensated individuals are equity holders of GAC.
GAC has paid the $10,618.19 provisionally, under protest and
is seeking a return of such amount. This payment has been
expensed on the books of GAC.
If GAC does not ultimately prevail in this dispute, GAC may
be required to make future payments to NYC totaling approximately
$20,000 for fiscal years 1993 and 1994.
B. Audits.
------
The following Audits are ongoing:
IRS: Federal Income Tax
Period: 1994
<PAGE>
SCHEDULE 7.13
PLANS
-----
List of Pension and Welfare Plans
- ---------------------------------
1. Mail-Well Corporation Employee Stock Ownership Plan.
2. Mail-Well Corporation 401(k) Savings Retirement Plan.
3. Mail-Well Corporation Severance Plan for Salaried Employees.
4. Mail-Well Corporation Section 125 ("Cafeteria") Plan - Pre-tax premium only
arrangement.
5. Mail-Well Corporation Flexible Health Care Plan.
6. Mail-Well Corporation Life and Disability Insurance Plan.
7. Mail-Well Corporation Educational Assistance Program.
8. Pension Plan for Hourly Employees of Mail-Well Corporation (MWEC).
9. Pension Plan for Hourly Employees of Portland and Oakland.
10. Pension Plan for Hourly Employees of Mail-Well Corporation (AEC).
11. Pavey Envelope and Tag Corporation Employees' Retirement Plan.
12. The Paper Industry Union-Management Pension Fund for and on behalf of the
United Paperworks International Union, Local 318, AFL-CIO of 30-48 Linden
Place, Flushing, New York. (Pavey employees)
13. Local 807 Labor-Management Health and Pension Fund, for and on behalf of
Truck Drivers Local Union No. 807, affiliated with the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
(Pavey employees)
14. Pension Plan for Employees Represented by United Paperworkers International
Union Local 286. (American Envelope employees)
<PAGE>
15. Midwest Pension Plan. (American Envelope employees)
16. Pension Plan for Markham Bargaining Employees of Innova Envelope Inc.,
amended and restated as at January 1, 1992, registration number 0219485.
17. Pension Plan for Non-Bargaining Employees of Innova Envelope Inc., amended
and restated as at January 1, 1992, registration number 0991356.
18. Pension Plan for Brantford Bargaining Employees of Innova Envelope Inc.,
amended and restated as at January 1, 1994, registration number 0389395.
19. Unwritten group Registered Retirement Savings Plan ("RRSP") Program for
some of the employees of the Supreme Envelope division and for all the
employees of Unique Envelope.
20. Supreme Envelope (Montreal) Profit Sharing Plan.
21. Supremex Management Incentive Plan.
22. Informal, unwritten bonus plans are in place for either all or some of the
employees at the following locations:
(a) 345 Montee de Liesse, St. Laurent
(b) 110 Simmonds Drive, Dartmouth
(c) 270 MacLaren, Ottawa
(d) 33 Plymouth Street, Winnipeg
(e) 199 North Leonard Street, Regina
(f) 16242 - 117th Avenue, Edmonton
(g) Unit 3, 6143 - 4th Street S.E., Calgary
23. GAC 401(k) Profit Sharing Plan (Non-union employees)
24. GAC 401(k) Profit Sharing Plan (Union employees)
25. GACSC 401(k) Profit Sharing Plan (Non-union employees)
26. GAC Medical Benefit Trust Fund - Mechanism for funding Health Plan
benefits, a "voluntary employees beneficiary association" ("VEBA")
27. GAC/GACSC Section 125 ("cafeteria") Plan - pre-tax premium only arrangement
28 GCIU Supplemental Retirement and Disability Fund (Graphic Communications
<PAGE>
International Union ("GCIU") union employees)
29. Oregon Printing Industries Retirement Trust - only employees participating
in the Plan on or before April 30, 1988 are eligible
30. Graphic Arts Center, Inc. Executive Life Insurance Plan and Trust Agreement
and Executive Life Insurance Funding Agreement with Frank M. Stammers
31. Local 292-M Inter/Local Pension Fund - GAC is responsible (under Article 27
of the GCIU Collective Bargaining Agreement for lithographic employees)
only to forward to the Trustees of this Fund payroll withholding for
employees who elect to contribute from their compensation to this Fund.
32. "Vantage Program" - a "preferred provider" arrangement required under
Section 29.6 of the GCIU Collective Bargaining Agreement for the Bindery,
Shipping, and Mailing employees.
33. GAC 1993 Stock Option Plan
34. GAC 1995 Leveraged Incentive Plan (the "LIP")-Based on GAC's EBITDA for a
fiscal year, a certain percentage of GAC's EBITDA will be put in a pool to
be allocated to participating officers (the "Distributable Value Pool").
The President determines which officers shall participate in the Plan and
how much of the pool an individual officer will receive.
35. Management Incentive Plan for fiscal year 1995. Participants share a
portion of EBITDA, after EBITDA exceeds 80% of plan. The incentive pay pool
is 4% of the quarterly EBITDA in excess of 80% of each quarter's EBITDA
plan. Payments are made quarterly. Participants are middle level managers
of GAC. Participants can be nominated by any officer of GAC. Determination
of participation is made by unanimous consent of the officers of GAC. It is
a one year plan.
36. Quality Park Products Management Incentive Bonus Plan
37. IAM National Pension Fund
38. I.P.P. and GCIU of North America Employer Retirement Fund
39. GCIU Employer Retirement Fund
40. Graphic Arts Industry Joint Pension Fund
<PAGE>
41 GCIU Local 1B Health and Welfare Fund A (Medical, Vision, Weekly Accident
and Sickness, Life Insurance)
42. GCIU Local 1B Health and Welfare Fund B (Dental)
43. Quality Park Products, Inc. Severance Pay Plan
The present value of vested benefits exceeds the fair market value of plan
- --------------------------------------------------------------------------
assets allocable to such benefits under the following plans (but does not exceed
- -----------------------------------------------------------
the limitations set forth in the last sentence of Section 7.13):
1. Pavey Envelope and Tag Corporation Employees' Retirement Plan.
2. Pension Plan for Employees Represented by United Paperworkers International
Union Local 286. (American Envelope employees)
<PAGE>
SCHEDULE 7.15
HOLDINGS COMMON STOCK; OPTIONS, ETC.
------------------------------------
A.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Stock Number Percentage
Certificate Par of of
Stock Issuer Owner Class of Stock No(s) Value Shares Outstanding
------------ ----- -------------- ----- ----- ------ -----------
<S> <C> <C> <C> <C> <C> <C>
Mail-Well I Corporation Mail-Well Inc. Common 001 $ .01 1,000 100%
- ---------------------------------------------------------------------------------------------------------------------------------
Mail-Well West, Inc. Mail-Well I Corporation Common 001 $0.01 1,000 100%
- ---------------------------------------------------------------------------------------------------------------------------------
Pavey Envelope and Tag Mail-Well I Corporation Common 003 $1.00 3,000 100%
Corp.
- ---------------------------------------------------------------------------------------------------------------------------------
WISCO Envelope Corp. Mail-Well I Corporation Common 001 No 1,000 100%
- ---------------------------------------------------------------------------------------------------------------------------------
Mail-Well Canada Mail-Well I Corporation Common 001 $0.01 1,000 100%
Holdings, Inc.
- ---------------------------------------------------------------------------------------------------------------------------------
WISCO II, L.L.C. Mail-Well I Corporation Limited Liability 001 N/A N/A 1% of
Company Membership Membership
Interests Interest
WISCO Envelope Corp. Limited Liability 002 N/A N/A 99% of
Company Membership Membership
Interests Interests
- ---------------------------------------------------------------------------------------------------------------------------------
WISCO III, L.L.C. Mail-Well I Corporation Limited Liability 001 N/A N/A 1% of
Company Membership Membership
Interests Interest
WISCO Envelope Corp. Limited Liability 002 N/A N/A 99% of
Company Membership Membership
Interests Interests
- ---------------------------------------------------------------------------------------------------------------------------------
Graphic Arts Center, Inc. Mail-Well I Corporation Common 001 $0.01 1,000 100%
- ---------------------------------------------------------------------------------------------------------------------------------
Supremex, Inc. Mail-Well Canada Common C-2 None 66 100%
Holdings, Inc.
Common C-3 None 34 100%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
B. Subscriptions, Warrants, Calls, Options, Etc.
Pursuant to The Mail-Well Holdings, Inc. 1994 stock Option
Plan, options to purchase 97,700 shares of Common Stock have been
granted to approximately 40 employees and 18,200 shares of Common
Stock have been granted to approximately 18 GAC employees.
<PAGE>
SCHEDULE 7.22
BANK ACCOUNTS
-------------
1. First National Bank of Tullahoma - Account No. 6013429 (Depository
Account).
2. Bank One, Arizona N.A. - Account No. 111642 (Lockbox Account).
3. First Security Bank of Utah - Account No. 0600007959 (Lockbox Account).
4. Traders National Bank - Account No. 0138142 (Depository Account).
5. Norwest Bank Colorado, National Association - Denver
a. Account No. 1018026204 (Lockbox Account)
b. Account No. 1018026652 (Concentration Account)
c. Account No. 1018026212 (Mastercard/Visa Account)
d. Account No. 1018026474 (Health Benefits)
e. Account No. 6062501426 (Accounts Payable)
f. Account No. 6062501434 (Managers Account)
g. Account No. 1013036547 (Mail-Well Holdings 1994 Stock Option
Plan Escrow Account)
6. Norwest Bank Colorado, National Association - Grand Junction
a. Account No. 8012700220 (Payroll Account)
b. Account No. 8012700212 (A/P Account)
c. Account No. 8012700327 (Freight Account)
d. Account No. 6062501442 (Payroll Account)
e. Account No. 6062503212 (American A/P)
f. Account No. 6062503044 (American Payroll)
7. Bank of Hawaii - Account No. 007043732 (Lockbox Account).
8. Bank of America - Account No. 7505639 (Lockbox Account).
9. First Union Bank of Florida - Account No. 2090000617809 (Depository
Account).
<PAGE>
10. Texas Commerce Bank National Association
a. Account No. 00101440395 (Mail-Well Holdings, Inc. - Equity
Subscription Account)
b. Account No. 00101440403 (Mail-Well Corporation - Supremex Closing
Account)
11. U.S. Bank (Oregon) - Account No. 0100027903 (Lockbox Account).
12. Midlantic National Bank
a. Account No. 1405173202 (Lockbox Account)
b. Account No. 1403182940 (Operating Account)
13. First Hawaiian Bank, Pearlridge Branch - Account No. 81050783 (Payroll
Account).
14. Society National Bank - Account No. 2166894408 (Lockbox Account).
15. Republic Bank of New York
a. Account No. 230026206 (Depository Account)
b. Account No. 230026214 (Payroll Account)
16. Boatmen's First National Bank of Oklahoma - Account No. 070108366101
(Lockbox Account).
17. Wells Fargo Bank - Account No. 1000005471 (Lockbox Account).
18. Meridian Bank - Account No. 43281135 (Lockbox Account).
19. Commerce Bank - Account No. 0203063415 (Lockbox Account).
20. First National Bank of Omaha - Account No. 22652740 (Lockbox Account).
21. Marine Midland Bank - Account No. 875000703 (Lockbox Account).
22. Bank of America - Account No. 7511019 (Lockbox Account).
23. Wells Fargo Bank
a. Account No. 4159-341771 (Lockbox Account)
b. Account No. 552-001-0626 (Lockbox Account)
c. Account No. 300125972 (Lockbox Account)
<PAGE>
24. Nations Bank of Tennessee, N.A. - Account No. 00102341477 (Lockbox
Account).
25. NationsBank of Texas, N.A.
a. Account No. 1293323185 (Mail-Well Holdings Equity Subscription
Account)
b. Account No. 1293323177 (Mail-Well Corporation Closing Account)
26. PNC Bank
a. Account No. 1001-34-8249 (Lockbox Account)
b. Account No. 1-40511323-3 (Lockbox Account)
27. Banque Nationale du Canada
a. Account No. 000000011022
b. Account No. 000000020722
c. Account No. 000000051524
d. Account No. 060002988878P
28. Royal Bank
a. Account No. 00001-1366178
b. Account No. 03012-0000273
c. Account No. 03510-1081025
d. Account No. 05259-1102763
e. Account No. 06857-1101559
f. Account No. 07981-1091867
g. Account No. 07981-1091875
h. Account No. 00001-4048336
i. Account No. 03012-4025482
j. Account No. 03510-4012373
k. Account No. 05259-4045985
l. Account No. 06857-4003984
m. Account No. 07981-4033569
n. Account No. 07981-4043501
<PAGE>
SCHEDULE 7.27
EMPLOYEE MATTERS
----------------
(a) COLLECTIVE BARGAINING AGREEMENTS
--------------------------------
GCIU Local 292M, expires on June 30, 1997.
GCIU Local 292M dated as of October 17, 1991, expires on April 30, 1997.
Allentown, PA - United Independent Union, Local No. 7. Agreement expires
September 30, 2000.
Atlanta, GA - Graphic Communications International Union, Local 527-S, AFL-
CIO-CLC, June 1, 1993 through May 31, 1999.
Chicago, IL (Ohio Street Facility) - International Union of Allied
Production and Novelty Workers Local No. 10. Agreement expires January 31,
1999.
Cleveland, OH - International Association of Machinists and Aerospace
Workers, District No. 54. Agreement expires June 12, 1998.
Honolulu, HI - Hawaii Printing and Graphic Communications Union, Local 501-
M. Agreement expires November 30, 1997.
Jersey City, NJ - United Paperworkers International Union, Local 318.
Agreement expires March 31, 2001.
Jersey City, NJ - International Brotherhood of Teamsters, Local 807.
Agreement expires March 31, 1998.
Omaha, NE - Graphic Communications Union, Local 543-M. Agreement expires
July 31, 1997.
Philadelphia, PA - United Paper Workers International Union, Local 286.
Agreement expires September 30, 1997.
Pittsburgh, PA - United Paperworkers International Union, Local 296.
<PAGE>
Agreement expires October 31, 1999.
Portland, OR - Graphic Communications Union, District Council No. 2. Also
covers employees at Oakland, CA. Agreement expired May 31, 1996.
San Antonio, TX - Graphic Communications Union, Local 737-S. Agreement
expires March 31, 1998.
Santa Fe Springs, CA - Graphic Communications Union, District Council No.
2. Agreement expires June 30, 1997.
Seattle, WA - Graphic Communications International Union, Local 767-M.
Agreement expires July 31, 1998.
Seattle, WA - Graphic Communications Union, District Council No. 2.
Agreement expires July 31, 1998.
St. Louis, MO - Graphic Communications International Union, Local 505.
Agreement expires August 31, 1997.
St. Paul, MN - District Lodge #77 of the International Association of
Machinists and Aerospace Workers, AFL-CIO, effective April 1, 1995 through
November 15, 1996.
St. Paul, MN - Twin Cities Printing Trades Union, Local No. 29, charted by
the Graphic Communications International Union, effective April 1, 1995
through November 15, 1996.
St. Paul, MN - Graphic Communications International Union Local #1B, Twin
Cities, effective April 1, 1995 through November 15, 1996.
Markham, Ontario, Canada - Communications, Energy and Paperworkers Union of
Canada and its Local 301. Agreement expired December 31, 1994, the renewal
of which is presently in process of negotiation which is expected to go to
arbitration in August, 1995.
Montreal, Quebec, Canada - "Working with Us", The Employee Manual, which
covers hourly paid production and warehouse employees. The manual does not
constitute a formal collective agreement, but is negotiated with the
employees and is valid up to August 31, 1996.
<PAGE>
Mississauga, Canada - A manual similar to the above is in the process of
being prepared for application at this location.
Brantford Plant, Canada - The Canadian Autoworkers Union and its Local 397.
Agreement expires September 30, 1996.
Regina, Saskatchewan, Canada - Communications, Energy and Paperworkers
Union of Canada. Agreement expires October 31, 1996.
Alberta, Canada - Informal system regarding wages and benefits, but does
not constitute a collective agreement in place. Informal proposal will
remain in effect until November 1995.
Vancouver, British Columbia, Canada - Pulp, Paper and Woodworkers of
Canada, Local No. 5. Agreement expired October 31, 1994, was renewed and
amended January 27, 1995, and expires August 31, 1996.
(b) Petitions for certification of union election: None.
(c) Strikes, work slowdowns, work stoppages, or threatened controversies: In
mid to late October of 1994 AEC management observed union organizers
speaking with employees at AEC's Kruysman facility in New York City. No
petition for certification has been filed, nor has there been further union
organizing activity.
(d) Employment contracts other than collective bargaining agreements:
Employment Contract between Classic Envelope Plus Ltd. and Barry John
Sikora dated June 1, 1994.
Employment Contract between Innova Envelope Inc. and Frederick Vernon Moore
dated June 1, 1994.
Verbal consulting agreement between Supremex and its Subsidiaries and Guy
Paquin.
Verbal consulting agreement between Joel Robert Yanow and Supremex. A
written agreement will be executed prior to closing.
Employment Agreement dated as of February 1, 1996, as amended March 21,
<PAGE>
1996 between Interests Quality Park Products, Inc. and Ronald J. Rebeck.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Ralph A. Benton.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Douglas A. Mahoney.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and Hans J. Loeffler.
Employment Agreement dated as of February 1, 1996, as amended March 21,
1996 between Quality Park Products, Inc. and James E. Bettinger.
Deferred Compensation Arrangement between Quality Park Products, Inc. and
Ken Templin.
<PAGE>
Exhibit 10.39
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of November 15, 1996
Between
MAIL-WELL I CORPORATION
WISCO ENVELOPE CORP.
PAVEY ENVELOPE AND TAG CORP.
MAIL-WELL WEST, INC.
WISCO II, L.L.C.
MAIL-WELL CANADA HOLDINGS, INC.
GRAPHIC ARTS CENTER, INC.
WISCO III, L.L.C.
SUPREMEX INC.
INNOVA ENVELOPE INC.
as Sellers
----------
and
MAIL-WELL TRADE RECEIVABLES CORPORATION
as Purchaser
------------
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
PRELIMINARY STATEMENTS
ARTICLE I DEFINITIONS
SECTION 1.01. Certain Defined Terms......................................1
Affiliate...........................................................1
Alternate Base Rate.................................................1
Asset Purchase Agreement............................................2
Banque Paribas......................................................2
BPNY................................................................2
Billing Date........................................................2
Business Day........................................................2
Canadian Sellers....................................................2
Collections.........................................................2
Contract............................................................2
Contributed Receivable..............................................2
Credit and Collection Policy........................................3
Defaulted Receivable................................................3
Designated Obligor..................................................3
Dilution............................................................3
Discount............................................................3
ERISA...............................................................4
Event of Termination................................................4
Facility............................................................4
Facility Termination Date...........................................4
Federal Funds Rate..................................................4
Financing Agreements................................................4
General Trial Balance...............................................5
Incipient Event of Termination......................................5
Indebtedness........................................................5
Indemnified Amounts.................................................5
Lien................................................................5
Liquidity Agent.....................................................6
Lock-Box Account....................................................6
Lock-Box Agreement..................................................6
Lock-Box Bank.......................................................6
Minimum Return......................................................6
Obligor.............................................................6
Outstanding Balance.................................................6
Parent..............................................................6
i
<PAGE>
Page
----
Person...............................................................6
Pooling and Servicing Agreement......................................6
Purchase.............................................................7
Purchase Date........................................................7
Purchase Price.......................................................7
Purchased Receivable.................................................7
Purchaser Invested Amount............................................7
Receivable...........................................................7
Receivables Purchase Request.........................................7
Related Security.....................................................7
Seller Report........................................................8
Series Representative................................................8
Servicer.............................................................8
Servicer Fee.........................................................8
Settlement Date......................................................8
Transferred Receivable...............................................8
Trustee..............................................................8
UCC..................................................................8
SECTION 1.02. Other Terms................................................8
ARTICLE II AMOUNTS AND TERMS OF PURCHASES AND
CONTRIBUTIONS
SECTION 2.01. Facility...................................................9
SECTION 2.02. Making Purchases..........................................10
SECTION 2.03. Collections...............................................10
SECTION 2.04. Settlement Procedures.....................................10
SECTION 2.05. Payments and Computations, Etc............................11
SECTION 2.06. Contributions.............................................11
SECTION 2.07. Addition of Sellers.......................................11
SECTION 2.08. Termination of Status as a Seller.........................12
ARTICLE III CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase from
the Sellers..............................................13
SECTION 3.02. Conditions Precedent to All Purchases.....................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Sellers.............15
ARTICLE V COVENANTS
SECTION 5.01. Covenants of the Sellers..................................18
SECTION 5.02. Grant of Security Interest................................22
ii
<PAGE>
Page
----
SECTION 5.03. Covenant of the Sellers and the Purchaser.................22
SECTION 5.04. Repurchase................................................23
ARTICLE VI ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer...................................23
SECTION 6.02. Duties of Servicer........................................24
SECTION 6.03. Servicer Fee..............................................25
SECTION 6.04. Certain Rights of the Purchaser...........................25
SECTION 6.05. Rights and Remedies.......................................26
SECTION 6.06. Transfer of Records to Purchaser..........................26
ARTICLE VII EVENTS OF TERMINATION
SECTION 7.01. Events of Termination.....................................27
ARTICLE VIII INDEMNIFICATION
SECTION 8.01. Indemnities by the Sellers................................29
ARTICLE IX MISCELLANEOUS
SECTION 9.01. Amendments, Etc...........................................31
SECTION 9.02. Notices, Etc..............................................31
SECTION 9.03. Binding Effect; Assignability.............................31
SECTION 9.04. Costs, Expenses and Taxes.................................32
SECTION 9.05. No Proceedings............................................32
SECTION 9.06. Confidentiality...........................................33
SECTION 9.07. GOVERNING LAW.............................................33
SECTION 9.08. Third Party Beneficiary...................................33
SECTION 9.09. Execution in Counterparts.................................33
EXHIBITS
EXHIBIT A [Intentionally Omitted.]
EXHIBIT B Credit and Collection Policy
EXHIBIT C Lock-Box Banks
SCHEDULE 1 Tradenames
iii
<PAGE>
[Purchase and Contribution Agreement]
PURCHASE AND CONTRIBUTION AGREEMENT
Dated as of November 15, 1996
MAIL-WELL I CORPORATION, (the "Parent"), WISCO ENVELOPE CORP., PAVEY
------
ENVELOPE AND TAG CORP., MAIL-WELL WEST, INC., WISCO II, L.L.C., MAIL-WELL CANADA
HOLDINGS, INC., GRAPHIC ARTS CENTER, INC., WISCO III, L.L.C., SUPREMEX INC.,
INNOVA ENVELOPE INC. (the Parent and each of the other foregoing parties, a
"Seller" and together with all other Persons added pursuant to Section 2.08, the
- -------
"Sellers"), and MAIL-WELL TRADE RECEIVABLES FUNDING CORPORATION, a Colorado
-------
corporation (the "Purchaser"), agree as follows:
---------
PRELIMINARY STATEMENTS. (1) Certain terms which are capitalized and
used throughout this Agreement (in addition to those defined above) are defined
in Article I of this Agreement.
(2) Each Seller has Receivables that it wishes to sell to the
Purchaser, and the Purchaser is prepared to purchase such Receivables on the
terms set forth herein.
(3) The Parent may also wish to contribute Receivables to the capital
of the Purchaser on the terms set forth herein.
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" means, with respect to any specified Person, any other
---------
Person controlling or controlled by or under common control with such
specified Person. For the purpose of this definition, "control" shall mean
the power to direct the management and policies of a Person, directly or
indirectly, whether through the ownership of voting securities, by contract
or otherwise and the terms "controlling" and "controlled" have meaning
correlative to the foregoing.
"Alternate Base Rate" means a fluctuating interest rate per annum as
-------------------
shall be in effect from time to time, which rate shall be at all times
equal to the higher of:
<PAGE>
[Purchase and Contribution Agreement]
(a) the rate of interest announced publicly by Banque Paribas in
New York, New York from time to time as BPNY's base rate; and
(b) the Federal Funds Rate.
"Asset Purchase Agreement" means that certain Asset Purchase
------------------------
Agreement, dated the date hereof, among the Trustee, Corporate Receivables
Corporation, Citicorp North America, Inc. and BPNY, as amended from time to
time.
"Banque Paribas" means Banque Paribas, a French banking corporation.
--------------
"BPNY" means Banque Paribas, New York Branch, a branch of Banque
----
Paribas, licensed under the laws of the State of New York.
"Billing Date" means the date on which the invoice with respect to a
------------
Receivable was generated.
"Business Day" means any day other than (a) a Saturday or Sunday or
------------
(b) any other day on which national banking associations or state banking
institutions in New York, New York or Denver, Colorado are authorized or
obligated by law, executive order or governmental decree to be closed.
"Canadian Receivable" means any Receivable originated by a Canadian
-------------------
Seller.
"Canadian Sellers" means, collectively, Supremex Inc. and Innova
----------------
Envelope Inc.
"Collections" means, with respect to any Receivable, all cash
-----------
collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable, and all funds deemed to have been received by the Seller or any
other Person as a Collection pursuant to Section 2.04.
"Contract" means an agreement between a Seller and an Obligor pursuant
--------
to or under which such Obligor shall be obligated to pay for merchandise or
services from time to time.
"Contributed Receivable" has the meaning specified in Section 2.07.
----------------------
2
<PAGE>
[Purchase and Contribution Agreement]
"Credit and Collection Policy" means those receivables credit and
----------------------------
collection policies and practices of the Sellers in effect on the date of
this Agreement applicable to the Receivables and described in Exhibit B
hereto, as modified in compliance with this Agreement.
"Defaulted Receivable" means a Receivable:
--------------------
(i) as to which any payment, or part thereof, remains unpaid
for 150 or more days from the original Billing Date thereof;
(ii) as to which the Obligor thereof or any other Person
obligated thereon has taken any action, or suffered any event to occur, of
the type described in Section 7.01(g); or
(iii) which, consistent with the Credit and Collection Policy,
would be written off the applicable Seller's books as uncollectible.
"Designated Obligor" means, at any time, each Obligor; provided,
------------------ --------
however, that any Obligor shall cease to be a Designated Obligor upon three
-------
Business Days' notice by the Purchaser to the Seller that the Purchaser (or
its assignee) has determined in its reasonable business judgment that such
Obligor is no longer acceptable and provided, further, that any Person
-------- -------
added as an Obligor after the date hereof shall be judged to be acceptable
or not acceptable in the sole discretion of the Purchaser (or its
assignee).
"Dilution" means, with respect to any Receivable, (a) the aggregate
--------
amount of any reductions or adjustments in the Outstanding Balance of such
Receivable as a result of (i) any failure by any Seller to deliver any
merchandise or services or otherwise to perform under the underlying
Contract, or (ii) any change in or cancellation of any of the terms of such
Contract or any other adjustment by any Seller which reduces the amount
payable by the Obligor on the related Receivables or (iii) any setoff in
respect of any claim by the Obligor thereof (whether such claim arises out
of the same or a related transaction or an unrelated transaction) or (b)
the Outstanding Balance of such Receivable subject to any specific dispute,
offset, counterclaim or defense whatsoever (except the discharge in
bankruptcy of the Obligor thereof); provided, that Dilution does not
include (x) contractual adjustments to the amount payable by an Obligor
that are eliminated from the Receivables balance sold to the Seller through
a reduction in the purchase price for the related Receivable or (y) any
portion of those Receivables for which a production prepayment has been
received.
"Discount" means, in respect of each Purchase, a percentage amount
--------
calculated by the Seller and approved from time to time by the Purchaser,
equal to:
3
<PAGE>
[Purchase and Contribution Agreement]
(a) the Outstanding Balance of Receivables that are the subject
of such Purchase, minus
-----
(b) the expected costs to be incurred by the Purchaser of
financing such Purchase until the Outstanding Balance of such
Receivable is paid in full, minus
-----
(c) the portion of such Receivables that are reasonably expected
by the Seller to become Defaulted Receivables, minus
-----
(d) the portion of such Receivables that are reasonably expected
by the Seller to be reduced by means other than receipt of Collections
on such Receivables or pursuant to (c) above,
each of (b), (c) and (d) determined based on historical experience of the
related Seller.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"Event of Termination" has the meaning specified in Section 7.01.
--------------------
"Facility" means the willingness of the Purchaser to consider making
--------
Purchases of Receivables from the Sellers from time to time pursuant to the
terms of this Agreement.
"Facility Termination Date" means the earliest of (i) November 15,
-------------------------
2001, (ii) the date of termination of the Facility pursuant to Section
7.01 and (iii) the date which the Parent designates by at least two
Business Days' notice to the Purchaser.
"Federal Funds Rate" means, with respect to any day, the rate set
------------------
forth in H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any date of determination, such rate is not published
in H.15(519), such rate will be the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for that day under the caption
"Federal Funds/Effective Rate". If on any date of determination, the
appropriate rate is not published in either H.15(519) or Composite 3:30
P.M. Quotations for U.S. Government Securities, such rate will be the
arithmetic mean of the rates for the last transaction in overnight Federal
funds arranged by three leading brokers of Federal funds transactions in
New York City prior to 9:00 A.M., New York City time, on that day.
"Financing Agreements" means the Third Amended and Restated Credit
--------------------
Agreement, dated as of the date hereof, among certain of the Sellers,
Banque Paribas, as
4
<PAGE>
[Purchase and Contribution Agreement]
Agent, and the Lenders named therein and the Amended and Restated Credit
Agreement, dated as of the date hereof, among certain of the Sellers,
Banque Paribas, as Agent, and the Lenders named therein.
"General Trial Balance" of a Seller on any date means the Seller's
---------------------
accounts receivable trial balance (whether in the form of a computer
printout, magnetic tape or diskette) on such date, listing Obligors and the
Receivables respectively owed by such Obligors on such date together with
the aged Outstanding Balances of such Receivables, in form and substance
satisfactory to the Purchaser.
"Incipient Event of Termination" means an event that but for notice or
------------------------------
lapse of time or both would constitute an Event of Termination.
"Indebtedness" of any Person means indebtedness, obligations and
------------
liabilities of such Person (a) for borrowed money, (b) evidenced by
promissory notes, bonds, debentures, notes or other similar instruments,
(c) to pay the deferred purchase price of property or services other than
trade accounts payable of such Person arising in the ordinary course of
business that are not past due by more than 90 days, (d) as lessee under
leases which have been or should be, in accordance with GAAP, recorded as
capital leases, (e) secured by any lien or other charge upon property or
assets owned by such Person, even though such Person has not assumed or
become liable for the payment of such obligations, (f) under any interest
rate, swap, "cap", "collar" or other hedging agreement, (g) under
reimbursement agreements or similar agreements with respect to the issuance
of letters of credit (other than obligations in respect of letters of
credit opened to provide for payment of goods and services purchased in the
ordinary course of business) and (h) under direct or indirect guaranties in
respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in
respect of, indebtedness or obligations of others of the kinds referred to
in clauses (a) through (g) above, provided, however, that any assignment or
--------
transfer with respect to any Purchase hereunder shall not be deemed to
constitute a Lien.
"Indemnified Amounts" has the meaning specified in Section 8.01.
-------------------
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other), or
other security agreement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease
having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC (other than any such
financing statement filed for informational purposes only) or comparable
law of any jurisdiction to evidence any of the foregoing, excluding any
lien or filing pursuant to this Agreement.
5
<PAGE>
[Purchase and Contribution Agreement]
"Liquidity Agent" means BPNY in its capacity as Liquidity Agent under
---------------
the Asset Purchase Agreement.
"Lock-Box Account" means one or more accounts, under the exclusive
----------------
ownership and control of the Purchaser (or its assignees or designees),
maintained for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement among a Seller, the Purchaser
------------------
(and/or its assignees or designees), the Trustee and any Lock-Box Bank in
form and substance satisfactory to the Purchaser (or its assignees or
designees).
"Lock-Box Bank" means any of the banks or other financial institutions
-------------
holding one or more Lock-Box Accounts.
"Minimum Return" means as of any date of determination, 50% of the
--------------
Outstanding Balance of Transferred Receivables for the calendar week on
which such date ends.
"Obligor" means a Person obligated to make payments to a Seller
-------
pursuant to a Contract.
"Outstanding Balance" of any Receivable at any time means the then
-------------------
outstanding principal balance thereof after reductions, cancelations and
adjustments resulting from Dilution; provided, however, that with respect
to any Canadian Receivable, Outstanding Balance at any time shall mean the
United States Dollar equivalent of the then outstanding principal balance
thereof as determined by reference to the weighted average rate for the
notional amount of Canadian Receivables pursuant to any applicable hedge
agreement.
"Parent" has the meaning specified in the Preamble hereto.
------
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.
"Pooling and Servicing Agreement" means that certain Pooling and
-------------------------------
Servicing Agreement, dated as of the date hereof, among the Purchaser, as
seller, Norwest Bank Colorado, National Association, as Trustee, and the
Parent, as Servicer, together with all supplements thereto, each as amended
or restated from time to time.
6
<PAGE>
[Purchase and Contribution Agreement]
"Purchase" means a purchase by the Purchaser of Receivables from a
--------
Seller pursuant to Article II.
"Purchase Date" has the meaning specified in Section 2.02(a).
-------------
"Purchase Price" has the meaning specified in Section 2.02(b).
--------------
"Purchased Receivable" means any Receivable which, pursuant to the
--------------------
procedure described in Section 2.02(c), has been identified as a Purchased
Receivable.
"Purchaser Invested Amount" means the sum of amounts paid by the
-------------------------
Purchaser to the Sellers for each Purchase of Receivables from the Seller
pursuant to Section 2.02, reduced from time to time by Collections of such
Receivables actually received by the Purchaser in excess of the applicable
portion of the Discount representing yield (assumed to be 2.5% unless
otherwise mutually agreed); provided, however, that such Purchaser Invested
-------- -------
Amount shall not be reduced by any Collections to the extent that at any
time such Collections are rescinded or must otherwise be returned for any
reason.
"Receivable" means the indebtedness of any Obligor resulting from the
----------
provision or sale of merchandise, insurance or services by a Seller under a
Contract, and includes the right to payment of any interest or finance
charges and other obligations of such Obligor with respect thereto.
"Receivables Purchase Request" has the meaning specified in Section
----------------------------
2.02(a).
"Related Security" means with respect to any Receivable all of the
----------------
related Seller's interest in:
(i) any merchandise (including returned merchandise) relating to
any sale giving rise to such Receivable;
(ii) all security interests or liens and property subject thereto
from time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise, together
with all financing statements signed by an Obligor describing any
collateral securing such Receivable;
(iii) all guaranties, insurance and other agreements or
arrangements of whatever character from time to time supporting or securing
payment of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise; and
7
<PAGE>
[Purchase and Contribution Agreement]
(iv) the Contract and all other books, records and other
information (including, without limitation, computer programs, tapes,
discs, punch cards, data processing software and related property and
rights) relating to such Receivable and the related Obligor.
"Seller Report" means a report, in form and substance satisfactory to
-------------
the Purchaser, furnished by the Servicer to the Purchaser pursuant to
Section 6.02(b).
"Series Representative" means Citicorp North America, Inc. or the
---------------------
Liquidity Agent, in each case in their capacities as Series Representative
under the Pooling and Servicing Agreement.
"Servicer" means at any time the Person then authorized pursuant to
--------
Section 6.01 to service, administer and collect Transferred Receivables.
"Servicer Fee" has the meaning specified in Section 6.03.
------------
"Settlement Date" means the fifteenth day of each month (or if such
---------------
day is not a Business Day, the immediately succeeding Business Day);
provided, however, that following the occurrence of an Event of
-------- -------
Termination, Settlement Dates shall occur on such days as are selected from
time to time by the Purchaser or its designee in a written notice to the
Servicer.
"Transferred Receivable" means a Purchased Receivable or a Contributed
----------------------
Receivable which, in either case, has not been transferred back to the
applicable seller pursuant to Section 5.04 (unless thereafter repurchased
by or recontributed to the Purchaser).
"Trustee" means Norwest Bank Colorado, National Association in its
-------
capacity as Trustee under the Pooling and Servicing Agreement.
"UCC" means the Uniform Commercial Code as from time to time in effect
---
in the specified jurisdiction.
SECTION 1.02. Other Terms. All accounting terms not specifically
-----------
defined herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the State of
New York, and not specifically defined herein, are used herein as defined in
such Article 9.
8
<PAGE>
[Purchase and Contribution Agreement]
ARTICLE II
AMOUNTS AND TERMS OF PURCHASES AND CONTRIBUTIONS
SECTION 2.01. Facility. On the terms and conditions hereinafter set
--------
forth and without recourse (except to the extent as is specifically provided
herein), the Purchaser may purchase Receivables of each Seller from such Seller
from time to time during the period from the date hereof to the Facility
Termination Date.
SECTION 2.02. Making Purchases.
----------------
(a) Purchases. Each Purchase from a Seller shall be made on notice
---------
from such Seller to the Purchaser given no later than 10:00 A.M. (New York City
time) on the date of such Purchase. Each such request for a Purchase (each a
"Receivables Purchase Request") shall specify the date of such Purchase (which
- -----------------------------
shall be a Business Day) and the proposed purchase price (as determined pursuant
to Section 2.02(b)) for such Purchase. The Purchaser shall promptly notify such
Seller whether it has determined to make such Purchase. On the date of each
Purchase (each a "Purchase Date"), the Purchaser shall, upon satisfaction of the
-------------
applicable conditions set forth in Article III, pay the purchase price for such
Purchase by deposit of such amount in same day funds to such Seller's account
designated by such Seller.
(b) Determination of Purchase Price. The purchase price (the
-------------------------------
"Purchase Price") for the Receivables that are the subject of any Purchase
- ---------------
hereunder shall be determined on or prior to the date of such Purchase, and
shall be equal to the Outstanding Balance of such Receivables as set forth in
the related Seller's General Trial Balance, minus the Discount for such
Purchase.
(c) Identification of Purchased Receivables. On each Purchase Date, a
---------------------------------------
sufficient number of Receivables (that do not already constitute Transferred
Receivables hereunder) of the applicable Seller shall be identified as Purchased
Receivables so that the Outstanding Balance of such Purchased Receivables so
identified shall result in the purchase price determined in accordance with
Section 2.02(b). The Purchased Receivables will be identified by reference to
the General Trial Balance of such Seller. Starting with the first Obligor
listed on the General Trial Balance, each Receivable owed by such Obligor (that
does not already constitute a Transferred Receivable hereunder) shall constitute
a Purchased Receivable. Additional Purchased Receivables shall be identified in
a similar manner by proceeding down the General Trial Balance of such Seller, in
alphabetical/numerical sequence for subsequent Obligors.
(d) Ownership of Receivables and Related Security. On each Purchase
---------------------------------------------
Date, after giving effect to each Purchase, the Purchaser shall own the
Purchased Receivables which
9
<PAGE>
[Purchase and Contribution Agreement]
been identified according to the procedure described in subsection (c)
above. The Purchase of any Receivable shall include all Related Security with
respect to such Receivable.
(e) Reconstruction of General Trial Balance. If at any time a Seller
---------------------------------------
fails to generate its General Trial Balance, the Purchaser shall have the right
to reconstruct such General Trial Balance so that a determination of the
Purchased Receivables can be made pursuant to Section 2.02(c). Each Seller
agrees to cooperate with such reconstruction of the General Trial Balance,
including, without limitation, the delivery to the Purchaser, upon the
Purchaser's request, of copies of all Contracts and all records relating to the
Contracts and the Receivables.
SECTION 2.03. Collections. (a) Unless otherwise agreed, the
-----------
Servicer shall, on each Settlement Date, deposit into an account of the
Purchaser or the Purchaser's assignee all Collections of Transferred Receivables
then held by the Servicer.
(b) In the event that a Seller believes that Collections which are not
Collections of Transferred Receivables have been deposited into an account of
the Purchaser or the Purchaser's assignee, such Seller shall so advise the
Purchaser and, on the Business Day following such identification, the Purchaser
shall remit, or shall cause to be remitted, all Collections so deposited which
are identified, to the Purchaser's satisfaction, to be Collections of
Receivables which are not Transferred Receivables to such Seller.
SECTION 2.04. Settlement Procedures. (a) If on any day the
---------------------
Outstanding Balance of any Purchased Receivable is reduced or adjusted as a
result of any defective, rejected, returned, repossessed or foreclosed
merchandise or services or any cash discount or other adjustment made by the
Seller, or any set-off or dispute in respect of any claim by the Obligor thereof
against the related Seller (whether such claim arises out of the same or a
related transaction or an unrelated transaction but excluding adjustments,
---------
reductions or cancellations in respect of such Obligor's bankruptcy), such
Seller shall be deemed to have received on such day a Collection of such
Purchased Receivable in the amount of such reduction or adjustment. If such
Seller is not the Servicer, such Seller shall pay to the Servicer on or prior to
the next Settlement Date all amounts deemed to have been received pursuant to
this subsection.
(b) Upon discovery by a Seller or the Purchaser of a breach of any of
the representations and warranties made by such Seller in Section 4.01(j) with
respect to any Transferred Receivable, such party shall give prompt written
notice thereof to the other party, as soon as practicable and in any event
within three Business Days following such discovery. Such Seller shall, upon
not less than two Business Days' notice from the Purchaser or its assignee or
designee, repurchase such Transferred Receivable on the next succeeding
Settlement Date for a repurchase price equal to the Outstanding Balance of such
Transferred Receivable. Each repurchase of a Transferred Receivable shall
include the Related Security with respect to such Transferred Receivable. The
proceeds of any such repurchase shall be deemed to be a Collection
10
<PAGE>
[Purchase and Contribution Agreement]
in respect of such Transferred Receivable. If the applicable Seller is not the
Servicer, such Seller shall pay to the Servicer on or prior to the next
Settlement Date the repurchase price required to be paid pursuant to this
subsection.
(c) Except as stated in subsection (a) or (b) of this Section 2.04 or
as otherwise required by law or the underlying Contract, all Collections from an
Obligor of any Transferred Receivable shall be applied to the Receivables of
such Obligor in the order of the age of such Receivables, starting with the
oldest such Receivable, unless such Obligor designates its payment for
application to specific Receivables.
SECTION 2.05. Payments and Computations, Etc. (a) All amounts to be
-------------------------------
paid or deposited by any Seller or the Servicer hereunder shall be paid or
deposited no later than 11:00 A.M. (New York City time) on the day when due in
same day funds to an account specified by the Purchaser.
(b) Each Seller shall, to the extent permitted by law, pay to the
Purchaser interest on any amount not paid or deposited by such Seller (whether
as Servicer or otherwise) when due hereunder at an interest rate per annum equal
to 2% per annum above the Alternate Base Rate, payable on demand.
(c) All computations of interest and all computations of fees
hereunder shall be made on the basis of a year of 360 days for the actual number
of days (including the first but excluding the last day) elapsed. Whenever any
payment or deposit to be made hereunder shall be due on a day other than a
Business Day, such payment or deposit shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
such payment or deposit.
SECTION 2.06. Contributions. The Parent may from time to time at its
-------------
option, by notice to the Purchaser, identify Receivables which it proposes to
contribute to the Purchaser as a capital contribution. Such Receivables shall
be identified by reference to the Parent's General Trial Balance. On the date
of each such contribution and after giving effect thereto, the Purchaser shall
own the Receivables so identified and contributed (collectively, the
"Contributed Receivables") and all Related Security with respect thereto.
- ------------------------
SECTION 2.07. Addition of Sellers. Any Affiliate of the Parent which
-------------------
is wholly owned by and consolidated with the Parent for federal income tax
purposes may become a Seller hereunder with the consent of the Purchaser with
respect to such addition. The Parent and such Affiliate that is proposed to be
added as a Seller shall give to the Purchaser and its assigns prior written
notice of its desire to add such Affiliate as a Seller. Once the notice has
been given, any addition of such Affiliate of the Parent as a Seller pursuant to
this Section 2.07 shall become effective on the first Business Day following the
date on which (i) such Affiliate and the parties
11
<PAGE>
[Purchase and Contribution Agreement]
hereto shall have executed and delivered the agreements, instruments and other
documents and the amendments or other modifications to the Related Documents, in
form and substance reasonably satisfactory to the Purchaser, the Series
Representative and the Liquidity Agent, that the Purchaser, the Series
Representative and the Liquidity Agent reasonably determine are necessary or
appropriate to effect the addition and (ii) the Series Representative and the
Liquidity Agent shall have given written notice of their approval of such
addition. Upon such effectiveness, any reference to "Sellers" in this Agreement
shall refer to the Sellers and the Affiliate of the Parent added as a Seller
pursuant to this Section collectively or individually as the context shall
require.
SECTION 2.08. Termination of Status as a Seller. (a) At any time
---------------------------------
when more than one Person is a Seller, a Seller may terminate its obligations as
a Seller hereunder if:
(i) such Seller (a "Terminating Seller") shall have given the
------------------
Purchaser and its assigns not less than 30 days' prior written notice of
its intention to terminate,
(ii) an authorized officer of the Terminating Seller shall have
certified that the termination by the Terminating Seller of its status as a
Seller will not have a material adverse effect on the business, financial
condition, operations or assets of the Purchaser, and
(iii) both immediately before and after giving effect to the
termination by the Terminating Seller, no Event of Termination shall have
occurred and be continuing or shall reasonably be expected to occur as a
result of such termination.
Any termination by a Seller shall become effective on the first
Business Day that follows the day on which the requirements of clauses (i)
through (iii) shall have been satisfied (or such later date specified in the
notice or certificate referred to in the clauses). Upon such effectiveness, any
reference to "Sellers" in this Agreement shall refer to the Sellers excluding
the Terminating Seller. Any termination by a Seller shall terminate its rights
and obligations hereunder; provided, however, that the termination shall not
-------- -------
relieve the Terminating Seller of obligations which relate to Transferred
Receivables originated by or obligations of the Terminating Seller prior to the
effective date of the termination.
(b) A Seller's right and obligation to sell its Receivables to the
Purchaser shall terminate immediately if the Seller ceases to be the Parent or
an Affiliate of the Parent; provided, however, that the termination shall not
-------- -------
relieve the Seller of obligations which relate to Transferred Receivables
originated by or obligations of the Seller prior to the effective date of the
termination.
12
<PAGE>
[Purchase and Contribution Agreement]
ARTICLE III
CONDITIONS OF PURCHASES
SECTION 3.01. Conditions Precedent to Initial Purchase from the
-------------------------------------------------
Sellers. (a) The initial Purchase of Receivables from the Sellers hereunder
- -------
is subject to the conditions precedent that the Purchaser shall have received on
or before the date of such Purchase the following, each (unless otherwise
indicated) dated such date, in form and substance satisfactory to the Purchaser:
(i) Certified copies of the resolutions of the Board of Directors of
each Seller approving this Agreement and certified copies of all documents
evidencing other necessary corporate action and governmental approvals, if
any, with respect to this Agreement.
(ii) A certificate of the Secretary or Assistant Secretary of each
Seller certifying the names and true signatures of the officers of such
Seller authorized to sign this Agreement and the other documents to be
delivered by it hereunder.
(iii) Acknowledgment copies or time stamped receipt copies of proper
financing statements, duly filed on or before the date of the initial
Purchase with respect to each Seller, naming such Seller as the debtor and
the Purchaser as the secured party, or other similar instruments or
documents, as the Purchaser may deem necessary or desirable under the UCC
of all appropriate jurisdictions or other applicable law to perfect the
Purchaser's ownership of and security interest in the Transferred
Receivables and Related Security and Collections with respect thereto.
(iv) Acknowledgment copies or time stamped receipt copies of proper
financing statements, if any, necessary to release all security interests
and other rights of any Person in the Transferred Receivables, Contracts or
Related Security previously granted by each Seller.
(v) Completed requests for information, dated on or before the date of
such initial Purchase, listing the financing statements referred to in
subsection (c) above and all other effective financing statements filed in
the jurisdictions referred to in subsection (c) above that name the Seller
as debtor, together with copies of such other financing statements (none of
which shall cover any Transferred Receivables, Contracts or Related
Security).
13
<PAGE>
[Purchase and Contribution Agreement]
(vi) Lock-Box Agreements in respect of each Lock-Box Account and each
Seller, duly executed by the applicable Seller, the Lock-Box Bank holding
such Lock-Box Account and any other parties thereto.
(b) Notwithstanding any other provision hereof, the initial Purchase
of Receivables from the Canadian Sellers hereunder is subject to the additional
conditions precedent that the Purchaser and its assigns shall have (i) consented
in writing to such Purchase on or before the date of such Purchase, (ii)
received blocked account agreements or other cash management agreements, in form
and substance satisfactory to the Purchaser and its assigns (naming the
Purchaser or Trustee on its behalf as the beneficiary of such Collections), with
respect to all bank accounts of the Canadian Sellers into which Collections with
respect to such Receivables shall be deposited, (iii) received opinions of
counsel, in form and substance satisfactory to the Purchaser and its assigns,
with respect to the transfer of such Receivables, the Collections related
thereto and such accounts and (iv) established hedging arrangements satisfactory
to the Purchaser and its assigns.
SECTION 3.02. Conditions Precedent to All Purchases. Each Purchase
-------------------------------------
(including the initial Purchase) hereunder shall be subject to the further
conditions precedent that:
(a) with respect to any such Purchase, on or prior to the date of such
Purchase, each Seller shall have delivered to the Purchaser, (i) if
requested by the Purchaser, such Seller's General Trial Balance (which if
in magnetic tape or diskette format shall be compatible with the
Purchaser's computer equipment) as of a date not more than 31 days prior to
the date of such Purchase, and (ii) a written report identifying, among
other things, the Receivables to be included in such Purchase and the then
outstanding Purchased Receivables and the aged balance thereof, in each
case correlated to Purchases;
(b) with respect to any such Purchase, on or prior to the date of such
Purchase, the Servicer shall have delivered to the Purchaser, in form and
substance satisfactory to the Purchaser, a completed Seller Report for the
most recently ended reporting period for which information is required
pursuant to Section 6.02(b) and containing such additional information as
may reasonably be requested by the Purchaser;
(c) each Seller shall have marked its records and, at the request of
the Purchaser, each Contract giving rise to Purchased Receivables and all
other relevant records evidencing the Receivables which are the subject of
such Purchase with a legend, acceptable to the Purchaser, stating that such
Receivables, the Related Security and Collections with respect thereto,
have been sold in accordance with this Agreement; and
14
<PAGE>
[Purchase and Contribution Agreement]
(d) on the date of such Purchase the following statements shall be
true (and the related Seller, by accepting the amount of such Purchase,
shall be deemed to have certified that):
(i) the representations and warranties contained in Section 4.01
are correct in all material respects on and as of the date of such
Purchase as though made on and as of such date,
(ii) no event has occurred and is continuing, or would result
from such Purchase, that constitutes an Event of Termination or would
constitute an Incipient Event of Termination and
(iii) the Purchaser shall not have delivered to the Parent a
notice that the Purchaser shall not make any further Purchases
hereunder; and
(e) the Purchaser shall have received such other approvals, opinions
or documents as the Purchaser may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Sellers. Each
---------------------------------------------
Seller represents and warrants as follows:
(a) Such Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation, and is duly qualified to do business, and is in good
standing, in every jurisdiction where the nature of its business requires
it to be so qualified, except where the failure to be so qualified could
reasonably be expected to have a material adverse effect on such Seller's
ability to perform its obligations under this Agreement.
(b) The execution, delivery and performance by such Seller of this
Agreement and the other documents to be delivered by it hereunder,
including such Seller's sale and, in the case of the Parent, the
contribution of Receivables hereunder and such Seller's use of the proceeds
of Purchases, (i) are within such Seller's corporate powers, (ii) have been
duly authorized by all necessary corporate action, (iii) do not contravene
(1) such Seller's charter or by-laws, (2) any law, rule or regulation
applicable to such Seller, (3) any contractual restriction binding on or
affecting such Seller or its property or (4) any order, writ, judgment,
award, injunction or decree binding on or affecting such Seller or its
15
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[Purchase and Contribution Agreement]
property, and (iv) do not result in or require the creation of any lien,
security interest or other charge or encumbrance upon or with respect to
any of its properties (except for the transfer of such Seller's interest in
Transferred Receivables pursuant to this Agreement). This Agreement has
been duly executed and delivered by such Seller.
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by such Seller of this
Agreement or any other document to be delivered thereunder.
(d) This Agreement constitutes the legal, valid and binding obligation
of such Seller enforceable against the Seller in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting creditors'
rights generally and by general principles of equity.
(e) Sales and contributions made pursuant to this Agreement will
constitute a valid sale, transfer, and assignment of the Transferred
Receivables to Purchaser, enforceable against creditors of, and purchasers
from, such Seller. Such Seller shall have no remaining property interest
in any Transferred Receivable.
(f) In the case of the Parent, the consolidated balance sheet of the
Parent and its subsidiaries as at December 31, 1995, and the related
consolidated statements of income and retained earnings of the Parent and
its subsidiaries for the fiscal year then ended, copies of which have been
furnished to the Purchaser, fairly present the consolidated financial
condition of the Parent and its subsidiaries as at such date and the
consolidated results of the operations of the Parent and its subsidiaries
for the period ended on such date, all in accordance with generally
accepted accounting principles consistently applied, and since December 31,
1995 there has been no material adverse change in the business, operations,
property or financial or other condition of the Parent.
(g) There is no pending or threatened action or proceeding affecting
such Seller or any of its subsidiaries before any court, governmental
agency or arbitrator which may materially adversely affect the financial
condition or operations of such Seller or any of its subsidiaries or the
ability of such Seller to perform its obligations under this Agreement, or
which purports to affect the legality, validity or enforceability of this
Agreement.
(h) No proceeds of any Purchase will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934.
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[Purchase and Contribution Agreement]
(i) No transaction contemplated hereby requires compliance with any
bulk sales act or similar law.
(j) Each Transferred Receivable, together with the Related Security,
is owned (prior to its sale or contribution hereunder) by such Seller free
and clear of any Lien (other than any Lien arising under the Financing
Agreements or solely as the result of any action taken by the Purchaser).
When Purchaser makes a Purchase it shall acquire valid and perfected first
priority ownership of each Purchased Receivable and the Related Security
and Collections with respect thereto free and clear of any Lien (other than
any Lien arising solely as the result of any action taken by the
Purchaser), and no effective financing statement or other instrument
similar in effect covering any Transferred Receivable, any interest
therein, the Related Security or Collections with respect thereto is on
file in any recording office except such as may be filed in favor of
Purchaser in accordance with this Agreement or in connection with any Lien
arising solely as the result of any action taken by the Purchaser.
(k) With respect to the Parent, each Seller Report (if prepared by the
Parent, or to the extent that information contained therein is supplied by
the Parent), and with respect to each Seller, all information, exhibits,
financial statements, documents, books, records or reports furnished or to
be furnished at any time by such Seller to the Purchaser in connection with
this Agreement is or will, when taken as a whole, be accurate in all
material respects as of its date or (except as otherwise disclosed to the
Purchaser at such time) as of the date so furnished, and no such document
contains or will contain any untrue statement of a material fact or omits
or will omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under which
they were made, when taken as a whole, not misleading.
(l) The principal place of business and chief executive office of such
Seller and the office where such Seller keeps its records concerning the
Transferred Receivables are located at the address or addresses referred to
in Section 5.01(b) or such other address specified to the Purchaser at such
time as such Seller becomes a Seller hereunder.
(m) The names and addresses of all the Lock-Box Banks, together with
the account numbers of the Lock-Box Accounts at such Lock-Box Banks, are
specified in Exhibit C (as the same may be updated from time to time
pursuant to Section 5.01(h)).
(n) Except as otherwise specified in Schedule 1 hereto (as amended
from time to time upon notice from the Seller), such Seller is not known by
and does not use any tradename or doing-business-as name.
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[Purchase and Contribution Agreement]
(o) With respect to any programs used by such Seller in the servicing
of the Receivables, no sublicensing agreements are necessary in connection
with the designation of a new Servicer pursuant to Section 6.01(b) so that
such new Servicer shall have the benefit of such programs (it being
-- -----
understood that, however, the Servicer, if other than
---------- ----
such Seller, shall be required to be bound by a confidentiality agreement
reasonably acceptable to such Seller).
(p) The transfers of Transferred Receivables by such Seller to the
Purchaser pursuant to this Agreement, and all other transactions between
such Seller and the Purchaser, have been and will be made in good faith and
without intent to hinder, delay or defraud creditors of such Seller.
(q) All of the Receivables of such Seller have been transferred to the
Purchaser pursuant to this Agreement.
ARTICLE V
COVENANTS
SECTION 5.01. Covenants of the Sellers. From the date hereof until
------------------------
the first day following the Facility Termination Date on which all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables:
(a) Compliance with Laws, Etc. Such Seller will comply in all
-------------------------
material respects with all applicable laws, rules, regulations and orders
and preserve and maintain its corporate existence, rights, franchises,
qualifications and privileges except to the extent that the failure so to
comply with such laws, rules and regulations or the failure so to preserve
and maintain such existence, rights, franchises, qualifications, and
privileges would not materially adversely affect the collectibility of the
Transferred Receivables or the ability of such Seller to perform its
obligations under this Agreement.
(b) Offices, Records and Books of Account. Such Seller will keep its
-------------------------------------
principal place of business and chief executive office and the office where
it keeps its records concerning the Transferred Receivables at the address
of such Seller set forth under its name on the signature page to this
Agreement or, upon 30 days' prior written notice to the Purchaser, at any
other locations in jurisdictions where all actions required by Section
5.01(j) shall have been taken and completed. Such Seller also will
maintain and implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing Transferred
Receivables and related Contracts in the event of the destruction of the
originals thereof), and keep and maintain all documents,
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[Purchase and Contribution Agreement]
books, records and other information reasonably necessary or advisable for
the collection of all Transferred Receivables (including, without
limitation, records adequate to permit the daily identification of each new
Transferred Receivable and all Collections of and adjustments to each
existing Transferred Receivable). Such Seller shall make a notation in its
books and records, including its computer files, to indicate which
Receivables have been sold or contributed to the Purchaser hereunder.
(c) Performance and Compliance with Contracts and Credit and
--------------------------------------------------------
Collection Policy. Such Seller will, at its expense, timely and fully
-----------------
perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Contracts related to the
Transferred Receivables, and timely and fully comply in all material
respects with the Credit and Collection Policy in regard to each
Transferred Receivable and the related Contract.
(d) Sales, Liens, Etc. Except for the sales and contributions of
-----------------
Receivables contemplated herein, such Seller will not sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Lien upon or with respect to, any Transferred Receivable,
Related Security, related Contract or Collections, or upon or with respect
to any account to which any Collections of any Transferred Receivable are
sent, or assign any right to receive income in respect thereof.
(e) Extension or Amendment of Transferred Receivables. Except as
-------------------------------------------------
provided in Section 6.02(c), such Seller will not extend, amend or
otherwise modify the terms of any Transferred Receivable, or amend, modify
or waive any term or condition of any Contract related thereto.
(f) Change in Business or Credit and Collection Policy. Such Seller
--------------------------------------------------
will not make any change in the character of its business or in the Credit
and Collection Policy that would, in either case, materially adversely
affect the collectibility of the Transferred Receivables of such Seller or
the ability of such Seller to perform its obligations under this Agreement.
(g) Audits. Such Seller will, from time to time during regular
------
business hours as requested by the Purchaser or its assigns, permit the
Purchaser, or its agents, represen tatives or assigns (including
independent public accountants, which may be the Seller's independent
public accountants), (i) to conduct periodic audits of the Receivables, the
Related Security and the related books and records and collections systems
of the Seller, (ii) to examine and make copies of and abstracts from all
books, records and documents (including, without limitation, computer tapes
and disks) in the possession or under the control of the Seller relating to
the Receivables and the Related Security, including, without limitation,
the Contracts, and (iii) to visit the offices and properties of the Seller
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[Purchase and Contribution Agreement]
for the purpose of examining such materials described in clause (ii) above,
and to discuss matters relating to the Receivables, the Related Security,
or Seller's performance hereunder or under the Contracts with any of the
officers or employees of the Seller having knowledge of such matters.
(h) Change in Payment Instructions to Obligors. Such Seller will not
------------------------------------------
add or terminate any bank or bank account as a Lock-Box Bank or Lock-Box
Account from those listed in Exhibit C to this Agreement, or make any
change in its instructions to Obligors regarding payments to be made to any
Lock-Box Bank, unless the Purchaser shall have received notice of such
addition, termination or change (including an updated Exhibit C) and
executed copies of Lock-Box Agreements with each new Lock-Box Bank or with
respect to each new Lock-Box Account.
(i) Deposits to Lock-Box Accounts. Such Seller will deposit, or
-----------------------------
cause to be deposited, all Collections of Transferred Receivables into
Lock-Box Accounts, and such Seller will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to any Lock-Box Account
cash or cash proceeds other than Collections of Transferred Receivables.
(j) Further Assurances. (i) Such Seller agrees from time to time, at
------------------
its expense, promptly to execute and deliver all further instruments and
documents, and to take all further actions, that may be necessary or
desirable, or that the Purchaser or its assignee may reasonably request, to
perfect, protect or more fully evidence the sale and contribution of
Receivables under this Agreement, or to enable the Purchaser or its
assignee to exercise and enforce its respective rights and remedies under
this Agreement. Without limiting the foregoing, such Seller will, upon the
request of the Purchaser or its assignee, (A) execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments and documents, that may be necessary or desirable to perfect,
protect or evidence such Transferred Receivables; and (B) deliver to the
Purchaser copies of all Contracts relating to the Transferred Receivables
and all records relating to such Contracts and the Transferred Receivables,
whether in hard copy or in magnetic tape or diskette format (which if in
magnetic tape or diskette format shall be compatible with the Purchaser's
computer equipment).
(ii) Such Seller authorizes the Purchaser or its assignee to file
financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Transferred Receivables and the
Related Security, the related Contracts and the Collections with respect
thereto without the signature of such Seller where permitted by law. A
photocopy or other reproduction of this Agreement shall be sufficient as a
financing statement where permitted by law.
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[Purchase and Contribution Agreement]
(iii) Such Seller shall perform its obligations under the
Contracts related to the Transferred Receivables to the same extent as if
the Transferred Receivables had not been sold or transferred.
(k) Reporting Requirements. Such Seller will provide to the Purchaser
----------------------
the following:
(i) as soon as available and in any event within 45 days after the
end of the first three quarters of each fiscal year of such Seller, balance
sheets of such Seller and its subsidiaries as of the end of such quarter
and statements of income and retained earnings of such Seller and its
subsidiaries for the period commencing at the end of the previous fiscal
year and ending with the end of such quarter, certified by the chief
financial officer of such Seller;
(ii) as soon as available and in any event within 90 days after
the end of each fiscal year of such Seller, a copy of the annual report for
such year for such Seller and its subsidiaries, containing financial
statements for such year audited by Deloitte & Touche or other nationally
recognized independent public accountants;
(iii) as soon as possible and in any event within five days
after the occurrence of each Event of Termination or Incipient Event of
Termination, a statement of the chief financial officer of such Seller
setting forth details of such Event of Termination or Incipient Event of
Termination and the action that such Seller has taken and proposes to take
with respect thereto;
(iv) promptly after the sending or filing thereof, copies of all
reports that such Seller sends to any of its securityholders, and copies of
all reports and registration statements that such Seller or any subsidiary
files with the Securities and Exchange Commission or any national
securities exchange;
(v) promptly after the filing or receiving thereof, copies of all
reports and notices that such Seller or any Affiliate files under ERISA
with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation or the U.S. Department of Labor or that such Seller or any
Affiliate receives from any of the foregoing or from any multiemployer plan
(within the meaning of Section 4001(a)(3) of ERISA) to which such Seller or
any Affiliate is or was, within the preceding five years, a contributing
employer, in each case in respect of the assessment of withdrawal liability
or an event or condition which could, in the aggregate, result in the
imposition of liability on the Seller and/or any such Affiliate in excess
of $5,000,000;
21
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[Purchase and Contribution Agreement}
(vi) at least ten Business Days prior to any change in such
Seller's name, a notice setting forth the new name and the effective date
thereof;
(vii) concurrently with the delivery of each Seller Report by
the Servicer, a statement that all of the Receivables of such Seller under
all Contracts arising during the immediately preceding month have been
transferred by such Seller to the Purchaser; and
(viii) such other information respecting the Transferred
Receivables or the condition or operations, financial or otherwise, of such
Seller as the Purchaser may from time to time reasonably request.
(l) Separate Conduct of Business. Each Seller will: (i) maintain
----------------------------
separate corporate records and books of account from those of the
Purchaser; (ii) conduct its business from an office separate from that of
the Purchaser; (iii) ensure that all oral and written communications,
including without limitation, letters, invoices, purchase orders,
Contracts, statements and applications, will be made solely in its own
name; (iv) have stationery and other business forms and a mailing address
and a telephone number separate from those of the Purchaser; (v) not hold
itself out as having agreed to pay, or as being liable for, the obligations
of the Purchaser; (vi) not engage in any transaction with the Purchaser
except as contemplated by this Agreement or as permitted by the Pooling and
Servicing Agreement; (vii) continuously maintain as official records the
resolutions, agreements and other instruments underlying the transactions
contemplated by this Agreement; and (viii) disclose on its annual financial
statements (A) the effects of the transactions contemplated by this
Agreement in accordance with generally accepted accounting principles and
(B) that the assets of the Purchaser are not available to pay its
creditors.
SECTION 5.02. Grant of Security Interest. To secure all obligations of
--------------------------
the Sellers arising in connection with this Agreement, and each other agreement
entered into in connection with this Agreement, whether now or hereafter
existing, due or to become due, direct or indirect, or absolute or contingent,
including, without limitation, Indemnified Amounts, payments on account of
Collections received or deemed to be received, and any other amounts due the
Purchaser hereunder, each Seller hereby assigns and grants to Purchaser, a
security interest in all of such Seller's right, title and interest now or
hereafter existing in, to and under all Receivables of such Seller which do not
constitute Transferred Receivables, the Related Security and all Collections
with regard thereto.
SECTION 5.03. Covenant of the Sellers and the Purchaser. The Sellers
-----------------------------------------
and the Purchaser have structured this Agreement with the intention that each
Purchase of Receivables hereunder be treated as a sale of such Receivables by
the Sellers to the Purchaser for all
22
<PAGE>
[Purchase and Contribution Agreement]
purposes. Each Seller and the Purchaser shall record each Purchase as a sale or
purchase, as the case may be, on its books and records, and reflect each
Purchase in its financial statements and tax returns as a sale or purchase, as
the case may be. In the event that, contrary to the mutual intent of such
Sellers and the Purchaser, any Purchase of Receivables hereunder is not
characterized as a sale, each Seller shall, effective as of the date hereof, be
deemed to have granted (and such Seller hereby does grant) to the Purchaser a
first priority security interest in and to any and all Receivables conveyed by
it hereunder and the proceeds thereof (together with Related Security and
Collections with respect thereto) to secure the repayment of all amounts
advanced to such Seller hereunder with accrued interest thereon, and this
Agreement shall be deemed to be a security agreement.
SECTION 5.04. Repurchase. Upon notice from Purchaser, each Seller
----------
shall purchase any and all Receivables transferred hereunder by such Seller from
time to time which thereafter become subject to Dilution or contribute in
respect thereof a Receivable (a "Substituted Receivable"). The purchase price
for such purchased Receivables or Outstanding Balance of any Substituted
Receivable shall be equal to the Outstanding Balance of such Receivables at the
time of such purchase by the Seller.
ARTICLE VI
ADMINISTRATION AND COLLECTION
SECTION 6.01. Designation of Servicer. The servicing, administration
-----------------------
and collection of the Transferred Receivables shall be conducted by such Person
(the "Servicer") so designated hereunder from time to time. Until the Purchaser
--------
or its assignee gives notice to the Parent of the designation of a new Servicer,
the Parent is hereby designated as, and hereby agrees to perform the duties and
obligations of, the Servicer pursuant to the terms hereof. The Parent agrees
that such notice may be given at any time in the Purchaser's or assignee's
discretion. Upon the Parent's receipt of such notice, the Parent agrees that it
will terminate its activities as Servicer hereunder in a manner which the
Purchaser (or its designee) believes will facilitate the transition of the
performance of such activities to the new Servicer, and the Parent shall use its
best efforts to assist the Purchaser (or its designee) to take over the
servicing, administration and collection of the Transferred Receivables,
including, without limitation, providing access to and copies of all computer
tapes or disks and other documents or instruments that evidence or relate to
Transferred Receivables maintained in its capacity as Servicer and access to all
employees and officers of the Parent responsible with respect thereto. The
Purchaser at any time after giving such notice may designate as Servicer any
Person (including itself) to succeed the Parent or any successor Servicer, if
such Person shall consent and agree to the terms hereof. The Servicer may, with
the prior consent of the Purchaser, subcontract with any other Person for the
servicing,
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<PAGE>
[Purchase and Contribution Agreement]
administration or collection of Transferred Receivables. Any such subcontract
shall not affect the Servicer's liability for performance of its duties and
obligations pursuant to the terms hereof.
SECTION 6.02. Duties of Servicer. (a) The Servicer shall take or cause
------------------
to be taken all such actions as may be necessary or advisable to collect each
Transferred Receivable from time to time, all in accordance with applicable
laws, rules and regulations, with reasonable care and diligence, and in
accordance with the Credit and Collection Policy. The Purchaser hereby appoints
the Servicer, from time to time designated pursuant to Section 6.01, as agent to
enforce its ownership and other rights in the Transferred Receivables, the
Related Security and the Collections with respect thereto. In performing its
duties as Servicer, the Servicer shall exercise the same care and apply the same
policies as it would exercise and apply if it owned the Transferred Receivables
and shall act in the best interests of the Purchaser and its assignees.
(b) Prior to the 15th day of each fiscal month, the Servicer shall
prepare and forward to the Purchaser (i) if requested by the Purchaser, a
Seller Report, relating to all then outstanding Transferred Receivables,
and the Related Security and Collections with respect thereto, in each
case, as of the close of business of the Servicer on the last day of the
immediately preceding month, and (ii) if requested by the Purchaser, a
listing by Obligor of all Transferred Receivables correlating Purchased
Receivables and Purchases, together with an aging report of such
Transferred Receivables.
(c) If no Event of Termination or Incipient Event of Termination shall
have occurred and be continuing, the Parent, while it is the Servicer, may,
in accordance with the Credit and Collection Policy, extend the maturity or
adjust the Outstanding Balance of any Transferred Receivable as the Parent
deems appropriate to maximize Collections thereof.
(d) Each Seller shall deliver to the Servicer, and the Servicer shall
hold in trust for such Seller and the Purchaser in accordance with their
respective interests, all documents, instruments and records (including,
without limitation, computer tapes or disks) which evidence or relate to
Transferred Receivables.
(e) The Servicer shall as soon as practicable following receipt turn
over to the applicable Seller any cash collections or other cash proceeds
received with respect to Receivables not constituting Transferred
Receivables, less, in the event the Parent is not the Servicer, all
reasonable and appropriate out-of-pocket costs and expenses of the Servicer
of servicing, collecting and administering the Receivables to the extent
not covered by the Servicer Fee received by it.
(f) The Servicer also shall perform the other obligations of the
"Servicer" set forth in this Agreement with respect to the Transferred
Receivables.
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[Purchase and Contribution Agreement]
SECTION 6.03. Servicer Fee. The Purchaser shall pay to the Servicer, so
------------
long as it is acting as the Servicer hereunder, a periodic collection fee (the
"Servicer Fee") of 0.50% per annum (or, in the case of a Servicer other than
- -------------
Parent or any Affiliate thereof, such higher amount, if any, not to exceed 1.00%
per annum) on the average daily outstanding Purchaser Invested Amount with
respect to the Purchased Receivables, payable on the tenth day of each month
(or, if such day is not a Business Day, the immediately succeeding Business Day)
or such other day during each fiscal month as the Purchaser and the Servicer
shall agree.
SECTION 6.04. Certain Rights of the Purchaser. (a) The Purchaser may, at
-------------------------------
any time, give notice of ownership and/or direct the Obligors of Transferred
Receivables and any Person obligated on any Related Security, or any of them,
that payment of all amounts payable under any Transferred Receivable shall be
made directly to the Purchaser or its designee. Each Seller hereby transfers to
the Purchaser (and its assigns and designees) the exclusive ownership and
control of the Lock-Box Accounts maintained by such Seller for the purpose of
receiving Collections.
(b) Each Seller shall, at any time upon the Purchaser's request and at
such Seller's expense, give notice of such ownership to each Obligor of
Transferred Receivables of such Seller and direct that payments of all
amounts payable under such Transferred Receivables be made directly to the
Purchaser or its designee.
(c) At the Purchaser's request and at the Sellers' expense, the
Sellers and the Servicer shall (A) assemble all of the documents,
instruments and other records (including, without limitation, computer
tapes and disks) that evidence or relate to the Transferred Receivables,
and the related Contracts and Related Security, or that are otherwise
necessary or desirable to collect the Transferred Receivables, and shall
make the same available to the Purchaser at a place selected by the
Purchaser or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting Collections of
Transferred Receivables in a manner acceptable to the Purchaser and,
promptly upon receipt, remit all such cash, checks and instruments, duly
indorsed or with duly executed instruments of transfer, to the Purchaser or
its designee. The Purchaser shall also have the right to make copies of
all such documents, instruments and other records at any time.
(d) Each Seller authorizes the Purchaser to take any and all steps in
such Seller's name and on behalf of such Seller that are necessary or
desirable, in the determination of the Purchaser, to collect amounts due
under the Transferred Receivables, including, without limitation, endorsing
such Seller's name on checks and other instruments representing Collections
of Transferred Receivables and enforcing the Transferred Receivables and
the Related Security and related Contracts.
25
<PAGE>
[Purchase and Contribution Agreement]
SECTION 6.05. Rights and Remedies. (a) If a Seller or the Servicer fails
-------------------
to perform any of its obligations under this Agreement, the Purchaser may (but
shall not be required to) itself perform, or cause performance of, such
obligation, and, if such Seller (as Servicer or otherwise) fails to so perform,
the costs and expenses of the Purchaser incurred in connection therewith shall
be payable by the Sellers as provided in Section 8.01 or Section 9.04 as
applicable.
(b) Each Seller shall perform all of its obligations under the
Contracts related to the Transferred Receivables of such Seller to the same
extent as if the Seller had not sold or contributed Receivables hereunder
and the exercise by the Purchaser of its rights hereunder shall not relieve
the Seller from such obligations or its obligations with respect
to the Transferred Receivables. The Purchaser shall not have any
obligation or liability with respect to any Transferred Receivables or
related Contracts, nor shall the Purchaser be obligated to perform any of
the obligations of such Seller thereunder.
(c) Each Seller shall cooperate with the Servicer in collecting
amounts due from Obligors in respect of the Transferred Receivables.
(d) Each Seller hereby grants to Servicer an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to
take in the name of such Seller all steps necessary or advisable to
endorse, negotiate or otherwise realize on any writing or other right of
any kind held or transmitted by such Seller or transmitted or received by
Purchaser (whether or not from such Seller) in connection with any
Transferred Receivable.
SECTION 6.06. Transfer of Records to Purchaser. Each Purchase and
--------------------------------
contribution of Receivables hereunder shall include the transfer to the
Purchaser of all of the applicable Seller's right and title to and interest in
the records relating to such Receivables and shall include an irrevocable non-
exclusive license to the use of such Seller's computer software system to access
and create such records. Such license shall be without royalty or payment of
any kind, is coupled with an interest, and shall be irrevocable until all of the
Transferred Receivables are either collected in full or become Defaulted
Receivables.
Each Seller shall take such action requested by the Purchaser, from time to
time hereafter, that may be necessary or appropriate to ensure that the
Purchaser has an enforceable ownership interest in the records relating to the
Transferred Receivables and rights (whether by ownership, license or sublicense)
to the use of such Seller's computer software system to access and create such
records.
In recognition of each Seller's need to have access to the records
transferred to the Purchaser hereunder, the Purchaser hereby grants to each
Seller an irrevocable license to access
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[Purchase and Contribution Agreement]
such records in connection with any activity arising in the ordinary course of
such Seller's business or in performance of its duties as Servicer, provided
that (i) such Seller shall not disrupt or otherwise interfere with the
Purchaser's use of and access to such records during such license period and
(ii) such Seller consents to the assignment and delivery of the records
(including any information contained therein relating to such Seller or its
operations) to any assignees or transferees of the Purchaser provided they agree
to hold such records confidential.
ARTICLE VII
EVENTS OF TERMINATION
SECTION 7.01. Events of Termination. If any of the following events
---------------------
("Events of Termination") shall occur and be continuing:
- -----------------------
(a) The Servicer (if the Parent or any of its Affiliates) (i) shall
fail to perform or observe any term, covenant or agreement under this
Agreement (other than as referred to in clause (ii) of this subsection (a))
and such failure shall remain unremedied for ten Business Days or (ii)
shall fail to make when due any payment or deposit to be made by it under
this Agreement and such failure shall remain unremedied for five Business
Days; or
(b) Any Seller shall fail (i) to transfer to the Purchaser when
requested any rights, pursuant to this Agreement, which the Seller then has
as Servicer, or (ii) to make any payment required under Section 2.04(a) or
2.04(b) and such failure shall remain unremedied for five Business Days; or
(c) Any representation or warranty made or deemed made by a Seller (or
any of its officers) under or in connection with this Agreement or any
information or report delivered by such Seller pursuant to this Agreement
shall prove to have been incorrect or untrue in any material respect when
made or deemed made or delivered; or
(d) Any Seller shall fail to perform or observe any other term,
covenant or agreement contained in this Agreement on its part to be
performed or observed and any such failure shall remain unremedied for 10
days after written notice thereof shall have been given to such Seller by
the Purchaser; or
(e) Any Seller or any of its subsidiaries shall fail to pay any
principal of or premium or interest on any of its Indebtedness which is
outstanding in a principal amount of at least $5,000,000 in the aggregate
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and
27
<PAGE>
[Purchase and Contribution Agreement]
such failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Indebtedness; or
any other event shall occur or condition shall exist under any agreement or
instrument relating to any such Indebtedness and shall continue after the
applicable grace period, if any, specified in such agreement or instrument,
if the effect of such event or condition is to accelerate, or to permit the
acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be
prepaid (other than by a regularly scheduled required prepayment),
redeemed, purchased or defeased, or an offer to repay, redeem, purchase or
defease such Indebtedness shall be required to be made, in each case prior
to the stated maturity thereof; or
(f) Any Purchase or contribution of Receivables hereunder, the Related
Security and the Collections with respect thereto shall for any reason
cease to constitute valid and perfected ownership of such Receivables,
Related Security and Collections free and clear of any Lien; or
(g) Any Seller or any of its subsidiaries shall generally not pay its
Indebtedness as such Indebtedness become due, or shall admit in writing its
inability to pay its Indebtedness generally, or shall make a general
assignment for the benefit of creditors; or any proceeding shall be
instituted by or against such Seller or any of its subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation, winding up,
reorganization, arrangement, adjustment, protection, relief, or composition
of it or its Indebtedness under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or other
similar official for it or for any substantial part of its property and, in
the case of any such proceeding instituted against it (but not instituted
by it), either such proceeding shall remain undismissed or unstayed for a
period of 60 days, or any of the actions sought in such proceeding
(including, without limitation, the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property) shall occur;
or the Seller or any of its subsidiaries/*/ shall take any corporate action
to authorize any of the actions set forth above in this subsection (g); or
(h) A Pay-Out Event or Series 1996-1 Pay-Out Event shall have occurred
under the Pooling and Servicing Agreement;
(i) As of the last day of any calendar week, the aggregate Purchase
Price paid by the Purchaser for such week shall be less than the Minimum
Return.
then, and in any such event, the Purchaser may, by notice to the Parent, take
either or both of the following actions: (x) declare the Facility Termination
Date to have occurred (in which case the
28
<PAGE>
[Purchase and Contribution Agreement]
Facility Termination Date shall be deemed to have occurred) and (y) without
limiting any right under this Agreement to replace the Servicer, designate
another Person to succeed the Parent as Servicer; provided, that, automatically
--------
upon the occurrence of any event (without any requirement for the passage of
time or the giving of notice) described in paragraph (g) of this Section 7.01,
the Facility Termination Date shall occur, the Parent (if it is then serving as
the Servicer) shall cease to be the Servicer, and the Purchaser (or its assigns
or designees) shall become the Servicer. Upon any such declaration or
designation or upon such automatic termination, the Purchaser shall have, in
addition to the rights and remedies under this Agreement, all other rights and
remedies with respect to the Receivables provided after default under the UCC
and under other applicable law, which rights and remedies shall be cumulative.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.01. Indemnities by the Sellers. Without limiting any other
--------------------------
rights which the Purchaser may have hereunder or under applicable law, the
Sellers, jointly and severally, hereby agree to indemnify the Purchaser and its
assigns and transferees (each, an "Indemnified Party") from and against any and
-----------------
all damages, claims, losses, liabilities and related costs and expenses,
including reasonable attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts"), awarded against or
-------------------
incurred by any Indemnified Party arising out of or as a result of:
(i) any representation or warranty or statement made or deemed
made by a Seller (or any of its officers) under or in connection with this
Agreement, which shall have been incorrect in any material respect when
made;
(ii) the failure by a Seller to comply with any applicable law,
rule or regulation with respect to any Transferred Receivable or the
related Contract; or the failure of any Transferred Receivable or the
related Contract to conform to any such applicable law, rule or regulation;
(iii) the failure to vest in the Purchaser absolute ownership of
the Receivables that are, or that purport to be, the subject of a Purchase
or contribution under this Agreement and the Related Security and
Collections in respect thereof, free and clear of any Lien;
(iv) the failure of a Seller to have filed, or any delay in
filing, financing statements or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable laws with
respect to any Receivables that are, or that
29
<PAGE>
[Purchase and Contribution Agreement]
purport to be, the subject of a Purchase or contribution under this
Agreement and the Related Security and Collections in respect thereof,
whether at the time of any Purchase or contribution or at any subsequent
time;
(v) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of
any Receivable that is, or that purports to be, the subject of a Purchase
or contribution under this Agreement (including, without limitation, a
defense based on such Receivable or the related Contract not being a legal,
valid and binding obligation of such Obligor enforceable against it in
accordance with its terms), or any other claim resulting from the sale of
the merchandise or services related to such Receivable or the furnishing or
failure to furnish such merchandise or services or relating to collection
activities with respect to such Receivable (if such collection activities
were performed by the Seller acting as Servicer) except to the extent that
such dispute, claim, offset or defense results solely from actions or
failures to act of the Purchaser or its assigns;
(vi) any failure of a Seller or the Servicer to perform its
duties or obligations in accordance with the provisions hereof or to
perform its duties or obligations under any Contract related to a
Transferred Receivable;
(vii) any products liability or other claim arising out of or
in connection with merchandise, insurance or services which are the subject
of any Contract;
(viii) the commingling of Collections of Transferred Receivables
by a Seller or a designee of such Seller at any time with other funds of
such Seller or an Affiliate of such Seller;
(ix) any investigation, litigation or proceeding related to
this Agreement or the use of proceeds of Purchases or the ownership of
Receivables, the Related Security, or Collections with respect thereto or
in respect of any Receivable, Related Security or Contract, except to the
extent any such investigation, litigation or proceeding relates to a
possible matter involving an Indemnified Party for which neither the Seller
nor any of its Affiliates is at fault;
(x) any failure of any Seller to comply with its covenants
contained in Section 5.01;
(xi) any Servicer Fees or other costs and expenses payable
to any replacement Servicer, to the extent in excess of the Servicer Fees
payable to the Seller hereunder;
30
<PAGE>
[Puchase and Contribution Agreement]
(xii) any claim brought by any Person other than an Indemnified
Party arising from any activity by the Sellers or any Affiliate of any
Seller in servicing, administering or collecting any Transferred
Receivable; or
(xiii) any Dilution with respect to any Transferred Receivable.
It is expressly agreed and understood by the parties hereto (i) that the
foregoing indemnification is not intended to, and shall not, constitute a
guarantee of the collectibility or payment of the Transferred Receivables and
(ii) that nothing in this Section 8.01 shall require a Seller to indemnify any
Person (A) for Receivables which are not collected, not paid or uncollectible on
account of the insolvency, bankruptcy, or financial inability to pay of the
applicable Obligor, (B) for damages, losses, claims or liabilities or related
costs or expenses resulting from such Person's gross negligence or willful
misconduct, or (C) for any income taxes or franchise taxes incurred by such
Person arising out of or as a result of this Agreement or in respect of any
Transferred Receivable or any Contract.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision of
----------------
this Agreement or consent to any departure by a Seller therefrom shall be
effective unless in a writing signed by the Purchaser and consented to by its
assignees and, in the case of any amendment, also signed by such Seller, and
then such amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part
of the Purchaser to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
SECTION 9.02. Notices, Etc. All notices and other communications
-------------
hereunder shall, unless otherwise stated herein, be in writing (which shall
include facsimile communication) and be faxed or delivered, to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile shall be
effective when sent (and shall be followed by hard copy sent by regular mail),
and notices and communications sent by other means shall be effective when
received.
SECTION 9.03. Binding Effect; Assignability. (a) This Agreement shall be
-----------------------------
binding upon and inure to the benefit of the Sellers, the Purchaser and their
respective successors and assigns; provided, however, that no Seller may assign
-------- -------
its rights or obligations hereunder or
31
<PAGE>
[Purchase and Contribution Agreement]
any interest herein without the prior written consent of the Purchaser. In
connection with any sale or assignment by the Purchaser of all or a portion of
the Transferred Receivables, the buyer or assignee, as the case may be, shall,
to the extent of its purchase or assignment, have all rights of the Purchaser
under this Agreement (as if such buyer or assignee, as the case may be, were the
Purchaser hereunder) except to the extent specifically provided in the agreement
between the Purchaser and such buyer or assignee, as the case may be.
(b) This Agreement shall create and constitute the continuing
obligations of the parties hereto in accordance with its terms, and shall
remain in full force and effect until such time, after the Facility
Termination Date, when all of the Transferred Receivables are either
collected in full or become Defaulted Receivables; provided,
--------
however, that rights and remedies with respect to any breach of any
-------
representation and warranty made by a Seller pursuant to Article IV and the
provisions of Article VIII and Sections 9.04, 9.05 and 9.06 shall be
continuing and shall survive any termination of this Agreement.
SECTION 9.04. Costs, Expenses and Taxes. (a) In addition to the
-------------------------
rights of indemnification granted to the Purchaser pursuant to Article VIII
hereof, the Parent agrees to pay on demand all costs and expenses in connection
with the preparation, execution and delivery of this Agreement and the other
documents and agreements to be delivered hereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Purchaser with respect thereto and with respect to advising the Purchaser as to
its rights and remedies under this Agreement, and the Sellers agree, jointly and
severally, to pay all costs and expenses, if any (including reasonable counsel
fees and expenses), in connection with the enforcement of this Agreement and the
other documents to be delivered hereunder excluding, however, any costs of
--------- -------
enforcement or collection of Transferred Receivables.
(b) In addition, the Sellers agree to pay any and all stamp and other
taxes and fees payable in connection with the execution, delivery, filing
and recording of this Agreement or the other documents or agreements to be
delivered hereunder, and the Sellers, jointly and severally, agree to save
each Indemnified Party harmless from and against any liabilities with
respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
SECTION 9.05. No Proceedings. Each Seller hereby agrees that it will
--------------
not institute against the Purchaser any proceeding of the type referred to in
Section 7.01(g) so long as there shall not have elapsed one year plus one day
since the later of (i) the Facility Termination Date and (ii) the date on which
all of the Transferred Receivables are either collected in full or become
Defaulted Receivables.
32
<PAGE>
[Purchase and Contribution Agreement]
SECTION 9.06. Confidentiality. Unless otherwise required by applicable
---------------
law, each party hereto agrees to maintain the confidentiality of this Agreement
in communications with third parties and otherwise; provided that this Agreement
may be disclosed to (i) third parties to the extent such disclosure is made
pursuant to a written agreement of confidentiality in form and substance
reasonably satisfactory to the other party hereto, and (ii) such party's legal
counsel and auditors and the Purchaser's assignees, if they agree in each case
to hold it confidential.
SECTION 9.07. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS PRINCIPLES THEREOF), EXCEPT TO THE EXTENT THAT
THE PERFECTION OF THE PURCHASER'S OWNERSHIP OF OR SECURITY INTEREST IN THE
RECEIVABLES OR REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 9.08. Third Party Beneficiary. Each of the parties hereto hereby
-----------------------
acknowledges that the Purchaser may assign all or any portion of its rights
under this Agreement and that such assignees may (except as otherwise agreed to
by such assignees) further assign their rights under this Agreement, and the
Sellers hereby consent to any such assignments. All such assignees, including
parties to the Pooling and Servicing Agreement in the case of assignment to such
parties, shall be third party beneficiaries of, and shall be entitled to enforce
the Purchaser's rights and remedies under, this Agreement to the same extent as
if they were parties thereto, except to the extent specifically limited under
the terms of their assignment.
SECTION 9.09. Execution in Counterparts. This Agreement may be executed
-------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.
[SIGNATURE PAGES TO FOLLOW]
33
<PAGE>
[Purchase and Contribution Agreement]
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.
SELLERS: MAIL-WELL I CORPORATION
By:________________________________________________
Title:_________________________________________
Address:
23 Inverness Way East
Engelwood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
WISCO ENVELOPE CORP.
By:________________________________________________
Title:_________________________________________
Address:
1509 North Washington Street
Tullahoma, TN 37388
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
34
<PAGE>
[Purchase and Contribution Agreement]
PAVEY ENVELOPE AND TAG CORP.
By:________________________________________________
Title:_________________________________________
Address:
25 Linden Avenue East
Jersey City, NJ 07305
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
MAIL-WELL WEST, INC.
By:________________________________________________
Title:_________________________________________
Address:
221 North 48th Street
Phoenix, AZ 85063
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
WISCO II, L.L.C.
By:________________________________________________
Title:_________________________________________
Address:
1509 North Washington Street
Tullahoma, TN 37388
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
35
<PAGE>
[Purchase and Contribution Agreement]
MAIL-WELL CANADA HOLDINGS, INC.
By:________________________________________________
Title:_________________________________________
Address:
23 Inverness Way East
Englewood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
GRAPHIC ARTS CENTER, INC.
By:________________________________________________
Title:_________________________________________
Address:
2000 North West Wilson Street
Portland, OR 97209
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
WISCO III, L.L.C.
By:________________________________________________
Title:_________________________________________
Address:
23 Inverness Way East
Englewood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
36
<PAGE>
[Purchase and Contribution Agreement]
SUPREMEX INC.
By:________________________________________________
Title:_________________________________________
Address:
Innova Montreal
345 Montee de Liesse - St. Laurent, Quebec H4T IP7
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
INNOVA ENVELOPE INC.
By:________________________________________________
Title:_________________________________________
Address:
56 Steelcase Road West
Markham, Ontario L3R 1B2
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
PURCHASER: MAIL-WELL TRADE RECEIVABLES
CORPORATION
By:________________________________________________
Title:_________________________________________
Address:
23 Inverness Way East
Englewood, CO 80112, Suite 160
Attention:
Facsimile No.: (303) 397-7401
37
<PAGE>
[Purchase and Contribution Agreement]
EXHIBIT A
[Intentionally Omitted.]
A-1
<PAGE>
[Purchase and Contribution Agreement]
EXHIBIT B
CREDIT AND COLLECTION POLICY
B-1
<PAGE>
[Purchase and Contribution Agreement]
EXHIBIT C
LOCK-BOX BANKS
C-1
<PAGE>
[Purchase and Contribution Agreement]
SCHEDULE 1
TRADENAMES
1. American Mail-Well Envelope
2. Mail-Well Envelope
3. Graphic Arts Center
4. Supermex
5. Unique Envelope
6. Innova Envelope
7. Classic Envelope
8. Quality Park Products
9. Pavey
10. Wisco
11. Wisco Envelope
12. Mail-Well West
13. Buffalo Envelope
14. Envelopes West
15. Southwest Envelope
S-1
<PAGE>
================================================================================
MAIL-WELL TRADE RECEIVABLES CORPORATION,
Seller
MAIL-WELL I CORPORATION,
Servicer
and
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
Trustee
MAIL-WELL RECEIVABLES MASTER TRUST
POOLING AND SERVICING AGREEMENT
Dated as of November 15, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I Definitions.................................................................1
Section 1.01. Definitions.....................................................................1
Section 1.02. Other Definitional Provisions..................................................17
ARTICLE II Conveyance of Receivables..................................................17
Section 2.01. Conveyance of Receivables......................................................17
Section 2.02. Acceptance of Trustee..........................................................18
Section 2.03. Representations and Warranties of the Seller Relating to the Seller............19
Section 2.04. Representations and Warranties of the Seller Relating to the Agreement and any
Supplement and the Receivables.................................................21
Section 2.05. Reassignment of Receivables in Trust Portfolio.................................23
Section 2.06. Covenants of the Seller........................................................24
Section 2.07. Covenants of the Seller with Respect to the Purchase Agreement.................27
Section 2.08. Purchase Agreement.............................................................27
ARTICLE III Administration and Servicing of Receivables................................28
Section 3.01. Acceptance of Appointment and Other Matters Relating to the Services...........28
Section 3.02. Servicing Compensation.........................................................28
Section 3.03. Representations, Warranties and Covenants of the Servicer......................29
Section 3.04. Servicer Reports to the Trustee................................................31
Section 3.05. Annual Certificate of Servicer.................................................31
Section 3.06. Semi-Annual Agreed-Upon Procedures Report of Independent Public Accountants;
Copies of Reports Available....................................................32
Section 3.07. Tax Treatment..................................................................32
Section 3.08. Notices to Mail-Well I Corporation.............................................32
Section 3.09. Adjustments....................................................................33
ARTICLE IV Rights of Certificateholders and Allocation and Application of Collections.
Section 4.01. Rights of Certificateholders...................................................33
Section 4.02. Establishment of Lockboxes, Lockbox Accounts, the Concentration Account,
the Collection Account, the Canadian Accounts, the Canadian Collection
Account and Special Funding Account............................................34
Section 4.03. Collections and Allocations....................................................38
ARTICLE V Distributions and Reports to Certificateholders............................39
ARTICLE VI The Certificates...........................................................39
Section 6.01. The Certificates...............................................................39
Section 6.02. Authentication of Certificates.................................................39
Section 6.03. New Issuances..................................................................40
Section 6.04. Registration of Transfer and Exchange of Certificates..........................40
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates..............................43
Section 6.06. Persons Deemed Owners..........................................................43
Section 6.07. Appointment of Paying Agent....................................................44
Section 6.08. Access to List of Registered Certificateholders' Names and Addresses...........44
Section 6.09. Authenticating Agent...........................................................45
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 6.10. Book-Entry Certificates........................................................45
Section 6.11. Notices to Clearing Agency.....................................................46
Section 6.12. Definitive Certificates........................................................46
Section 6.13. Meetings of Certificateholders.................................................47
Section 6.14. Changes in Amount of Variable Funding Certificates.............................48
ARTICLE VII Other Matters Relating to the Seller.......................................49
Section 7.01. Liability of the Seller........................................................49
Section 7.02. Merger or Consolidation of, or Assumption of the Obligations of, the Seller....49
Section 7.03. Limitations on Liability of the Seller.........................................50
Section 7.04. Liabilities....................................................................50
Section 7.05. Transferability of Seller Certificates.........................................51
Section 7.06. Limit on Certain Holders.......................................................51
Section 7.07 Seller Indemnification of the Trust, etc.......................................51
ARTICLE VIII Other Matters Relating to the Servicer.....................................51
Section 8.01. Liability of the Servicer......................................................51
Section 8.02. Merger or Consolidation of, or Assumption of the Obligations of, the Servicer..51
Section 8.03. Limitation on Liability of the Servicer and Others.............................52
Section 8.04. Servicer Indemnification of the Trust and the Trustee..........................53
Section 8.05. The Servicer Not to Resign.....................................................53
Section 8.06. Access to Certain Documentation and Information Regarding the Receivables......53
Section 8.07. Delegation of Duties...........................................................54
Section 8.08. Examination of Records.........................................................54
ARTICLE IX Pay-Out Events.............................................................54
Section 9.01. Pay-Out Events.................................................................54
Section 9.02. Additional Rights upon the Occurrence of Certain Events........................56
ARTICLE X Servicer Defaults..........................................................57
Section 10.01. Servicer Defaults..............................................................57
Section 10.02. Trustee to Act: Appointment of Successor......................................58
Section 10.03. Notification to Certificateholders.............................................59
ARTICLE XI The Trustee................................................................60
Section 11.01. Duties of Trustee..............................................................60
Section 11.02. Certain Matters Affecting the Trustee..........................................61
Section 11.03. Trustee Not Liable for Recitals in Certificates................................62
Section 11.04. Trustee May Own Certificates...................................................62
Section 11.05. The Seller To Pay Trustee's Fees and Expenses..................................62
Section 11.06. Eligibility Requirements for Trustee...........................................63
Section 11.07. Resignation or Removal of Trustee..............................................63
Section 11.08. Successor Trustee..............................................................64
Section 11.09. Merger or Consolidation of Trustee.............................................64
Section 11.10. Appointment of Co-Trustee or Separate Trustee..................................64
Section 11.11. Tax Return.....................................................................65
Section 11.12. Trustee May Enforce Claims Without Possession of Certificates..................66
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Section 11.13. Suits for Enforcement..........................................................66
Section 11.14. Rights of Certificateholders to Direct Trustee.................................66
Section 11.15. Representations and Warranties of Trustee......................................66
Section 11.16. Maintenance of Office or Agency................................................67
Section 11.17. Confidentiality................................................................67
ARTICLE XII Termination................................................................67
Section 12.01. Termination of Trust...........................................................67
Section 12.02. Final Distribution.............................................................67
Section 12.03. Seller's Termination Rights....................................................68
Section 12.04. Defeasance.....................................................................69
ARTICLE XIII Miscellaneous Provisions...................................................70
Section 13.01. Amendment; Waiver of Past Defaults.............................................70
Section 13.02. Protection of Right, Title and Interest to Trust...............................71
Section 13.03. Limitation on Rights of Certificateholders.....................................72
Section 13.04. Governing Law..................................................................72
Section 13.05. Notices, Payments..............................................................72
Section 13.06. Rule 144A Information..........................................................74
Section 13.07. Severability of Provisions.....................................................74
Section 13.08. Certificates Nonassessable and Fully Paid......................................74
Section 13.09. Further Assurances.............................................................74
Section 13.10. Nonpetition Covenant...........................................................74
Section 13.11. No Waiver; Cumulative Remedies.................................................74
Section 13.12. Counterparts...................................................................75
Section 13.13. Third-Party Beneficiaries......................................................75
Section 13.14. Actions by Certificateholders..................................................75
Section 13.15. Merger and Integration.........................................................75
Section 13.16. Headings.......................................................................75
Section 13.17. No Proceedings.................................................................75
</TABLE>
EXHIBITS
Exhibit A Form of Seller Certificate
Exhibit B-1 Form of Daily Report
Exhibit B-2 Form of Weekly Report
Exhibit C Form of Monthly Settlement Report
Exhibit D Form of Annual Servicer's Certificate
Exhibit E-1 Private Placement Legend
Exhibit E-2 Representation Letter
Exhibit E-3 ERISA Legend
Exhibit F Form of Semi-Annual Agreed-Upon Procedures Report
SCHEDULES
Schedule 1 Credit and Collection Policy
Schedule 2 Schedule of Monthly Periods
Schedule 3 Schedule of Monthly Settlement Report Dates
iii
<PAGE>
POOLING AND SERVICING AGREEMENT, dated as of November 15, 1996, among MAIL-
WELL TRADE RECEIVABLES CORPORATION, a Colorado corporation, as Seller, MAIL-WELL
I CORPORATION, a Delaware corporation, as Servicer, and NORWEST BANK COLORADO,
NATIONAL ASSOCIATION, as Trustee.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties, the Certificateholders
and any Series Enhancer to the extent provided herein and in any Supplement:
ARTICLE I
Definitions
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Section 1.01. Definitions. Whenever used in this Agreement, the following
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words and phrases shall have the following meanings, and the definitions of such
terms are applicable to the singular as well as the plural forms of such terms
and to the masculine as well as to the feminine and neuter genders of such
terms:
"Accumulation Period" shall mean, with respect to any Series, the period,
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if any, specified as such in the related Supplement.
"Act" shall mean the Securities Act of 1933, as amended.
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"Affiliate" shall mean, with respect to any specified Person, any other
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Person controlling or controlled by or under common control with such specified
Person. For the purpose of this definition, "control" shall mean the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise and the
terms "controlling" and "controlled" have meaning correlative to the foregoing.
"Affiliated Obligor" shall mean any Obligor that is an Affiliate of another
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Obligor.
"Agreement" shall mean this Pooling and Servicing Agreement and all
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amendments hereof and supplements hereto, including, with respect to any Series
or Class, the related Supplement.
"Amortization Period" shall mean, with respect to any Series or any Class
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within a Series, a period following the Revolving Period, which shall be the
controlled amortization period, the principal amortization period, the early
amortization period, the optional amortization period, the limited amortization
period or other amortization period, in each case as defined with respect to
such Series in the related Supplement.
"Applicants" shall have the meaning specified in Section 6.08.
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"Appointment Date" shall have the meaning specified in Section 9.02(a).
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"Authorized Newspaper" shall mean any newspaper or newspapers of general
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circulation in the Borough of Manhattan, The City of New York printed in the
English language and customarily published on each Business Day at such place,
whether or not published on Saturdays, Sundays or holidays.
<PAGE>
"Bearer Certificate" shall have the meaning specified in Section 6.01.
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"Benefit Plan" shall have the meaning specified in Section 6.04(c).
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"Billing Date" shall mean the date on which the invoice with respect to a
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Receivable was generated.
"Book-Entry Certificates" shall mean beneficial interests in the Investor
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Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 6.10.
"Business Day" shall mean any day other than (a) a Saturday or Sunday, (b)
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any other day on which national banking associations or state banking
institutions in New York, New York or Denver, Colorado are authorized or
obligated by law, executive order or governmental decree to be closed or (c) for
purposes of any particular Series, any other day specified in the related
Supplement.
"Canadian Account" shall mean have the meaning specified in Section 4.02.
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"Canadian Collection Account" shall have the meaning specified in Section
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4.02 and shall include Canadian Collection Subaccounts.
"Canadian Collection Subaccount" shall have the meaning specified in
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Section 4.02.
"Canadian person" shall mean a citizen or resident of Canada, a
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corporation, partnership or other entity created or organized in or under the
laws of Canada or any province thereof or doing business in Canada or any
province thereof.
"Canadian Receivables" shall mean Receivables which are (i) originated by
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an Originator which is a Canadian person and (ii) payable in Canadian Dollars
pursuant to the terms of the Contract with respect to such Receivables.
"Certificate" with respect to any Series, shall have the meaning specified
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in the related Supplement.
"Certificateholder" or "Holder" shall mean an Investor Certificateholder or
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a Person in whose name the Seller Certificate is registered.
"Certificateholders' Interest" shall have the meaning specified in Section
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4.01.
"Certificate Owner" shall mean, with respect to a Book-Entry Certificate,
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the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Rate" shall mean, with respect to any Series or Class, the
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certificate rate specified therefor in the related Supplement.
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"Certificate Register" shall mean the register maintained pursuant to
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Section 6.04, providing for the registration of the Registered Certificates and
the Seller Certificate and transfers and exchanges thereof.
"Class" shall mean, with respect to any Series, any one of the classes of
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Investor Certificates of that Series.
"Clearing Agency" shall mean an organization registered as a "clearing
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agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" shall mean a broker, dealer, bank, other
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financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" shall mean, with respect to any Series, the closing date
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specified in the related Supplement.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
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to time.
"Collection Account" shall have the meaning specified in Section 4.02 and
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shall include Collection Subaccounts.
"Collection Subaccount" shall have the meaning specified in Section 4.02.
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"Collections" shall mean, with respect to any Receivable, all cash
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collections and other cash proceeds of such Receivable, including, without
limitation, all cash proceeds of Related Security with respect to such
Receivable.
"Commission" shall mean the Securities and Exchange Commission.
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"Concentration Limit" for any Obligor means at any time (a) 5% in the case
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of an Obligor rated at least A-1 or its equivalent by the Rating Agencies, (b)
3% in the case of an Obligor rated below A-1 or its equivalent by the Rating
Agencies but equal to or above A-2 or its equivalent by the Rating Agencies, (c)
2% in the case of an Obligor rated below A-2 or its equivalent by the Rating
Agencies but equal to or above A-3 or its equivalent by the Rating Agencies, (d)
2% in the case of an Obligor the short-term debt of which is not rated by the
Rating Agencies, (e) 0% in the case of any Obligor which is a Governmental
Entity to the extent that the Receivables of such Obligor cause the aggregate
Eligible Receivables of all Obligors which are Governmental Entities to exceed
5% of the aggregate Outstanding Balance of Eligible Receivables, (f)
notwithstanding clauses (a) through (e) above, 2% in the case of an Obligor that
is a Canadian person at any time that the sovereign debt rating of the
Commonwealth of Canada is rated below AA or its equivalent by the Rating
Agencies, (g) 0% in the case of any Obligor which is a Canadian person to the
extent that the Receivables of such Obligor cause the aggregate Eligible
Receivables of all Obligors which are Canadian persons to exceed 20% of the
aggregate Outstanding Balance of Eligible Receivables or (h) such other
percentage ("Special Concentration Limit") for such Obligor designated by the
Series Representative in a writing delivered to the Seller and consented to by
the Seller, which consent shall not be unreasonably withheld (unless such
Special Concentration Limit is designated by the Series Representative at the
request of a Rating Agency in which case such designation need not be consented
to by the Seller); provided that in the case of an Obligor with any Affiliated
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Obligor, the Concentration Limit shall be calculated as if such
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Obligor and such Affiliated Obligor are one Obligor; provided further that the
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Liquidity Agent or any Series Representative may cancel any Special
Concentration Limit upon three Business Days' notice to the Seller.
"Consolidated Fixed Charge Coverage Ratio" shall have the meaning specified
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in the Third Amended and Restated Credit Agreement, dated as of the date hereof,
among Mail-Well I Corporation, certain Affiliates thereof, Banque Paribas and
the Lenders named therein, as in existence on the date hereof, without giving
effect to any amendment of the definition of such term agreed to by the parties
to such agreement after the date hereof.
"Contract" shall mean an agreement between an Originator and an Obligor
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pursuant to or under which such Obligor shall be obligated to pay for
merchandise or services from time to time.
"Controlled Distribution Amount" with respect to any Series, shall have the
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meaning specified in the related Supplement.
"Corporate Trust Office" shall have the meaning specified in Section 11.16.
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"Coupon" shall have the meaning specified in Section 6.01.
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"Credit and Collection Policy" means those receivables credit and
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collection policies and practices of the Originators in effect on the date of
this Agreement and described in Schedule 1 hereto, as modified in compliance
with this Agreement.
"Daily Report" shall have the meaning specified in Section 3.04(a).
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"Debtor Relief Laws" shall mean the Bankruptcy Code of the United States of
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America and all other applicable liquidation, conservatorship, bankruptcy,
moratorium, rearrangement, receivership, insolvency, reorganization, suspension
of payments, readjustment of debt, marshalling of assets or similar debtor
relief laws of the United States, any state or any foreign country from time to
time in effect, affecting the rights of creditors generally.
"Default Ratio" means the ratio (expressed as a percentage) computed as of
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the last day of each Monthly Period by dividing (i) the sum of (a) the aggregate
Outstanding Balance of all Receivables that were unpaid 90-120 days after the
Billing Date therefor as of the end of the preceding Monthly Period and (b) the
aggregate Outstanding Balance of all Receivables that became Defaulted
Receivables during the preceding Monthly Period by (ii) the aggregate
Outstanding Balance of all Receivables created by the Originators during the
Monthly Period four months prior to such day.
"Defaulted Receivable" shall mean an Originator Receivable:
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(i) as to which any payment, or part thereof, remains unpaid for 150
or more days from the original Billing Date thereof;
(ii) as to which the Obligor thereof or any other Person obligated
thereon has taken any action, or suffered any event to occur, of the
type described in the definition of Insolvency Event; or
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(iii) which, consistent with the Credit and Collection Policy, would
be written off the applicable Originator's or the Seller's books as
uncollectible.
"Defeasance" shall have the meaning specified in Section 12.04.
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"Defeased Series" shall have the meaning specified in Section 12.04.
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"Definitive Certificates" shall have the meaning specified in Section
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6.10.
"Depositaries" shall mean the Person specified in the applicable
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Supplement, in its capacity as depositary for the respective accounts of any
Clearing Agency.
"Depository Agreement" shall mean, with respect to any Series or
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Class, the agreement among the Seller, the Trustee and the applicable Clearing
Agency.
"Designated Obligor" means, at any time, each Obligor; provided,
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however, that any Obligor shall cease to be a Designated Obligor upon three
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Business Days' notice by the Liquidity Agent to the Seller that the Liquidity
Agent and the Series Representative has determined in its reasonable business
judgment that such Obligor is no longer acceptable, and provided further that
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any Person added as an Obligor after the date hereof shall be judged to be
acceptable or not acceptable in the sole discretion of the Liquidity Agent and
the Series Representative.
"Determination Date" shall mean the third Business Day prior to each
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Distribution Date.
"Diluted Receivable" means on any date that portion of any Eligible
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Receivable which is either (a) reduced or canceled as a result of (i) any
failure by the applicable Originator to deliver any merchandise or services or
otherwise to perform under the underlying Contract, or (ii) any change in or
cancellation of any of the terms of such Contract or any other adjustment by the
applicable Originator which reduces the amount payable by the Obligor on the
related Eligible Receivable or (iii) any setoff in respect of any claim by the
Obligor thereof (whether such claim arises out of the same or a related
transaction or an undated transaction) or (b) subject to any specific dispute,
offset, counterclaim or defense whatsoever (except the potential discharge in
bankruptcy of the Obligor thereof); provided, that Diluted Receivables do not
include (x) contractual adjustments to the amount payable by an Obligor that are
eliminated from the Eligible Receivables balance sold to the Seller through a
reduction in the purchase price for the related Eligible Receivable or (y) any
portion of those Eligible Receivables for which a production prepayment has been
received.
"Dilution Factors" means with respect to the Receivables, any net
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credits, rebates, freight charges, cash discounts, volume discounts, cooperative
advertising expenses, royalty payments, warranties, cost of parts required to be
maintained by agreement (whether express or implied), warehouse and other
offsets, allowances, disputes, chargebacks, defective returns, other returned or
repossessed goods, inventory transfers, allowances for early payments and other
similar allowances that are made or coordinated with an Originator's usual
practices, in each case after, in the case of any Receivable, such Receivable
first became a "Receivable" hereunder; provided that any allowances or
adjustments in accordance with the Credit and Collection Policy made on account
of an Obligor's insolvency or inability to pay shall not constitute a Dilution
Factor.
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<PAGE>
"Dilution Ratio" means the ratio (expressed as a percentage) computed
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as of the last day of each Monthly Period by dividing the aggregate amount of
Diluted Receivables at the end of the preceding Monthly Period by the sales of
the Originators during the second Monthly Period preceding such day.
"Distribution Date" shall mean, unless otherwise specified in the
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Supplement for the related Series, the 15th day of each calendar month during
the term hereof, or, if such 15th day is not a Business Day, the next succeeding
Business Day.
"Eligible Deposit Account" shall mean either (a) a segregated account
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with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States or any one of the states thereof, including the District of
Columbia (or any domestic branch of a foreign bank), and acting as a trustee for
funds deposited in such account, so long as any of the securities of such
depository institution shall have a credit rating from each Rating Agency in one
of its generic credit rating categories which signifies investment grade.
"Eligible Institution" shall mean (a) a depository institution (which
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may be the Trustee) organized under the laws of the United States or any one of
the states thereof (including the District of Columbia) or any domestic branch
or agency of a foreign bank institution licensed by the Controller of the
Currency or any state banking agency which at all times (i) has either (x) a
long-term unsecured debt rating of A2 or better by Moody's or (y) a certificate
of deposit rating of P-1 by Moody's, (ii) has either (x) a long-term unsecured
debt rating of AAA by Standard & Poor's or (y) a certificate of deposit rating
of A-1+ by Standard & Poor's and (iii) if such depository institution is
organized under the laws of the United States or any one of the states thereof,
is a member of the FDIC or (b) any other institution that is acceptable to each
Rating Agency and the Series Representatives.
"Eligible Investments" shall mean book-entry securities, negotiable
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instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, or subject to the full faith and
credit of, the United States of America;
(b) demand deposits, time deposits or certificate of deposit
(having original maturities of no more than 365 days) of depository institutions
or trust companies incorporated under the laws of the United States of America
or any state thereof (or domestic branches of foreign banks) and subject to
supervision and examination by federal or state banking or depository
institution authorities; provided that at the time of the Trust's investment or
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contractual commitment to invest therein, the short-term debt rating of such
depository institution or trust company shall be in the highest investment
category of each Rating Agency;
(c) commercial paper or other short-term obligations having, at the
time of the Trust's investment or contractual commitment to invest therein, a
rating from each Rating Agency in its highest investment category;
(d) demand deposits, time deposits and certificates of deposit
which are fully insured by the FDIC, with a Person the commercial paper of which
has a credit rating from each Rating Agency in its highest investment category;
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<PAGE>
(e) notes or bankers' acceptances (having original maturities of no
more than 365 days) issued by any depository institution or trust company
referred to in (b) above;
(f) investments in money market funds rated AAAm or AAAmg or the
equivalent by Standard & Poor's and in the equivalent rating categories by each
other Rating Agency or otherwise approved in writing by each Rating Agency;
(g) investments in money market accounts held at an Eligible
Institution which accounts invest solely in securities and instruments described
in the preceding clauses (a) through (f); or
(h) any other investments approved in writing by each Rating
Agency, the Liquidity Agent and the Series Representatives.
"Eligible Receivable" means, at any time, a Receivable:
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(a) the Obligor of which is a U. S. person or Canadian person and
is not an Affiliate of any Originator;
(b) the Obligor of which, at the time of its transfer to the Trust,
is a Designated Obligor and is not the Obligor of any Receivables which remain
unpaid 150 days or more from the original Billing Date which in the aggregate
constitute 10% or more of the aggregate Outstanding Balance of all Receivables
of such Obligor;
(c) which at the time of its transfer to the Trust is not a
Defaulted Receivable;
(d) which, according to the Contract related thereto, is required
to be paid in full in accordance with the Credit and collection Policy but in
any event within 120 days of the original Billing Date therefor;
(e) [Intentionally omitted.]
(f) which is an "account" within the meaning of Section 9-106 of
the UCC of the applicable jurisdictions;
(g) which is denominated and payable only (i) in United States
dollars in the United States or (ii) in Canadian dollars (and subject to
currency swap arrangements satisfactory to the Liquidity Agent and each Series
Representative) and payable in Canada;
(h) which arises under a Contract which, together with such
Receivable, is in full force and effect and constitutes the legal, valid and
binding obligation of the Obligor of such Receivable and is not subject to any
dispute, offset, counterclaim or defense whatsoever (except the potential
discharge in bankruptcy of such Obligor);
(i) which, together with the Contract related thereto, does not
contravene in any material respect any laws, rules or regulations applicable
thereto (including, without limitation, laws, rules and regulations relating to
usury, consumer protection, truth in lending, fair credit billing, fair credit
reporting, equal credit opportunity, fair debt collection practices and privacy)
and with respect to
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<PAGE>
which none of the Seller, the applicable Originator or the Obligor is in
violation of any such law, rule or regulation in any material respect;
(j) which arises under a Contract with a party other than a party
subject to the United States Assignment of Claims Act which (A) does not
prohibit (or require the Obligor thereunder to consent to) the transfer, sale or
assignment of the rights and duties of the Seller or the applicable Originator
thereunder and (B) does not contain a confidentiality provision that expressly
restricts the ability of the parties hereto to exercise their rights under this
Agreement, including, without limitation, their right to review the Contract;
(k) which (A) satisfies all applicable requirements of the Credit
and Collection Policy (including, without limitation, those requirements with
respect to the payment terms of such Receivable) and (B) complies with such
other criteria and requirements (other than those relating to the collectibility
of such Receivable) as the Series Representatives or the Liquidity Agent may,
upon the request of any Rating Agency, from time to time specify to the Seller
upon 30 days' notice;
(l) as to which, at or prior to the time of its transfer to the
Trust, the Series Representatives, the Liquidity Agent and the Seller shall
mutually agree or the Rating Agencies (through the Series Representative or
Liquidity Agent) shall require that such Receivable (or class of Receivables) is
no longer acceptable for transfer to the Trust hereunder;
(m) with respect to which all material consents, licenses or
authorizations of any governmental authority have been obtained;
(n) which is not the subject of any specific waiver or modification
except in compliance with the Credit and Collection Policy;
(o) as to which, at the time of its transfer to the Trust, the
Seller or the Trust will have good and marketable title free and clear of all
Liens other than Liens in favor of the Trustee;
(p) which has been the subject of a valid transfer and assignment
from the Seller to the Trust of all the Seller's right, title and interest
therein;
(q) as to which, at the time of its transfer to the Trust, the
Seller has not taken any action which, or failed to take any action the omission
of which, would, at the time of its transfer to the Trust, impair the rights of
the Trust or the Certificateholders therein; and
(r) which remains unpaid for less than 120 days after its original
Billing Date.
"Eligible Servicer" shall mean the Trustee, a wholly-owned subsidiary
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of the Trustee or an entity which, at the time of its appointment as Servicer,
(a) is legally qualified and has the capacity to service the Receivables, (b) is
qualified (or licensed) to use the software that is then being used to service
the Receivables or obtains the right to use, or has its own, software which is
adequate to perform its duties under this Agreement, (c) has, in the reasonable
judgment of the Trustee, the ability to professionally and competently service a
portfolio of similar accounts receivable and (d) either (i)(x) has a net worth
of at least $50,000,000 as of the end of its most recent fiscal quarter and (y)
is a nationally chartered bank or (ii) is Mail-Well I Corporation or a wholly-
owned subsidiary of Mail-Well I Corporation.
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<PAGE>
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended.
"Established Securities Market" means a national securities exchange
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that is either registered under Section 6 of the Exchange Act or exempt from
registration because of the limited 'volume of transactions, a foreign
securities exchange that, under the law of the jurisdiction where it is
organized, satisfies regulatory requirements that are analogous to the
regulatory requirements of the Exchange Act, a regional or local exchange, or an
interdealer quotation system that regularly disseminates firm buy or sell
quotations by identified brokers or dealers by electronic means or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
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"Exchange Date" shall mean, with respect to any Series, any date that
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is after the related Series Issuance Date.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
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successor.
"Fees" with respect to any Series, shall have the meaning specified in
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the related Supplement.
"Floating Allocation Percentage" shall mean, with respect to any
------------------------------
Series, the floating allocation percentage specified in the related Supplement.
"Governmental Authority" shall mean the United States of America or
----------------------
any other country, and in each case, any state or other political subdivision
thereof and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to government.
"Group" shall mean, with respect to any Series, the group of Series,
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if any, in which the related Supplement specifies such Series is to be included.
"Indebtedness" of any Person shall mean indebtedness, obligations and
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liabilities of such Person (a) for borrowed money, (b) evidenced by promissory
notes, bonds, debentures, notes or other similar instruments, (c) to pay the
deferred purchase price of property or services other than trade accounts
payable of such Person arising in the ordinary course of business that are not
past due by more than 90 days, (d) as lessee under leases which have been or
should be, in accordance with GAAP, recorded as capital leases, (e) secured by
any lien or other charge upon property or assets owned by such Person, even
though such Person has not assumed or become liable for the payment of such
obligations, (f) under any interest rate, swap, "cap", "collar" or other hedging
agreement, (g) under reimbursement agreements or similar agreements with respect
to the issuance of letters of credit (other than obligations in respect of
letters of credit opened to provide for payment of goods and services purchased
in the ordinary course of business) and (h) under direct or indirect guaranties
in respect of, and obligations (contingent or otherwise) to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (g) above. For the purposes hereof, the term "guarantee" shall include
any agreement, whether such agreement is on a contingency or otherwise, to
purchase, repurchase or otherwise acquire Indebtedness of any other Person, or
to purchase, sell or lease, as lessee or lessor, property or services, in any
such case primarily for the purpose of enabling another person to make payment
of Indebtedness, or to make any payment (whether as an advance, capital
contribution,
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<PAGE>
purchase of an equity interest or otherwise) to assure a minimum equity, asset
base, working capital or other balance sheet or financial condition, in
connection with the Indebtedness of another Person, or to supply funds to or in
any manner invest in another Person in connection with Indebtedness of such
Person.
"Insolvency Event" shall mean, with respect to any Person, the
----------------
occurrence of any of the following events: such Person shall fail generally to,
or admit in writing its inability to, pay its debts as they become due; or a
proceeding shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of such Person in an
involuntary case under any Debtor Relief Law, or for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or
other similar official of such Person or for any substantial part of its
property, or for the winding-up or liquidation of its affairs and, if instituted
against such Person, any such proceeding shall continue undismissed or unstayed
and in effect, for a period of 60 consecutive days, or any of the actions sought
in such proceeding shall occur; or the commencement by such Person of a
voluntary case under any Debtor Relief Law, or such Person's consent to the
entry of any order for relief in an involuntary case under any Debtor Relief
Law, or consent to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator, conservator or other
similar official of such Person or for any substantial part of its property, or
any general assignment for the benefit of creditors; or such Person or any
Subsidiary of such Person shall have taken any corporate action in furtherance
of any of the foregoing actions.
"Insolvency Proceeds" shall have the meaning specified in Section
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9.02(b).
"Interest" with respect to any Series, shall have the meaning
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specified in the related Supplement.
"Invested Amount" shall have, with respect to any Series, the meaning
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specified in the related Supplement.
"Investment Company Act" shall mean the Investment Company Act of
----------------------
1940, as amended.
"Investor Certificateholder" shall mean the Person in whose name a
--------------------------
Registered Certificate is registered in the Certificate Register or the holder
of any Bearer Certificate or Coupon.
"Investor Certificate" shall mean any one of the certificates
--------------------
(including the Bearer Certificates or the Registered Certificates) executed by
the Seller and authenticated by or on behalf of the Trustee, substantially in
the form attached to the related Supplement, other than the Seller Certificate.
"Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
----
assignment, deposit arrangement, encumbrance, lien (statutory or other), or
other security agreement of any kind or nature whatsoever, including any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the UCC (other than any such financing statement
filed for informational purposes only) or comparable law of any jurisdiction to
evidence any of the foregoing, excluding any lien or filing pursuant to this
Agreement; provided, however, that any assignment or transfer pursuant to
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Section 7.02 shall not be deemed to constitute a Lien.
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<PAGE>
"Liquidity Agent" shall have the meaning specified in the related
---------------
Supplement.
"Lockboxes" and "Lockbox Accounts" shall have the meanings specified
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in Section 4.02.
"Minimum Balance" with respect to any Series, shall have the meaning
---------------
specified in the related Supplement.
"Monthly Period" shall mean initially, the period from the close of
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business on the Trust Closing Date to Saturday, November 30, 1996, and
thereafter the period from the last day of the prior Monthly Period to the
fourth (or, in the case of the first Monthly Period of each fiscal quarter, the
fifth) Saturday following such day as set forth on Schedule 2 hereto for the
first 12 calendar months following the date hereof and to be agreed upon by the
Servicer, the Series Representative and the Liquidity Agent thereafter.
"Monthly Settlement Report" shall have the meaning specified in
-------------------------
Section 3.04(c).
"Monthly Servicing Fee" shall have the meaning specified in the
---------------------
related Supplement.
"Moody's" shall mean Moody's Investors Service, Inc., or its
-------
successor.
"Net Receivables Pool Balance" means at any time the Outstanding
----------------------------
Balance of Eligible Receivables reduced by the sum of (i) the Outstanding
Balance of such Eligible Receivables that are then Defaulted Receivables and
(ii) the aggregate amount by which the Outstanding Balance of Eligible
Receivables (other than Defaulted Receivables) of each Obligor exceeds the
product of (A) the Concentration Limit for such Obligor multiplied by (B) the
Outstanding Balance of the Eligible Receivables.
"Notices" shall have the meaning specified in Section 13.05(a).
-------
"Obligor" shall mean a Person obligated to make payments pursuant to a
-------
Contract.
"Officer's Certificate" shall mean, unless otherwise specified in this
---------------------
Agreement, a certificate delivered to the Trustee and the Series Representative
signed by the Chairman of the Board, President, any Vice President or the
Treasurer of the Seller or the Servicer, as the case may be.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
------------------
be counsel for, or an employee of, the Person providing the opinion and which
opinion shall be reasonably acceptable to the Trustee and any Series
Representative.
"Originators" shall mean collectively, Mail-Well I Corporation, Wisco
-----------
Envelope Corp., Pavey Envelope and Tag Corp., Mail-Well West, Inc., Wisco II,
L.L.C., Mail-Well Canada Holdings, Inc., Graphic Arts Center, Inc.,Wisco III,
L.L.C., Supremex Inc., Innova Envelope Inc. and each corporation added as a
"Seller" under the Purchase Agreement pursuant to Section 2.08 thereof, and
their successors or assigns under the Purchase Agreement; any one of the
foregoing Persons being referred to herein as an "Originator."
----------
"Originator Receivable" means the indebtedness of any Obligor
---------------------
resulting from the provision or sale of merchandise, insurance or services by an
Originator under a Contract, and includes
11
<PAGE>
the right to payment of any interest or finance charges and other obligations of
such Obligor with respect thereto.
"Outstanding Balance" of any Receivable at any time shall mean the
-------------------
then outstanding principal balance thereof after reductions, cancellations and
adjustments resulting from Dilution Factors; provided, however, that with
-------- -------
respect to any Canadian Receivable, Outstanding Balance at any time shall mean
the United States Dollar equivalent of the then outstanding principal balance
thereof as determined by reference to the weighted average of the notional
amount of Canadian Receivables pursuant to any applicable hedge agreement.
"Pay-Out Event" shall, with respect to any Series, have the meaning
-------------
specified in Section 9.01 and shall also include each additional event, if any,
specified in the relevant Supplement as a Pay-Out Event with respect to such
Series.
"Paying Agent" shall mean any paying agent and co-paying agent
------------
appointed pursuant to Section 6.07.
"Person" shall mean any legal entity, including any individual,
------
corporation, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, governmental entity or other entity of
similar nature.
"Principal Terms" shall mean, with respect to any Series, (i) the name
---------------
or designation; (ii) the initial principal amount (or method for calculating
such amount) and its invested amount in the Trust; (iii) the Certificate Rate
(or method for the determination thereof); (iv) the payment date or dates and
the date or dates from which interest shall accrue; (v) the method for
allocating Collections to Certificateholders of such Series; (vi) the
designation of any Series Accounts and the terms governing the operation of any
such Series Accounts; (vii) the method of calculating the servicing fee with
respect thereto; (viii) the provider, if any, and the terms of any form of
Series Enhancement with respect thereto; (ix) the terms on which the Investor
Certificates of such Series may be exchanged for Investor Certificates of
another Series, repurchased by the Seller or any Affiliate of the Seller or
remarketed to other investors; (x) the Series Termination Date; (xi) the number
of Classes of Investor Certificates of such Series and, if such Series consists
of more than one Class, the rights and priorities of each such Class; (xii) the
extent to which the Investor Certificates of such Series will be issuable in
temporary or permanent global form; (xiii) whether the Investor Certificates of
such Series may be issued as Bearer Certificates and any limitation imposed
thereon; (xiv) the priority of such Series with respect to any other Series;
(xv) the Group, if any, to which such Series belongs; (xvi) whether the Investor
Certificates of each Series are Variable Funding Certificates and, if so, the
Stated Amount thereof and (xvii) any other terms of, or with respect to, such
Series.
"Purchase Agreement" shall mean the Purchase and Contribution
------------------
Agreement, dated as of the date hereof, between Mail-Well I Corporation, certain
Affiliates of Mail-Well I Corporation and Mail-Well Trade Receivables
Corporation, as amended, restated or supplemented from time to time in
accordance therewith and herewith.
"Rating Agency" shall mean, with respect to any outstanding Series or
-------------
Class, each statistical rating agency selected by the Seller to rate the
Investor Certificates of such Series or Class.
"Rating Agency Condition" shall mean, with respect to any action, that
-----------------------
each Rating Agency shall have notified the Seller, the Servicer and the Trustee
in writing that such action will not
12
<PAGE>
result in a reduction or withdrawal of the rating of any outstanding Series or
Class (or in the case of any Series or Class owned by any commercial paper
conduit, the rating of any outstanding commercial paper notes issued by such
conduit to fund or maintain its investment in such Series or Class) with respect
to which it is a Rating Agency.
"Reassigned Receivables" shall have the meaning specified in Section
----------------------
2.05(a).
"Receivable" shall mean any Originator Receivable which has been
----------
acquired by the Seller from an Originator by purchase or by capital contribution
pursuant to the Purchase Agreement.
"Recoveries" shall mean all cash amounts received by the Servicer with
----------
respect to Receivables which had previously become Defaulted Receivables.
"Record Date" shall mean, with respect to any Distribution Date, the
-----------
last Business Day of the preceding calendar month, except as otherwise provided
with respect to a Series in the related Supplement.
"Registered Certificateholder" shall mean the Holder of a Registered
----------------------------
Certificate.
"Registered Certificates" shall have the meaning specified in Section
-----------------------
6.01.
"Related Security" shall mean with respect to any Receivable all of
----------------
the Seller's interest in :
(i) any merchandise (including returned merchandise) relating to any
sale giving rise to such Receivable;
(ii) all security interests or liens and property subject thereto from
time to time purporting to secure payment of such Receivable, whether
pursuant to the Contract related to such Receivable or otherwise,
together with all financing statements signed by an Obligor describing
any collateral securing such Receivable;
(iii) all guaranties, insurance and other agreements or arrangements
of whatever character from time to time supporting or securing payment
of such Receivable whether pursuant to the Contract related to such
Receivable or otherwise; and
(iv) the Contract and all other books, records and other information
(including, without limitation, computer programs, tapes, discs, punch
cards, data processing software and related property and rights)
directly relating to such Receivable and the related Obligor.
"Requirements of Law" with respect to any Person shall mean the
-------------------
certificate of incorporation or articles of association and by-laws or other
organizational or governing documents of such Person, and any law, treaty, rule
or regulation, or determination of an arbitrator or Governmental Authority, in
each case applicable to or binding upon such Person or to which such Person is
subject, whether Federal, state or local.
13
<PAGE>
"Responsible Officer" shall mean any officer within the Trustee's
-------------------
Corporate Trust Office including any Vice President, any Assistant Vice
President, any Trust Officer, any Assistant Cashier, or any other officer of the
Trustee within the Trustee's Corporate Trust Office customarily performing
functions similar to those performed by any of the above-designated officers and
also, with respect to a particular matter, any other officer within the
Trustee's Corporate Trust Office to whom such matter is referred because of such
officer's knowledge of and familiarity with the particular subject.
"Revolving Period" shall mean, with respect to any Series, the period
----------------
specified as such in the related Supplement.
"Rule 144A" shall mean Rule 144A under the Act, as such Rule may be
---------
amended from time to time.
"Seller" shall mean Mail-Well Trade Receivables Corporation, a
------
Colorado corporation, or its successors or assigns under this Agreement.
"Seller Amount" shall mean at any time of determination an amount
-------------
equal to the total amount of Receivables and the principal amount on deposit in
the Special Funding Account in the Trust at such time minus the aggregate
Invested Amounts for all outstanding Series at such time.
"Seller Certificate" shall mean the certificate executed by the Seller
------------------
and authenticated by or on behalf of the Trustee, substantially in the form of
Exhibit A.
"Seller Retained Certificates" shall mean Investor Certificates of any
----------------------------
Series which the Seller retained pursuant to the terms of any Supplement.
"Seller Retained Class" shall mean any Class of Investor Certificates
---------------------
of any Series which the Seller retained pursuant to the terms of any Supplement.
"Seller's Interest" shall have the meaning specified in Section 4.01.
-----------------
"Seller's Percentage" shall mean, with respect to Receivables and
-------------------
Defaulted Receivables, 100% less the sum of the Floating Allocation Percentages
with respect to all outstanding Series.
"Series" shall mean any series of Investor Certificates established
------
pursuant to a Supplement.
"Series Account" shall mean any deposit, trust, escrow or similar
--------------
account maintained for the benefit of the Investor Certificateholders of any
Series or Class, as specified in any Supplement.
"Series Enhancement" shall mean the rights and benefits provided to
------------------
the Investor Certificateholder of any Series or Class pursuant to any letter of
credit, surety bond, cash collateral account, enhancement invested amount,
spread account, guaranteed rate agreement, maturity liquidity facility, tax
protection agreement, interest rate swap agreement, interest rate cap agreement
or other similar arrangement. The subordination of any Class to another Class
shall be deemed to be a Series Enhancement.
14
<PAGE>
"Series Enhancer" shall mean the Person or Persons providing any
---------------
Series Enhancement, other than the Investor Certificateholders of any Class
which is subordinated to another Class.
"Series Invested Amount" shall have, with respect to any Series, the
----------------------
meaning specified in the related Supplement.
"Series Issuance Date" shall mean, with respect to any Series, the
--------------------
date on which the Investor Certificates of such Series are to be originally
issued in accordance with Section 6.03 and the related Supplement.
"Series Representative" shall mean, with respect to any Series, the
---------------------
agent (if any) specified in the related Supplement.
"Series Termination Date" shall mean, with respect to any Series, the
-----------------------
termination date specified in the related Supplement.
"Servicer" shall mean Mail-Well I Corporation, in its capacity as
--------
Servicer pursuant to this Agreement or the Successor Servicer, as the case may
be.
"Servicer Default" shall have the meaning specified in Section 10.01.
----------------
"Servicing Fee" shall mean, with respect to any Series, the servicing
-------------
fee specified in Section 3.02.
"Servicing Fee Rates" shall mean, with respect to any Series, the
-------------------
Servicing Fee Rate specified in the related Supplement.
"Servicing Officer" shall mean any officer of the Servicer involved
-----------------
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers furnished to the Trustee by
the Servicer, as such list may from time to time be amended.
"Shortfalls" shall have the meaning specified in Section 4.04.
----------
"Special Funding Account" shall have the meaning specified in Section
-----------------------
4.02.
"Standard & Poor's" shall mean Standard & Poor's Ratings Group, a
-----------------
division of The McGraw-Hill Companies, Inc., or its successor.
"Stated Amount" shall mean, as to any Variable Funding Certificate,
-------------
the maximum principal amount that may be required to be funded by the Holder of
such Variable Funding Certificate as determined by the applicable Supplement.
"Subordinated Note" shall have the meaning specified in the Purchase
-----------------
Agreement.
"Successor Servicer" shall have the meaning specified in Section
------------------
10.02(a).
15
<PAGE>
"Supplement" shall mean, with respect to any Series, a Supplement to
----------
this Agreement, executed and delivered in connection with the original issuance
of the Investor Certificates of such Series pursuant to Section 6.03, and all
amendments thereof and supplements thereto.
"Tax Opinion" shall mean, with respect to any action, an Opinion of
-----------
Counsel to the effect that, for Federal income tax purposes, such action will
not adversely affect the tax characterization as debt of Investor Certificates
of any outstanding Series or Class that were characterized as debt at the time
of their issuance.
"Termination Notice" shall have the meaning specified in Section
------------------
10.01.
"Transfer Agent and Registrar" shall have the meaning specified in
----------------------------
Section 6.04.
"Transfer Date" shall mean the Business Day immediately preceding each
-------------
Distribution Date.
"Trust" shall mean the Mail-Well I Corporation Master Trust created by
-----
this Agreement.
"Trust Asset" shall have the meaning specified in Section 2.01.
-----------
"Trust Closing Date" shall mean November 15, 1996.
------------------
"Trustee" shall mean Norwest Bank Colorado, National Association in
-------
its capacity as trustee on behalf of the Trust, or its successor in interest, or
any successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from time to
---
time, as in effect in the State of New York or, where Section 9-103 of the
Uniform Commercial Code as in effect in the State of New York provides that the
perfection of security interests is governed by the Uniform Commercial Code then
in effect in another State, then, with respect to perfection of security
interests only, the Uniform Commercial Code, as amended from time to time, as in
effect in such State.
"United States" shall mean the United States of America (including the
-------------
States and the District of Columbia) its territories, its possessions and other
areas subject to its jurisdiction.
"U.S. person" or "United States person" shall mean a citizen or
----------- --------------------
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States, or of which is
subject to United State Federal income taxation regardless of its source.
"Variable Funding Certificates" shall have the meaning specified in
-----------------------------
any Variable Funding Supplement.
"Variable Funding Supplement" shall mean a Supplement executed in
---------------------------
connection with the issuance of, and otherwise specifying the terms governing
the issuance of, Variable Funding Certificates provided for therein.
"Weekly Report" shall have the meaning specified in Section 3.04(b).
-------------
16
<PAGE>
Section 1.02. Other Definitional Provisions. (a) With respect to any
-----------------------------
Series, all terms used herein and not otherwise defined herein shall have
meanings ascribed to them in the related Supplement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) Any reference to notification to a Rating Agency or to a Rating
Agency Condition shall only apply to any specific rating agency if such rating
agency is then rating any outstanding Series.
(e) Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.
(f) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement; references to any
Section, Schedule or Exhibit are references to Sections, Schedules and Exhibits
in or to this Agreement unless otherwise specified; and the term "including"
means "including without limitation."
(g) For purposes of determining whether the Holders of Variable
Funding Certificates of any Series have consented to, approved or disapproved of
any action to be taken hereunder where a vote of the Certificateholders of such
Series is required, "unpaid principal amount" of such Series of Variable Funding
Certificates shall mean, during the Revolving Period for such Series, the
Stated Amount for such Series, and during the Amortization Period for such
Series, the unpaid principal amount of such Variable Funding Certificates.
ARTICLE II
Conveyance of Receivables
-------------------------
Section 2.01. Conveyance of Receivables. (a) By execution of this
-------------------------
Agreement, the Seller does hereby sell, transfer, assign, set over and otherwise
convey to the Trustee, on behalf of the Trust, for the benefit of the
Certificateholders, all its right, title and interest in, to and under (i) the
Receivables existing at the close of business on the Trust Closing Date and
thereafter created from time to time until the termination of the Trust, (ii)
the Related Security, (iii) all Recoveries, (iv) the Purchase Agreement,
including, without limitation, the Seller's right to approve any additional
"Sellers" thereunder pursuant to Section 2.08 thereof, (v) the right to any
Series Enhancement, and (vi) all
17
<PAGE>
Collections and other moneys due or to become due and all amounts received with
respect to any of the foregoing and all proceeds (including "proceeds" as
defined in the UCC) of any of the foregoing. Such property, together with all
moneys on deposit in the Lockbox Accounts, the Concentration Account, the
Collection Account, the Canadian Accounts, the Canadian Collection Account, the
Special Funding Account, the Series Accounts and any Series Enhancement shall
constitute the assets of the Trust (the "Trust Assets"). The foregoing does not
------------
constitute and is not intended to result in the creation or assumption by the
Trust, the Trustee, any Investor Certificateholders or any Series Enhancer of
any obligation of the applicable Originator, the Servicer, the Seller or any
other Person in connection with the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors.
(b) The Seller shall file, at its own expense, financing statements
(and continuation statements when applicable) with respect to the Receivables
and other Trust Assets now existing and hereafter created meeting the
requirements of applicable state law in such manner and in such jurisdictions as
are necessary to perfect, and maintain the perfection of, the sale and
assignment of such Receivables to the Trust, and to deliver a file stamped copy
of each such financing statement or other evidence of such filing (which may,
for purposes of this Section 2.01 consist of telephone confirmation of such
filing promptly followed by delivery to the Trustee of a file-stamped copy) to
the Trustee on or prior to the initial Closing Date.
(c) The Seller shall, at its own expense, beginning on or prior to
the initial Closing Date until the termination of the Trust pursuant to Section
12.01 hereof indicate in the appropriate records that Receivables have been
conveyed to the Trust pursuant to this Agreement for the benefit of the
Certificateholders by including in such records notations identifying each such
Receivable.
(d) It is the intention of the parties hereto that the conveyance
of the Receivables and all other Trust Assets by the Seller to the Trustee, on
behalf of the Trust, as provided in this Section 2.01 be, and be construed as,
an absolute sale of the Receivables by the Seller to the Trustee for the benefit
of the Certificateholders. Furthermore, it is not intended that such conveyance
be deemed a pledge of the Receivables and the other Trust Assets by the Seller
to the Trustee to secure a debt or other obligation of the Seller. If, however,
a court of competent jurisdiction holds that any transaction provided for hereby
constitutes a loan and not a sale, this Agreement shall be deemed to be a
security agreement within the meaning of Article 9 of the UCC and the conveyance
provided for in this Section 2.01 shall be deemed to be a grant by the Seller to
the Trustee of a "security interest" within the meaning of Article 9 of the UCC
in all of the Seller's right, title and interest in and to the Receivables and
other Trust Assets and all amounts payable to the holders of the Receivables
after the initial Closing Date in accordance with the terms thereof and all
proceeds of the conversion, voluntary or involuntary, of the foregoing into
cash, instruments, securities or other property, including without limitation
all amounts from time to time held or invested in the Series Accounts, whether
in the form of cash, instruments, securities or other property.
Section 2.02. Acceptance of Trustee. (a) The Trustee hereby
---------------------
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, conveyed to the
Trust pursuant to Section 2.01 and declares that it shall maintain such right,
title and interest, upon the trust herein set forth, for the benefit of all
Certificateholders.
(b) The Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement or any Supplement.
18
<PAGE>
(c) The Trustee shall not use any information it obtains pursuant
to this Agreement, including any of the information delivered by the Seller to
the Trustee pursuant to Section 2.01, 2.09 or 3.04(c), to compete or assist any
person in competing with any Originator or the Seller in their respective
businesses.
Section 2.03. Representations and Warranties of the Seller Relating
-----------------------------------------------------
to the Seller. (a) Representations and Warranties. The Seller hereby
- ------------- ------------------------------
represents and warrants to the Trust (and agrees that the Trustee may
conclusively rely on each such representation and warranty in accepting the
Receivables in trust and in authenticating the Certificates) as of each Closing
Date that:
(i) Organization and Good Standing. The Seller is a corporation
------------------------------
duly organized and validly existing in good standing under the laws of
the State of Colorado, and has full corporate power, authority and
legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently
conducted, to execute, deliver and perform its obligations under this
Agreement, each Supplement and the Purchase Agreement and to execute
and deliver to the Trustee the Certificates pursuant hereto.
(ii) Due Qualification. The Seller is duly qualified to do
-----------------
business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary
licenses and approvals in each jurisdiction necessary for the conduct
of its business.
(iii) Due Authorization and Execution. The execution, delivery
-------------------------------
and performance of this Agreement, each Supplement and the Purchase
Agreement by the Seller, the execution and delivery to the Trustee of
the Certificates by the Seller and the consummation by the Seller of
the transactions provided for in this Agreement, each Supplement and
the Purchase Agreement have been duly authorized by the Seller by all
necessary corporate action on the part of the Seller and have been
duly executed and delivered by the Seller.
(iv) No Conflict. The execution and delivery by the Seller of
-----------
this Agreement, each Supplement, the Purchase Agreement and the
Certificates, the performance by the Seller of the transactions
contemplated by this Agreement, each Supplement and the Purchase
Agreement and the fulfillment by the Seller of the terms hereof and
thereof (i) will not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, any indenture, contract,
agreement, mortgage, deed of trust, or other instrument to which the
Seller is a party or by which it or any of its properties are bound
and (ii) do not result in or require the creation of any Lien,
security interest or other charge or encumbrance upon or with respect
to any of its properties (except for the interest created pursuant to
this Agreement).
(v) No Violation. The execution and delivery by the Seller of
------------
this Agreement, each Supplement, the Purchase Agreement and the
Certificates, the performance by the Seller of the transactions
contemplated by this Agreement, each Supplement and the Purchase
Agreement and the fulfillment by the Seller of the terms hereof and
thereof will not conflict with or violate any Requirements of Law
applicable to the Seller and will not contravene the Seller's charter
or by-laws.
19
<PAGE>
(vi) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Seller, threatened against the
Seller, before any court, regulatory body, administrative agency, or other
tribunal or governmental instrumentality (A) asserting the invalidity of
this Agreement, any Supplement or the Certificates, (B) seeking to prevent
the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement, any Supplement or the
Certificates, (C) seeking any determination or ruling that, in the
reasonable judgment of the Seller, would materially and adversely affect
the performance by the Seller of its obligations under this Agreement or
any Supplement, (D) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement, any Supplement, the Purchase Agreement or the Certificates, or
(E) seeking to affect adversely the income tax attributes of the Trust
under the Federal or applicable state income or franchise tax systems, and
the Seller is not in default with respect to any order of any court,
arbitration or Governmental Authority except for defaults with respect to
orders of Governmental Authority which defaults are not material to the
business or operations of the Seller, taken as a whole.
(vii) Use of Proceeds. No proceeds of any Distributions will be used
---------------
to acquire any equity security of a class which is registered pursuant to
Section 12 of the Securities Exchange Act of 1934.
(viii) All Consents Required. All approvals, authorizations, consents,
---------------------
orders or other actions of or notices to or filings with any Person or any
Governmental Authority or governmental official required in connection with
the execution and delivery by the Seller of this Agreement, each
Supplement, the Purchase Agreement and the Certificates, the performance by
the Seller of the transactions contemplated by this Agreement, each
Supplement and the Purchase Agreement and the fulfillment by the Seller of
the terms hereof and thereof, have been duly obtained and are in full force
and effect.
(ix) Chief Executive Office. The Seller has its chief executive
----------------------
office at 23 Inverness Way East, Suite 160, Englewood, Colorado 80112, or
such other place of which the Seller has notified the Trustee in accordance
with Section 2.06(g).
(x) Investment Company. The Seller is not an "Investment Company"
------------------
within the meaning of the Investment Company Act.
(xi) Bulk Sales. The execution, delivery and performance of this
----------
Agreement do not require compliance with "bulk sales" law by the Seller.
(xii) Tradenames. The Seller is not known by and does not use any
----------
tradename or doing-business-as name.
(xiii) Incorporation. The Seller was incorporated on November 5, 1996
-------------
and the Seller did not engage in any business activities prior to the date
of this Agreement.
(xiv) Insolvency. (i) The fair value of the property of the Seller is
----------
greater than the total amount of liabilities, including contingent
liabilities, of the Seller, (ii) the present fair salable value of the
assets of the Seller is not less than the amount that will
20
<PAGE>
be required to pay all probable liabilities of the Seller on its debts
as they become absolute and matured, (iii) the Seller does not intend
to, and does not believe that it will, incur debts or liabilities
beyond the Seller's abilities to pay such debts and liabilities as
they mature, (iv) the Seller is not engaged in a business or a
transaction, and is not about to engage in a business or a
transaction, for which the Seller's property would constitute
unreasonably small capital and (v) the transfer of the Receivables by
the Seller to the Trust will not render the Seller insolvent.
(b) Notice of Breach. The representations and warranties of the
----------------
Seller set forth in this Section 2.03 shall survive the transfer and assignment
by the Seller of the respective Receivables to the Trust. Upon discovery by the
Seller, the Servicer or the Trustee of a breach of any of the representations
and warranties by the Seller set forth in this Section 2.03, the party
discovering such breach shall give prompt written notice to the others and to
each Series Enhancer entitled thereto pursuant to the relevant Supplement. The
Seller agrees to cooperate with the Servicer and the Trustee in attempting to
cure any such breach. For purposes of the representations and warranties set
forth in this Section 2.03, each reference to a Supplement shall be deemed to
refer only to those Supplements in effect as of the relevant Closing Date.
Section 2.04. Representations and Warranties of the Seller Relating to
--------------------------------------------------------
the Agreement and any Supplement and the Receivables. (a) Representations and
- ---------------------------------------------------- -------------------
Warranties. The Seller hereby represents and warrants to the Trust (and agrees
- ----------
that the Trustee may conclusively rely on each such representation and warranty
in accepting the Receivables in trust and in authenticating the Certificates) as
of the date of this Agreement and the date of each Supplement, as of each
Closing Date that:
(i) this Agreement, each Supplement, the Purchase Agreement
and each Certificate constitutes a legal, valid and binding obligation
of the Seller, enforceable against the Seller in accordance with its
terms, except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium, or similar law
affecting creditors' rights generally and by general principles of
equity;
(ii) each Daily Report, Weekly Report and Monthly Settlement
Report (in each case, if prepared by the Seller or one of its
Affiliates, or to the extent that information contained therein is
supplied by the Seller or an Affiliate), other report exhibit,
financial statement, document, book or record and all information
furnished or to be furnished at any time by or on behalf of the Seller
to the Trustee and each Series Representative in connection with this
Agreement and each Supplement is or will be accurate in all material
respects as of its date or (except as otherwise disclosed to the
Trustee and/or each Series Representative, as the case may be, at such
time) as of the date so furnished, and no such document contains or
will contain any untrue statement of a material fact or omits or will
omit to state a material fact necessary in order to make the
statements contained therein, in the light of the circumstances under
which they were made and taken as a whole, not misleading;
(iii) the Seller is the legal and beneficial owner of all
right, title and interest in each Receivable and the Seller has the
full right to transfer such Receivables to the Trust, and each
Receivable conveyed to the Trust by the Seller has been conveyed to
the Trust free and clear of any Lien of any Person claiming through or
under the Seller or any of its Affiliates (other than Liens permitted
under subsection 2.06(b)) and in compliance with all Requirements of
Law applicable to the Seller;
21
<PAGE>
(iv) with respect to each Receivable transferred to the
Trust, the Seller (i) shall have received such Receivable as a
contribution to the capital of the Seller by the applicable Originator
or (ii) shall have purchased such Receivable from the applicable
Originator in exchange for payment (made by the Seller to the
applicable Originator in accordance with the provisions of the
Purchase Agreement) of cash, in an amount which constitutes fair
consideration and reasonably equivalent value. Each such sale referred
to in clause (ii) of the preceding sentence shall not have been made
for or on account of an antecedent debt owed by the applicable
Originator to the Seller and no such sale is or may be voidable or
subject to avoidance under any section of any Debtor Relief Laws;
(v) this Agreement constitutes a valid transfer and
assignment to the Trust of all right, title and interest of the Seller
in the Receivables and other Trust Assets conveyed to the Trust by the
Seller and all monies due or to become due with respect thereto and
the proceeds thereof. If, however, a court of competent jurisdiction
holds that any transaction provided for hereby constitutes a loan and
not a sale, this Agreement constitutes a grant of a "security
interest" (as defined in the UCC) in such property to the Trust,
which, in the case of existing Receivables and the proceeds thereof,
is enforceable upon execution and delivery of this Agreement and which
will be enforceable with respect to such Receivables hereafter created
and the proceeds thereof upon such creation. Upon the filing of the
financing statements pursuant to Section 2.01 and, in the case of
Receivables hereafter created and the proceeds thereof, upon the
creation thereof, the Trust shall have a first priority security
interest in such property and proceeds (as defined in the UCC) except
for Liens permitted under subsection 2.06(b);
(vi) except as otherwise expressly provided in this Agreement
or any Supplement, neither the Seller nor any Person claiming through
or under the Seller has any claim to or interest in the Lockboxes, the
Lockbox Accounts, the Concentration Account, the Collection Account,
the Canadian Accounts, the Canadian Collection Account, the Special
Funding Account, any Series Account or any Series Enhancement and the
Seller has no other lockboxes or related accounts other than the
Lockboxes, the Lockbox Accounts and the Canadian Accounts;
(vii) each Receivable designated by the Seller as an Eligible
Receivable on the date hereof is an Eligible Receivable;
(viii) as of the date of the creation of any new Receivable,
such Receivable is an Eligible Receivable, unless such Receivable is
identified as not being an Eligible Receivable in the Monthly
Servicer's Certificate for the month in which such Receivable was
created; and
(ix) except pursuant to the Purchase Agreement or this
Agreement, no effective financing statement or other instrument
similar in effect covering any Contract, any Receivable or collections
or proceeds thereof, is on file in any recording office;
(b) Notice of Breach. The representations and warranties of
----------------
the Seller set forth in this Section 2.04 shall survive the transfer
and assignment by the Seller of Receivables to the Trust.
22
<PAGE>
Subject to Section 2.05, upon discovery by the Seller, the Servicer or the
Trustee of a breach of any of the representations and warranties by the Seller
set forth in this Section 2.04, the party discovering such breach shall give
prompt written notice to the others and to each Series Enhancer and Series
Representative entitled thereto pursuant to the relevant Supplement. The Seller
agrees to cooperate with the Servicer and the Trustee in attempting to cure any
such breach. For purposes of the representations and warranties set forth in
this Section 2.04, each reference to a Supplement shall be deemed to refer only
to those Supplements in effect as of the date of the relevant representations or
warranties.
Section 2.05. Reassignment of Receivables in Trust Portfolio. (a) If
----------------------------------------------
any representation or warranty of the Seller set forth in Section
2.04(a)(vii),(viii) or (ix) is not true and correct in any material respect with
respect to any Receivables, then either the Trustee or the Holders of Investor
Certificates evidencing not less than 50% of the aggregate unpaid principal
amount of all outstanding Investor Certificates, by notice then given to the
Seller and the Servicer (and to the Trustee if given by the Investor
Certificateholders), may direct the Seller to accept a reassignment of such
Receivables (the "Reassigned Receivables") transferred to the Trust by the
Seller if such breach of representation or warranty is not cured within 30 days
of such notice and upon those conditions the Seller shall be obligated to accept
such reassignment on the terms set forth below; provided, however, that such
-------- -------
Receivables will not be reassigned to the Seller if, on any day prior to the end
of such 30 day period (i) the relevant representation and warranty shall be true
and correct in all material respects as if made on such day and (ii) the Seller
shall have delivered to the Trustee a certificate of an authorized officer
describing the nature of such breach and the manner in which the relevant
representation and warranty became true and correct.
(b) The Servicer shall deduct the portion of the Reassigned
Receivables from the aggregate amount of Receivables used to calculate the
Seller Amount, the Seller's Interest and the Floating Allocation Percentage
applicable to any Series. If, following the exclusion of such Receivables from
the calculation of the Seller Amount, the Floating Allocation Percentage for all
Series would be greater than 100%, not later than two Business Days after the
date on which such reassignment obligation arises, the Seller shall deposit into
the Collection Account in immediately available funds not later than two
Business Days after the date on which such reassignment obligation arises, in
payment for such reassignment, an amount equal to the amount necessary to reduce
the Floating Allocation Percentage applicable to all Series to be a percentage
no greater than 100% with respect to each outstanding Series in the related
Supplement. Notwithstanding anything to the contrary in this Agreement, such
amounts shall be distributed on such Distribution Date in accordance with
Article IV and the terms of each Supplement. The payment of such deposit amount
in immediately available funds shall be considered payment in full of all of
such Receivables being reassigned.
(c) Upon the deposit, if any, required to be made to the Collection
Account as provided in this Section and the reassignment of the applicable
Receivables, the Trustee, on behalf of the Trust, shall automatically and
without further action be deemed to sell, transfer, assign, set over and
otherwise convey to the Seller or its designee, without recourse, representation
or warranty, all the right, title and interest of the Trust in and to such
Receivables, the Related Security and Recoveries with respect thereto, all
moneys due or to become due and all amounts received with respect thereto and
all proceeds thereof. The Trustee shall execute such documents and instruments
of transfer or assignment and take such other actions as shall be reasonably
requested by the Seller to effect the conveyance of such Receivables pursuant to
this Section. The obligation of the Seller to accept reassignment of any
Receivables, and to make the deposits, if any, required to be made to the
Collection Account as provided in this Section, shall constitute the sole remedy
respecting the event
23
<PAGE>
giving rise to such obligation available to Certificateholders (or the Trustee
on behalf of the Certificateholders).
Section 2.06. Covenants of the Seller. The Seller hereby covenants as
-----------------------
follows:
(a) Receivables to be Accounts. The Seller will take no action to
--------------------------
cause any Receivable transferred by it to the Trust (i) not to be classified as
an account or proceeds thereof (as defined in the UCC) or (ii) to be evidenced
by any instrument (as defined in the UCC).
(b) Security Interests. Except for the conveyances hereunder, the
------------------
Seller will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on any Receivable, whether now
existing or hereafter created, or any interest therein; and the Seller shall
defend the right, title and interest of the Trust in, to and under the
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under the Seller; provided, however, that
-------- -------
nothing in this Section 2.06(b) shall prevent or be deemed to prohibit the
Seller from suffering to exist upon any of the Receivables any Liens for taxes
if such taxes shall not at the time be due and payable or if the Seller shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with respect
thereto. Notwithstanding the foregoing, nothing in this Section 2.06(b) shall
be construed to prevent or be deemed to prohibit the transfer of the Seller
Certificate and certain other rights of the Seller in accordance with the terms
of this Agreement and any related Supplement.
(c) Seller's Interest. Except for the conveyances hereunder, in
-----------------
connection with any transaction permitted by Section 7.02, the Seller shall not
transfer, assign, exchange or otherwise convey or pledge, hypothecate or
otherwise grant a security interest in the Seller's Interest represented by the
Seller Certificate and any such attempted transfer, assignment, exchange,
conveyance, pledge, hypothecation or grant shall be void.
(d) Delivery of Collections or Recoveries. If the Seller receives
-------------------------------------
Collections or Recoveries, the Seller shall deposit in the Collection Account
all such Collections and Recoveries as soon as practicable after receipt thereof
but in no event later than two Business Days after the date of receipt thereof
by the Seller; provided, however that if such Collections or Recoveries relate
-------- -------
to Canadian Receivables, the Seller shall deposit in the Canadian Collection
Account all such Collections and Recoveries as soon as practicable after receipt
thereof but in no event later than two Business Days after the date of receipt
thereof by the Seller.
(e) Notice of Liens. The Seller shall notify the Trustee, each
---------------
Series Enhancer and each Series Representative entitled to such notice pursuant
to the relevant Supplement promptly after becoming aware of any Lien on any
Receivable other than the conveyances hereunder or Liens permitted under Section
2.07(b).
(f) Separate Corporate Existence. The Seller shall:
----------------------------
(i) Maintain in full effect its existence, rights and franchises
as a corporation under the laws of the state of its incorporation and
will obtain and preserve its qualification to do business in each
jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement and the
Purchase Agreement and each other instrument or agreement necessary or
appropriate
24
<PAGE>
to proper administration hereof and permit and effectuate the
transactions contemplated hereby.
(ii) Maintain its own deposit account or accounts, separate
from those of any Affiliate of the Seller, with commercial banking
institutions. The funds of the Seller will not be diverted to any
other Person or for other than the corporate use of the Seller, and,
except as may be expressly permitted by this Agreement or the Purchase
Agreement, the funds of the Seller shall not be commingled with those
of any Affiliate of the Seller.
(iii) Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or Affiliates,
the salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(iv) Ensure that, to the extent that it jointly contracts
with any of its stockholders or Affiliates to do business with vendors
or service providers or to share overhead expenses, the costs incurred
in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent
that Seller contracts or does business with vendors or service
providers where the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between the Seller and
any of its Affiliates shall be only on an arm's-length basis and shall
receive the approval of the Seller's Board of Directors including at
least two Independent Directors (defined below).
(v) Maintain a principal executive and administrative office
through which its business is conducted separate from those of its
stockholders and Affiliates. To the extent that the Seller and any of
its stockholders or Affiliates have offices in contiguous space, there
shall be fair and appropriate allocation of overhead costs among them,
and each such entity shall bear its fair share of such expenses.
(vi) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate
and customary corporate formalities, including, but not limited to,
holding all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of such meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts including, but not
limited to, payroll and intercompany transaction accounts. Regular
stockholders' and directors' meetings shall be held at least annually.
(vii) Ensure that its Board of Directors shall be elected
independently from the Boards of Directors of its Affiliates and shall
at all times include at least two Independent Directors (for purposes
hereof, "Independent Director" shall mean any member of the Board of
--------------------
Directors of the Seller who (i) is in fact independent, (ii) does not
have any direct financial interest or any material indirect financial
interest in the
25
<PAGE>
Seller, or in any Affiliate of the Seller, (iii) is not connected with
the Seller or any Affiliate of the Seller as an officer, employee,
promoter, underwriter, trustee, partner or person performing similar
functions and (iv) is not, and has not been for a period of at least
five (5) years, a director of any Affiliate of the Seller.
(viii) Ensure that decisions with respect to its business and
daily operations shall be independently made by the Seller (although
the officer making any particular decision may also be an officer or
director of an Affiliate of the Seller) and shall not be dictated by
an Affiliate of the Seller.
(ix) Act solely in its own corporate name and through its own
authorized officers and agents, and no Affiliate of the Seller shall
be appointed to act as agent of the Seller, except as expressly
contemplated by this Agreement or the Purchase Agreement.
(x) Ensure that no Affiliate of the Seller shall advance
funds to the Seller, other than capital contributions from an
Originator made to enable the Seller to pay the purchase price of
Receivables or as is otherwise provided in the Purchase Agreement, and
no Affiliate of the Seller will otherwise supply funds to, or guaranty
debts of, the Seller.
(xi) Not enter into any guaranty, or otherwise become liable,
with respect to any obligation of any Affiliate of the Seller other
than with respect to Section 7.04.
(xii) Ensure that any financial reports required of the Seller
shall comply with generally accepted accounting principles and shall
be issued separately from, but may be consolidated with, any reports
prepared for any of its Affiliates.
(g) Continuous Perfection. The Seller shall not change its name,
---------------------
identity or structure in any manner that might cause any financing or
continuation statement filed pursuant to this Agreement to be misleading within
the meaning of Section 9-402(7) of the UCC (or any other then applicable
provision of the UCC) unless the Seller shall have delivered to the Trustee at
least 30 days' prior written notice thereof and, no later than 30 days after
making such change, shall have taken all action necessary or advisable to amend
such financing statement or continuation statement so that it is not misleading.
The Seller shall not change its chief executive office or change the location of
its principal records concerning the Receivables, the Trust Assets or the
Collections unless it has delivered to the Trustee at least 30 days' prior
written notice of its intention to do so and has taken such action as is
necessary or advisable to cause the interest of the Trustee in the Receivables
and other Trust Assets to continue to be perfected with the priority required by
this Agreement.
(h) Compliance with Laws. The Seller shall comply with Requirements
--------------------
of Law applicable to Seller.
(i) Information. The Seller shall provide to the Servicer, if the
-----------
Servicer is not Mail-Well I Corporation, all information in its possession or
control necessary to service the Receivables in accordance with this Agreement.
(j) Activities of Seller. The Seller shall not engage in any
--------------------
business or activity of any kind or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or
26
<PAGE>
other undertaking which is not directly related to the transactions contemplated
and authorized by this Agreement or the Purchase Agreement.
(k) Indebtedness. The Seller shall not create, incur, assume or
------------
suffer to exist any Indebtedness or other liability whatsoever, except (i)
obligations incurred or owing to the Trust under this Agreement or the Purchase
Agreement or (ii) liabilities incident to the maintenance of its corporate
existence in good standing and the ownership of the Receivables.
(l) Guarantees. The Seller shall not become or remain liable,
----------
directly or contingently, in connection with any Indebtedness or other liability
of any other Person, whether by guarantee, endorsement (other than endorsements
of negotiable instruments for deposit or collection in the ordinary course of
business), agreement to purchase or repurchase, agreement to supply or advance
funds, or otherwise.
(m) Distributions. Subject to minimum equity requirements in any
-------------
Supplement, the Seller shall not declare or pay, directly or indirectly, any
dividend or make any other distribution (whether in cash or other property) with
respect to the profits, assets or capital of the Seller or any Person's interest
therein, or purchase, redeem or otherwise acquire for value any of its capital
stock now or hereafter outstanding, except that the Seller may make the
purchases under the Purchase Agreement and so long as (i) there is no
outstanding principal balance on the Subordinated Note, (ii) no Pay-Out Event
has occurred and is continuing and no Pay-Out Event would occur as a result
thereof or after giving effect thereto and (iii) such dividends are in
compliance with all applicable law including the corporate law of the state of
Seller's incorporation, and (iv) such dividends have been approved by all
necessary and appropriate corporate action of the Seller, the Seller may declare
and pay dividends on its capital stock.
Section 2.07. Covenants of the Seller with Respect to the Purchase
----------------------------------------------------
Agreement. The Seller, in its capacity as purchaser of the Receivables from the
- ---------
Originators pursuant to the Purchase Agreement, hereby covenants that the Seller
will at all times enforce, except for immaterial breaches, the covenants and
agreements of such Originators in the Purchase Agreement. The Seller further
covenants that the Seller will not enter into any amendments to the Purchase
Agreement unless each Series Representative shall consent and the Rating Agency
Condition has been satisfied in each case. The Seller further covenants that the
Seller will not approve any additional "Sellers" pursuant to Section 2.08 of the
Purchase Agreement and will not enter into any waivers with respect to the
Purchase Agreement unless each Series Representative shall consent in each case
Section 2.08. Purchase Agreement. The Seller will not amend, waive or
------------------
modify any provision of the Purchase Agreement or waive the occurrence of any
"Event of Termination" under the Purchase Agreement, without in each case the
prior written consent of the Liquidity Agent and the Series Representative. The
Seller will perform all of its obligations under the Purchase Agreement in all
material respects.
27
<PAGE>
ARTICLE III
Administration and Servicing
----------------------------
of Receivables
--------------
Section 3.01. Acceptance of Appointment and Other Matters Relating to
-------------------------------------------------------
the Servicer. (a) Mail-Well I Corporation agrees to act as the Servicer under
- ------------
this Agreement and the Certificateholders, by their acceptance of Certificates,
consent to Mail-Well I Corporation acting as Servicer.
(b) The Servicer shall service and administer the Receivables,
shall collect payments due under the Receivables and shall charge off
Receivables as uncollectible Receivables, all in accordance with its customary
and usual servicing procedures for servicing receivables comparable to the
Receivables and in accordance with the Credit and Collection Policy. Subject to
the first sentence of this Section 3.01(b), the Servicer shall have full power
and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable. Subject to the first
sentence of this Section 3.01(b), without limiting the generality of the
foregoing, subject to Section 10.01, the Servicer is hereby authorized and
empowered (i) to provide information to the Trustee to permit it to make
withdrawals and payments from the Collection Account, the Canadian Collection
Account and any Series Account, as set forth in this Agreement or any
Supplement, and (ii) to take any action required or permitted under any Series
Enhancement, as set forth in this Agreement or any Supplement. Without limiting
the generality of the foregoing and subject to Section 10.01, the Servicer is
hereby authorized and empowered to make any filings, reports, notices,
applications and registrations with, and to seek any consents or authorizations
from, the Commission and any state securities authority on behalf of the Trust
as may be necessary or advisable to comply with any Federal or state securities
laws or reporting requirements. The Trustee shall furnish the Servicer with any
powers of attorney or other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
(c) The Servicer shall not be obligated to use separate servicing
procedures, offices, employees or accounts for servicing the Receivables from
the procedures, offices, employees and accounts used by the Servicer in
connection with servicing other receivables.
Section 3.02. Servicing Compensation. (a) As full compensation for its
----------------------
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") payable solely from Collections from
-------------
Receivables with respect to each Monthly Period, payable monthly on the related
Distribution Date, in an amount equal to one-twelfth of the product of (a) the
weighted average of the Servicing Fee Rates with respect to each outstanding
Series (based upon the Servicing Fee Rate for each Series and the Invested
Amount (or such other amount as specified in the related Supplement) of such
Series, in each case as of the last day of the prior Monthly Period) and (b) the
amount of the Invested Amount on the last day of the prior Monthly Period. The
share of the Servicing Fee allocable to the Certificateholders' Interest of a
particular Series with respect to any Monthly Period (the "Monthly Servicing
-----------------
Fee") will be determined in accordance with the relevant Supplement. The
portion of the Servicing Fee with respect to any Monthly Period not so allocated
to the Certificateholders' Interest of a particular Series shall be paid by the
Holder of the Seller Certificate on the related Distribution Date and in no
event shall the Trust, the Trustee, the Investor Certificateholders of any
28
<PAGE>
Series or any Series Enhancer be liable for the share of the Servicing Fee with
respect to any Monthly Period to be paid by the Holder of the Seller
Certificate.
(b) The Servicer's expenses include the reasonable fees and
disbursements of independent accountants and all other expenses incurred by the
Servicer in connection with its activities hereunder; provided that the Servicer
shall not be liable for any liabilities, costs or expenses of the Trust or the
Certificateholders arising under any tax law, including without limitation any
federal, state or local income or franchise taxes or any other tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure to comply therewith). The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment therefor
other than the Monthly Servicing Fee.
Section 3.03. Representations, Warranties and Covenants of the
------------------------------------------------
Servicer. (a) Mail-Well I Corporation, as initial Servicer, hereby makes, and
- --------
any Successor Servicer by its appointment hereunder shall make, on each Closing
Date (and on the date of any such appointment), the following representations,
warranties and covenants to the Trust (and agrees that the Trustee may rely on
each such representation, warranty and covenant in accepting the Receivables in
trust and in authenticating the Certificates):
(i) Organization and Good Standing. The Servicer is a
------------------------------
corporation (or with respect to such Successor Servicer, such other
corporate entity as may be applicable) duly organized, validly
existing and in good standing under the laws of its state of
incorporation (or, in the case of a national banking association, in
good standing under applicable federal law), and has full corporate
power, authority and legal right to execute, deliver and perform its
obligations under this Agreement and each Supplement and to own its
properties and conduct its business as such properties are presently
owned and as such business is presently conducted.
(ii) Due Qualification. The Servicer is duly qualified to do
-----------------
business and is in good standing as a foreign corporation (or is
exempt from such requirements), and has obtained all necessary
licenses and approvals in each jurisdiction in the United States
necessary for the conduct of its business of which the failure to
obtain could reasonably be expected to affect the Servicer's ability
to perform its obligations under this Agreement.
(iii) Due Authorization. The execution, delivery, and
-----------------
performance of this Agreement and each Supplement have been duly
authorized by the Servicer by all necessary corporate action on the
part of the Servicer.
(iv) Binding Obligation. This Agreement and each Supplement
------------------
has been, in the case of Mail-Well I Corporation, duly executed and
constitutes a legal, valid and binding obligation of the Servicer,
enforceable in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium, or similar law affecting
creditors' rights generally and by general principles of equity.
(v) No Violation. The execution and delivery of this
------------
Agreement and each Supplement by the Servicer, the performance of the
transactions contemplated by this Agreement and each Supplement and
the fulfillment of the terms hereof and thereof
29
<PAGE>
applicable to the Servicer, will (i) not conflict with, violate, result in
any breach of any of the material terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any
Requirement of Law applicable to the Servicer or any indenture, contract,
agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it or any of its properties are bound and
(ii) do not result in or require the creation of any Lien, security
interest or other charge or encumbrance upon or with respect to any of its
properties (except for the interest created pursuant to this Agreement.)
(vi) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the best knowledge of the Servicer, threatened against the
Servicer before any court, regulatory body, administrative agency or other
tribunal or governmental instrumentality seeking to prevent the issuance of
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any Supplement, seeking any determination
or ruling that, in the reasonable judgment of the Servicer, would
materially and adversely affect the performance by the Servicer of its
obligations under this Agreement or any Supplement, or seeking any
determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement or any Supplement. Neither the
Servicer nor any Affiliate thereof is in default with respect to any order
of any court, arbitration or Governmental Authority except for defaults
with respect to orders of Governmental Authority which defaults are not
material to the business or operations of the Servicer and its Affiliates,
taken as a whole.
(vii) Compliance with Requirements of Law. The Servicer shall duly
-----------------------------------
satisfy all obligations on its part to be fulfilled under or in connection
with the Receivables, will maintain in effect all qualifications required
under Requirements of Law in order to properly service the Receivables and
will comply in all material respects with all other Requirements of Law in
connection with servicing the Receivables.
(viii) No Rescission or Cancellation. The Servicer shall not permit
-----------------------------
any rescission or cancellation of a Receivable except as ordered by a court
of competent jurisdiction or other Governmental Authority or in the
ordinary course of its business and in accordance with the Credit and
Collection Policy.
(ix) Protection of Certificateholders' Rights. The Servicer shall
----------------------------------------
take no action which, nor omit to take any action the omission of which,
would materially impair the rights of Certificateholders in any Receivable,
nor shall it, except in the ordinary course of its business and in
accordance with the Credit and Collection Policy, reschedule, revise or
defer Collections due on the Receivables.
(x) Receivables Not to be Evidenced by Promissory Notes. Except in
---------------------------------------------------
connection with its enforcement or collection of a Receivable, the Servicer
will take no action to cause any Receivable to be evidenced by any
instrument (as such term is defined in the UCC).
(xi) All Consents Required. All approvals, authorizations, consents,
---------------------
orders or other actions of any Person or of any governmental body or
official required in connection with the execution and delivery by the
Servicer of this Agreement and each Supplement, the performance by the
Servicer of the transactions contemplated by this
30
<PAGE>
Agreement and each Supplement and the fulfillment by the Servicer of
the terms hereof and thereof, have been obtained.
(xii) Maintenance of Records and Books of Account. The
-------------------------------------------
Servicer shall maintain and implement administrative and operating
procedures (including the ability to recreate records evidencing the
Receivables in the event of the destruction of the originals thereof),
and keep and maintain all documents, books, computer records and other
information, reasonably necessary or advisable for the collection of
all the Receivables. Such documents, books and computer records shall
reflect all facts giving rise to the Receivables, all payments and
credits with respect thereto, and such documents, books and computer
records shall indicate the interests of the Trust in the Receivables.
(xiii) Financial Statements. The consolidated balance sheet
--------------------
of the Servicer as at December 31, 1995, and the related consolidated
statements of income and retained earnings of the Servicer for the
fiscal year then ended, copies of which have been furnished to the
Trustee, the Series Representative and the Liquidity Agent, fairly
present the consolidated financial condition of the Servicer as at
such date and the consolidated results of the operations of the
Servicer for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and
since December 31, 1995 there has been no material adverse change in
the business, operations, property or financial condition of the
Servicer. The opening pro forma balance sheet of the Seller as at
November 15, 1996, giving effect to the initial purchase to be made
under this Agreement, a copy of which has been furnished to the
Trustee, the Series Representative and the Liquidity Agent, fairly
presents the financial condition of the Seller as at such date, in
accordance with generally accepted accounting principles.
(b) For purposes of the representations and warranties set forth in
this Section 3.03, each reference to a Supplement shall be deemed to refer only
to those Supplements in effect as of the relevant Closing Date or the date of
appointment of a Successor Servicer, as applicable.
Section 3.04. Servicer Reports to the Trustee. (a) Daily Reports. On
------------------------------- -------------
each Business Day, the Servicer shall prepare and forward to the Trustee and
each Series Representative by facsimile a report in the form of Exhibit B-1
hereto (the "Daily Report").
------------
(b) Weekly Reports. On the 4th Business Day of each calendar week,
--------------
the Servicer shall prepare and forward to the Trustee and each Series
Representative by facsimile a report in the form of Exhibit B-2 hereto (the
"Weekly Report").
- --------------
(c) Monthly Settlement Report. Unless otherwise stated in the
-------------------------
Supplement related to any Series, on each date set forth on Schedule 3 hereto,
and upon the monthly dates thereafter agreed upon by the Servicer and the
Liquidity Agent and each Series Representative, the Servicer shall forward to
the Trustee, the Paying Agent, each Rating Agency, each Series Enhancer and each
Series Representative entitled thereto pursuant to the relevant Supplement a
certificate of a Servicing Officer in the form of Exhibit C (the "Monthly
-------
Settlement Report").
- -----------------
Section 3.05. Annual Certificate of Servicer. The Servicer shall
------------------------------
deliver to the Trustee, each Rating Agency, each Series Enhancer and each Series
Representative entitled thereto
31
<PAGE>
pursuant to the relevant Supplement, on or before January 31 of each calendar
year, beginning with the January 31, 1997, an Officer's Certificate (with
appropriate insertions) substantially in the form of Exhibit D.
Section 3.06. Semi-Annual Agreed-Upon Procedures Report of Independent
--------------------------------------------------------
Public Accountants; Copies of Reports Available. On the date hereof and on or
- -----------------------------------------------
before May 1 and November 1 of each calendar year thereafter, or, if the
Liquidity Agent and the Series Representative so consent, on one such date
during each calendar year, the Servicer shall cause at its expense a firm of
nationally recognized independent public accountants (who may also render other
services to the Servicer or the Seller) to furnish a report in the form of
Exhibit F hereto (addressed to the Liquidity Agent, the Series Representative,
and the Servicer) to the Trustee, the Servicer and each Rating Agency (a) to the
effect that they have applied certain procedures with the Servicer and examined
certain documents relating to the servicing of Receivables under this Agreement
and each Supplement and that, on the basis of such agreed upon procedures,
nothing has come to the attention of such accountants that caused them to
believe that the servicing (including the allocation of Collections) has not
been conducted in compliance with the terms and conditions set forth in Article
III and Article IV and Section 8.08 of this Agreement and the applicable
provisions of each Supplement, except for such exceptions as they believe to be
immaterial and such other exceptions as shall be set forth in such statement,
(b) to the effect that they have applied certain procedures agreed upon with the
Servicer to compare the mathematical calculations of certain amounts set forth
in the Servicer's Certificates delivered pursuant to Section 3.04(b) during the
period covered by such report with the Servicer's computer reports which were
the source of such amounts and that on the basis of such agreed upon procedures
and comparison, such accountants are of the opinion that such amounts are in
agreement, except for such exceptions as they believe to be immaterial and such
other exceptions as shall be set forth in such statement and (c) to the effect
that they have applied certain procedures agreed upon with the Servicer to
determine compliance by the Seller with Section 2.06(f), and on the basis of
such agreed upon procedures, nothing has come to the attention of the
accountants that caused them to believe that the Seller was not in compliance
with Section 2.06(f), except for such exceptions they believe to be immaterial
and such other exceptions as shall be set forth in such statement. A copy of
such report shall be delivered to each Series Enhancer and each Series
Representative entitled thereto pursuant to the relevant Supplement. A copy of
each certificate and report provided pursuant to Section 3.04(b), 3.05 or 3.06
may be obtained by any Investor Certificateholder or Certificate Owner by a
request to the Trustee addressed to the Corporate Trust Office.
Section 3.07. Tax Treatment. The Seller has entered into this
-------------
Agreement, and the Certificates will be issued with the intention that, for
Federal, state and local income and franchise tax purposes, the Investor
Certificates (except Seller Retained Certificates which are held by the Seller)
of each Series will qualify as debt secured by the Receivables. The Seller, by
entering into this Agreement, each Certificateholder, by the acceptance of its
Certificate (and each Certificate Owner, by its acceptance of an interest in the
applicable Certificate), agree to treat such Investor Certificates for Federal,
state and local income and franchise tax purposes as debt. Each Holder of such
Investor Certificate agrees that it will cause any Certificate Owner acquiring
an interest in a Certificate through it to comply with this Agreement as to
treatment as debt under applicable tax law, as described in this Section 3.07.
Furthermore, subject to Section 11.11, the Trustee shall treat the Trust as a
security device only, and shall not file tax returns or obtain an employer
identification number on behalf of the Trust.
Section 3.08. Notices to Mail-Well I Corporation. If neither
----------------------------------
Mail-Well I Corporation nor one of its Affiliates is acting as Servicer, any
Successor Servicer shall deliver to Mail-Well I
32
<PAGE>
Corporation each certificate and report required to be provided thereafter
pursuant to Section 3.04(b), 3.05 or 3.06.
Section 3.09. Adjustments. (a) If the Servicer adjusts downward the
-----------
amount of any Receivable (i) because of a rebate, refund, adjustment,
unauthorized charge or billing error to an Obligor, (ii) because such Receivable
was created in respect of merchandise which was refused or returned by an
Obligor, or (iii) if the Servicer otherwise adjusts downward the amount of any
Receivable without receiving Collections therefor or charging off such amount as
uncollectible, then, in any such case, the amount of Receivables used to
calculate the Seller Amount, the Seller's Interest, the Floating Allocation
Percentage applicable to any Series will be reduced by the amount of the
adjustment. Any reduction required pursuant to the preceding sentence shall be
made no later than the next Business Day following the downward adjustment of
the applicable Receivable.
(b) If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Receivable and such Collection was received by
the Servicer in the form of a check which is not honored for any reason or (ii)
the Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. If (i) the Servicer makes a deposit into the Canadian Collection
Account in respect of a Collection of a Canadian Receivable and such Collection
was received by the Servicer in the form of a check which is not honored for any
reason or (ii) the Servicer makes a mistake with respect to the amount of any
Collection and deposits an amount that is less than or more than the actual
amount of such Collection, the Servicer shall appropriately adjust the amount
subsequently deposited into the Canadian Collection Account to reflect such
dishonored check or mistake. Any Receivable in respect of which a dishonored
check is received shall be deemed not to have been paid. Notwithstanding the
first three sentences of this paragraph, any adjustments made pursuant to this
paragraph will be reflected in a current report but will not change any amount
of Collections previously reported pursuant to subsection 3.04(b).
ARTICLE IV
Rights of Certificateholders and
--------------------------------
Allocation and Application of Collections
-----------------------------------------
Section 4.01. Rights of Certificateholders. The Investor Certificates
----------------------------
shall represent fractional undivided interests in the Trust, which, with respect
to each Series, shall consist of the right to receive, to the extent necessary
to make the required payments with respect to the Investor Certificates of such
Series at the times and in the amounts specified in the related Supplement, the
portion of Collections allocable to Investor Certificateholders of such Series
pursuant to this Agreement and such Supplement, funds on deposit in the
Collection Account and the Canadian Collection Account allocable to
Certificateholders of such Series pursuant to this Agreement and such
Supplement, funds on deposit in any related Series Account and funds available
pursuant to any related Series Enhancement (collectively, with respect to all
Series, the "Certificateholders' Interest"), it being understood that, unless
----------------------------
otherwise specified in the Supplement with respect to such Series, the Investor
Certificates of any Series or Class shall not represent any interest in any
Series Account or Series Enhancement for the benefit of any other Series or
Class. The Seller Certificate shall represent the ownership interest in the
Trust Assets not allocated pursuant to this Agreement or any Supplement to the
Certificateholders' Interest, including the right to receive Collections with
respect to the
33
<PAGE>
Receivables and other amounts at the times and in the amounts specified in this
Agreement or any Supplement to be paid to the Seller on behalf of the Holder of
the Seller Certificate (the "Seller's Interest"); provided, however, that the
----------------- -------- -------
Seller Certificate shall not represent any interest in the Lockboxes, the
Lockbox Accounts, the Concentration Account, the Collection Account, the
Canadian Accounts, the Canadian Collection Account, any Series Account or any
Series Enhancement, except as specifically provided in this Agreement or any
Supplement.
Section 4.02. Establishment of Lockboxes, Lockbox Accounts, the
-------------------------------------------------
Concentration Account, the Collection Account, the Canadian Accounts, the
- -------------------------------------------------------------------------
Canadian Collection Account and Special Funding Account. (a)(i) The Servicer
- -------------------------------------------------------
has instructed all existing Obligors, and will instruct all future Obligors, to
make payments in respect of Receivables only (A) by check or money order mailed
to one or more lockboxes or post office boxes under the control of the Trustee
(each such box being a "Lockbox" and collectively, the "Lockboxes"), (B) by wire
------- ---------
transfer, ACH transfer or moneygram directly to the applicable Lockbox Account
or, (C) in the case of Obligors making payments denominated in Canadian Dollars
in respect of Canadian Receivables, to a Canadian Account. The Servicer shall
endorse, to the extent necessary, all checks or other instruments received in
any Lockbox so that the same can be deposited in such Lockbox Account, in the
form so received (with all necessary endorsements), and the Servicer shall
deposit the same in such Lockbox Account on the Business Day on which such check
or other instruments are received.
(ii) The Servicer, for the benefit of the Certificateholders,
shall establish and maintain in the name of the Seller, Eligible
Deposit Accounts bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Trust (each
such account being a "Lockbox Account and collectively the "Lockbox
--------------- -------
Accounts"). The Trustee shall possess a security interest in the
--------
Seller's right, title and interest in all funds on deposit from time
to time in the Lockbox Accounts and in all proceeds thereof for the
benefit of the Certificateholders. The Lockbox Accounts shall be under
the sole dominion and control of the Trustee for the benefit of the
Certificateholders. The Servicer hereby grants a first priority
security interest in and to the Lockbox Accounts and all amounts now
or hereafter deposited therein or evidenced thereby. The Servicer
agrees that it shall have no right of set-off or banker's lien
against, and no right to otherwise deduct from, any funds held in the
Lockbox Accounts for any amount owed to it by the Trustee, the Trust,
any Certificateholder or any Series Enhancer. If, at any time, any
Lockbox Account ceases to be an Eligible Deposit Account, the Trustee
(or the Servicer on its behalf) shall, within 10 Business Days after
notice from the Servicer or any Series Representative, establish a new
Lockbox Account meeting the conditions specified above, transfer any
cash or any investments in the old Lockbox Account to such new Lockbox
Account and from the date such new Lockbox Account is established, it
shall be a "Lockbox Account". The Servicer shall irrevocably instruct
---------------
each bank at which a Lockbox Account is held, to transfer, by 12:00
noon (New York City time) on each Business Day, all amounts in such
Lockbox Account to the Concentration Account.
(b) The Servicer, for the benefit of the Certificateholders, shall
establish and maintain at Norwest Bank Colorado, National Association in the
name of the Seller, an Eligible Deposit Account bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Certificateholders (the "Concentration Account"). The Trustee shall possess a
---------------------
security interest in the Seller's right, title and interest in all funds on
deposit from time to time in the Concentration Account and in all proceeds
thereof for the benefit of the Certificateholders. The Concentration
34
<PAGE>
Account shall be under the sole dominion and control of the Trustee for the
benefit of the Certificateholders. The Servicer hereby grants a first priority
security interest in and to the Concentration Account and all amounts now or
hereafter deposited therein or evidenced thereby. The Servicer agrees that it
shall have no right of set-off or banker's lien against, and no right to
otherwise deduct from, any funds held in the Concentration Account for any
amount owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If, at any time, the Concentration Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall, within 10
Business Days after notice from the Servicer or any Series Representative,
establish a new Concentration Account meeting the conditions specified above,
transfer any cash or any investments to such new Concentration Account and from
the date such new Concentration Account is established, it shall be the
"Concentration Account". The Servicer shall irrevocably instruct the bank at
---------------------
which the Concentration Account is held, to transfer, by 12:00 noon (New York
City time) on each Business Day, all amounts in the Concentration Account to the
Collection Account.
(c) The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (including
all Collection Subaccounts therein, the "Collection Account"). The Supplement
------------------
for a Series may require the Trustee to establish and maintain, for
administrative purposes only, subaccounts of the Collection Account for the
benefit of the Certificateholders of such Series (such subaccounts the
"Collection Subaccounts"). The Trustee shall possess all right, title and
- -----------------------
interest in all funds on deposit from time to time in the Collection Account and
in all proceeds thereof for the benefit of the Certificateholders. The
Collection Account shall be under the sole dominion and control of the Trustee
for the benefit of the Certificateholders. The Servicer hereby grants a first
priority security interest in and to the Collection Account and all amounts now
or hereafter deposited therein or evidenced thereby. The Servicer agrees that
it shall have no right of set-off or banker's lien against, and no right to
otherwise deduct from, any funds held in the Collection Account for any amount
owed to it by the Trustee, the Trust, any Certificateholder or any Series
Enhancer. If at any time the Collection Account ceases to be an Eligible
Deposit Account, the Trustee (or the Servicer on its behalf) shall within 10
Business Days establish a new Collection Account meeting the conditions
specified above, transfer any cash or any investments to such new Collection
Account and from the date such new Collection Account is established, it shall
be the "Collection Account".
------------------
(d) So long as no Pay-Out Event has occurred and is continuing, funds
on deposit in the Collection Account shall at the direction of the Servicer be
invested by the Trustee in Eligible Investments selected by the Servicer. All
such Eligible Investments shall be held by the Trustee for the benefit of the
Certificateholders. The Trustee shall maintain for the benefit of the
Certificateholders possession of the negotiable instruments or securities, if
any, evidencing such Eligible Investments. Funds representing Collections
collected during any Monthly Period shall be invested in Eligible Investments
that will mature so that all funds will be available at the close of business on
the Transfer Date following such Monthly Period. No Eligible Investment shall
be disposed of prior to its maturity; provided, however, that, at any time when
-------- -------
a Payout Event has not occurred or is not continuing, the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Servicer, the Servicer having reasonably determined that the
interests of the Investor Certificateholders may be adversely affected if such
Eligible Investment is held to its maturity and; provided, further, that, at any
-------- -------
time when a Payout Event has occurred and is continuing, the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Series Representative and Liquidity Agent. On each Distribution
Date, all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Collection Account shall be treated as
Collections
35
<PAGE>
of Receivables with respect to the last day of the related Monthly Period,
except as otherwise specified in any Supplement. For purposes of determining the
availability of funds or the balances in the Collection Account for any reason
under this Agreement, all investment earnings net of investment expenses and
losses on such funds shall be deemed not to be available or on deposit.
(e) The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Seller, Eligible Deposit Accounts
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Trust (each such account being a "Canadian Account
----------------
and collectively the "Canadian Accounts"). The Trustee shall possess a security
-----------------
interest in the Seller's right, title and interest in all funds on deposit from
time to time in the Canadian Accounts and in all proceeds thereof for the
benefit of the Certificateholders. The Canadian Accounts shall be under the
sole dominion and control of the Trustee for the benefit of the
Certificateholders. The Servicer hereby grants a first priority security
interest in and to the Concentration Accounts and all amounts now or hereafter
deposited therein or evidenced thereby. The Servicer agrees that it shall have
no right of set-off or banker's lien against, and no right to otherwise deduct
from, any funds held in the Canadian Accounts for any amount owed to it by the
Trustee, the Trust, any Certificateholder or any Series Enhancer. If, at any
time, any Canadian Account ceases to be an Eligible Deposit Account, the Trustee
(or the Servicer on its behalf) shall, within 10 Business Days after notice from
the Servicer or any Series Representative, establish a new Canadian Account
meeting the conditions specified above, transfer any cash or any investments in
the old Canadian Account to such new Canadian Account and from the date such new
Canadian Account is established, it shall be a "Canadian Account". The Servicer
----------------
shall irrevocably instruct each bank at which a Canadian Account is held, to
transfer, by 12:00 noon (New York City time) on each Business Day, all amounts
in such Canadian Account to the Canadian Collection Account.
(f) The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (including
all Canadian Collection Subaccounts therein, the "Canadian Collection Account").
---------------------------
The Supplement for a Series may require the Trustee to establish and maintain,
for administrative purposes only, subaccounts of the Canadian Collection Account
for the benefit of the Certificateholders of such Series (such subaccounts the
"Canadian Collection Subaccounts"). The Trustee shall possess all right, title
- --------------------------------
and interest in all funds on deposit from time to time in the Canadian
Collection Account and in all proceeds thereof for the benefit of the
Certificateholders. The Canadian Collection Account shall be under the sole
dominion and control of the Trustee for the benefit of the Certificateholders.
The Servicer hereby grants a first priority security interest in and to the
Canadian Collection Account and all amounts now or hereafter deposited therein
or evidenced thereby. The Servicer agrees that it shall have no right of set-
off or banker's lien against, and no right to otherwise deduct from, any funds
held in the Canadian Collection Account for any amount owed to it by the
Trustee, the Trust, any Certificateholder or any Series Enhancer. If at any
time the Canadian Collection Account ceases to be an Eligible Deposit Account,
the Trustee (or the Servicer on its behalf) shall within 10 Business Days
establish a new Canadian Collection Account meeting the conditions specified
above, transfer any cash or any investments to such new Collection Account and
from the date such new Collection Account is established, it shall be the
"Canadian Collection Account".
- ----------------------------
(g) So long as no Pay-Out Event has occurred and is continuing, funds
on deposit in the Canadian Collection Account shall at the direction of the
Servicer be invested by the Trustee in Eligible Investments selected by the
Servicer. All such Eligible Investments shall be held by the Trustee for the
benefit of the Certificateholders. The Trustee shall maintain for the benefit
of the
36
<PAGE>
Certificateholders possession of the negotiable instruments or securities, if
any, evidencing such Eligible Investments. Funds representing Collections
collected during any Monthly Period shall be invested in Eligible Investments
that will mature so that all funds will be available at the close of business on
the Transfer Date following such Monthly Period. No Eligible Investment shall be
disposed of prior to its maturity; provided, however, that, at amy time when a
-------- -------
Payout Event has not occurred or is not continuing, the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Servicer, the Servicer having reasonably determined that the
interests of the Investor Certificateholders may be adversely affected if such
Eligible Investment is held to its maturity and; provided, further, that, at any
-------- -------
time when a Payout Event has occurred and is continuing, the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Series Representative and Liquidity Agent. On each Distribution
Date, all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Canadian Collection Account shall be
treated as Collections of Receivables with respect to the last day of the
related Monthly Period, except as otherwise specified in any Supplement. For
purposes of determining the availability of funds or the balances in the
Canadian Collection Account for any reason under this Agreement, all investment
earnings net of investment expenses and losses on such funds shall be deemed not
to be available or on deposit.
(h) The Servicer, for the benefit of the Certificateholders, shall
establish and maintain in the name of the Trustee, on behalf of the Trust, an
Eligible Deposit Account bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Certificateholders (the
"Special Funding Account"). The Trustee shall possess all right, title and
- ------------------------
interest in all funds on deposit from time to time in the Special Funding
Account and in all proceeds thereof for the benefit of the Certificateholders.
The Special Funding Account shall be under the sole dominion and control of the
Trustee for the benefit of the Certificateholders. The Servicer hereby grants a
first priority security interest in and to the Special Funding Account and all
amounts now or hereafter deposited therein or evidenced thereby. The Servicer
agrees that it shall have no right of set-off or banker's lien against, and no
right to otherwise deduct from, any funds held in the Special Funding Account
for any amount owed to it by the Trustee, the Trust, any Certificateholder or
any Series Enhancer. If, at any time, the Special Funding Account ceases to be
an Eligible Deposit Account, the Trustee (or the Servicer on its behalf) shall
within 10 Business Days establish a new Special Funding Account meeting the
conditions specified above, transfer any cash or any investments to such new
Special Funding Account and from the date such new Special Funding Account is
established, it shall be the "Special Funding Account".
-----------------------
(i) So long as no Pay-Out Event has occurred and is continuing, funds
on deposit in the Special Funding Account shall at the direction of the Servicer
be invested by the Trustee in Eligible Investments selected by the Servicer.
All such Eligible Investments shall be held by the Trustee for the benefit of
the Certificateholders. The Trustee shall maintain for the benefit of the
Certificateholders possession of the negotiable instruments or securities, if
any, evidencing such Eligible Investments. Funds deposited in the Special
Funding Account on any date during a Monthly Period will be invested in Eligible
Investments that will mature no later than the close of business on the Transfer
Date following such Monthly Period. No Eligible Investment shall be disposed of
prior to its maturity; provided, however, that, at any time when a Payout Event
-------- -------
has not occurred or is not continuing, the Trustee may sell, liquidate or
dispose of an Eligible Investment before its maturity, if so directed by the
Servicer, the Servicer having reasonably determined that the interests of the
Investor Certificateholders may be adversely affected if such Eligible
Investment is held to its maturity and; provided, further, that, at any time
-------- -------
when a Payout Event has occurred and is continuing, the Trustee may sell,
liquidate or dispose of an Eligible Investment before its maturity, if so
directed by the Series
37
<PAGE>
Representative and Liquidity Agent. Unless directed by the Servicer, funds
deposited in the Special Funding Account on a Transfer Date with respect to the
next following Distribution Date are not required to be invested overnight. On
each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Special Funding
Account shall be treated as Collections of Receivables with respect to the last
day of the related Monthly Period except as otherwise specified in the related
Supplement. Unless otherwise directed by the Servicer, (i) on each Distribution
Date on which no Series is in an Accumulation Period or an Amortization Period,
funds on deposit in the Special Funding Account will be withdrawn and paid to
the Holder of the Seller Certificate to the extent that the Seller Amount
exceeds the Minimum Balance on such date, and (ii) on each "Purchase Date" (as
defined in the Purchase Agreement) on which no Series is in an Accumulation
Period or an Amortization Period, funds on deposit in the Special Funding
Account will be withdrawn and paid to the Seller, to be applied to the "Purchase
Price" of the Receivables to be purchased on such date pursuant to the Purchase
Agreement; provided, however, amounts may be withdrawn from the Special Funding
-------- -------
Account on any Purchase Date pursuant to this clause (ii) only if, and to the
extent that, such withdrawal will not result in a Payout Event (after giving
effect to all Receivables to be transferred to the Trust on such date). For
purposes of determining the availability of funds or the balances in the Special
Funding Account for any reason under this Agreement, all investment earnings net
of investment expenses and losses on such funds shall be deemed not to be
available or on deposit.
Section 4.03. Collections and Allocations. (a) The Servicer will
---------------------------
apply or will instruct the Trustee to apply all funds on deposit in the
Collection Account and the Canadian Collection Account as described in this
Article IV and in each Supplement. Except as otherwise provided below, the
Servicer shall deposit, or cause to be deposited, all Collections received
(whether through the Lockbox Accounts, the Canadian Accounts or otherwise) into
the Collection Account (or in the case of Collections with respect to Canadian
Receivables into the Canadian Collection Account), no later than two Business
Days following the receipt of such Collections.
(b) With respect to each day during each Monthly Period, Collections
of Receivables will be allocated to the Certificateholders' Interest of each
Series as set forth in the Supplement related to such Series. On each
Determination Date, Defaulted Receivables will be allocated to the
Certificateholders' Interest of each Series, each as set forth in the related
Supplement.
(c) (i) Throughout the existence of the Trust, unless otherwise
stated in any Supplement, the Servicer shall allocate to the Holder of the
Seller Certificate an amount equal to the product of (A) the Seller's Percentage
and (B) the aggregate amount of such Collections allocated to Receivables in
respect of each Monthly Period. Notwithstanding anything in this Agreement to
the contrary, unless otherwise stated in any Supplement, the Servicer need not
deposit this amount or any other amounts so allocated to the Seller Certificate
pursuant to any Supplement into the Collection Account or the Canadian
Collection Account and shall pay, or be deemed to pay, such amounts as collected
to the Holder of the Seller Certificate.
(ii) The payments to be made to the Holder of the Seller
Certificate pursuant to this Section 4.03(c) do not apply to deposits
to the Collection Account or the Canadian Collection Account or other
amounts that do not represent Collections, including payment of the
purchase price for Receivables pursuant to Section 2.06 or 10.01,
proceeds from the sale, disposition or liquidation of Receivables
pursuant to Section 9.02 or 12.02 or payment of the purchase price for
the Certificateholders' Interest of a specific Series pursuant to the
related Supplement.
38
<PAGE>
ARTICLE V
Distributions and Reports to
----------------------------
Certificateholders
------------------
Distributions shall be made to, and reports shall be provided to,
Certificateholders as set forth in the applicable Supplement.
ARTICLE VI
The Certificates
----------------
Section 6.01. The Certificates. The Investor Certificates of any
----------------
Series or Class may be issued in bearer form ("Bearer Certificates") with
-------------------
attached interest coupons and any other applicable coupon (collectively, the
"Coupons") or in fully registered form ("Registered Certificates") and shall be
------- -----------------------
substantially in the form of the exhibits with respect thereto attached to the
applicable Supplement. Each Series of Variable Interest Certificates initially
shall be issued as one or more Series of Variable Interest Certificates in an
aggregate original principal amount equal to the Initial Invested Amount (as
defined in the related Supplement) for the Series and with an initial aggregate
Stated Amount in the amount set out in the related Supplement . The Seller
Certificate will be issued in registered form, substantially in the form of
Exhibit A, and shall upon issue, be executed and delivered by the Seller to the
Trustee for authentication and redelivery as provided in Section 6.02. Except
as otherwise provided in Section 6.03 or in any Supplement, Bearer Certificates
shall be issued in minimum denominations of $500,000 and Registered Certificates
shall be issued in minimum denominations of $500,000 and in integral multiples
of $100,000 in excess thereof. If specified in any Supplement, the Investor
Certificates of any Series or Class shall be issued upon initial issuance as a
single certificate evidencing the aggregate original principal amount (or Stated
Amount in the case of Variable Funding Certificates) of such Series or Class.
The Seller Certificate shall initially be a single certificate and shall
initially represent the entire Seller's Interest. Each Certificate shall be
executed by manual or facsimile signature on behalf of the Seller by its
President or any Vice President. Certificates bearing the manual or facsimile
signature of an individual who was, at the time when such signature was affixed,
authorized to sign on behalf of the Seller shall not be rendered invalid,
notwithstanding that such individual ceased to be so authorized prior to the
authentication and delivery of such Certificates or does not hold such office at
the date of such Certificates. No Certificates shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by or on behalf of the Trustee by the manual signature of a
duly authorized signatory, and such certificate of authentication upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. Bearer
Certificates shall be dated the Closing Date. All Registered Certificates and
the Seller Certificate shall be dated the date of their authentication.
Section 6.02. Authentication of Certificates. The Trustee shall
------------------------------
authenticate and deliver the Investor Certificates of each Series and Class that
are issued upon original issuance to or upon the order of the Seller against
payment to the Seller of the purchase price therefor. The Trustee shall
authenticate and deliver the Seller Certificate to the Seller simultaneously
with its delivery of the Investor Certificates of the first Series to be issued
hereunder.
39
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Section 6.03. New Issuances. (a) The Seller may from time to time
-------------
direct the Trustee, on behalf of the Trust, to authenticate one or more new
Series of Investor Certificates. The Investor Certificates of all outstanding
Series shall be equally and ratably entitled as provided herein to the benefits
of this Agreement without preference, priority or distinction, all in accordance
with the terms and provisions of this Agreement and the applicable Supplement
except, with respect to any Series or Class, as provided in the related
Supplement.
(b) On or before the Closing Date relating to any new Series, the
parties hereto will execute and deliver a Supplement which will specify the
Principal Terms of such new Series. The terms of such Supplement may modify or
amend the terms of this Agreement solely as applied to such new Series. The
obligation of the Trustee to authenticate the Investor Certificates of such new
Series and to execute and deliver the related Supplement is subject to the
satisfaction of the following conditions:
(i) on or before the fifth Business Day immediately
preceding the Closing Date, the Seller shall have given the Trustee,
the Servicer, each Rating Agency and any Series Representative or
Series Enhancer entitled thereto pursuant to the relevant Supplement
notice of such issuance and the Closing Date;
(ii) the Seller shall have delivered to the Trustee the related
Supplement, in form satisfactory to the Trustee, executed by each
party hereto other than the Trustee;
(iii) the Seller shall have delivered to the Trustee any
related Enhancement Agreement executed by each of the parties thereto,
other than the Trustee;
(iv) the Rating Agency Condition shall have been satisfied with
respect to such issuance and each Series Representative shall have
consented thereto;
(v) the Seller shall have delivered to the Trustee and any
Series Representative or Series Enhancer entitled thereto pursuant to
the relevant Supplement an Officer's Certificate, dated the Series
Issuance Date, to the effect that the Seller reasonably believes that
such issuance will not, based on the facts known to such officer at
the time of such certification, then or thereafter cause a Pay-Out
Event to occur with respect to any Series;
(vi) the Seller shall have delivered to the Trustee and each
Rating Agency a Tax Opinion, dated the Closing Date, with respect to
such issuance; and
(vii) the Floating Allocation Percentage for all Series shall
not be greater than 100%, in each case as of the Closing Date and after
giving effect to such issuance.
Upon satisfaction of the above conditions, the Trustee shall execute the
Supplement and authenticate the Investor Certificates of such Series upon
execution thereof by the Seller.
Section 6.04. Registration of Transfer and Exchange of Certificates.
-----------------------------------------------------
(a)(1) The Trustee shall cause to be kept at the office or agency to be
maintained in accordance with the
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provisions of Section 11.16 a register (the "Certificate Register") in which,
--------------------
subject to such reasonable regulations as it may prescribe, a transfer Agent and
registrar (which may be the Trustee) (the "Transfer Agent and Registrar") shall
----------------------------
provide for the registration of the Registered Certificates and of transfers and
exchanges of the Registered Certificates as herein provided. The Transfer Agent
and Registrar shall initially be the Trustee, except as otherwise specified in
any Supplement with respect to the Certificates issued under that Supplement,
and any co-transfer Agent and co-registrar chosen by the Seller and acceptable
to the Trustee.
(ii) The Trustee may revoke such appointment and remove any
Transfer Agent and Registrar if the Trustee determines in its sole
discretion that such Transfer Agent and Registrar failed to perform
its obligations under this Agreement in any material respect. Any
Transfer Agent and Registrar shall be permitted to resign as Transfer
Agent and Registrar upon 30 days' notice to the Seller, the Trustee
and the Servicer; provided, however, that such
-------- -------
resignation shall not be effective and such Transfer Agent and
Registrar shall continue to perform its duties as Transfer Agent and
Registrar until the Trustee has appointed a successor Transfer Agent
and Registrar reasonably acceptable to the Seller.
(iii) Subject to paragraph (c) below, upon surrender for
registration of transfer of any Registered Certificate at any office
or agency of the Transfer Agent and Registrar maintained for such
purpose, one or more new Registered Certificates (of the same Series
and Class) in authorized denominations of like aggregate fractional
undivided interests in the Certificateholders' Interest shall be
executed, authenticated and delivered, in the name of the designated
transferee or transferees.
(iv) At the option of a Registered Certificateholder,
Registered Certificates (of the same Series and Class) may be
exchanged for other Registered Certificates of authorized
denominations of like aggregate fractional undivided interests in the
Certificateholders' Interest, upon surrender of the Registered
Certificates to be exchanged at any such office or agency; Registered
Certificates, including Registered Certificates received in exchange
for Bearer Certificates, may not be exchanged for Bearer Certificates.
At the option of the Holder of a Bearer Certificate, subject to
applicable laws and regulations, Bearer Certificates may be exchanged
for other Bearer Certificates or Registered Certificates (of the same
Series and Class) of authorized denominations of like aggregate
fractional undivided interests in the Certificateholders' Interest,
upon surrender of the Bearer Certificates to be exchanged at an office
or agency of the Transfer Agent and Registrar located outside the
United States. Each Bearer Certificate surrendered pursuant to this
Section shall have attached thereto all unmatured Coupons; provided
--------
that any Bearer Certificate, so surrendered after the close of
business on the Record Date preceding the relevant payment date or
distribution date after the expected final payment date need not have
attached the Coupon relating to such payment date or distribution date
(in each case, as specified in the applicable Supplement).
(v) Whenever any Investor Certificates are so surrendered
for exchange, the Seller shall execute, the Trustee shall authenticate
and the Transfer Agent and Registrar shall deliver (in the case of
Bearer Certificates, outside the United States) the Investor
Certificates which the Investor Certificateholder making the exchange
is entitled to receive. Every Investor Certificate presented or
surrendered for
41
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registration of transfer or exchange shall be accompanied by a written
instrument of transfer in a form satisfactory to the Trustee or the
Transfer Agent and Registrar duly executed by the Investor
Certificateholder or the attorney-in-fact thereof duly authorized in
writing.
(vi) No service charge shall be made for any registration of
transfer or exchange of Investor Certificates, but the Transfer Agent
and Registrar may require payment of a sum sufficient to cover any tax
or governmental charge that may be imposed in connection with any such
transfer or exchange.
(vii) All Investor Certificates (together with any Coupons)
surrendered for registration of transfer and exchange or for payment
shall be canceled and disposed of by or on behalf of the Trustee in a
manner satisfactory to the Trustee.
(viii) The Seller shall execute and deliver to the Trustee
Bearer Certificates and Registered Certificates in such amounts and at
such times as are necessary to enable the Trustee to fulfill its
responsibilities under this Agreement, each Supplement and the
Certificates.
(b) The Transfer Agent and Registrar will maintain at its expense
in the City of New York, an office or agency where Investor Certificates may be
surrendered for registration of transfer or exchange (except that Bearer
Certificates may not be surrendered for exchange at any such office or agency in
the United States).
(c)(i)(A) Registration of transfer of Investor Certificates containing
a legend substantially to the effect set forth on Exhibit E-1 shall be
effected only if such transfer (x) is made pursuant to an effective
registration statement under the Act, or is exempt from the
registration requirements under the Act, and (y) is made to a Person
which is not an employee benefit plan, trust or account, including an
individual retirement account, that is subject to ERISA or that is
described in Section 4975(e)(1) of the Code or an entity whose
underlying assets include plan assets by reason of a plan's investment
in such entity (a "Benefit Plan"). In the event that registration of a
------------
transfer is to be made in reliance upon an exemption from the
registration requirements under the Act, the transferor or the
transferee shall deliver, at its expense, to the Seller, the Servicer
and the Trustee, an investment letter from the transferee,
substantially in the form of the investment and ERISA representation
letter attached hereto as Exhibit E-2, and no registration of transfer
shall be made until such letter is so delivered.
(B) Investor Certificates issued upon registration or transfer
of, or Investor Certificates issued in exchange for, Investor
Certificates bearing the legend referred to above shall also bear
such legend unless the Seller, the Servicer, the Trustee and the
Transfer Agent and Registrar receive an opinion of counsel,
satisfactory to each of them, to the effect that such legend may
be removed.
(C) Whenever an Investor Certificate containing the legend
referred to above is presented to the Transfer Agent and Registrar
for registration of transfer, the Transfer Agent and Registrar
shall promptly seek instructions from the Servicer regarding such
transfer and shall be entitled to receive instructions
42
<PAGE>
signed by a Servicing Officer prior to registering any such
transfer. The Seller hereby agrees to indemnify the Transfer
Agent and Registrar and the Trustee and to hold each of them
harmless against any loss, liability or expense incurred without
negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by them in relation to
any such instructions furnished pursuant to this clause (i).
(ii) Registration of a transfer of Investor Certificates
containing a legend to the effect set forth on Exhibit E-3 shall be
effected only if such transfer is made to a Person which is not a
Benefit Plan. By acquiring any interest in a Book-Entry Certificate
which contains such legend, a Certificate Owner shall be deemed to
have represented and warranted that it is not a Benefit Plan.
Section 6.05. Mutilated, Destroyed, Lost or Stolen Certificates. If
-------------------------------------------------
(a) any mutilated Certificate (together, in the case of Bearer Certificates,
with all unmatured Coupons (if any) appertaining thereto) is surrendered to the
Transfer Agent and Registrar, or the Transfer Agent and Registrar receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate and (b) there is delivered to the Transfer Agent and Registrar and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Trustee that such
Certificate has been acquired by a bona fide purchaser, the Seller shall
execute, the Trustee shall authenticate and the Transfer Agent and Registrar
shall deliver (in the case of Bearer Certificates, outside the United States),
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and aggregate fractional undivided
interest. In connection with the issuance of any new Certificate under this
Section, the Trustee or the Transfer Agent and Registrar may require the payment
by the Certificateholder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee and Transfer Agent and
Registrar) connected therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
Section 6.06. Persons Deemed Owners. The Trustee, the Paying Agent,
---------------------
the Transfer Agent and Registrar and any Agent of any of these may (a) prior to
due presentation of a Registered Certificate for registration of transfer, treat
the Person in whose name any Registered Certificate is registered as the owner
of such Registered Certificate for the purpose of receiving distributions
pursuant to the terms of the applicable Supplement and for all other purposes
whatsoever, and (b) treat the bearer of a Bearer Certificate or Coupon as the
owner of such Bearer Certificate or Coupon for the purpose of receiving
distributions pursuant to the terms of the applicable Supplement and for all
other purposes whatsoever; and, in any such case, neither the Trustee, the
Paying Agent, the Transfer Agent and Registrar nor any Agent of any of these
shall be affected by any notice to the contrary. Notwithstanding the foregoing,
in determining whether the Holders of the requisite Investor Certificates have
given any request, demand, authorization, direction, notice, consent or waiver
hereunder (including under any Supplement), Certificates owned by the Seller,
the Servicer, any other Holder of the Seller Certificate, the Trustee or any
Affiliate thereof, shall be disregarded and deemed not to be outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent or waiver, only
Certificates which the Trustee actually knows to be so owned shall be so
disregarded. Certificates so owned which have been pledged in good faith shall
not be disregarded and may be regarded as outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such
43
<PAGE>
Certificates and that the pledgee is not the Seller, the Servicer, any other
Holder of the Seller Certificate or any Affiliate thereof.
Section 6.07. Appointment of Paying Agent. The Paying Agent shall
---------------------------
make distributions to Investor Certificateholders from the Collection Account,
Canadian Collection Account or any applicable Series Account pursuant to the
provisions of the applicable Supplement and shall report the amounts of such
distributions to the Trustee. Any Paying Agent shall have the revocable power
to withdraw funds from the Collection Account, Canadian Collection Account or
any applicable Series Account for the purpose of making the distributions
referred to above. The Trustee may revoke such power and remove the Paying
Agent if the Trustee determines in its sole discretion that the Paying Agent
shall have failed to perform its obligations under this Agreement or any
Supplement in any material respect. The "Paying Agent" shall initially be the
------------
Trustee, except as otherwise specified in any Supplement with respect to the
Certificates issued under that Supplement, and any co-paying Agent chosen by the
Seller and acceptable to the Trustee. Any Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' notice to the Trustee; provided, however,
-------- -------
that such resignation shall not be effective and such Paying Agent shall
continue to perform its duties as Paying Agent until the Trustee has appointed a
successor Paying Agent reasonably acceptable to the Seller. In the event that
any Paying Agent shall resign, the Trustee shall appoint a successor to act as
Paying Agent. The Trustee shall cause each successor or additional Paying Agent
to execute and deliver to the Trustee an instrument in which such successor or
additional Paying Agent shall agree with the Trustee that it will hold all sums,
if any, held by it for payment to the Investor Certificateholders in trust for
the benefit of the Investor Certificateholders entitled thereto until such sums
shall be paid to such Investor Certificateholders. The Paying Agent shall
return all unclaimed funds to the Trustee and upon removal shall also return all
funds in its possession to the Trustee. The provisions of Sections 11.01,
11.02, 11.03 and 11.05 shall apply to the Trustee also in its role as Paying
Agent, for so long as the Trustee shall act as Paying Agent. Any reference in
this Agreement to the Paying Agent shall include any co-paying Agent unless the
context requires otherwise.
Section 6.08. Access to List of Registered Certificateholders' Names
------------------------------------------------------
and Addresses. (a) The Trustee will furnish or cause to be furnished by the
- -------------
Transfer Agent and Registrar to the Servicer or the Paying Agent, within five
Business Days after receipt by the Trustee of a request therefor, a list in such
form as the Servicer or the Paying Agent may reasonably require, of the names
and addresses of the Registered Certificateholders. If any Holder or group of
Holders of Investor Certificates of any Series or all outstanding Series, as the
case may be, evidencing not less than 10% of the aggregate unpaid principal
amount of such Series or all outstanding Series, as applicable (the
"Applicants"), apply to the Trustee, and such application states that the
----------
Applicants desire to communicate with other Investor Certificateholders with
respect to their rights under this Agreement or any Supplement or under the
Investor Certificates and is accompanied by a copy of the communication which
such Applicants propose to transmit, then the Trustee, after having been
adequately indemnified by such Applicants for its costs and expenses shall
afford or shall cause the Transfer Agent and Registrar to afford such Applicants
access during normal business hours to the most recent list of Registered
Certificateholders of such Series or all outstanding Series, as applicable, held
by the Trustee, within five Business Days after the receipt of such application.
Such list shall be as of a date no more than 45 days prior to the date of
receipt of such Applicants' request.
(b) Every Registered Certificateholder, by receiving and holding a
Registered Certificate, agrees with the Trustee that neither the Trustee, the
Transfer Agent and Registrar, nor any of their respective agents, shall be held
accountable by reason of the disclosure of any such information
44
<PAGE>
as to the names and addresses of the Registered Certificateholders hereunder,
regardless of the sources from which such information was derived.
Section 6.09. Authenticating Agent. (a) The Trustee may appoint one
--------------------
or more authenticating agents with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made in this Agreement to
the authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and certificate of
authentication executed on behalf of the Trustee by an authenticating agent.
Each authenticating agent must be acceptable to the Seller and the Servicer.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any power or any further act on the part of the Trustee
or such authenticating agent. An authenticating agent may at any time resign by
giving notice of resignation to the Trustee and to the Seller. The Trustee may
at any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Seller. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Trustee or the Seller,
the Trustee promptly may appoint a successor authenticating agent. Any
successor authenticating agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an authenticating agent.
No successor authenticating agent shall be appointed unless acceptable to the
Trustee and the Seller. The Seller agrees to pay to each authenticating agent
from time to time reasonable compensation for its services under this Section.
The provisions of Sections 11.01, 11.02 and 11.03 shall be applicable to any
authenticating agent.
(c) Pursuant to an appointment made under this Section, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the Certificates described in the Pooling and Servicing
Agreement.
______________________________________________________________
______________________________________________________________
as Authenticating Agent
for the Trustee
By: ________________________________________________________
Authorized Officer
Section 6.10. Book-Entry Certificates. Unless otherwise specified
-----------------------
in the related Supplement for any Series or Class, the Investor Certificates,
upon original issuance, shall be issued in the form of one or more typewritten
Investor Certificates representing the Book-Entry Certificates, to be delivered
to the Clearing Agency, by, or on behalf of, the Seller. The Investor
Certificates shall initially be registered on the Certificate Register in the
name of the Clearing Agency or its nominee, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Investor Certificates, except as provided in Section 6.12. Unless and
until definitive,
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<PAGE>
fully registered Investor Certificates ("Definitive Certificates") have been
-----------------------
issued to the applicable Certificate Owners pursuant to Section 6.12 or as
otherwise specified in any such Supplement:
(i) the provisions of this Section shall be in full force
and effect;
(ii) the Seller, the Servicer and the Trustee may deal with
the Clearing Agency and the Clearing Agency Participants for all
purposes (including the making of distributions) as the authorized
representatives of the respective Certificate Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions
of this Section shall control; and
(iv) the rights of the respective Certificate Owners shall be
exercised only through the Clearing Agency and the Clearing Agency
Participants and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency or
the Clearing Agency Participants. Pursuant to the Depository
Agreement, unless and until Definitive Certificates are issued
pursuant to Section 6.12, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the related
Investor Certificates to such Clearing Agency Participants.
(v) purposes of any provision of this Agreement requiring or
permitting actions with the consent of, or at the direction of,
Investor Certificateholders evidencing a specified percentage of the
aggregate unpaid principal amount of Investor Certificates, such
direction or consent may be given by Certificate Owners (acting
through the Clearing Agency and the Clearing Agency Participants)
owning Investor Certificates evidencing the requisite percentage of
principal amount of Investor Certificates.
Section 6.11. Notices to Clearing Agency. Whenever any notice or
--------------------------
other communication is required to be given to Investor Certificateholders of
any Series or Class with respect to which Book-Entry Certificates have been
issued, unless and until Definitive Certificates shall have been issued to the
related Certificate Owners, the Trustee shall give all such notices and
communications to the applicable Clearing Agency.
Section 6.12. Definitive Certificates. If Book-Entry Certificates
-----------------------
have been issued with respect to any Series or Class and (a) the Seller advises
the Trustee that the Clearing Agency is no longer willing or able to discharge
properly its responsibilities under the Depository Agreement with respect to
such Series or Class and the Trustee or the Seller is unable to locate a
qualified successor, (b) the Seller, at its option, advises the Trustee that it
elects to terminate the book-entry system with respect to such Series or Class
through the Clearing Agency or (c) after the occurrence of a Servicer Default,
Certificate Owners of such Series or Class evidencing not less than 50% of the
aggregate unpaid principal amount of such Series or Class advise the Trustee and
the Clearing Agency through the Clearing Agency Participants that the
continuation of a book entry system with respect to the Investor Certificates of
such Series or Class through the Clearing Agency is no longer in the best
interests of the Certificate Owners with respect to such Certificates, then the
Trustee shall notify all Certificate Owners of such Certificates, through the
Clearing Agency, of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of any such Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency for
registration, the Seller shall execute and the Trustee shall
46
<PAGE>
authenticate and deliver such Definitive Certificates. Neither the Seller nor
the Trustee shall be liable for any delay in delivery of such instructions and
may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of such Definitive Certificates all references
herein to obligations imposed upon or to be performed by the Clearing Agency
shall be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Certificates and the Trustee shall
recognize the Holders of such Definitive Certificates as Investor
Certificateholders hereunder.
Section 6.13. Meetings of Certificateholders. (a) If at the time any
------------------------------
Bearer Certificates are issued and outstanding with respect to any Series or
Class to which any meeting described below relates, the Servicer or the Trustee
may at any time call a meeting of Investor Certificateholders of any Series or
Class or of all Series, to be held at such time and at such place as the
Servicer or the Trustee, as the case may be, shall determine, for the purpose of
approving a modification of or amendment to, or obtaining a waiver of any
covenant or condition set forth in, this Agreement, any Supplement or the
Investor Certificates or of taking any other action permitted to be taken by
Investor Certificateholders hereunder or under any Supplement. Notice of any
meeting of Investor Certificateholders, setting forth the time and place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be given in accordance with Section 13.05, the first mailing and
publication to be not less than 20 nor more than 180 days prior to the date
fixed for the meeting. To be entitled to vote at any meeting of Investor
Certificateholders a person shall be (i) a Holder of one or more Investor
Certificates of the applicable Series or Class or (ii) a person appointed by an
instrument in writing as proxy by the Holder of one or more such Investor
Certificates. The only persons who shall be entitled to be present or to speak
at any meeting of Investor Certificateholders shall be the persons entitled to
vote at such meeting and their counsel and any representative of the Seller, the
Servicer and the Trustee and their respective counsel.
(b) At a meeting of Investor Certificateholders, persons entitled to
vote Investor Certificates evidencing a majority of the aggregate unpaid
principal amount of the applicable Series or Class or all outstanding Series, as
the case may be, shall constitute a quorum. No business shall be transacted in
the absence of a quorum, unless a quorum is present when the meeting is called
to order. In the absence of a quorum at any such meeting, the meeting may be
adjourned for a period of not less than 10 days; in the absence of a quorum at
any such adjourned meeting, such adjourned meeting may be further adjourned for
a period of not less than 10 days; at the reconvening of any meeting further
adjourned for lack of a quorum, the persons entitled to vote Investor
Certificates evidencing at least 50% of the aggregate unpaid principal amount of
the applicable Series or Class or all outstanding Series, as the case may be,
shall constitute a quorum for the taking of any action set forth in the notice
of the original meeting. Notice of the reconvening of any adjourned meeting
shall be given as provided above except that such notice must be given not less
than five days prior to the date on which the meeting is scheduled to be
reconvened. Notice of the reconvening of an adjourned meeting shall state
expressly the percentage of the aggregate principal amount of the outstanding
applicable Investor Certificates which shall constitute a quorum.
(c) Any Investor Certificateholder who has executed an instrument in
writing appointing a person as proxy shall be deemed to be present for the
purposes of determining a quorum and be deemed to have voted; provided, that
--------
such Investor Certificateholder shall be considered as present or voting only
with respect to the matters covered by such instrument in writing. Subject to
the provisions of Section 13.01, any resolution passed or decision taken at any
meeting of Investor Certificateholders duly held in accordance with this Section
shall be binding on all Investor Certificateholders whether or not present or
represented at the meeting.
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(d) The holding of Bearer Certificates shall be proved by the
production of such Bearer Certificates or by a certificate, satisfactory to the
Servicer, executed by any bank, trust company or recognized securities dealer,
wherever situated, satisfactory to the Servicer. Each such certificate shall be
dated and shall state that on the date thereof a Bearer Certificate bearing a
specified serial number was deposited with or exhibited to such bank, trust
company or recognized securities dealer by the person named in such certificate.
Any such certificate may be issued in respect of one or more Bearer Certificates
specified therein. The holding by the person named in any such certificate of
any Bearer Certificate specified therein shall be presumed to continue for a
period of one year from the date of such certificate unless at the time of any
determination of such holding (i) another certificate bearing a later date
issued in respect of the same Bearer Certificate shall be produced, (ii) the
Bearer Certificate specified in such certificate shall be produced by some other
person or (iii) the Bearer Certificate specified in such certificate shall have
ceased to be outstanding. The appointment of any proxy shall be proved by
having the signature of the person executing the proxy guaranteed by any bank,
trust company or recognized securities dealer satisfactory to the Trustee.
(e) The Trustee shall appoint a temporary chairman of the meeting. A
permanent chairman and a permanent secretary of the meeting shall be elected by
vote of the holders of Investor Certificates evidencing a majority of the
aggregate unpaid principal amount of Investor Certificates of the applicable
Series or Class or all outstanding Series, as the case may be, represented at
the meeting. No vote shall be cast or counted at any meeting in respect of any
Investor Certificate challenged as not outstanding and ruled by the chairman of
the meeting to be not outstanding. The chairman of the meeting shall have no
right to vote except as an Investor Certificateholder or proxy. Any meeting of
Investor Certificateholders duly called at which a quorum is present may be
adjourned from time to time, and the meeting may be held as so adjourned without
further notice.
(f) The vote upon any resolution submitted to any meeting of Investor
Certificateholders shall be by written ballot on which shall be subscribed the
signatures of Investor Certificateholders or proxies and on which shall be
inscribed the serial number and series and class numbers of the Investor
Certificates held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record in duplicate of the proceedings of each
meeting of Investor Certificateholders shall be prepared by the secretary of the
meeting and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was published as provided above. The
record shall be signed and verified by the permanent chairman and secretary of
the meeting and one of the duplicates shall be delivered to the Servicer and the
other to the Trustee to be preserved by the Trustee, the latter to have attached
thereto the ballots voted at the meeting. Any record so signed and verified
shall be conclusive evidence of the matters therein stated.
Section 6.14. Changes in Amount of Variable Funding Certificates.
--------------------------------------------------
(a) The outstanding principal amount of a Variable Funding Certificate shall at
no time exceed the Stated Amount then applicable to such Variable Funding
Certificate. The Stated Amount of a Variable Funding Certificate may be
increased or decreased from time to time by the Seller with the prior written
consent of the Holder of the Variable Funding Certificate, if the following
conditions each shall have been satisfied on or prior to the effective date of
the proposed increase or decrease (as the case may be):
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(i) the Seller shall have delivered to the Trustee a Tax
Opinion with respect to the proposed increase, and
(ii) the Rating Agency Condition shall have been satisfied
with respect to the increase.
(b) The Seller may, pursuant to the Supplement that applies to a
particular Variable Funding Certificate, request the Holder of the Variable
Funding Certificate to provide funds to the Trustee in respect of the Holder's
Variable Funding Certificate in order to increase the then-outstanding principal
amount of the Variable Funding Certificate, which requested increase shall be
subject to the further provisions of this subsection and to the provisions of
the Supplement. Except as otherwise provided in the related Supplement, no
increase shall cause the Invested Amount to exceed the Stated Amount then
applicable to such Variable Funding Certificate. No such increase may be
requested or (even if previously requested) implemented during an Amortization
Period for the Variable Funding Certificate. Subject to Section 6.14(a), the
Seller may make such a request at any time prior to the commencement of the
Amortization Period, and shall make any such request in a writing that is
substantially in the from required by the applicable Supplement, appropriately
completed, and that is delivered to the Holder of the Variable Funding
Certificate at the time required by the applicable Supplement. The outstanding
principal amount of the Holder's Variable Funding Certificate shall be increased
on the Business Day on which the Holder provides to the Seller immediately
available funds in the amount of the requested increase by an amount equal to
the amount of the funds.
ARTICLE VII
Other Matters Relating to the Seller
------------------------------------
Section 7.01. Liability of the Seller. The Seller shall be liable
-----------------------
in all respects for the obligations, covenants, representations and warranties
of the Seller arising under or related to this Agreement or any Supplement. The
Seller shall be liable only to the extent of the obligations specifically
undertaken by it in its capacity as Seller.
Section 7.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Seller. (a) The Seller shall not consolidate with or merge
- --------------------------
into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person unless:
(i) (x) the business entity formed by such consolidation or into
which the Seller is merged or the Person which acquires by conveyance
or transfer the properties and assets of the Seller substantially as
an entirety shall be, if the Seller is not the surviving entity,
organized and existing under the law of the United States of America
or any State or the District of Columbia, and, if the Seller is not
the surviving entity, such business entity shall expressly assume, by
an agreement supplemental hereto, executed and delivered to the
Trustee, in form reasonably satisfactory to the Trustee, the
performance of every covenant and obligation of the Seller hereunder,
including its obligations under Section 7.04; (y) the Seller has
delivered to the Trustee an Officer's Certificate and an Opinion of
Counsel each stating that such consolidation, merger, conveyance or
transfer and such supplemental agreement comply with this Section,
that such supplemental agreement is a valid and binding obligation of
such surviving entity enforceable against such surviving entity in
accordance with its terms, except as such
49
<PAGE>
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally from time to time in effect and except as such
enforceability may be limited by general principles of equity (whether
considered in a suit at law or in equity), and that all conditions
precedent herein provided for relating to such transaction have been
complied with;
(ii) the Rating Agency Condition shall have been satisfied
with respect to such consolidation, merger, conveyance or transfer;
(iii) the Seller shall have delivered to the Trustee and each
Rating Agency a Tax Opinion, dated the date of such consolidation,
merger, conveyance or transfer, with respect thereto;
(iv) in connection with any merger or consolidation, the
business entity into which the Seller shall merge or consolidate shall
be (x) a business entity that is not subject to Title 11 of the United
States Code or (y) a special-purpose corporation, the powers and
activities of which shall be limited to the performance of the
Seller's obligations under this Agreement, any Supplement and the
Purchase Agreement;
(v) if the Seller is not the surviving entity, the surviving
entity shall file new UCC-l financing statements with respect to the
interest of the Trust in the Receivables; and
(vi) both immediately prior and immediately subsequent to
such consolidation, merger, conveyance or transfer, no Payout Event
shall have occurred and be continuing or would result therefrom.
(b) The obligations of the Seller hereunder shall not be assignable
nor shall any Person succeed to the obligations of the Seller hereunder except
for consolidations, mergers, assumptions or transfers in accordance with the
provisions of the foregoing paragraph.
Section 7.03. Limitations on Liability of the Seller. Subject to
--------------------------------------
Sections 7.01 and 7.04, neither the Seller nor any of the directors, officers,
employees or agents of the Seller acting in such capacities shall be under any
liability to the Trust, the Trustee, the Certificateholders, any Series Enhancer
or any other Person for any action taken or for refraining from the taking of
any action in good faith in such capacities pursuant to this Agreement;
provided, however, that this provision shall not protect the Seller or any
- -------- -------
such Person against any liability which would otherwise be imposed by reason of
wilful misconduct, bad faith or gross negligence in the performance of duties or
by reason of reckless disregard of obligations and duties hereunder. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person (other than the Seller) respecting any matters arising hereunder.
Section 7.04. Liabilities. Notwithstanding Sections 7.03, 8.03 and
-----------
8.04, the Seller by entering into this Agreement, and any Holder of the Seller
Certificate by its acceptance thereof, agree to be liable, directly to the
injured party or the Trustee, for the entire amount of any losses, claims,
damages or liabilities (other than those incurred by an Investor
Certificateholder in the capacity of an investor in the Investor Certificates as
a result of the performance of the Receivables, market fluctuations, a shortfall
or failure to make payment under any Series Enhancement or other similar market
or investment risks associated with ownership of the Investor Certificates)
arising out of or
50
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based on the arrangement created by this Agreement or the actions of the
Servicer taken pursuant hereto (to the extent Trust Assets remaining
after the Investor Certificateholders and Series Enhancers have been
paid in full are insufficient to pay any such losses, claims, damages or
liabilities) as though this Agreement created a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Seller and such Holder of
the Seller Certificate were general partners excluding, however, losses, claims,
------------------
damages or liabilities resulting from (i) the gross negligence or wilful
misconduct of any such injured party, and (ii) income taxes imposed on such
injured party arising out of the transaction. In the event of the appointment
of a Successor Servicer, the Successor Servicer will (from its own assets and
not from the assets of the Trust) indemnify and hold harmless the Seller and
such Holder of the Seller Certificate against and from any losses, claims,
damages and liabilities of the Seller or such Holder as described in this
Section arising from the actions or omissions of such Successor Servicer.
Section 7.05. Transferability of Seller Certificates.
--------------------------------------
Notwithstanding anything contained in this Agreement to the contrary, the Seller
shall not transfer or assign any of the Seller Certificates.
Section 7.06. Limit on Certain Holders. Notwithstanding anything
------------------------
contained in this Agreement to the contrary, the Seller shall not allow (i) to
be outstanding over 100 Holders of Certificates or (ii) any Certificate to be
traded on an Established Securities Market, registered under the Securities Act
of 1933 or offered or sold pursuant to Regulation S (17 C.F.R. (S) 230.901
through (S) 230.904 or any successor thereto) if such offering or sale would
have been required to be registered under the Securities Act of 1933 if the
interests so offered or sold had been offered and sold within the United States.
Section 7.07. Seller Indemnification of the Trust, etc. The Seller
----------------------------------------
shall indemnify the Trust, the Investor Certificateholders or the Certificate
Owners for any liabilities, costs or expenses of the Trust, the Investor
Certificateholders or the Certificate Owners arising under any tax law,
including without limitation, any Federal, state, local or foreign income or
franchise taxes (and any interest or penalties with respect thereto or arising
from a failure to comply therewith), other than any tax imposed on or measured
by income, required to be paid by the Trust, the Investor Certificateholders or
the Certificate Owners in connection herewith to any taxing authority.
Indemnification pursuant to this Section shall not be payable from the Trust
Assets. The provisions of this indemnity shall run directly to and be
enforceable by an injured party subject to the limitations hereof
ARTICLE VIII
Other Matters Relating to the Servicer
--------------------------------------
Section 8.01. Liability of the Servicer. The Servicer shall be liable
-------------------------
under this Article only to the extent of the obligations specifically undertaken
by the Servicer in its capacity as Servicer.
Section 8.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, the Servicer. The Servicer shall not consolidate with or merge
- ----------------------------
into any other corporation, convey or transfer its properties and assets
substantially as an entirety to any Person, or assign its obligations as
Servicer hereunder, unless:
(a) the corporation formed by such consolidation or into which the
Servicer is merged, the Person which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety, or the
Person to whom the Servicer assigns its obligations hereunder, shall
51
<PAGE>
be, if the Servicer is not the surviving entity or if the Servicer assigns its
obligations hereunder, a corporation organized and existing under the laws of
the United States of America or any State or the District of Columbia, and, if
the Servicer is not the surviving entity or if the Servicer assigns its
obligations hereunder, such corporation shall expressly assume, by an agreement
supplemental hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the performance of every covenant and obligation of
the Servicer hereunder;
(b) the Servicer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, conveyance, transfer or assignment and such supplemental agreement
comply with this Section, that such supplemental agreement is a valid and
binding obligation of such surviving entity enforceable against such surviving
entity in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally from time to time in
effect and except as such enforceability may be limited by general principles of
equity (whether considered in a suit at law or in equity), and that all
conditions precedent herein provided for relating to such transaction have been
complied with;
(c) either (i) the corporation formed by such consolidation or into
which the Servicer is merged or the Person which acquired by conveyance or
transfer the properties and assets of the Servicer substantially as an entirety
shall be an Eligible Servicer (such determination, taking into account the
experience and operations of the predecessor Servicer) or (ii) upon the
effectiveness of such consolidation, merger, conveyance, transfer or assignment,
a Successor Servicer shall have assumed the obligations of the Servicer in
accordance with this Agreement;
(d) the Servicer shall have delivered notice of such consolidation,
merger, conveyance, transfer or assignment to each Rating Agency; and
(e) both immediately prior and immediately subsequent to such
consolidation, merger, conveyance, transfer or assignment, no Payout Event shall
have occurred and be continuing or would result therefrom.
Section 8.03. Limitation on Liability of the Servicer and Others.
--------------------------------------------------
Except as provided in Section 8.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Trustee, the
Certificateholders, any Series Enhancers or any other Person for any action
taken or for refraining from the taking of any action in good faith in its
capacity as Servicer pursuant to this Agreement; provided, however, that this
-------- -------
provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising hereunder. The Servicer
shall not be under any obligation to appear in, prosecute or defend any legal
action which is not incidental to its duties as Servicer in accordance with this
Agreement and which in its reasonable judgment may involve it in any expense or
liability. The Servicer may, in its sole discretion, undertake any such legal
action which it may deem necessary or desirable for the benefit of the
Certificateholders with respect to this Agreement and the rights and duties of
the parties hereto and the interests of the Certificateholders hereunder.
52
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Section 8.04. Servicer Indemnification of the Trust and the Trustee.
-----------------------------------------------------
The Servicer shall indemnify and hold harmless the Trust and the Trustee and its
officers, directors, employees and agents, from and against any loss, liability,
expense, damage or injury suffered or sustained by reason of any acts or
omissions of the Servicer with respect to the Trust pursuant to this Agreement,
including any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any action,
proceeding or claim; provided, however, that the Servicer shall not indemnify
-------- -------
the Trustee if such acts, omissions or alleged acts or omissions constitute or
are caused by gross negligence, or willful misconduct by the Trustee; provided
--------
further, that the Servicer shall not indemnify the Trust, the Investor
- -------
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust with respect to any action taken by the Trustee at the
request of the Investor Certificateholders; provided further, that the Servicer
-------- -------
shall not indemnify the Trust, the Investor Certificateholders or the
Certificate Owners as to any losses, claims or damages incurred by any of them
in their capacities as investors, including, without limitation, losses with
respect to market or investment risks associated with ownership of the Investor
Certificates or losses incurred as a result of Defaulted Receivables; and
provided further, that the Servicer shall not indemnify the Trust, the Investor
- -------- -------
Certificateholders or the Certificate Owners for any liabilities, costs or
expenses of the Trust, the Investor Certificateholders or the Certificate Owners
arising under any tax law, including without limitation, any Federal, state,
local or foreign income or franchise taxes or any other tax imposed on or
measured by income (or any interest or penalties with respect thereto or arising
from a failure to comply therewith) required to be paid by the Trust, the
Investor Certificateholders or the Certificate Owners in connection herewith to
any taxing authority. Indemnification pursuant to this Section shall not be
payable from the Trust Assets. The provisions of this indemnity shall run
directly to and be enforceable by an injured party subject to the limitations
hereof.
Section 8.05. The Servicer Not to Resign. The Servicer shall not
--------------------------
resign from the obligations and duties hereby imposed on it except (x) upon the
determination that (i) the performance of its duties hereunder is no longer
permissible under Requirements of Law (other than the charter and by-laws of the
Servicer) and (ii) there is no reasonable action which the Servicer could take
to make the performance of its duties hereunder permissible under such
Requirements of Law or (y) as may be required, in connection with the Servicer's
consolidation with, or merger into any other corporation or the Servicer's
conveyance or transfer of its properties and assets substantially as an entirety
to any person in each case, in accordance with Section 8.02. Any determination
permitting the resignation of the Servicer pursuant to clause (x) above shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee. No
resignation shall become effective until the Trustee or a Successor Servicer
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 10.02. If within 120 days of the date of the
determination that the Servicer may no longer act as Servicer, and if the
Trustee is unable to appoint a Successor Servicer, the Trustee shall serve as
Successor Servicer. Notwithstanding the foregoing, the Trustee shall, if it is
legally unable to so act, petition a court of competent jurisdiction to appoint
any established institution having a net worth of not less than $50,000,000 and
whose regular business includes the servicing of trade receivables to be the
Successor Servicer hereunder. The Trustee shall give prompt notice of the
appointment of a Successor Servicer to each Rating Agency, each Series Enhancer
and each Series Representative entitled thereto under the terms of the
applicable Supplement.
Section 8.06. Access to Certain Documentation and Information
-----------------------------------------------
Regarding the Receivables. If the Trustee is required, in connection with the
- -------------------------
enforcement of the rights of Certificateholders or by applicable statutes or
regulations, to review the documentation regarding the Receivables, the Servicer
shall provide the Trustee access, without charge, to such documentation (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security
53
<PAGE>
and confidentiality procedures, and (d) at reasonably accessible offices in the
continental United States designated by the Servicer. Nothing in this Section
shall derogate from the obligation of the applicable Originator, the Seller, the
Trustee and the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors and the failure of the Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.
Section 8.07. Delegation of Duties. In the ordinary course of
--------------------
business, the Servicer may at any time delegate any duties hereunder to any
Person who agrees to conduct such duties in accordance with the Credit and
Collection Policy and this Agreement; provided, however, that at least 30 days
-------- -------
prior written notice of such delegation (except for delegations to collection
agencies for the collection of Defaulted Receivables in the ordinary course of
the Servicer's business as conducted on the Trust Closing Date] shall be given
to the Trustee, each Rating Agency, each Series Enhancer and each Series
Representative entitled thereto pursuant to the relevant Supplement. Any such
delegation shall not relieve the Servicer of its liability and responsibility
with respect to its duties hereunder, and shall not constitute a resignation
within the meaning of Section 8.05 hereof.
Section 8.08. Examination of Records. The Seller and the Servicer
----------------------
shall clearly and unambiguously indicate in their respective records that the
Receivables have been conveyed to the Trustee, on behalf of the Trust, pursuant
to this Agreement for the benefit of the Certificateholders. The Seller and the
Servicer shall, prior to the sale or transfer to a third party of any
"receivable" held in its custody, examine its records to determine that such
"receivable" is not a Receivable for purposes of this Agreement.
ARTICLE IX
Pay-Out Events
--------------
Section 9.01. Pay-Out Events. If any one of the following events
--------------
(each, a "Pay-Out Event") shall occur and be continuing:
-------------
(a) The Servicer (if Mail-Well I Corporation or any of its
Affiliates) or the Seller (i) shall fail to perform or observe any term,
covenant or agreement under this Agreement, any Supplement or the Purchase
Agreement (other than as referred to in clause (ii) of this subsection (a)) and
such failure shall remain unremedied for ten Business Days or (ii) shall fail to
make when due any payment or deposit to be made by it under this Agreement, any
Supplement or the Purchase Agreement provided, that if such failure is a failure
--------
to pay Interest or Fees, such failure shall remain unremedied for one Business
Day after the due date for such Interest or Fees; or
(b) The Seller or any Originator shall fail to transfer to the
Trust when requested any rights, pursuant to this Agreement, which the Seller or
such Originator then has as Servicer; or
(c) Any representation or warranty made or deemed made by the
Seller or the Servicer or any Affiliate thereof (or any of their respective
officers) under or in connection with this Agreement, any Supplement, the
Purchase Agreement or any document related hereto or thereto or any information
or report delivered by the Seller or the Servicer pursuant to this Agreement,
any Supplement, the Purchase Agreement or any document related hereto or thereto
shall prove to have been incorrect or untrue in any material respect when made
or deemed made or delivered; or
54
<PAGE>
(d) The Seller or any Originator shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement, any Supplement or
the Purchase Agreement on its part to be performed or observed and any such
failure shall remain unremedied for 10 days after written notice thereof shall
have been given to the Seller by the Trustee, the Series Representative or the
Holders of 50% of the Certificates; or
(e) The Seller or any Originator shall fail to pay any principal of
or premium or interest on any of its Indebtedness which is outstanding in a
principal amount of at least $5,000,000 in the aggregate when the same becomes
due and payable (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or instrument
relating to such Indebtedness; or any other event shall occur or condition shall
exist under any agreement or instrument relating to any such Indebtedness and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such Indebtedness;
or any such Indebtedness shall be declared to be due and payable, or required to
be prepaid (other than by a regularly scheduled required prepayment), redeemed,
purchased or defeased, or an offer to repay, redeem, purchase or defease such
Indebtedness shall be required to be made, in each case prior to the stated
maturity thereof; or
(f) Any purchase or any reinvestment pursuant to this Agreement shall
for any reason (other than pursuant to the terms hereof) cease to create a valid
and perfected first priority ownership interest to the extent of the pertinent
Receivable and the Related Security and Collections with respect thereto; or the
security interest created pursuant to Section 2.01 shall for any reason cease to
be a valid first priority security interest in the collateral security referred
to in that section; or
(g) A termination event specified in Section 7.01 of the Purchase
Agreement shall occur, or the Purchase Agreement shall cease to be in full force
and effect; or
(h) All of the outstanding capital stock of the Seller shall cease to
be owned, directly or indirectly, by Mail-Well I Corporation; or
(i) The Seller is determined by the SEC or other regulatory body to
be an investment company within the meaning of the Investment Company Act of
1940, as amended; or
(j) As of any date, the Dilution Ratio shall exceed 5%; or
(k) As of any date, the average Default Ratio for the preceding three
Monthly Periods shall exceed 8%; or
(l) As of each Distribution Date, the sum of the Net Receivables Pool
Balance as of the end of the Monthly Period ending prior to such Distribution
Date plus amounts on deposit in the Special Funding Account on such Distribution
Date shall be less than 100% of the sum of the aggregate outstanding Invested
Amount of all Series; or
(m) An Insolvency Event shall occur with respect to the Seller, the
Holder of the Seller Certificate or Mail-Well I Corporation;
(n) The Trust shall become an "investment company" within the meaning
of the Investment Company Act; or
55
<PAGE>
(o) The Trust is at any time treated as an association taxable as a
corporation for federal income tax purposes; or
(p) Any event shall occur which adversely affects the
characterization of the Investor Certificates as debt for Federal income tax
purposes;
then a Pay-Out Event shall occur with respect to all Series without any notice
or other action on the part of the Trustee or the Investor Certificateholders,
immediately upon the occurrence of such event.
Section 9.02. Rights upon the Occurrence of Certain Events. (a) If
--------------------------------------------
an Insolvency Event occurs with respect to the Seller, the Holder of the Seller
Certificate or any Originator, the Seller shall on the day any such Insolvency
Event occurs (the "Appointment Date"), immediately cease to transfer
----------------
Receivables to the Trust and shall promptly give notice to the Trustee thereof.
Notwithstanding any cessation of the transfer to the Trust of additional
Receivables, Receivables transferred to the Trust prior to the occurrence of
such Insolvency Event and Collections in respect of such Receivables, whenever
created, accrued in respect of such Receivables, shall continue to be a part of
the Trust. Upon the Appointment Date this Agreement and the Trust shall be
deemed to have terminated, subject to the liquidation, winding up and
dissolution procedures described below. Within 15 days of the Appointment Date,
the Trustee shall (i) publish a notice in an Authorized Newspaper that the Trust
has terminated and that the Trustee intends to sell, dispose of or otherwise
liquidate the Receivables on commercially reasonable terms and in a commercially
reasonable manner and (ii) send written notice to Investor Certificateholders
and each Series Enhancer or other Person entitled thereto pursuant to the
relevant Supplement describing the provisions of this Section and requesting
instructions from such Holders. Unless the Trustee shall have received
instructions within 90 days from the date notice pursuant to clause (i) above is
first published, from (x) Holders of Investor Certificates evidencing more than
50% of the aggregate unpaid principal amount of each Series or, with respect to
any Series with two or more Classes, of each Class, and (y) to the extent
provided in the relevant Supplement, the Series Enhancer with respect to such
Series, to the effect that such Persons disapprove of the liquidation of the
Receivables and wish to continue having Receivables transferred to the Trust as
before such Insolvency Event or violation, the Trustee shall promptly sell,
dispose of or otherwise liquidate the Receivables in a commercially reasonable
manner and on commercially reasonable terms, which shall include the
solicitation of competitive bids. The Trustee may obtain a prior determination
from the conservator, receiver or liquidator, as the case may be, that the terms
and manner of any proposed sale, disposition or liquidation are commercially
reasonable. The provisions of Sections 9.01 and 9.02 shall not be deemed to be
mutually exclusive.
(b) The proceeds from the sale, disposition or liquidation of the
Receivables pursuant to paragraph (a) above ("Insolvency Proceeds") shall be
-------------------
immediately deposited in the Collection Account. The Insolvency Proceeds shall
be allocated and distributed to Investor Certificateholders in accordance with
Article IV and the terms of each Supplement.
56
<PAGE>
ARTICLE X
Servicer Defaults
-----------------
Section 10.01 Servicer Defaults. (a) If any one of the following
-----------------
events (each a "Servicer Default") shall occur and be continuing:
----------------
(i) any failure by the Servicer to make any payment,
transfer or deposit or to give instructions or notice to the Trustee
pursuant to the terms of this Agreement or any Supplement on or before
the date occurring five Business Days after the date such payment,
transfer or deposit or such instruction or notice is required to be
made or given, as the case may be, under the terms of this Agreement
or any Supplement;
(ii) failure on the part of the Servicer to duly observe or
perform any other covenants or agreements of the Servicer set forth in
this Agreement or any Supplement which continues unremedied for a
period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Trustee, or to the Servicer and the Trustee by
Holders of Investor Certificates evidencing not less than 50% of the
aggregate unpaid principal amount of all Investor Certificates (or,
with respect to any such failure that does not relate to all Series,
50% of the aggregate unpaid principal amount of all Series to which
such failure relates); or the Servicer shall delegate its duties under
this Agreement, except as permitted by Sections 8.02 and 8.07;
(iii) any representation, warranty or certification made by
the Servicer in this Agreement or any Supplement or in any certificate
delivered pursuant to this Agreement or any Supplement shall prove to
have been incorrect when made which continues to be incorrect for a
period of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Trustee, or to the Servicer and the Trustee by the
Holders of Investor Certificates evidencing not less than 50% of the
aggregate unpaid principal amount of all Investor Certificates (or,
with respect to any such representation, warranty or certification
that does not relate to all Series, 50% of the aggregate unpaid
principal amount of all Series to which such representation, warranty
or certification relates);
(iv) an Insolvency Event shall occur with respect to the
Servicer; or
(v) if the Servicer (if Mail-Well I Corporation) permits the
Consolidated Fixed Charge Coverage Ratio, calculated as of the end of
each fiscal quarter of the Servicer commencing with the fiscal quarter
ended December 31, 1996, for the four fiscal quarters of the Servicer
then ended to be less than 1.10 to 1.00.
then, so long as such Servicer Default shall not have been remedied, either the
Trustee, each Series Representative and the Liquidity Agent, by notice given to
the Servicer (and to the Trustee and any Series Enhancer entitled thereto
pursuant to the relevant Supplement if given by the Investor Certificateholders)
(a "Termination Notice"), may terminate all the rights and obligations of the
------------------
Servicer as Servicer under this Agreement and in and to the Receivables and the
proceeds thereof.
57
<PAGE>
(b) After receipt by the Servicer of a Termination Notice, and on
the date that a Successor Servicer shall have been appointed by the Trustee
pursuant to Section 10.02, all authority and power of the Servicer under this
Agreement shall pass to and be vested in the Successor Servicer; and, without
limitation, the Trustee is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
to do and accomplish all other acts or things necessary or appropriate to effect
the purposes of such transfer of servicing rights. The Servicer agrees to
cooperate with the Trustee and the Successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder including, without limitation, the transfer to the Successor
Servicer of all authority of the Servicer to service the Receivables provided
for under this Agreement, including, without limitation, all authority over all
Collections which shall on the date of transfer be held by the Servicer for
deposit, or which have been deposited by the Servicer, in the Collection Account
or the Canadian Collection Account, or which shall thereafter be received with
respect to the Receivables. The Servicer shall promptly transfer its electronic
records relating to the Receivables to the Successor Servicer in such electronic
form as the Successor Servicer may reasonably request and shall promptly
transfer to the Successor Servicer all other records, correspondence and
documents necessary for the continued servicing of the Receivables in the manner
and at such times as the Successor Servicer shall reasonably request. To the
extent that compliance with this Section 10.01 shall require the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
reasonably deems to be confidential, the Successor Servicer shall be required to
enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interests.
Section 10.02. Trustee to Act: Appointment of Successor. (a) On and
-----------------------------------------
after the receipt by the Servicer of a Termination Notice pursuant to Section
10.01, the Servicer shall continue to perform all servicing functions under this
Agreement until the date specified in the Termination Notice or otherwise
specified by the Trustee or until a date mutually agreed upon by the Servicer
and Trustee. The Trustee shall as promptly as possible after the giving of a
Termination Notice appoint an Eligible Servicer as a successor servicer (the
"Successor Servicer"), and such Successor Servicer shall accept its appointment
- -------------------
by a written assumption in a form acceptable to the Trustee. The Trustee may
obtain bids from any potential successor servicer. If (i) the Trustee is unable
to obtain any bids from any potential successor servicer, or if no such bid is
acceptable to each Series Representative, and (ii) the Servicer delivers to the
Trustee an Officer's Certificate to the effect that it cannot in good faith cure
the Servicer Default which gave rise to a transfer of servicing, and if the
Trustee is legally unable to act as Successor Servicer, then the Trustee shall
notify each Investor Certificateholder, each Series Representative and any
Series Enhancer of the proposed sale of the Receivables and shall provide each
Investor Certificateholder and Series Enhancer an opportunity to bid on the
Receivables and shall offer the Seller the right of first refusal to purchase
the Receivables on terms equivalent to the best purchase offer as determined by
the Trustee, but in no event less than an amount equal to the aggregate Invested
Amount of all Series on the date of such purchase plus all interest accrued but
----
unpaid on all of the outstanding Investor Certificates at the applicable
Certificate Rate, and all fees and expenses under any Supplement due but unpaid
through the date of such purchase. The proceeds of such sale shall be deposited
in the Collection Account, as provided in the related Supplement, for
distribution to the Investor Certificateholders of each outstanding Series and
pursuant to each Supplement. Notwithstanding the foregoing, the Trustee may
petition a court of competent jurisdiction to appoint any established
institution having a net worth of not less than $50,000,000 and whose regular
business includes the servicing of receivables as the Successor Servicer
hereunder. The Trustee shall give
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prompt notice of the appointment of a Successor Servicer to each Rating Agency,
each Series Enhancer and each Series Representative entitled thereto pursuant to
the applicable Supplement.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities (except for liabilities arising during the period of time when
the prior Servicer was performing and acting as Servicer) relating thereto
placed on the Servicer by the terms and provisions hereof, and all references in
this Agreement to the Servicer shall be deemed to refer to the Successor
Servicer.
(c) In connection with any Termination Notice, the Trustee will
review any bids which it obtains from Eligible Servicers and shall be permitted
to, upon receiving the written consent of the Series Representative, (i) appoint
any Eligible Servicer submitting such a bid as a Successor Servicer and (ii)
make such arrangements for the compensation of the Successor Servicer out of
Collections as it and such Successor Servicer shall agree; provided, however,
-------- -------
that no such monthly compensation paid out of Collections shall be in excess of
such aggregate Servicing Fees. The Holder of the Seller Certificate agrees
that, if Mail-Well I Corporation (or any Successor Servicer) is terminated as
Servicer hereunder, the portion of the Collections in respect of Receivables
that the Holder of the Seller Certificate is entitled to receive pursuant to
this Agreement or any Supplement shall be reduced by an amount sufficient to pay
the Holder of the Seller Certificate share (determined by reference to the
Supplements with respect to any outstanding Series) of the compensation of the
Successor Servicer.
(d) All authority and power granted to the Successor Servicer under
this Agreement shall automatically cease and terminate upon termination of the
Trust pursuant to Section 12.01 and shall pass to and be vested in the Seller
and, without limitation, the Seller is hereby authorized and empowered to
execute and deliver, on behalf of the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of such
transfer of servicing rights. The Successor Servicer agrees to cooperate with
the Seller in effecting the termination of the responsibilities and rights of
the Successor Servicer to conduct servicing on the Receivables. The Successor
Servicer shall transfer its electronic records relating to the Receivables to
the Seller in such electronic form as the Seller may reasonably request and
shall transfer all other records, correspondence and documents to the Seller in
the manner and at such times as the Seller shall reasonably request. To the
extent that compliance with this Section 10.02 shall require the Successor
Servicer to disclose to the Seller information of any kind which the Successor
Servicer deems to be confidential, the Seller shall be required to enter into
such customary licensing and confidentiality agreements as the Successor
Servicer shall deem necessary to protect its interests.
Section 10.03. Notification to Certificateholders. Within one
----------------------------------
Business Day after the Servicer becomes aware of any Servicer Default, the
Servicer shall give notice thereof to the Trustee, each Rating Agency, each
Series Enhancer and each Series Representative entitled thereto pursuant to the
relevant Supplement and the Trustee shall give notice to the Investor
Certificateholders. Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Trustee shall give prompt notice thereof to the
Investor Certificateholders.
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ARTICLE XI
The Trustee
-----------
Section 11.01. Duties of Trustee. (a) The Trustee, prior to the
-----------------
occurrence of a Servicer Default and after the curing of all Servicer Defaults
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. If a Servicer Default has
occurred (which has not been cured or waived) the Trustee shall exercise such of
the rights and powers vested in it by this Agreement, and use the same degree of
care and skill in its exercise, as a prudent person would exercise or use under
the circumstances in the conduct of such person's own affairs.
(b) Subject to Section 11.01(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own grossly negligent
action, its own grossly negligent failure to act or its own willful misconduct;
provided, however, that:
- -------- -------
(i) the Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee
was grossly negligent in ascertaining the pertinent facts;
(ii) the Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good
faith in accordance with the direction of the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid
principal amount of all Investor Certificates (or, with respect to any
such action that does not relate to all Series, 50% of the aggregate
unpaid principal amount of the Investor Certificates of all Series to
which such action relates) relating to the administration of the Trust
under the terms of this Agreement, including, without limitation, the
time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement; and
(iii) the Trustee shall not be charged with knowledge of any
failure or breach by the Servicer to comply with the obligations of
the Servicer referred to in clauses (i), (ii) and (iii) of Section
10.01(a) unless a Responsible Officer of the Trustee obtains actual
knowledge of such failure or breach or the Trustee receives written
notice of such failure or breach from the Servicer, any Holders of
Investor Certificates evidencing not less than 10% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect
to any such failure or breach that does not relate to all Series, 10%
of the aggregate unpaid principal amount of all Investor Certificates
of all Series to which such failure or breach relates) or the Series
Enhancers for all Series to which such failure or breach relates.
(c) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers hereunder or
thereunder and none of the provisions contained in this Agreement shall in any
event require the Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Trustee
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shall be the successor to, and be vested with the rights, duties, powers and
privileges of, the Servicer in accordance with the terms of this Agreement.
(d) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to (i) impair the interests of
the Trust in any Receivable now existing or hereafter created or (ii) impair the
value of any Receivable now existing or hereafter created.
(e) The Trustee shall have no power to vary the corpus of the Trust,
except as expressly provided in this Agreement.
(f) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Registrar, as the case may be, under this Agreement, the Trustee shall be
obligated as soon as possible upon actual knowledge of a Responsible Officer
thereof and receipt of appropriate records, if any, to perform such obligation,
duty or agreement in the manner so required.
(g) If the Seller has agreed to transfer any of its receivables
(other than the Receivables) to another Person, upon the written request of the
Seller, the Trustee will enter into such intercreditor agreements with the
transferee of such receivables as are customary and necessary to separately
identify the rights of the Trust and such other Person in the Seller's
receivables; provided that the Trustee shall not be required to enter into any
--------
intercreditor agreement which could adversely affect the interests of the
Certificateholders and, upon the request of the Trustee, the Seller will deliver
an Opinion of Counsel on any matters relating to such intercreditor agreement,
reasonably requested by the Trustee.
Section 11.02. Certain Matters Affecting the Trustee. Except as
-------------------------------------
otherwise provided in Section 11.01:
(a) the Trustee may conclusively rely on and shall be protected in
acting on, or in refraining from acting in accord with, any resolution,
Officer's Certificate, certificate of auditors or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented to it pursuant to this Agreement by
the proper party or parties;
(b) the Trustee may consult with counsel, and any advice of such
counsel or Opinion of Counsel shall be full and complete authorization and
protection from any liability in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice or
Opinion of Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or any Enhancement Agreement, or
to institute, conduct or defend any litigation hereunder or thereunder or in
relation to this Agreement or any Enhancement Agreement, at the request, order
or direction of any of the Certificateholders, pursuant to the provisions of
this Agreement or any Enhancement Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which may be incurred therein or thereby;
nothing contained herein shall, however, relieve the Trustee of the obligations,
upon the occurrence of any Servicer Default (which has not been cured) to
exercise such of the rights and powers vested in it by this Agreement, and to
use the same degree of care and skill in its
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exercise, as a prudent person would exercise or use under the circumstances in
the conduct of such person's own affairs;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) the Trustee shall not be required to make any investigation into
the facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of all Investor Certificates (or with respect to any such matters that do
not relate to all Series, 50% of the aggregate unpaid principal amount of the
Investor Certificates of all Series to which such matters relate);
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian, and the Trustee shall not be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed with due care by it hereunder; and
(g) except as may be required by subsection 11.01(a) hereof, the
Trustee shall not be required to make any initial or periodic examination of any
documents or records related to the Receivables for the purpose of establishing
the presence or absence of defects, the compliance by the Seller with its
representations and warranties or for any other purpose.
Section 11.03. Trustee Not Liable for Recitals in Certificates. The
-----------------------------------------------
Trustee assumes no responsibility for the correctness of the recitals contained
herein and in the Certificates (other than the certificate of authentication on
the Certificates). Except as set forth in Section 11.15, the Trustee makes no
representations as to the validity or sufficiency of this Agreement or any
Supplement or of the Certificates (other than the certificate of authentication
on the Certificates) or of any Receivable or related document. The Trustee
shall not be accountable for the use or application by the Seller of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller or the Holder of the Seller
Certificate in respect of the Receivables or deposited in or withdrawn from the
Collection Account, Canadian Collection Account, any Series Accounts or any
other accounts hereafter established to effectuate the transactions contemplated
by this Agreement and in accordance with the terms of this Agreement.
Section 11.04. Trustee May Own Certificates. The Trustee in its
----------------------------
individual or any other capacity may become the owner or pledgee of Certificates
and may otherwise deal, and transact banking business, with the Servicer and the
Seller with the same rights as it would have if it were not the Trustee.
Section 11.05. The Seller To Pay Trustee's Fees and Expenses. (a) The
---------------------------------------------
Seller covenants and agrees to pay to the Trustee from time to time, and the
Trustee shall be entitled to receive, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trust
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Seller will pay or reimburse the
Trustee (without reimbursement from the Collection Account, Canadian Collection
Account or otherwise) upon its request for all reasonable expenses,
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disbursements and advances incurred or made by the Trustee in accordance with
any of the provisions of this Agreement or any Enhancement Agreement (including
the reasonable fees and expenses of its agents, any co-trustee and counsel)
except any such expense, disbursement or advance as may arise from its own gross
negligence or wilful misconduct and except as provided in the following
sentence. If the Trustee is appointed Successor Servicer pursuant to Section
10.02, the provisions of this Section 11.05 shall not apply to expenses,
disbursements and advances made or incurred by the Trustee in its capacity as
Successor Servicer.
(b) The obligations of the Seller and the Servicer under Sections
7.04 and 8.04 respectively and this Section 11.05 shall survive the termination
of the Trust and the resignation or removal of the Trustee.
(c) In the case of a sale, disposition or liquidation of the
Receivables pursuant to Section 9.02(a), the Trustee shall be entitled to retain
from any amounts distributable to the Seller pursuant to Article IV or any
Supplement from the Insolvency Proceeds an amount equal to the Trustee's
expenses in connection with such sale, disposition or liquidation and the
performance by the Trustee of the procedures set forth in Section 9.02(a).
Section 11.06. Eligibility Requirements for Trustee. The Trustee
------------------------------------
hereunder shall at all times (a) be a bank or a corporation organized and doing
business under the laws of the United States or any state thereof that qualifies
as a "bank" (as defined in the Investment Company Act), (b) be authorized under
applicable law to exercise corporate trust powers, (c) have a combined capital
and surplus of at least $50,000,000, (d) be subject to supervision or
examination by Federal or state authority, and (e) have any credit or deposit
rating required by any Rating Agency. If such bank publishes reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 11.06, the combined capital and surplus of such bank shall be
conclusively deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. In no event shall any "affiliate"
(as defined in Rule 405 under the Act) of the Trust or any Person involved in
the organization or operation of the Trust be eligible to act as Trustee, nor
shall any Person that offers or actually does provide any credit or credit
enhancement to the Trust be eligible to act as Trustee. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 11.06, the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.07.
Section 11.07. Resignation or Removal of Trustee. (a) The Trustee
---------------------------------
may at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Seller and the Servicer. Upon receiving such
notice of resignation, the Seller shall (i) promptly appoint a successor trustee
by written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor trustee and
(ii) provide written notice to each Rating Agency of such resignation. If no
successor trustee shall have been so appointed and have accepted within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
(b) If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.06 and shall fail to resign after
written request therefor by the Servicer or the Seller, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, the Seller may, but shall not be required to, remove the Trustee
and
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promptly appoint a successor trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee so removed and one
copy to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 11.07 shall
not become effective until acceptance of appointment by the successor trustee as
provided in Section 11.08 and any liability of the Trustee arising hereunder
shall survive such appointment of a successor trustee.
Section 11.08. Successor Trustee. (a) Any successor trustee appointed
-----------------
as provided in Section 11.07 shall execute, acknowledge and deliver to the
Seller, to the Servicer and to its predecessor Trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its predecessor hereunder, with the
like effect as if originally named as Trustee herein. The predecessor Trustee
shall deliver to the successor trustee all documents and statements held by it
hereunder, and the Seller and the predecessor Trustee shall execute and deliver
such instruments and do such other things as may reasonably be required for
fully and certainly vesting and confirming in the successor trustee all such
rights, powers, duties and obligations.
(b) No successor trustee shall or shall be eligible to accept
appointment as provided in this Section 11.08 unless at the time of such
acceptance such successor trustee shall be eligible under the provisions of
Section 11.06.
(c) Upon acceptance of appointment by a successor trustee as
provided in this Section, such successor trustee shall provide notice of such
succession hereunder to all Investor Certificateholders and the Servicer shall
provide such notice to each Rating Agency and any Series Enhancer entitled
thereto pursuant to the relevant Supplement.
Section 11.09. Merger or Consolidation of Trustee. Any Person into
----------------------------------
which the Trustee may be merged or converted or with which it may be
consolidated, or any Person resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any Person succeeding to
the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, provided such corporation shall be eligible under the
provisions of Section 11.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 11.10. Appointment of Co-Trustee or Separate Trustee. (a)
---------------------------------------------
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust may at the time be located, the Trustee shall have the power and
may execute and deliver all instruments to appoint one or more Persons to act as
a co-trustee or co-trustees, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person or Persons, in such capacity
and for the benefit of the Certificateholders, such title to the Trust, or any
part thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or desirable; provided, however, that the Trustee shall exercise due
-------- -------
care in the appointment of any co-trustee. No co-trustee or separate trustee
hereunder shall be required to meet the terms of eligibility as a successor
trustee under Section 11.06 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee shall be required under
Section 11.08.
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(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-
trustee jointly (it being understood that such separate trustee or co-
trustee is not authorized to act separately without the Trustee
joining in such act) except to the extent that under any laws of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee hereunder or as successor to the Servicer
hereunder) the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer.
(d) Any separate trustee or co-trustee may at any time appoint the
Trustee its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 11.11. Tax Return. In the event the Trust shall be required
----------
to file tax returns, the Servicer shall prepare or shall cause to be prepared
any tax returns required to be filed by the Trust and shall remit such returns
to the Trustee for signature at least five Business Days before such returns are
due to be filed; the Trustee shall promptly, but in any event within two
Business Days of receipt, sign such returns and deliver such returns after
signature to the Servicer and such returns shall be filed by the Servicer. The
Servicer in accordance with the terms of each Supplement shall also prepare or
shall cause to be prepared all tax information required by law to be distributed
to Investor Certificateholders. The Trustee upon request, will furnish the
Servicer with all such information known to the Trustee as may be reasonably
required in connection with the preparation of all tax returns of the Trust. In
no event shall the Trustee or the Servicer (except as provided in Sections 7.04
or 8.04) be liable for any liabilities, costs or expenses of the Trust or the
Investor Certificateholders
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arising under any tax law, including without limitation Federal, state, local or
foreign income or excise taxes or any other tax imposed or measured by income
(or any interest or penalty with respect thereto or arising from a failure to
comply therewith).
Section 11.12. Trustee May Enforce Claims Without Possession of
------------------------------------------------
Certificates. All rights of action and claims under this Agreement or the
- ------------
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
Section 11.13. Suits for Enforcement. If a Servicer Default shall
---------------------
occur and be continuing, the Trustee, in its discretion may, subject to the
provisions of Sections 10.01 and 11.14, proceed to protect and enforce its
rights and the rights of the Certificateholders under this Agreement by a suit,
action or proceeding in equity or at law or otherwise, whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or for the enforcement
of any other legal, equitable or other remedy as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
Section 11.14. Rights of Certificateholders to Direct Trustee.
----------------------------------------------
Holders of Investor Certificates evidencing more than 50% of the aggregate
unpaid principal amount of all Investor Certificates (or, with respect to any
remedy, trust or power that does not relate to all Series, 50% of the aggregate
unpaid principal amount of the Investor Certificates of all Series to which such
remedy, trust or power relates) shall have the right to direct the Trustee with
respect to all matters relating to the administration of the Trust under the
terms of this Agreement, including, without limitation, the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee relating to such
proceeding; provided, however, that, subject to Section 11.01, the Trustee shall
-------- -------
have the right to decline to follow any such direction if the Trustee being
advised by counsel determines that the action so directed may not lawfully be
taken, or if the Trustee in good faith shall, by a Responsible Officer or
Responsible Officers of the Trustee, determine that the proceedings so directed
would be illegal or involve it in personal liability or be unduly prejudicial to
the rights of Certificateholders not parties to such direction; and provided
--------
further that nothing in this Agreement shall impair the right of the Trustee to
- -------
take any action deemed proper by the Trustee and which is not inconsistent with
such direction.
Section 11.15. Representations and Warranties of Trustee. The Trustee
-----------------------------------------
represents and warrants as of each Closing Date that:
(a) the Trustee is a national banking association organized, existing
and in good standing under the laws of the United States;
(b) the Trustee has full power, authority and right to execute,
deliver and perform this Agreement and each Supplement, and has taken all
necessary action to authorize the execution, delivery and performance by it of
this Agreement and each Supplement; and
(c) this Agreement and each Supplement has been duly executed and
delivered by the Trustee and is a binding obligation of the Trustee enforceable
against the Trustee in accordance
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with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a suit at law or in equity).
Section 11.16. Maintenance of Office or Agency. The Trustee will
-------------------------------
maintain at its expense an office or agency (the "Corporate Trust Office")
----------------------
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served in the City of New York. The Corporate Trust
Office shall initially be located at Norwest Trust Company, 3 New York Plaza,
New York, New York 10004. The Trustee will give prompt notice to the Servicer
and to Investor Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 11.17. Confidentiality. Information provided by any
---------------
Originator or the Seller to the Trustee related to the transactions effected
hereunder, including all information related to the Obligors with respect to the
Receivables, and any computer software provided to the Trustee in connection
with the transactions effected hereunder or under any Supplement, in each case
whether in the form of documents, reports, lists, tapes, discs or any other
form, shall be "Confidential Information". The Trustee and its agents,
------------------------
representatives or employees shall at all times maintain the confidentiality of
all Confidential Information and shall not, without the prior written consent of
the applicable Originator or the Seller, as applicable, disclose to third
parties (including Certificateholders) or use such information, in any manner
whatsoever, in whole or in part, except as expressly permitted under this
Agreement or under any Supplement or as required to fulfill an obligation of the
Trustee under this Agreement or under any Supplement, in which case such
Confidential Information shall be revealed only to the extent expressly
permitted or only to the Trustee's agents, representatives and employees who
need to know such Confidential Information to the extent required for the
purpose of fulfilling an obligation of the Trustee under this Agreement or under
any Supplement. Notwithstanding the above, Confidential Information may be
disclosed to the extent required by law or legal process, provided that the
Trustee gives prompt written notice to the applicable Originator or the Seller
(unless such notice is prohibited under any Requirement of Law), as applicable,
of the nature and scope of such disclosure, so that the Seller may request a
protective order or other appropriate remedy.
ARTICLE XII
Termination
-----------
Section 12.01. Termination of Trust. The Trust and the respective
--------------------
obligations and responsibilities of the Seller, the Servicer and the Trustee
created hereby (other than the obligation of the Trustee to make payments to
Investor Certificateholders as hereinafter set forth) shall terminate, except
with respect to the duties described in Sections 7.04, 8.04 and 12.02(b), upon
the earliest of (i) November 15, 2002, (ii) the day following the Distribution
Date on which the Invested Amount for each Series is zero (provided that the
Seller has delivered a written notice to the Trustee electing to terminate the
Trust) and (iii) the Appointment Date.
Section 12.02. Final Distribution. (a) The Servicer shall give the
------------------
Trustee at least 15 days prior notice of the Distribution Date on which the
Investor Certificateholders of any Series or Class may surrender their Investor
Certificates for payment of the final distribution on and cancellation of such
Investor Certificates (or, in the event of a final distribution resulting from
the application of Section 2.06 or 9.02, notice of such Distribution Date
promptly after the Servicer has determined that a
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final distribution will occur, if such determination is made less than 15 days
prior to such Distribution Date). Such notice shall be accompanied by an
Officer's Certificate setting forth the information specified in Section 3.05
covering the period during the then current calendar year through the date of
such notice. Not later than the fifth day of the month in which the final
distribution in respect of such Series or Class is payable to Investor
Certificateholders, the Trustee shall provide notice to Investor
Certificateholders of such Series or Class specifying (i) the date upon which
final payment of such Series or Class will be made upon presentation and
surrender of Investor Certificates of such Series or Class at the office or
offices therein designated, (ii) the amount of any such final payment and (iii)
that the Record Date otherwise applicable to such payment date is not
applicable, payments being made only upon presentation and surrender of such
Investor Certificates at the office or offices therein specified (which, in the
case of Bearer Certificates, shall be outside the United States). The Trustee
shall give such notice to the Transfer Agent and Registrar and the Paying Agent
at the time such notice is given to Investor Certificateholders.
(b) Notwithstanding a final distribution to the Investor
Certificateholder of any Series or Class (or the termination of the Trust),
except as otherwise provided in this paragraph, all funds then on deposit in the
Lockbox Accounts, the Concentration Account, the Collection Account, the
Canadian Accounts, the Canadian Collection Account, the Special Funding Account
and any Series Account allocated to such Investor Certificateholders shall
continue to be held in trust for the benefit of such Investor Certificateholders
and the Paying Agent or the Trustee shall pay such funds to such Investor
Certificateholders upon surrender of their Investor Certificates (and any excess
shall be paid in accordance with the terms of any relevant Enhancement
Agreement). In the event that all such Investor Certificateholders shall not
surrender their Investor Certificates for cancellation within six months after
the date specified in the notice from the Trustee described in paragraph (a),
the Trustee shall give a second notice to the remaining such Investor
Certificateholders to surrender their Investor Certificates for cancellation and
receive the final distribution with respect thereto (which surrender and
payment, in the case of Bearer Certificates, shall be outside the United
States). If within one year after the second notice all such Investor
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining such Investor Certificateholders concerning surrender of
their Investor Certificates, and the cost thereof shall be paid out of the funds
in the Collection Account (and to the extent that such costs exceed the funds
therein, the Canadian Collection Account) are insufficient or any Series Account
held for the benefit of such Investor Certificateholders. The Trustee and the
Paying Agent shall pay to the Seller any moneys held by them for the payment of
principal or interest that remains unclaimed for two years. After payment to
the Seller, Investor Certificateholders entitled to the money must look to the
Seller for payment as general creditors unless an applicable abandoned property
law designates another Person.
(c) In the event that the Invested Amount with respect to any Series
is greater than zero on its Series Termination Date or such earlier date as is
specified in the related Supplement (after giving effect to deposits and
distributions otherwise to be made on such date), the Trustee will sell or cause
to be sold on such Series Termination Date, in accordance with the procedures
and subject to the conditions described in such Supplement, Receivables (or
interests therein) in an amount equal to the Invested Amount with respect to
such Series on such date (after giving effect to such deposits and
distributions; provided, however, that in no event shall such amount exceed such
-------- -------
Series' allocable share of Receivables on such Series Termination Date). The
proceeds from any such sale shall be allocated and distributed in accordance
with the terms of the applicable Supplement.
Section 12.03. Seller's Termination Rights. Subject to Section
---------------------------
12.02(b), upon the termination of the Trust pursuant to Section 12.01 and the
surrender of the Seller Certificate, the
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Trustee shall sell, assign and convey to the Seller or its designee, without
recourse, representation or warranty, all right, title and interest of the Trust
in the Receivables, whether then existing or thereafter created, all moneys due
or to become due and all amounts received with respect thereto and all proceeds
thereof. The Trustee shall execute and deliver such instruments of transfer and
assignment, in each case without recourse, as shall be reasonably requested by
the Seller to vest in the Seller or its designee all right, title and interest
which the Trust had in the Receivables and such other related assets.
Section 12.04. Defeasance. Notwithstanding anything to the contrary in
----------
this Agreement or any Supplement:
(a) The Seller may at its option be discharged from its obligations
hereunder with respect to any Series or all outstanding Series (the "Defeased
--------
Series") on the date the applicable conditions set forth in Section 12.04(c) are
- ------
satisfied ("Defeasance"); provided, however, that the following rights,
---------- -------- -------
obligations, powers, duties and immunities shall survive with respect to the
Defeased Series until otherwise terminated or discharged hereunder: (i) the
rights of Holders of Investor Certificates of the Defeased Series to receive,
solely from the trust fund provided for in Section 12.04(c), payments in respect
of principal of and interest on such Investor Certificates when such payments
are due; (ii) the Seller's obligations with respect to such Certificates under
Sections 6.04 and 6.05; (iii) the rights, powers, trusts, duties and immunities
of the Trustee, the Paying Agent and the Transfer Agent and Registrar hereunder;
and (iv) this Section 12.04.
(b) Subject to Section 12.04(c), the Seller at its option may cause
Collections allocated to the Defeased Series and available to purchase
additional Receivables to be applied to purchase Eligible Investments rather
than additional Receivables.
(c) The following shall be the conditions to Defeasance under
Section 12.04(a): (i) the Seller irrevocably shall have deposited or assigned,
or caused to be deposited or assigned, with the Trustee, under the terms of an
irrevocable trust agreement in form and substance satisfactory to the Trustee,
as trust funds in trust for making the payments described below, (A) dollars in
an amount, (B) Eligible Investments which through the scheduled payment of
principal and interest in respect thereof will provide, not later than the due
date of payment thereon, money in an amount, (C) interest rate swaps, caps or
other hedging agreements from an Eligible Institution, or (D) a combination
thereof, in each case sufficient to pay and discharge, and, which shall be
applied by the Trustee to pay and discharge, all remaining scheduled interest
and principal payments on all outstanding Investor Certificates of the Defeased
Series on the dates scheduled for such payments in this Agreement and the
applicable Supplements and all amounts owing to the Series Enhancers with
respect to the Defeased Series; (ii) prior to its first exercise of its right
pursuant to this Section 12.04 with respect to a Defeased Series to substitute
money or Eligible Investments for Receivables, the Seller shall have delivered
to the Trustee a Tax Opinion with respect to such deposit and termination of
obligations and an Opinion of Counsel to the effect that such deposit and
termination of obligations will not result in the Trust being required to
register as an "investment company" within the meaning of the Investment Company
Act; (iii) the Seller shall have delivered to the Trustee and each Series
Enhancer entitled thereto pursuant to the relevant Supplement an Officer's
Certificate of the Seller stating that the Seller reasonably believes that such
deposit and termination of obligations will not, based on the facts known to
such officer at the time of such certification, then cause a Pay-Out Event or
any event that, with the giving of notice or the lapse of time, would constitute
a Pay-Out Event to occur with respect to any Series; and (iv) the Rating Agency
Condition has been satisfied.
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ARTICLE XIII
Miscellaneous Provisions
------------------------
Section 13.01. Amendment; Waiver of Past Defaults. (a) This Agreement
----------------------------------
or any Supplement may be amended from time to time (including, without
limitation, in connection with (i) adding covenants, restrictions or conditions
of the Seller, such further covenants, restrictions or conditions as its Board
of Directors and the Trustee shall consider to be for the benefit or protection
of the Investor Certificateholders, and to make the occurrence, or the
occurrence and continuance, of a default in any of such additional covenants,
restrictions or conditions a default or Pay-Out Event permitting the enforcement
of all or any of the several remedies provided in this Agreement as herein set
forth; provided, however, that in respect of any such additional covenant,
-------- -------
restriction or condition such amendment may provide for a particular period of
grace after default or may provide for an immediate enforcement upon such
default or may limit the remedies available to the Trustee upon such default,
(ii) curing any ambiguity or correcting or supplementing any provision contained
herein or in any Supplement which may be defective or inconsistent with any
other provision contained herein or in any Supplement or to surrender any right
or power conferred upon the Seller, (iii) the assumption by another entity, in
accordance with the provisions of this Agreement, of the Seller's obligations
hereunder, or (iv) the provision of additional Series Enhancement for the
benefit of Certificateholders of any Series) by the Servicer, the Seller and the
Trustee without the consent of any of the Certificateholders, provided that (x)
the Seller shall have delivered to the Trustee an Officer's Certificate to the
effect that the Seller reasonably believes that such action shall not adversely
affect in any material respect the interests of any Investor Certificateholder
and (y) the Rating Agency Condition shall have been satisfied with respect to
any such amendment.
(b) This Agreement or any Supplement may also be amended from time
to time by the Servicer, the Seller, each Liquidity Agent, each Series
Representative and the Trustee, with the consent of the Holders of Investor
Certificates evidencing more than 50% of the aggregate unpaid principal amount
of the Investor Certificates of all adversely affected Series, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or any Supplement or of modifying in any manner the
rights of the Certificateholders; provided, however, that no such amendment
-------- -------
shall (i) reduce in any manner the amount of or delay the timing of any
distributions to be made to Investor Certificateholders or deposits of amounts
to be so distributed or the amount available under any Series Enhancement
without the consent of each affected Certificateholder (provided that any
amendment of the terms of a Pay-Out Event shall not be deemed to be within the
scope of this clause (i)), (ii) change the definition of or the manner of
calculating the interest or priority of any Investor Certificateholder without
the consent of each affected Investor Certificateholder, (iii) reduce the
aforesaid percentage required to consent to any such amendment without the
consent of each Investor Certificateholder or (iv) adversely affect the rating
of any Series or Class by each Rating Agency without the consent of all the
Holders of Investor Certificates of such Series or Class. Any amendment to be
effected pursuant to this paragraph shall be deemed to affect all outstanding
Series adversely, other than any Series with respect to which such action shall
not, as evidenced by an Opinion of Counsel for the Seller, addressed and
delivered to the Trustee, each Liquidity Agent and Series Representative,
adversely affect in any material respect the interests of any Investor
Certificateholder of such Series. The Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Trustee's rights, duties or
immunities under this Agreement or otherwise.
(c) Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Trustee shall furnish
notification of the substance of such
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amendment to each Investor Certificateholder, and the Servicer shall furnish
notification of the substance of such amendment to each Rating Agency, each
Series Enhancer and each Series Representative entitled thereto pursuant to the
relevant Supplement.
(d) It shall not be necessary for the consent of Investor
Certificateholders under this Section to approve the particular form of any
proposed amendment, but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Investor Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
(e) Any Supplement executed solely in accordance with the
provisions of Section 6.03 shall not be considered an amendment to this
Agreement for the purposes of this Section.
(f) The Holders of Investor Certificates evidencing more than 50%
of the aggregate unpaid principal amount of the Investor Certificates of each
Series, the Liquidity Agent and the Series Representative, or, with respect to
any Series with two or more Classes, of each such Class (or, with respect to any
default that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of each Series to which such
default relates or, with respect to any such Series with two or more Classes, of
each Class) each Liquidity Agent and Series Representative may, waive any
default by the Seller or the Servicer in the performance of their obligations
hereunder and its consequences, except the failure to make any distributions
required to be made to Investor Certificateholders or to make any required
deposits of any amounts to be so distributed. Upon any such waiver of a past
default, such default shall cease to exist, and any default arising therefrom
shall be deemed to have been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly so waived.
Section 13.02. Protection of Right, Title and Interest to Trust. (a)
------------------------------------------------
Servicer shall cause this Agreement, all amendments and supplements hereto and
all financing statements and continuation statements and any other necessary
documents covering the Certificateholders' and the Trustee's right, title and
interest to the Trust to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner and in such
places as may be required by law fully to preserve and protect the right, title
and interest of the Certificateholders and the Trustee hereunder to all property
comprising the Trust Assets. The Servicer shall deliver to the Trustee file-
stamped copies of, or filing receipts for, any document recorded, registered or
filed as provided above, as soon as available following such recording,
registration or filing. The Seller shall cooperate fully with the Servicer in
connection with the obligations set forth above and will execute any and all
documents reasonably required to fulfill the intent of this paragraph.
(b) Within 15 days after the Seller makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, the Seller shall give the Trustee notice of any such change and
shall file such financing statements or amendments as may be necessary to
continue the perfection of the Trust's security interest in the Receivables and
the proceeds thereof.
(c) The Seller and Servicer will give the Trustee prompt notice of
any relocation of any office from which it services Receivables or keeps records
concerning the Receivables or of its principal executive office and whether, as
a result of such relocation, the applicable provisions of the
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UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall file such
financing statements or amendments as may be necessary to perfect or to continue
the perfection of the Trust's security interest in the Receivables and the
proceeds thereof. The Seller and Servicer will at all times maintain each office
from which it services Receivables and its principal executive offices within
the United States.
Section 13.03. Limitation on Rights of Certificateholders. (a) The
------------------------------------------
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor shall such death or incapacity entitle such
Certificateholders' legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
(b) No Investor Certificateholder shall have any right by virtue of
any provisions of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Investor Certificateholder previously shall have made, and unless the Holders of
Investor Certificates evidencing more than 50% of the aggregate unpaid principal
amount of all Investor Certificates (or, with respect to any such action, suit
or proceeding that does not relate to all Series, 50% of the aggregate unpaid
principal amount of the Investor Certificates of all Series to which such
action, suit or proceeding relates) shall have made, a request to the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 60 days after such request and offer of indemnity,
shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Investor Certificateholder with every other Investor Certificateholder and
the Trustee, that no one or more Investor Certificateholders shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of the Investor Certificates, or to obtain or seek to
obtain priority over or preference to any other such Investor Certificateholder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the equal, ratable and common benefit of all Investor
Certificateholders except as otherwise expressly provided in this Agreement.
For the protection and enforcement of the provisions of this Section, each and
every Investor Certificateholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
SECTION 13.04. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 13.05. Notices, Payments. (a) All demands, notices,
-----------------
instructions, directions and communications (collectively, "Notices") under this
Agreement shall be in writing and shall be deemed to have been duly given if
personally delivered at, mailed by registered mail, return receipt requested, or
sent by facsimile transmission
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(i) in the case of the Seller, to
Mail-Well Trade Receivables Corporation
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Julie Clark
Facsimile no.: 303-397-7401
(ii) in the case of the Servicer, to
Mail-Well I Corporation
23 Inverness Way East
Englewood, Colorado 80112
Attention: Paul V. Reilly
Facsimile no.: 303-397-7400
(iii) in the case of the Trustee, to
Norwest Bank Colorado, National Association
Corporate Trust and Escrow Services
1740 Broadway
Denver, Colorado 80274-8693
Attention: Corporate Trust
Facsimile no.: 303-863-5645
(iv) in the case of Moody's, to
99 Church Street
New York, New York 10007
Attention of ABS Monitoring Department, 4th Floor
Facsimile no.: 212-553-4600
(v) in the case of Standard & Poor's, to
26 Broadway
New York, New York 10004
Attention of Asset Backed Group
15th Floor
Facsimile no.: 212-412-0323
and
(vi) to the Paying Agent, the Transfer Agent and Registrar or any
other Person, as specified in any Supplement; or, as to each party, at such
other address or facsimile number as shall be designated by such party in a
written notice to each other party.
(b) Any Notice required or permitted to be given to a Holder of
Registered Certificates shall be given by first-class mail, postage prepaid, at
the address of such Holder as shown
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in the Certificate Register. No Notice shall be required to be mailed to a
Holder of Bearer Certificates or Coupons but shall be given as provided below.
Any Notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the Investor
Certificateholder receives such Notice.
Section 13.06. Rule 144A Information. For so long as any of the
---------------------
Investor Certificates of any Series or Class are "restricted securities" within
the meaning of Rule 144(a)(3) under the Act, each of the Seller, the Trustee,
the Servicer and any Series Enhancer agrees to cooperate with each other to
provide to any Investor Certificateholders of such Series or Class and to any
prospective purchaser of Certificates designated by such Investor
Certificateholder, upon the request of such Investor Certificateholder or
prospective purchaser, any information required to be provided to such holder or
prospective purchaser to satisfy the condition set forth in Rule 144A(d)(4)
under the Act.
Section 13.07. Severability of Provisions. If any one or more of the
--------------------------
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Certificates or the rights of the Certificateholders.
Section 13.08. Certificates Nonassessable and Fully Paid. It is the
-----------------------------------------
intention of the parties to this Agreement that the Certificateholders shall not
be personally liable for obligations of the Trust, that the interests in the
Trust represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever and that Certificates upon
authentication thereof by the Trustee pursuant to Section 6.02 are and shall be
deemed fully paid.
Section 13.09. Further Assurances. The Seller and the Servicer agree
------------------
to do and perform, from time to time, any and all acts and to execute any and
all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables and
other Trust Assets for filing under the provisions of the UCC of any applicable
jurisdiction.
Section 13.10. Nonpetition Covenant. Notwithstanding any prior
--------------------
termination of this Agreement, the Servicer, the Trustee, the Seller, and each
Series Enhancer shall not, prior to the date which is one year and one day after
the termination of this Agreement with respect to the Trust, acquiesce, petition
or otherwise invoke or cause the Trust to invoke the process of any Governmental
Authority for the purpose of commencing or sustaining a case against the Trust
under any Federal or state bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Trust.
Section 13.11. No Waiver; Cumulative Remedies. No failure to exercise
------------------------------
and no delay in exercising, on the part of the Trustee or the
Certificateholders, any right, remedy, power or privilege under this Agreement
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges provided under this
Agreement are cumulative and not exhaustive of any rights, remedies, powers and
privileges provided by law.
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Section 13.12. Counterparts. This Agreement may be executed in two
------------
or more counterparts (and by different parties on separate counterparts), each
of which shall be an original, but all of which together shall constitute one
and the same instrument.
Section 13.13. Third-Party Beneficiaries. This Agreement will inure
-------------------------
to the benefit of and be binding upon the parties hereto, the
Certificateholders, any Series Enhancer (to the extent provided in this
Agreement and the related Supplement) and their respective successors and
permitted assigns. Except as otherwise expressly provided in this Agreement
(including, without limitation, Section 7.04), no other Person will have any
right or obligation hereunder.
Section 13.14. Actions by Certificateholders. (a) Wherever in this
-----------------------------
Agreement a provision is made that an action may be taken or a Notice given by
Certificateholders, such action or Notice may be taken or given by any
Certificateholder, unless such provision requires a specific percentage of
Certificateholders.
(b) Any Notice, request, authorization, direction, consent, waiver or
other act by the Holder of a Certificate shall bind such Holder and every
subsequent Holder of such Certificate and of any Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done or omitted to be done by the Trustee or the Servicer in
reliance thereon, whether or not notation of such action is made upon such
Certificate.
Section 13.15. Merger and Integration. Except as specifically stated
----------------------
otherwise herein, this Agreement sets forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.
Section 13.16. Headings. The headings herein are for purposes of
--------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.
Section 13.17. No Proceedings. Each of the Trustee, the Servicer, and
--------------
each Certificateholder by acceptance of its Certificate, hereby agrees that it
will not institute against the Seller or join any other Person in instituting
against the Seller, on account of its ownership of the Seller
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Certificate or its obligations hereunder, any bankruptcy, insolvency,
liquidation, readjustment of debt, marshalling of assets or any similar
proceeding so long as there shall not have elapsed one year plus one day since
the last day on which any Investor Certificates shall have been outstanding.
[SIGNATURE PAGE TO FOLLOW.]
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Agreement to be duly executed by their respective officers as of the
day and year first above written.
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Seller
By:
---------------------------------
Name:
Title:
MAIL-WELL I CORPORATION,
as Servicer
By:
---------------------------------
Name:
Title:
NORWEST BANK COLORADO, NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------------
Name:
Title:
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EXHIBIT A
[FORM OF] SELLER CERTIFICATE
THIS SELLER CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NEITHER THIS SELLER CERTIFICATE NOR ANY PORTION HEREOF
MAY BE OFFERED OR SOLD EXCEPT IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF
SUCH ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM SUCH REGISTRATION
PROVISIONS.
THIS SELLER CERTIFICATE IS NOT PERMITTED TO BE TRANSFERRED, ASSIGNED,
EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT IN COMPLIANCE WITH THE TERMS
OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
No. R-1 One Unit
MAIL-WELL RECEIVABLES MASTER TRUST
SELLER CERTIFICATE
THIS CERTIFICATE REPRESENTS AN INTEREST
IN CERTAIN ASSETS OF THE
MAIL-WELL RECEIVABLES MASTER TRUST
Evidencing an interest in a trust, the corpus of which consists primarily of
receivables generated from time to time in the ordinary course of business of
Mail-Well I Corporation and certain of its Affiliates.
(Not an interest in or obligation of the Seller
or any affiliate thereof)
This certifies that MAIL-WELL TRADE RECEIVABLES CORPORATION is the
registered owner of a fractional interest in the assets of a trust (the "Trust")
not allocated to the Certificateholders' Interest pursuant to the Pooling and
Servicing Agreement dated as of November 15, 1996 (as amended, restated or
supplemented, the "Agreement"), among Mail-Well Trade Receivables Corporation, a
Colorado corporation, as Seller, Mail-Well I Corporation, a Delaware
corporation, as Servicer, and Norwest Bank Colorado, National Association, as
trustee (the "Trustee"). The corpus of the Trust consists of (i) all
receivables (the "Receivables") generated from time to time in the ordinary
course of business of Mail-Well I Corporation and certain of its Affiliates
identified under the Agreement, (ii) all Receivables generated from time to time
thereafter, (iii) funds collected or to be collected from Obligors in respect of
the Receivables, (iv) all funds which are from time to time on deposit in the
Lockbox Accounts, the Concentration Account, Collection Account, the Canadian
Accounts, the Canadian Collection Account, Special Funding Account and in the
Series Accounts, (v) the benefits of any Series Enhancements issued and to be
issued by Series Enhancers with respect to one or more Series of Investor
Certificates, (vi) the Related Security, and (v) all other assets and interests
constituting the Trust. Although a summary of certain provisions of the
Agreement is set forth below, this Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and
A-1
<PAGE>
obligations of the Trustee. A copy of the Agreement may be requested from the
Trustee by writing to the Trustee at Norwest Bank Colorado, National
Association, Corporate Trust and Escrow Services, 2nd Floor, 1700 Broadway,
Denver, Colorado 80274-8693. To the extent not defined herein, the capitalized
terms used herein have the meanings ascribed to them in the Agreement.
This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement, as amended,
restated or supplemented from time to time, the Holder of this Certificate by
virtue of the acceptance hereof assents and is bound.
The Receivables arise from the sale of merchandise and services.
This Certificate is the Seller Certificate, which represents the
Seller's interest in certain assets of the Trust, including the right to receive
a portion of the Collections and other amounts at the times and in the amounts
specified in the Agreement. The aggregate interest represented by the Seller
Certificate at any time in the Receivables in the Trust shall not exceed the
Seller's Interest at such time. In addition to the Seller Certificate, Investor
Certificates will be issued to investors pursuant to the Agreement, which will
represent the Certificateholders' Interest. This Seller Certificate shall not
represent any interest in the Lockboxes, the Lockbox Accounts, the Concentration
Account, the Collection Account, the Canadian Accounts, the Canadian Collection
Account, the Special Funding Account or the Series Accounts, except as expressly
provided in the Agreement, or any Series Enhancements.
Subject to certain conditions and exceptions specified in the
Agreement, the obligations created by the Agreement and the Trust created
thereby shall terminate upon the earlier of (i) November 15, 2002, (ii) the day
following the Distribution Date on which the Invested Amount for each Series is
zero (provided the Seller has delivered a written notice to the Trustee electing
to terminate the Trust) and (iii) the Appointment Date specified in Section
9.02(a) of the Agreement.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
[SIGNATURE PAGE TO FOLLOW.]
A-2
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this Certificate to be duly
executed.
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Seller
By:
---------------------------------
Name:
Title:
Dated: November 13, 1996
A-3
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Seller Certificate described in the within-mentioned Agreement.
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------
Authorized Signatory
A-4
<PAGE>
EXHIBIT B-1
FORM OF DAILY REPORT
[See Attached.]
B-1
<PAGE>
EXHIBIT B-2
FORM OF WEEKLY REPORT
[See Attached.]
B-2
<PAGE>
EXHIBIT C
FORM OF MONTHLY SETTLEMENT REPORT
[See Attached.]
C-1
<PAGE>
EXHIBIT D
FORM OF ANNUAL SERVICER'S CERTIFICATE
(To be delivered on or before [ ] of
each calendar year beginning with [ ], 1996,
pursuant to Section 3.05 of the Pooling and
Servicing Agreement referred to below)
MAIL-WELL I CORPORATION
MAIL-WELL RECEIVABLES MASTER TRUST
The undersigned, a duly authorized representative of Mail-Well I
Corporation, as Servicer (the "Servicer"), pursuant to the Pooling and Servicing
--------
Agreement dated as of _______ __, 1996 (as amended, restated or and supplemented
from time to time, the "Agreement"), among Mail-Well Trade Receivables
Corporation, as Seller, Mail-Well I Corporation, as Servicer, and Norwest Bank
Colorado, National Association, as Trustee, does hereby certify that:
1. Mail-Well I Corporation is, as of the date hereof, the Servicer
under the Agreement. Capitalized terms used in this Certificate have their
respective meanings as set forth in the Agreement.
2. The undersigned is a Servicing Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the
Trustee.
3. A review of the activities of the Servicer during the [period
from the initial Closing Date to December 31, 1996] [calendar year ended
December 31, 19__], and of its performance under the Agreement was conducted
under my supervision.
4. Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.
5. The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Agreement known to me
to have been made by the Servicer during the fiscal year ended, which sets forth
in detail (i) the nature of each such default, (ii) the action taken by the
Servicer, if any, to remedy each such default and (iii) the current status of
each default: [If applicable, insert "None."]
D-1
<PAGE>
IN WITNESS WHEREOF, the undersigned has duly executed this
Certificate this ____ day of _________, 19__.
MAIL-WELL I CORPORATION,
as Servicer
By:
--------------------------------
Name:
Title:
D-2
<PAGE>
EXHIBIT E-1
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED, SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE
PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW).
E-1-1
<PAGE>
EXHIBIT E-2
[FORM OF REPRESENTATION LETTER]
[Date]
[
Attention: ]
Mail-Well Trade Receivables Corporation
Attention:
Re: Purchase of $___________/1/ principal amount of Mail-Well
Receivables Master Trust, [Class ____], [ %] [Floating Rate]
Asset Backed Certificates, Series [ ]
Dear Sirs:
In connection with our purchase of the above-referenced Asset Backed
Certificate (the "Certificates") we confirm that:
(i) we understand that the Certificates are not being registered under
the Securities Act of 1933, as amended (the "1933 Act"), and are being sold
to us in a transaction that is exempt from the registration requirements of
the 1933 Act;
(ii) any information we desire concerning the Certificates or any
other matter relevant to our decision to purchase the Certificates is or
has been made available to us;
(iii) we have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an
investment in the Certificates, and we (and any account for which we are
purchasing under paragraph (iv) below) are able to bear the economic risk
of an investment in the Certificates; we (and any account for which we are
purchasing under paragraph (iv) below) are an "accredited investor" (as
such term is defined in Rule 501(a)(1), (2) or (3) of Regulation D under
the 1933 Act); and we are not, and none of such accounts is, a Benefit
Plan;
(iv) we are acquiring the Certificates for our own account or for
accounts as to which we exercise sole investment discretion and not with a
view to any distribution of the Certificates, subject, nevertheless, to the
understanding that the disposition of our property shall at all times be
and remain within our control;
- -------------------------------
/1/ Not less than $250,000 minimum amount.
E-2-1
<PAGE>
(v) we agree that the Certificates must be held indefinitely by us
unless subsequently registered under the 1933 Act or an exemption from any
registration requirements of that Act and any applicable state securities
laws is available;
(vi) we agree that in the event that at some future time we wish to
dispose of or exchange any of the Certificates (such disposition or exchange
not being currently foreseen or contemplated), we will not transfer or
exchange any of the Certificates unless
(A)(1) the sale is of at least U.S. $250,000 principal amount
of Certificates to an Eligible Purchaser (as defined below), (2) a
letter to substantially the same effect as paragraphs (i), (ii), (iii),
(iv), (v) and (vi) of this letter is executed promptly by the purchaser
and (3) all offers or solicitations in connection with the sale,
whether directly or through any Agent acting on our behalf, are limited
only to Eligible Purchasers and are not made by means of any form of
general solicitation or general advertising whatsoever; or
(B) the Certificates are transferred pursuant to Rule 144
under the 1933 Act by us after we have held them for more than three
years; or
(C) the Certificates are sold in any other transaction that
does not require registration under the 1933 Act and, if the Seller,
the Servicer, the Trustee or the Transfer Agent and Registrar so
requests, we theretofore have furnished to such party an opinion of
counsel satisfactory to such party, in form and substance satisfactory
to such party, to such effect; or
(D) the Certificates are transferred pursuant to an
exception from the registration requirements of the 1933 Act under Rule
144A under the 1933 Act; and
(vii) we understand that the Certificates will bear a legend to
substantially the following effect:
"THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "1933 ACT"). NEITHER THIS CERTIFICATE NOR ANY PORTION
HEREOF MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE REGISTRATION PROVISIONS OF THE 1933 ACT AND ANY APPLICABLE
PROVISIONS OF ANY STATE BLUE SKY OR SECURITIES LAWS OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM SUCH REGISTRATION PROVISIONS. THE TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO CERTAIN CONDITIONS SET FORTH IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW)."
The first paragraph of this legend may be removed if the Seller, the Servicer,
the Trustee and the Transfer Agent and Registrar have received an opinion of
counsel satisfactory to them, in form and substance satisfactory to them, to the
effect that such paragraph may be removed.
"Eligible Purchaser" means either an Eligible Dealer or a corporation,
------------------
partnership or other entity which we have reasonable grounds to believe and do
believe can make representations with respect
E-2-2
<PAGE>
to itself to substantially the same effect as the representations set forth
herein. "Eligible Dealer" means any corporation or other entity the principal
---------------
business of which is acting as a broker and/or dealer in securities. "Benefit
-------
Plan" means any employee benefit plan, trust or account, including an individual
- ----
retirement account, that is subject to the Employee Retirement Income Security
Act of 1974, as amended, or that is described in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended, or an entity whose underlying assets
include plan assets by reason of a plan's investment in such entity. Capitalized
terms used but not defined herein shall have the meanings given to such terms in
the Pooling and Servicing Agreement, dated as of ______ __, 1996, as amended,
restated or supplemented from time to time, among Mail-Well Trade Receivables
Corporation, Mail-Well I Corporation and Norwest Bank Colorado, National
Association.
Very truly yours,
____________________________
(Name of Purchaser)
By:_________________________
(Authorized Officer)
E-2-3
<PAGE>
EXHIBIT E-3
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT PLAN (AS
DEFINED BELOW)./1/
- --------------------------------
/1/The following text should be included in any Certificate in which the above
legend appears:
The [Certificates] may not be acquired by or for the account of any
employee benefit plan, trust or account, including an individual retirement
account, that is subject to the Employee Retirement Income Security Act of
1974, as amended, or that is described in Section 4975(e)(1) of the
Internal Revenue Code of 1986, as amended, or an entity whose underlying
assets include plan assets by reason of a plan's investment in such entity
(a "Benefit Plan"). By accepting and holding this Certificate, the Holder
hereof shall be deemed to have represented and warranted that it is not a
Benefit Plan. By acquiring any interest in this Certificate, the
applicable Certificate Owner or Owners shall be deemed to have represented
and warranted that it or they are not Benefit Plans.
E-3-1
<PAGE>
EXHIBIT F
FORM OF SEMI-ANNUAL AGREED-UPON
PROCEDURES REPORT
[See Attached.]
F-1
<PAGE>
SCHEDULE 1
Credit and Collection Policy
[See attached.]
S-1-1
<PAGE>
SCHEDULE 2
Schedule of Monthly Periods
(Dates shown are the last dates of Monthly Periods)
November 2, 1996
November, 30, 1996
December 28, 1996
February 1, 1997
March 1, 1997
March 29, 1997
May 3, 1997
May 31, 1997
June 28, 1997
August 2, 1997
August 30, 1997
September 27, 1997
October 1, 1997
November 29, 1997
December 27, 1997
S-2-1
<PAGE>
SCHEDULE 3
Schedule of Monthly Settlement Report Dates
November 18, 1996
December 16, 1996
January 13, 1997
February 17, 1997
March 17, 1997
April 14, 1997
May 19, 1997
June 16, 1997
July 14, 1997
August 18, 1997
September 15, 1997
October 13, 1997
November 17, 1997
December 15, 1997
January 12, 1998
S-2-2
<PAGE>
EXHIBIT 10.41
--------------------------------------
MAIL-WELL TRADE
RECEIVABLES CORPORATION
Seller
MAIL-WELL I CORPORATION
Servicer
and
NORWEST BANK COLORADO, NATIONAL ASSOCIATION
Trustee
on behalf of the Series 1996-1 Certificateholders
--------------------------------------
SERIES 1996-1 SUPPLEMENT
Dated as of November 15, 1996
to
POOLING AND SERVICING AGREEMENT
Dated as of November 15, 1996
--------------------------------------
MAIL-WELL RECEIVABLES MASTER TRUST
$100,000,000 Asset Backed
Certificates, Series 1996-1
--------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I CREATION OF THE SERIES 1996-1 CERTIFICATES
Section 1.1. Designation........................................... 1
ARTICLE II DEFINITIONS
Section 2.1. Definitions........................................... 1
ARTICLE III SERVICER
Section 3.1. Servicing Compensation................................12
ARTICLE IV RIGHTS OF CERTIFICATEHOLDERS; INCREASES
Section 4.1. Rights of Certificateholders..........................12
Section 4.2. Increases.............................................13
Section 4.3. Dividing or Combining Increases.......................13
Section 4.4. Increased Costs.......................................13
Section 4.5. Additional Interest on Increases Bearing a
Eurodollar Rate.......................................14
Section 4.6. Conditions Precedent to All Increases and
Reinvestments.........................................14
ARTICLE V ALLOCATION AND APPLICATION OF COLLECTIONS
Section 5.1. Establishment of Distribution Account.................15
Section 5.2. Allocations; Payments on Seller Certificate...........16
Section 5.3. Payments for the Series 1996-1 Certificates...........19
Section 5.4. Determination and Payment of Principal Amounts........21
Section 5.5. Payment of Certificate Interest.......................21
ARTICLE VI DISTRIBUTIONS AND REPORTS TO SERIES 1996-1 INVESTOR
CERTIFICATEHOLDERS
Section 6.1. Distributions.........................................22
Section 6.2. Reports and Statements to Series 1996-1
Certificateholders....................................22
Section 6.3. Additional Reporting Requirements.....................23
ARTICLE VII COVENANTS AND OTHER AGREEMENTS
Section 7.1. Further Agreements....................................24
Section 7.2. Maintenance of Accounts...............................25
Section 7.3. Eligible Investments..................................25
Section 7.4. Monthly Officer's Certificate.........................25
Section 7.5. Covenants.............................................25
Section 7.6. Performance and Compliance with Contracts and
Credit and Collection Policy..........................26
Section 7.7. Extension or Amendment of Receivables.................26
Section 7.8. Change in Business or Credit and Collection
Policy................................................26
</TABLE>
i
<PAGE>
<TABLE>
Page
----
<S> <C>
Section 7.9. Deposits to Lockbox Accounts and Canadian Accounts.......26
Section 7.10. Marking of Records.......................................26
Section 7.11. Further Assurances.......................................26
Section 7.12. Audits...................................................27
ARTICLE VIII PAY-OUT EVENTS
Section 8.1. Series 1996-1 Pay-Out Events.............................27
ARTICLE IX OPTIONAL TERMINATION, REDUCTION OR REPURCHASE;
SERIES TERMINATION
Section 9.1. Optional Termination.....................................29
Section 9.2. Series 1996-1 Termination................................29
ARTICLE X FINAL DISTRIBUTION
Section 10.1. Sale of Receivables or Certificateholders' Interest
pursuant to Section 2.06 of the Agreement and Section
9.1 or 9.2 of this Supplement............................29
Section 10.2. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to Section
9.02 of the Agreement....................................30
ARTICLE XI THE SERIES REPRESENTATIVE
Section 11.1. Authorization and Action of the Series Representative....31
Section 11.2. The Series Representative's Reliance, Etc................31
Section 11.3. The Series Representative and Affiliates.................31
Section 11.4. Amendments, Waivers and Other Actions by the
Series Representative....................................32
ARTICLE XII MISCELLANEOUS PROVISIONS
Section 12.1. Delivery and Payment for the Series 1996-1
Certificates.............................................32
Section 12.2. Form of Delivery of Series 1996-1 Certificates...........32
Section 12.3. Legend on Series 1996-1 Certificates.....................32
Section 12.4. Ratification of Agreement................................32
Section 12.5. Counterparts.............................................33
Section 12.6. GOVERNING LAW............................................33
Section 12.7. Instructions in Writing..................................33
Section 12.8. Confidentiality..........................................33
</TABLE>
EXHIBITS
EXHIBIT A FORM OF INVESTOR CERTIFICATE
ii
<PAGE>
SERIES 1996-1 SUPPLEMENT, dated as of November 15, 1996 (this "Supplement")
----------
by and among MAIL-WELL TRADE RECEIVABLES CORPORATION, a corporation organized
and existing under the laws of the State of Colorado, as Seller (the "Seller"),
------
MAIL-WELL I CORPORATION, a corporation organized and existing under the laws of
the State of Delaware, as Servicer (the "Servicer"), and NORWEST BANK COLORADO,
--------
NATIONAL ASSOCIATION, as trustee (together with its successors in trust
thereunder as provided in the Agreement referred to below, the "Trustee") under
-------
the Pooling and Servicing Agreement dated as of November 15, 1996 (as the same
may be amended, restated or supplemented from time to time in accordance with
its terms, the "Agreement") among the Seller, the Servicer and the Trustee.
---------
Section 6.03 of the Agreement provides, among other things, that the Seller
and the Trustee may at any time and from time to time enter into a supplement to
the Agreement for the purpose of authorizing the issuance by the Trustee to the
Seller, for execution and redelivery to the Trustee for authentication, of one
or more Series of Certificates.
Pursuant to this Supplement, the Seller and the Trustee shall create a new
Series of Investor Certificates and shall specify the Principal Terms thereof.
ARTICLE I
CREATION OF THE SERIES 1996-1 CERTIFICATES
Section 1.1. Designation. There is hereby created a Series of Investor
-----------
Certificates in the form of Exhibit A hereto to be issued pursuant to the
Agreement and this Supplement to be known generally as the "Series 1996-1
-------------
Certificates". The Series 1996-1 Certificates shall be issued in one Class,
- ------------
which shall be designated generally as the $100,000,000 Asset Backed
Certificates, Series 1996-1 (each, a "Certificate" and collectively, the
-----------
"Certificates").
- -------------
ARTICLE II
DEFINITIONS
Section 2.1. Definitions. In the event that any term or provision contained
-----------
herein shall conflict with or be inconsistent with any provision contained in
the Agreement, the terms and provisions of this Supplement shall govern with
respect to the Series 1996-1 Certificates. All Article, Section or subsection
references herein shall mean Article, Section or subsections of this Supplement
except as otherwise provided herein. All capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement. Each capitalized term defined herein shall relate only to the Series
1996-1 Certificates and no other Series of Certificates issued by the Trust.
<PAGE>
"Accrued and Unpaid Fees" shall mean the product of (i) the product of (a)
-----------------------
0.00875 and (b) $100,000,000 and (ii) (a) the product of DSO and 2 (b) divided
by 365.
"Affected Person" shall have the meaning specified in Section 4.4.
---------------
"Agreement" shall have the meaning specified in the preamble to the
---------
Supplement.
"Alternate Base Rate" shall mean a fluctuating interest rate per annum as
-------------------
shall be in effect from time to time, which rate shall be at all times equal to
the sum of the Margin and the highest of:
(a) the rate of interest announced publicly by the Reference Bank in
New York, New York, from time to time as the Reference Bank's base rate;
and
(b) the Federal Funds Rate.
"Amortization Period" shall mean the period beginning on the Amortization
-------------------
Period Commencement Date, and ending on the earlier of (i) the date on which the
Invested Amount and all Interest, Fees and Expenses have been paid in full and
(ii) the Series 1996-1 Termination Date.
"Amortization Period Commencement Date" shall mean the earliest of (i) the
-------------------------------------
Scheduled Series 1996-1 Termination Date and (ii) the Early Amortization
Commencement Date.
"Asset Purchase Agreement" shall mean that certain Series 1996-1 Asset
------------------------
Purchase Agreement, dated as of the date hereof, among Banque Paribas, New York
Branch, the Trustee, CRC and the Liquidity Providers.
"Available Series 1996-1 Collections" shall mean, for any Monthly Period,
-----------------------------------
an amount equal to the Floating Allocation Percentage of Collections of
Receivables.
"Average Default Ratio" means, as of any date, the average of the Default
---------------------
Ratios for the preceding three Monthly Periods.
"Average Maturity" means at any time that period of days equal to the
----------------
average maturity of the Receivables as calculated by the Servicer in the then
most recent Weekly Report; provided if the Trustee, the Liquidity Agent or the
Series Representative shall disagree with any such calculation, the Trustee, the
Liquidity Agent or the Series Representative may determine the Average Maturity.
2
<PAGE>
"Bank Rate" for any Interest Period shall mean an interest rate per annum
---------
equal to the sum of the Margin plus the Eurodollar Rate for such Interest
Period; provided, however, that in the case of:
-------- -------
(i) any Interest Period on or prior to the first day of which a
Certificateholder shall have notified the Trustee, the Series
Representative or the Liquidity Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts that
it is unlawful, for such Certificateholder to fund the Invested Amount at
the Bank Rate set forth above (and such Certificateholder shall not have
subsequently notified the Trustee, the Series Representative or the
Liquidity Agent that such circumstances no longer exist),
(ii) any Interest Period of one to (and including) 29 days,
(iii) any Interest Period as to which the Liquidity Agent does not
receive notice, by no later than 12:00 noon (New York City time) on the
third Business Day preceding the first day of such Interest Period, that
the related Increase will not be funded by issuance of commercial paper, or
(iv) any Interest Period during which the Invested Amount is less than
$500,000,
the "Bank Rate" for such Interest Period shall be an interest rate per annum
---------
equal to the sum of the Margin and the Alternate Base Rate in effect on the
first day of such Interest Period; provided further that the Liquidity Providers
-------- -------
and the Seller may agree in writing from time to time upon a different "Bank
----
Rate."
- ----
"Banque Paribas" means Banque Paribas, a French banking corporation.
--------------
"Certificate" shall have the meaning specified in Section 1.1.
-----------
"Certificate Purchase Agreement" shall mean that certain Certificate
------------------------------
Purchase Agreement, dated as of the date hereof, among the Trustee, the
Servicer, the Seller, the Series Representative and CRC, as amended or restated
from time to time.
"Certificate Rate" shall mean with respect to any Increase, (i) with
----------------
respect to any Interest Period or portion thereof during which such Increase or
portion thereof is funded or maintained by issuing Notes, the Investor Rate and
(ii) with respect to any Interest Period or
3
<PAGE>
portion thereof during which such Increase or portion thereof is not funded or
maintained by issuing Notes, the Bank Rate.
"Certificate Register" shall mean, for this Series 1996-1, the books
--------------------
and records of the Series Representative with respect to the Series 1996-1
Certificateholders.
"Certificateholder" shall mean the Person in whose name a Series 1996-
-----------------
1 Certificate is registered in the Certificate Register.
"Closing Date" shall mean November 15, 1996.
------------
"CNAI" shall mean Citicorp North America, Inc.
----
"Collection Delay Period" means ten days or such other number of days
-----------------------
as the Liquidity Agent or Series Representative may select upon three Business
Days' notice to the Seller.
"Commingling Reserve" shall mean as of any date of determination, an
-------------------
amount equal to the average of the Negative Monthly Amounts over the preceding
twelve Monthly Periods. For the purposes hereof:
"Negative Monthly Amount" means, for any Monthly Period, an amount equal to
the negative difference between the Average Weekly Sales as of the end of
such Monthly Period and the Average Weekly Cash as of the end of such
Monthly Period.
"Average Weekly Sales" means, as of the end of each Monthly Period, an
amount equal to the Outstanding Balance of Receivables generated by the
Originators for such Monthly Period divided by four.
"Average Weekly Cash" means, as of the end of each Monthly Period, an
amount equal to the Collections received, without duplication, in any
Lockbox Account, Canadian Account, Concentration Account, Collection
Account and Canadian Collection Account during such Monthly Period divided
by four.
"Cost of Funds" shall mean, on any date, the sum of the applicable
-------------
Eurodollar Rate plus 1.00%.
"CP Fixed Period Date" means for any Increase, the date of such
--------------------
Increase and thereafter the first day of each calendar month (or, if such day is
not a Business Day, the immediately succeeding Business Day) or any other day as
shall have been agreed to by the Seller, the Series Representative and the
Liquidity Agent, such agreement to be made prior to the first day of the
preceding Fixed Period for such Increase or if there is no preceding Fixed
Period, prior to the first day of such Fixed Period.
4
<PAGE>
"CRC" shall mean Corporate Receivables Corporation, a Delaware
---
corporation.
"Daily Yield Amount" shall mean, on any date, the product of (i) the
------------------
Invested Amount and (ii) the Cost of Funds divided by 360.
"Dilution Horizon Ratio" shall mean, on any date, the Outstanding
----------------------
Balance of Receivables created by the Originators for the Monthly Period
preceding such day divided by the Outstanding Balance of Receivables as of such
date.
"Dilution Reserve" shall mean, on any date, the product of (i)(a) the
----------------
product of 2 and the Dilution Ratio plus (b) the Dilution Volatility Ratio and
(ii) the Dilution Horizon Ratio.
"Dilution Volatility Ratio" shall mean, on any date, the excess of the
-------------------------
highest Dilution Ratio calculated during the previous twelve Monthly Periods (or
if such date occurs less than twelve Monthly Periods following the date hereof,
such fewer number of months occurring prior to such date) over the lowest
Dilution Ratio calculated during the previous twelve Monthly Periods.
"Distribution Account" shall have the meaning specified in Section
--------------------
4.2(b).
"Distribution Date" shall mean December 15, 1996 and the 15th day of
-----------------
each calendar month thereafter, or if such day is not a Business Day, the next
succeeding Business Day.
"DSO" shall mean, as of any date, the average days' sales outstanding
---
for the preceding Monthly Period as shown on the books of the Servicer.
"Early Amortization Commencement Date" shall mean the earlier of the
------------------------------------
date on which a Pay-Out Event occurs pursuant to Section 9.01 of the Agreement
or a Series 1996-1 Pay-Out Event occurs pursuant to Section 8.1.
"Eurocurrency Liabilities" shall have the meaning assigned to that
------------------------
term in Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.
"Eurodollar Rate" shall mean, with respect to any Increase and for any
---------------
Interest Period, an interest rate per annum equal to the rate per annum at which
deposits in U.S. dollars are offered by the principal office of the Banque
Paribas in London, England to prime banks in the London interbank market at
11:00 A.M. (London Time) two Business Days before the first day of such Interest
Period in an amount substantially equal to such Increase on such first day and
for a period equal to such Interest Period.
"Eurodollar Rate Reserve Percentage" shall mean, for any Fixed Period
----------------------------------
with respect to which the Certificate Rate with respect to any Increase is
computed by reference to the
5
<PAGE>
Eurodollar Rate, the reserve percentage applicable two Business Days before the
first day of such Fixed Period under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) (or if more
than one such percentage shall be applicable, the daily average of such
percentages for those days in such Fixed Period during which any such percentage
shall be so applicable) for determining the maximum reserve requirement
(including, without limitation, any emergency, supplemental or other marginal
reserve requirement) with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or with respect to any other category of
liabilities that includes deposits by reference to which the interest rate on
Eurocurrency Liabilities is determined) having a term equal to such Fixed
Period.
"Excess Servicing Fee" shall have the meaning specified in Section
--------------------
5.2(a)(i)(E).
"Expenses" shall mean the sum of all amounts (other than Invested
--------
Amount, Interest and Fees) payable to the Certificateholder pursuant to the
Certificate Purchase Agreement, the Asset Purchase Agreement or this Supplement.
"Federal Funds Rate" shall mean, with respect to any day, the rate set
------------------
forth in H.15(519) for that day opposite the caption "Federal Funds
(Effective)". If on any date of determination, such rate is not published in
H.15(519), such rate will be the rate set forth in Composite 3:30 P.M.
Quotations for U.S. Government Securities for that day under the caption
"Federal Funds/Effective Rate". If on any date of determination, the
appropriate rate is not published in either H.15(519) or Composite 3:30 P.M.
Quotations for U.S. Government Securities, such rate will be the arithmetic mean
of the rates for the last transaction in overnight Federal funds arranged by
three leading brokers of Federal funds transactions in New York City prior to
9:00 A.M., New York City time, on that day.
"Fee Letter" shall mean that certain fee letter, dated as of the date
----------
hereof between the Seller and the Liquidity Agent, as amended or restated from
time to time.
"Fees" shall mean the sum of all amounts payable to the
----
Certificateholders pursuant to the Fee Letter.
"Fixed Period" means with respect to any Increase:
------------
(a) initially the period commencing on the date of such
Increase and ending such number of days later as the Seller shall
select and the Series Representative shall approve (upon notice to the
Series Representative) pursuant to Section 4.2, up to 270 days from
such date; and
(b) thereafter each period commencing on the last day of the
immediately preceding Fixed Period for such Increase and ending such
number of days (not to exceed 270 days) later as the Seller shall
select and the Series Representative shall approve (upon notice to the
Series Representative) including
6
<PAGE>
notice by telephone, confirmed in writing) not later than 11:00 A.M.
(New York City time) on such last day, except that if the Series
------
Representative shall not have received such notice or approved such
period on or before 11:00 A.M. (New York City time) on such last day,
such period shall be one day;
provided that (i) in the case of any Fixed Period in respect of which the
- --------
Certificate Rate is computed by reference to the rate referred to in clause (i)
of the definition of Investor Rate, Fixed Period shall mean each successive
period commencing on each CP Fixed Period Date for such Increase and ending on
the next succeeding CP Fixed Period Date for such Increase; (ii) any Fixed
Period in respect of which the Certificate Rate in respect of each such Increase
is computed by reference to the Bank Rate shall be a period from one to and
including 29 days, or a period of one, two or three calendar months, as the
Seller may select as provided above; (iii) any Fixed Period (other than of one
day) which would otherwise end on a day which is not a Business Day shall be
extended to the next succeeding Business Day (provided, however, if the
-------- -------
Certificate Rate in respect of such Fixed Period is computed by reference to the
Eurodollar Rate, and such Fixed Period would otherwise end on a day which is not
a Business Day, and there is no subsequent Business Day in the same calendar
month as such day, such Fixed Period shall end on the next preceding Business
Day); (iv) in the case of any Fixed Period of one day, (A) if such Fixed Period
is the initial Fixed Period for an Increase, such Fixed Period shall be the day
of purchase of such Increase; (B) any subsequently occurring Fixed Period which
is one day shall, if the immediately preceding Fixed Period is more than one
day, be the last day of such immediately preceding Fixed Period, and, if the
immediately preceding Fixed Period is one day, be the day next following such
immediately preceding Fixed Period; and (C) if such Fixed Period occurs on a day
immediately preceding a day which is not a Business Day, such Fixed Period shall
be extended to the next succeeding Business Day; and (v) in the case of any
Fixed Period for any Increase which commences before the Termination Date for
such Increase and would otherwise end on a date occurring after such Termination
Date, such Fixed Period shall end on such Termination Date and the duration of
each Fixed Period which commences on or after the Termination Date for such
Increase shall be of such duration as shall be selected by the Series
Representative.
"Floating Allocation Percentage" shall mean, on any date of
------------------------------
determination, the percentage equivalent of a fraction computed as
IA + YR + LDR + SFR
-------------------------------
The greater of (NRPB + CF) or SAP
where:
IA = the Invested Amount at the time of computation.
YR = the Yield Reserve at the time of computation.
LDR = the Loss and Dilution Reserve at the time of computation.
7
<PAGE>
SFR = the Servicing Fee Reserve at the time of computation.
NRPB = the Net Receivables Pool Balance at the time of computation.
CF = the amounts on deposit in the Special Funding Account (in
excess of the Minimum Balance) at the time of computation.
SAP = the sum of the numerators with respect to all Classes of all
Series then outstanding used to calculate the applicable
allocation percentage.
The Floating Allocation Percentage shall be determined from time to time
pursuant to the provisions of Section 4.1(a).
"Funds Transfer Letter" means a letter in substantially the form of
---------------------
Exhibit B hereto executed and delivered by the Seller to the Series
Representative, as the same may be amended or restated in accordance with the
terms thereof.
"Incipient Pay-Out Event" shall mean an event that but for notice or
-----------------------
lapse of time or both would constitute a Series 1996-1 Pay-Out Event.
"Increase" shall mean, as the context requires, each addition to the
--------
principal amount of the Certificates made pursuant to Section 6.14(b) of the
Agreement or the aggregate amount of all additions to the principal amount of
the Certificates made pursuant to Section 6.14(b) of the Agreement.
"Initial Invested Amount" shall mean the aggregate initial principal
-----------------------
amount of the Series 1996-1 Certificates, which is $71,000,000.
"Interest" shall mean the interest distributable in respect of the
--------
Certificates as calculated in accordance with Section 5.3(a).
"Interest Period" shall mean, (i) with respect to a Distribution Date,
---------------
the period from and including the preceding Distribution Date to and excluding
such Distribution Date; provided, however, that the initial Interest Period
shall be the period from the Closing Date to and excluding the first
Distribution Date and (ii) with respect to an Interim Date, the Fixed Period
ending on such Interim Date.
"Interim Date" shall have the meaning specified in Section 5.3(a).
------------
"Invested Amount" shall mean, when used with respect to any date of
---------------
determination, an amount equal to (a) the Initial Invested Amount, minus (b) the
-----
aggregate
8
<PAGE>
amount of principal payments made to Certificateholders prior to such
date, plus (c) all Increases; provided that if such Invested Amount shall have
---- --------
been reduced by any distribution and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Invested Amount shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
"Investor Rate" shall mean, for any Interest Period or portion
-------------
thereof, for any Increase to the extent such Increase is funded or maintained by
issuing Notes, at the option of the Series Representative (i) the per annum rate
equivalent to the weighted average of the per annum rates paid or payable by
CRC, from time to time as interest on or otherwise (by means of interest rate
hedges or otherwise) in respect of those Notes issued by CRC, that are
allocated, in whole or in part, by the Series Representative to fund or maintain
such Increase during such Interest Period as determined by the Series
Representative (on behalf of CRC) and reported to the Trustee [and the Liquidity
Agent], which rates shall reflect and give effect to (x) the commissions of
placement agents and dealers in respect of such Notes in the amount of .05% of
any such Increase and (y) administration fees in the amount of .03% of any such
Increase; provided, if any component of such rate is a discount rate, then in
--------
calculating the "Investor Rate" for such Interest Period, the Series
Representative shall for such component use the rate resulting from converting
such discount rate to an interest-bearing equivalent rate per annum; or (ii) the
rate per annum (or if more than one rate, the weighted average of the rates),
which rate or rates shall reflect and give effect to (x) the commissions of
placement agents and dealers in respect of such Notes in the amount of .05% of
any such Increase and (y) administration fees in the amount of .03% of any such
Increase, at which Notes of CRC having a term equal to such Interest Period and
to be issued to fund such Increase may be sold by any placement agent or
commercial paper dealer selected by the Series Representative on behalf of CRC,
as agreed between each such agent or dealer and the Series Representative and
notice of which has been given by the Series Representative to the Trustee;
provided if the rate (or rates) as agreed between any such agent or dealer and
- --------
the Series Representative for Increase is a discount rate (or rates), then such
rate shall be the rate (or if more than one rate, the weighted average of the
rates) resulting from converting such discount rate (or rates) to an interest-
bearing equivalent rate per annum.
"Liquidation Day" means each day (i) on which the conditions set forth
---------------
in Section 4.6 are not satisfied, and (ii) which occurs on or after the
Amortization Period Commencement Date.
"Liquidity Agent" shall mean Banque Paribas or any successor or
---------------
assigns thereto, as liquidity agent under the Asset Purchase Agreement.
"Liquidity Providers" shall mean each of the financial institutions or
-------------------
any successor or assigns thereto executing the Asset Purchase Agreement.
"Loss and Dilution Percentage" shall mean, on any date the greater of
----------------------------
(i) 13% or (ii) the sum of (x) the Loss Reserve Percentage and (y) the Dilution
Reserve.
9
<PAGE>
"Loss and Dilution Reserve" shall mean, on any date, an amount equal
-------------------------
to
LDP x NRPB
where:
LDP = the Loss and Dilution Percentage on such date.
NRPB = the Net Receivables Pool Balance at the close
of business of the Servicer on such date.
"Loss Horizon Ratio" shall mean the ratio (expressed as a percentage)
------------------
computed as of the last day of each Monthly Period by dividing (i) the aggregate
original Outstanding Balance of all Receivables created by the Originators
during the preceding four Monthly Periods by (ii) the Outstanding Balance of
Receivables as of such day.
"Loss Reserve Percentage" shall mean, on any date, the product of (i)
-----------------------
2 and (ii) the product of (x) the Average Default Ratio and (y) the Loss Horizon
Ratio.
"Margin" shall mean .50%; provided that on and after the Amortization
------
Period Commencement Date, the Margin shall be 1%.
"Minimum Balance" shall have the meaning specified in Section 7.5(d).
---------------
"Monthly Servicing Fee" shall have the meaning specified in Section
---------------------
3.1.
"Note" shall mean any commercial paper or other promissory note issued
----
by CRC to fund or maintain all or any portion of the Invested Amount.
"Negative Amount" shall have the meaning specified in Section 5.2(a)
---------------
(i) (C).
"Principal" shall mean the principal distributable in respect of the
---------
Certificates as calculated in accordance with Section 5.4.
"Rating Agency" shall mean Standard & Poor's and Moody's.
-------------
"Reference Bank" shall mean for purposes of determining the
--------------
Certificate Rate, Banque Paribas, its successors and assigns.
"Revolving Period" shall mean the period from and including the
----------------
Closing Date to, but not including, the Amortization Period Commencement Date.
"Scheduled Series 1996-1 Termination Date" shall mean the November 15,
----------------------------------------
2001 Distribution Date; provided that no later than November 15, 1998, the
Seller, the Originators,
10
<PAGE>
CRC, the Liquidity Agent and CNAI may agree in writing to extend the Scheduled
Series 1996-1 Termination Date for eighteen months in which event the Scheduled
Series 1996-1 Termination Date shall be so extended.
"Seller Retained Certificates" shall mean investor certificates of
----------------------------
any Series which the Seller retains.
"Series 1996-1" shall mean the Series of the Mail-Well Corporation
-------------
Master Trust represented by the Series 1996-1 Certificates.
"Series 1996-1 Certificateholder" shall mean the holder of record of
-------------------------------
any Series 1996-1 Certificate.
"Series 1996-1 Certificates" shall have the meaning specified in
--------------------------
Section 1.1.
"Series 1996-1 Pay-Out Event" shall have the meaning specified in
---------------------------
Section 8.1.
"Series 1996-1 Termination Date" shall mean the earlier to occur of
------------------------------
(i) the day after the Distribution Date on which the Series 1996-1 Certificates
are paid in full, or (ii) the Scheduled Series 1996-1 Termination Date.
"Series Representative" shall mean, with respect to the Series 1996-1
---------------------
Certificates, (x) CNAI, at any time that CRC (i) is a Series 1996-1
Certificateholder and (ii) is funding or maintaining any portion of the Invested
Amount by issuing commercial paper or through any credit support maintained for
the benefit of CRC through Citibank, N.A. and (y) the Liquidity Agent, at any
time (i) the Liquidity Providers are Series 1996-1 Certificateholders or (ii)
CRC is a Series 1996-1 Certificateholder and is not funding or maintaining any
portion of the Invested Amount by issuing commercial paper or through any credit
support maintained for the benefit of CRC through Citibank, N.A. but is funding
or maintaining any portion of the Invested Amount by the transfer of
participations to no Person other than the Liquidity Providers; provided, that
-------- ----
with respect to the receipt of any notices under the Agreement, this Supplement
or any other Supplement (solely with respect to delivery of notices to the
Series Representative for the Series 1996-1 Certificates), "Series
Representative" shall mean both CNAI and the Liquidity Agent.
"Servicing Fee Rate" shall mean .5% per annum (or, in the case of a
------------------
Servicer other than Mail-Well I Corporation or any Affiliate thereof, such
higher amount, if any, not to exceed 1% per annum).
"Servicing Fee Reserve" at any time means the sum of (i) the unpaid
---------------------
Servicing Fee accrued to such time plus (ii) an amount equal to (a) the Invested
Amount on such date multiplied by (b) the product of (x) the Servicing Fee Rate
on such date and (y) a fraction having the sum of the Average Maturity plus the
Collection Delay Period (each as in effect at such date) as its numerator and
360 as its denominator.
11
<PAGE>
"Stated Amount" means $100,000,000. References to the unused portion
-------------
of the Stated Amount shall mean, at any time, the Stated Amount minus the then
outstanding Invested Amount.
"Termination Date" shall mean the earlier of (i) the Business Day
----------------
which the Seller or the Series Representative so designates by notice to the
other of at least three Business Days and (ii) the Amortization Period
Commencement Date.
"Yield Amount" shall mean the product of (i) Daily Yield Amount and
------------
(ii) the product of (a) DSO and (b) 2.
"Yield Reserve" at any time shall mean the sum of (i) the Yield
-------------
Amount and (ii) the Accrued and Unpaid Fees.
ARTICLE III
SERVICER
Section 3.1. Servicing Compensation. The share of the Servicing Fee
----------------------
allocable to the Series 1996-1 Certificateholders with respect to any
Distribution Date (the "Monthly Servicing Fee") shall be equal to one-twelfth of
---------------------
the product of (a) the Servicing Fee Rate and (b) (i) the Invested Amount as of
the last day of the Monthly Period preceding such Distribution Date, minus (ii)
-----
the product of the amounts, if any, on deposit in the Special Funding Account
(in excess of the Minimum Balance) as of the last day of the Monthly Period
preceding such Distribution Date and the Floating Allocation Percentage with
respect to such Monthly Period. The Monthly Servicing Fee shall be payable in
arrears to the Servicer solely to the extent amounts are available for
distribution in respect thereof pursuant to Section 5.3.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS; INCREASES
Section 4.1. Rights of Certificateholders. (a) The Series 1996-1
----------------------------
Certificates shall represent undivided interests in the Trust, consisting of the
right to receive, to the extent necessary to make the required payments with
respect to such Series 1996-1 Certificates at the times and in the amounts
specified in this Agreement, (i) the Floating Allocation Percentage of
Collections available in the Collection Account and (ii) funds allocable to the
Series 1996-1 Certificates on deposit in the Special Funding Account. The
Floating Allocation Percentage shall be automatically recomputed (or deemed to
be recomputed) on each day other than the Amortization Period Commencement Date.
The Floating Allocation Percentage, as computed (or deemed recomputed) as of the
day immediately preceding the Amortization Period Commencement Date, shall
thereafter remain constant. The Floating Allocation Percentage shall
12
<PAGE>
become zero when the Invested Amount and accrued and unpaid Interest thereon
shall have been paid in full, and all other amounts owed by the Seller hereunder
to the Certificateholders, the Liquidity Providers, the Series Representative or
the Liquidity Agent are paid and the Servicer shall have received the accrued
Servicing Fee thereon.
(b) The Seller Certificate shall represent the ownership interest in
the Trust Assets not allocated to the Series 1996-1 Certificates and any other
Series outstanding, including the right to receive Collections with respect to
the Receivables and other amounts at the times and in the amounts specified in
the Agreement or any Supplement to be paid to the Seller on behalf of the Holder
of the Seller Certificate; provided, however, the ownership interest represented
-------- -------
by the Seller Certificate and any other Series outstanding shall not represent
any interest in the Collection Account or any other Series Account, except as
specifically provided in Article V of the Agreement or this Supplement.
Section 4.2. Increases. (a) Each Increase by the Certificateholder
---------
shall be made on at least three Business Days' notice from the Seller to the
Series Representative. Each such notice shall specify (i) the amount of such
Increase requested to be paid to the Seller (which shall not be less than
$500,000), (ii) the date of such Increase (which shall be a Business Day), and
(iii) the duration of the initial Fixed Period for such Increase.
(b) On the date of each such Increase, the Certificateholder shall,
upon satisfaction of the applicable conditions set forth herein and in Section
6.14 of the Agreement, make available to the Seller in same day funds an amount
equal to such Increase, at the account set forth in the Funds Transfer Letter.
Section 4.3. Dividing or Combining Increases. Either the Seller or the
-------------------------------
Series Representative may, upon notice to the other party received at least
three Business Days prior to the last day of any Fixed Period in the case of the
Seller giving notice, or up to the last day of such Fixed Period in the case of
the Series Representative giving notice, either (i) divide any Increase into two
or more Increases having an aggregate principal amount equal to the principal
amount of such divided Increase, or (ii) combine any two or more Increases
originating on such last day or having Fixed Periods ending on such last day
into a single Increase having principal amount equal to the aggregate of the
principal amount of such Increases.
Section 4.4. Increased Costs. (a) If the Certificateholder, any entity
---------------
which enters into a commitment to purchase the Series 1996-1 Certificate or
interests therein, or any of their respective Affiliates (each an "Affected
--------
Person") determines that compliance with any new law or regulation or on or
- ------
after January 1, 1997, compliance with any guideline or request from any central
bank or other governmental authority (whether or not having the force of law)
affects or would affect the amount of the capital required or expected to be
maintained by such Affected Person and such Affected Person determines that the
amount of such capital is increased by or based upon the existence of any
commitment to make purchases of or otherwise to maintain the investment in the
Series 1996-1 Certificate or interests therein or to the funding thereof and
other commitments of the same type, then, upon demand by such Affected Person
(with a copy to the
13
<PAGE>
Series Representative), the Seller shall immediately pay to the Series
Representative, for the account of such Affected Person (as a third-party
beneficiary), from time to time as specified by such Affected Person, additional
amounts sufficient to compensate such Affected Person in the light of such
circumstances, to the extent that such Affected Person reasonably determines
such increase in capital to be allocable to the existence of any of such
commitments. A certificate as to such amounts submitted to the Seller and the
Series Representative by such Affected Person shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve requirements) in or
in the interpretation of any law or regulation or (ii) on or after January 1,
1997, compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Affected Person of agreeing to purchase or
purchasing, or maintaining the ownership of the Series 1996-1 Certificate in
respect of which the Certificate Rate is computed by reference to the Eurodollar
Rate, then, upon demand by such Affected Person (with a copy to the Series
Representative), the Seller shall immediately pay to the Series Representative
(each as a third-party beneficiary), from time to time as specified by the
Affected Person, additional amounts sufficient to compensate such Affected
Person for such increased costs. A certificate as to such amounts submitted to
the Seller and the Series Representative by such Affected Person shall be
conclusive and binding for all purposes, absent manifest error.
Section 4.5. Additional Interest on Increases Bearing a Eurodollar
-----------------------------------------------------
Rate. The Seller shall pay to any Certificateholder, so long as such
- ----
Certificateholder shall be required under regulations of the Board of Governors
of the Federal Reserve System to maintain reserves with respect to liabilities
or assets consisting of or including Eurocurrency Liabilities, additional
Interest on any Increase during each Fixed Period in respect of which Interest
is computed by reference to the Eurodollar Rate, for such Fixed Period, at a
rate per annum equal at all times during such Fixed Period to the remainder
obtained by subtracting (i) the Eurodollar Rate for such Fixed Period from (ii)
the rate obtained by dividing such Eurodollar Rate referred to in clause (i)
above by that percentage equal to 100% minus the Eurodollar Rate Reserve
Percentage of such Certificateholder for such Fixed Period, payable on each date
on which Interest is payable on such Increase. Such additional Interest shall
be determined by such Certificateholder and notice thereof given to the Seller
through the Series Representative within 30 days after any Interest payment is
made with respect to which such additional Interest is requested. A certificate
as to such additional Interest submitted to the Seller and the Series
Representative by such Certificateholder shall be conclusive and binding for all
purposes, absent manifest error.
Section 4.6. Conditions Precedent to All Increases and Reinvestments.
-------------------------------------------------------
Each Increase (including the initial Increase) and each reinvestment shall be
subject to the conditions precedent that (a) in the case of each Increase, (i)
there has been no Increase during the fifteen days prior to the date of such
Increase and (ii) the Servicer shall have delivered to the Series Representative
at least one Business Day prior to such Increase, in form and substance
satisfactory to the Series Representative, a completed Daily Report, Weekly
Report and Monthly
14
<PAGE>
Settlement Report containing information covering the most recently ended
reporting periods for which information is required pursuant to the Agreement
and demonstrating that after giving effect to such Increase no Series 1996-1
Pay-Out Event or Incipient Pay-Out Event would occur, (b) in the case of each
reinvestment, the Servicer shall have delivered to the Series Representative on
or prior to the date of such reinvestment, in form and substance satisfactory to
the Series Representative, a completed Daily Report containing information
covering the most recently ended reporting period for which information is
required pursuant to the Agreement, (c) on the date of such Increase or
reinvestment the following statements shall be true (and acceptance of the
proceeds of such Increase or reinvestment shall be deemed a representation and
warranty by the Seller that such statements are then true):
(i) The representations and warranties contained in the Agreement
are correct on and as of the date of such Increase or reinvestment as
though made on and as of such date,
(ii) No event has occurred and is continuing, or would result
from such purchase or reinvestment, that constitutes a Series 1996-1
Pay-Out Event or an Incipient Pay-Out Event, and
(iii) The Originators shall have sold or contributed to the
Seller, pursuant to the Purchase Agreement, all Originator Receivables
arising on or prior to such date, and
(d) the Series Representative and the Liquidity Agent shall have received such
other approvals, opinions or documents as they may reasonably request.
ARTICLE V
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 5.1. Establishment of Distribution Account. The Servicer, for
-------------------------------------
the benefit of the Series 1996-1 Certificateholders, shall cause to be
established and maintained in the name of the Trustee, on behalf of the Trust,
an Eligible Deposit Account bearing a designation clearly indicating that the
funds deposited therein are held in trust for the benefit of the Series 1996-1
Certificateholders (the "Distribution Account"). The Servicer on behalf of the
--------------------
Trustee at all times shall maintain accurate records reflecting each transaction
in the Distribution Account. The Servicer shall have the power, revocable by
the Series Representative, to withdraw funds, and the obligation, as needed, to
provide the Series Representative with all information necessary to enable the
Series Representative to withdraw funds, from the Distribution Account for the
purpose of carrying out its duties hereunder. All such information from the
Servicer to the Series Representative shall be provided in writing; provided,
--------
however, that the Servicer is entitled to provide such information to the Series
- -------
Representative by facsimile. Funds on deposit in the Distribution Account shall
not be invested.
15
<PAGE>
Section 5.2. Allocations; Payments on Seller Certificate.
-------------------------------------------
(a) Daily Allocations of Funds in Collection Account. Prior to the
------------------------------------------------
close of business on each Business Day, the Servicer will provide the Series
Representative with all information necessary to enable the Trustee to apply,
all Collections and other funds on deposit in the Collection Account (including
all interest and other investment earnings (net of losses and investment
expenses) on funds on deposit in the Collection Account) in the following order
and priority:
(i) Out of an amount equal to the Floating Allocation Percentage
of such Collections in the following order and priority:
(A) set aside and hold in trust (and, at the request of the
Series Representative, segregate) for the Certificateholders an amount
equal to the Interest and Monthly Servicing Fee accrued through such
day and not previously set aside;
(B) if such day is a Distribution Date or Interim Date, set
aside and hold in the Collection Account for application pursuant to
Section 5.3, all amounts payable pursuant to such Section (except on
any day which is a Liquidation Day, amounts payable pursuant to clause
(e) thereunder) on such Distribution Date or Interim Date, as the case
may be;
(C) if such day is not a Liquidation Day, reinvest with the
Seller such Collections; provided that on any day during the
--------
Revolving Period that the Floating Allocation Percentage exceeds 100%
(the amount by which the Floating Allocation Percentage exceeds 100%
being, the "Negative Amount"), such Collections shall be allocated (in
whole or part, as necessary) in an amount equal to the Negative Amount
and used to repay the Invested Amount as contemplated by Section
5.4(a); and provided further that if the balance of funds in the
--------
Special Funding Account is less than the Minimum Balance, such
Collections (in whole or in part, as necessary) in excess of the
Collections allocated pursuant to the first proviso of this Section
5.2(a)(i)(C) shall be deposited into the Special Funding Account in an
amount necessary to cause the balance of the Special Funding Account
to equal the Minimum Balance;
(D) if such day is a Liquidation Day, set aside and hold in
trust (and, at the request of the Series Representative, segregate)
for the Certificateholders the entire remainder of such Collections;
provided that if amounts are set aside and held in trust on any
--------
Liquidation Day occurring prior to the Termination Date, and
thereafter the conditions set forth in Section 4.6 are satisfied or
waived by the Series Representative, such previously set aside amounts
shall be reinvested in accordance with the preceding subsection (C) on
the day of such subsequent satisfaction or waiver of conditions; and
16
<PAGE>
(E) during such times as amounts are required to be
reinvested in accordance with the foregoing subsection (C) or the
proviso to subsection (D), pay to the Servicer for its own account any
Collections ("Excess Servicing Fee") in excess of the sum of such
amounts plus the amounts that are required to be set aside pursuant to
subsections (A) and (B) above provided that the Servicer may, at its
--------
option, (x) deposit any or all Excess Servicing Fee into the Special
Funding Account or (y) apply any or all Excess Servicing Fee to reduce
the Invested Amount as contemplated by Section 5.4(a).
(ii) Pay to the Holder of the Seller Certificate an amount
("Seller Collections") equal to the excess of (A) the Collections on
deposit in the Collection Account over (B) the amount allocated
pursuant to Section 5.2(a)(i), if any; provided that the Seller may,
-------- ----
at its option, direct the Servicer to deposit any or all Seller
Collections into the Special Funding Account or to be applied to
reduce the Invested Amount as contemplated by Section 5.4(a).
(b) Daily Allocations of Funds in Canadian Collection Account. Prior
---------------------------------------------------------
to the close of business on each Business Day, the Servicer will provide the
Series Representative with all information necessary to enable the Trustee to
apply, all Collections and other funds on deposit in the Canadian Collection
Account (including all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Canadian Collection Account) in
the following order and priority:
(i) Out of an amount equal to the Floating Allocation Percentage
of such Collections in the following order and priority:
(A) if such day is a Distribution Date or Interim Date, set
aside and hold in the Canadian Collection Account for application
pursuant to Section 5.3, all amounts payable pursuant to such Section
(except on any day which is a Liquidation Day, amounts payable
pursuant to clause (e) thereunder) to the extent that Collections and
other funds on deposit in the Collection Account are insufficient to
cover the withdrawals referred to in Section 5.3 on such Distribution
Date or Interim Date, as the case may be; provided, that any
--------
funds so withdrawn from the Canadian Collection Account for
application pursuant to Section 5.3 shall have been converted to
United States Dollars in a manner acceptable to the Trustee, the
Liquidity Agent and the Series Representative;
(B) if such day is not a Liquidation Day, reinvest with the
Seller such Collections; provided that on any day during the Revolving
--------
Period that the Floating Allocation Percentage exceeds 100%, such
Collections shall be allocated (in whole or part, as necessary) in an
amount equal to the Negative Amount (less any amount allocated and
paid with respect to the Negative Amount pursuant to Section 5.2 (C))
and be applied to reduce the Invested Amount as contemplated by
Section 5.4(a)); and provided further that if the balance of
--------
funds
17
<PAGE>
in the Special Funding Account is less than the Minimum Balance, such
Collections (in whole or in part, as necessary) in excess of the
Collections allocated pursuant to the first proviso of this Section
5.2(b)(i)(B) shall (to the extent that funds deposited into the
Special Funding Account pursuant to the second proviso of Section
5.2(a)(i)(C) are insufficient to cause the balance of the Special
Funding Account to equal the Minimum Balance) be deposited into the
Special Funding Account in an amount necessary to cause the balance of
the Special Funding Account to equal the Minimum Balance; provided,
--------
that any funds allocated pursuant to the first or second provisos of
this Section 5.2(b)(i)(B) shall have been converted to United States
Dollars in a manner acceptable to the Trustee, the Liquidity Agent and
the Series Representative;
(C) if such day is a Liquidation Day occurring prior to the
Termination Date, set aside and hold in trust (and, at the request of
the Series Representative, segregate) for the Certificateholders the
entire remainder of such Collections; provided that if amounts are set
--------
aside and held in trust on any Liquidation Day occurring prior to the
Termination Date, and thereafter the conditions set forth in Section
4.6 are satisfied or waived by the Series Representative, such
previously set aside amounts shall be reinvested in accordance with
the preceding subsection (B) on the day of such subsequent
satisfaction or waiver of conditions;
(D) if such day is a Liquidation Day occurring on or after
the Termination Date, transfer the entire remainder of such
Collections to the Collection Account; provided, that such funds shall
--------
have been converted to United States Dollars in a manner acceptable to
the Trustee, the Liquidity Agent and the Series Representative; and
(E) during such times as amounts are required to be
reinvested in accordance with the foregoing subsection (B) or the
second proviso to subsection (C), pay to the Servicer for its own
account any Collections ("Canadian Excess Servicing Fee") in excess of
the sum of such amounts plus the amounts that are required to be set
aside pursuant to subsections (A) above; provided that the Servicer
--------
may, at its option, (x) deposit any or all Canadian Excess Servicing
Fee (after it shall have been converted to United States Dollars in a
manner acceptable to the Trustee, the Liquidity Agent and the Series
Representative) into the Special Funding Account or (y) apply any or
all Canadian Excess Servicing Fee (after it shall have been converted
to United States Dollars in a manner acceptable to the Trustee, the
Liquidity Agent and the Series Representative) to reduce the Invested
Amount and paid pursuant to Section 5.4(a).
(ii) Pay to the Holder of the Seller Certificate an amount
("Canadian Seller Collections") equal to the excess of (A) the
Collections on
18
<PAGE>
deposit in the Canadian Collection Account over (B) the amount
allocated pursuant to Section 5.3(a)(i), if any; provided that the
-------- ----
Seller may, at its option, direct the Servicer to deposit any or all
Canadian Seller Collections (after it shall have been converted to
United States Dollars in a manner acceptable to the Trustee, the
Liquidity Agent and the Series Representative) into the Special
Funding Account or to be applied to reduce the Invested Amount and
paid pursuant to Section 5.4(a).
(c) The allocations to be made pursuant to this Section 5.2 shall also
apply to deposits into the Collection Account and the Canadian Collection
Account that are, in each case, treated as Collections, including adjustment
payments made in accordance with Section 3.09 of the Agreement, payment of the
reassignment price pursuant to Section 2.05(b) of the Agreement and proceeds
from the sale, disposition or liquidation of the Receivables pursuant to Section
9.02 or 12.02 of the Agreement and Section 10.2 of this Supplement.
Section 5.3. Payments for the Series 1996-1 Certificates. The Series
-------------------------------------------
Representative and the Liquidity Agent, acting based on information provided
(which information the Servicer hereby agrees to give on each Distribution Date)
by the Servicer, shall instruct the Trustee to make the following withdrawals
from the Collection Account in the following order and priority:
(a) Certificate Interest. On each Distribution Date, the Series
--------------------
Representative and the Liquidity Agent shall instruct the Trustee to withdraw
from the Collection Account, to the extent available (and, to the extent that
funds in the Collection Account are insufficient to do so, from the Canadian
Collection Account (after the funds therein to be withdrawn shall have been
converted to United States Dollars in a manner acceptable to the Trustee, the
Liquidity Agent and the Series Representative)), and deposit to the Distribution
Account an amount equal to the sum of (1) the product of (I) the Certificate
Rate and (II) the Outstanding Balance of each Increase, as determined on the
preceding Distribution Date (after giving effect to any reduction therein that
occurs on such preceding Distribution Date) (or if there is no preceding
Distribution Date, the Closing Date) multiplied by a fraction the numerator of
which is the number of days in the related Interest Period (or portion thereof)
to and including such Distribution Date and the denominator of which is 360,
plus (2) an amount equal to the aggregate amount of the Interest Shortfalls, as
- ----
defined below (the "Interest"); provided, however, that during any period that
--------
CRC is a Certicateholder, the Series Representative may, on any day other than
the Distribution Date (each an "Interim Date"), withdraw from the Collection
Account and deposit to the Distribution Account all or a portion of the accrued
Interest allocable to the Certificate held by CRC.
If the amounts on deposit in the Collection Account and the Canadian Collection
Account are insufficient to pay such amounts in respect of any Interest Period,
payments to the Certificateholders will be reduced by the amount of such
deficiency. The amount, if any, of such deficiency for any Interest Period
shall be referred to as the "Interest Shortfall" for such Interest Period.
------------------
Interest shall accrue on each Interest Shortfall for each Interest Period at the
Certificate
19
<PAGE>
Rate (calculated on the basis of actual days elapsed over a year of 360 days)
and such interest shall be included in the Interest Shortfalls.
(b) Certificateholder Fees. On each Distribution Date, the Liquidity
----------------------
Agent shall instruct the Trustee to withdraw from the Collection Account, to the
extent available (and, to the extent that funds in the Collection Account are
insufficient to do so, from the Canadian Collection Account (after the funds
therein to be withdrawn shall have been converted to United States Dollars in a
manner acceptable to the Trustee, the Liquidity Agent and the Series
Representative)), an amount equal to the lesser of (x) the Available Series
1996-1 Collections less any amounts withdrawn from the Collection Account
pursuant to Section 5.3(a) and (y) the amount of all Fees payable for the
preceding Interest Period plus all accrued and unpaid Fees in respect of
----
previous Interest Periods, and the Series Representative shall pay such amount
on the next Distribution Date to the Certificateholders.
(c) Servicing Fee. On each Distribution Date that Mail-Well I
-------------
Corporation or an Affiliate thereof is not the Servicer, the Series
Representative and the Liquidity Agent shall instruct the Trustee to withdraw
from the Collection Account, to the extent available (and, to the extent that
funds in the Collection Account are insufficient to do so, from the Canadian
Collection Account (after the funds therein to be withdrawn shall have been
converted to United States Dollars in a manner acceptable to the Trustee, the
Liquidity Agent and the Series Representative)), an amount equal to the lesser
of (x) the Available Series 1996-1 Collections less any amounts withdrawn from
the Collection Account pursuant to Sections 5.4(a) and (b), and (y) the Monthly
Servicing Fee accrued in respect of the preceding Monthly Period plus all
----
accrued and unpaid Monthly Servicing Fees in respect of previous Monthly
Periods, and the Series Representative shall pay such amount to the Servicer.
(d) Certificateholder Expenses. On each Distribution Date, the Series
--------------------------
Representative and the Liquidity Agent shall instruct the Trustee to withdraw
from the Collection Account, to the extent available (and, to the extent that
funds in the Collection Account are insufficient to do so, from the Canadian
Collection Account (after the funds therein to be withdrawn shall have been
converted to United States Dollars in a manner acceptable to the Trustee, the
Liquidity Agent and the Series Representative)), an amount equal to the lesser
of (x) the Available Series 1996-1 Collections less any amounts withdrawn from
the Collection Account pursuant to Sections 5.3(a) through (c) and (y) the
amount of all Expenses payable for the preceding Monthly Period plus all accrued
----
and unpaid Expenses in respect of previous Monthly Periods, and the Series
Representative shall pay such amount on the next Distribution Date to the
Certificateholders.
(e) Servicing Fee. On each Distribution Date which is not a
-------------
Liquidation Day that Mail-Well I Corporation or an Affiliate thereof is the
Servicer, the Series Representative and the Liquidity Agent shall instruct the
Trustee to withdraw from the Collection Account, to the extent available (and,
to the extent that funds in the Collection Account are insufficient to do so,
from the Canadian Collection Account (after the funds therein to be withdrawn
shall have been converted to United States Dollars in a manner acceptable to the
Trustee, the Liquidity Agent and
20
<PAGE>
the Series Representative)), an amount equal to the lesser of (x) the Available
Series 1996-1 Collections less any amounts withdrawn from the Collection Account
pursuant to Sections 5.3(a) through (d), and (y) the Monthly Servicing Fee
accrued in respect of the preceding Monthly Period plus all accrued and unpaid
----
Monthly Servicing Fees in respect of previous Monthly Periods, and the Series
Representative shall pay such amount to the Servicer.
Section 5.4 Determination and Payment of Principal Amounts. (a) Prior
----------------------------------------------
to the Amortization Period Commencement Date, the outstanding principal amount
of the Series 1996-1 Certificates shall vary from time to time as Increases are
made and as Collections are allocated to repay (in whole or in part) the
Invested Amount pursuant to Sections 5.2(a)(i)(C) and (E), 5.2(a)(ii),
5.2(b)(i)(B) and (D), 5.2(b)(ii). In any event, the aggregate principal amount
of any Series 1996-1 Certificates outstanding at any time shall not exceed the
Stated Amount.
(b) On each Distribution Date following the Amortization Period
Commencement Date, the Servicer shall provide the Series Representative and the
Liquidity Agent with all information necessary to enable the Series
Representative to instruct the Trustee to withdraw, and on the next succeeding
Distribution Date the Trustee shall, subject to the provisions of this Article
V, withdraw, from the Collection Account (or, subject to Section 5.3, the
Canadian Collection Account) and deposit in the Distribution Account the amount
deposited in the Collections Account (or, subject to Section 5.3, the Canadian
Collection Account) during the preceding Monthly Period.
(c) On the final Distribution Date, the Servicer shall determine the
amounts to be deposited pursuant to this sentence, and on the final Distribution
Date the Servicer shall, or shall provide the Series Representative and the
Liquidity Agent with all information necessary to enable the Series
Representative and the Liquidity Agent to instruct the Trustee to, and the
Trustee shall, withdraw all funds from the Collection Account and deposit the
same into the Distribution Account.
(d) On each Distribution Date occurring after a deposit is made
pursuant to Section 5.4(a), the Series Representative and the Liquidity Agent
shall pay in accordance with Section 6.1 to the Certificateholders from the
Distribution Account the lesser of (i) the amount deposited into the
Distribution Account pursuant to Section 5.4(a) on such date and (ii) the
Invested Amount on such date.
Section 5.5 Payment of Certificate Interest. On each Distribution
--------------------------------
Date or Interim Date, as the case may be, the Series Representative shall pay in
accordance with Section 6.1(a) to the Certificateholders from the Distribution
Account the amount deposited into the Distribution Account pursuant to Section
4.4(a) on such date.
21
<PAGE>
ARTICLE VI
DISTRIBUTIONS AND REPORTS TO SERIES 1996-1 INVESTOR
CERTIFICATEHOLDERS
Section 6.1 Distributions . (a) On each Distribution Date, the Series
--------------
Representative and the Liquidity Agent shall instruct the Trustee to distribute
to each Certificateholder of record on the related Record Date (other than as
provided in Section 12.02 of the Agreement) such Certificateholder's pro rata
share of the amounts that are allocated and available on such Distribution Date
to pay Interest on the Certificates pursuant to this Supplement; provided,
however, that during any period that CRC is a Certificateholder, the Series
Representative and the Liquidity Agent shall distribute on each Interim Date any
amounts deposited in the Distribution Account on such Interim Date on account of
CRC's share of Interest pursuant to Section 5.3(a).
(b) On each Distribution Date, the Series Representative and the
Liquidity Provider shall instruct the Trustee to distribute to each
Certificateholder of record on the related Record Date (other than as provided
in Section 12.02 of the Agreement) such Certificateholder's pro rata share of
the amounts that are allocated and available on such date to pay principal of
the Certificates pursuant to this Supplement up to a maximum amount on any such
date equal to the Invested Amount on such date.
(c) The distributions to be made pursuant to this Section 6.1 are
subject to the provisions of Sections 2.06, 9.02, and 12.02 of the Agreement and
Sections 10.1 and 10.2 of this Supplement.
(d) Except as provided in Section 12.02 of the Agreement with respect
to a final distribution, distributions to Certificateholders hereunder shall be
made in immediately available funds to each Certificateholder in accordance with
such Certificateholder's instructions or in the absence of such instructions, by
check mailed to such Certificateholder's address appearing in the Certificate
Register without representation or surrender of any Series 1996-1 Certificate or
the making of any notation thereon.
Section 6.2 Reports and Statements to Series 1996-1 Certificateholders.
----------------------------------------------------------
(a) Each day the Servicer shall deliver to the Trustee and the Series
Representative a Daily Report and, not later than the 4th Business Day of each
calendar week, the Servicer shall deliver to the Trustee and the Series
Representative a Weekly Report.
(b) Not later than each Determination Date, the Servicer shall deliver
to the Trustee and the Series Representative a Monthly Settlement Report.
(c) On or before January 31 of each calendar year, beginning with
January 31 1997, the Series Representative, on behalf of the Trustee, shall
furnish or cause to be furnished to each Person who at any time during the
preceding calendar year was a Series 1996-1
22
<PAGE>
Certificateholder, a statement prepared by the Servicer containing the
information which is required to be contained in the statement to Series 1996-1
Certificateholders, as set forth in paragraph (a) above, as applicable,
aggregated for such calendar year or the applicable portion thereof during which
such Person was a Series 1996-1 Certificateholder, together with the other
information as is required to be provided by an issuer of indebtedness under the
Internal Revenue Code.
(d) Each of the Seller, the Servicer and the Trustee agrees, as to
itself, that concurrently with the sending of any notice, demand, direction,
report, certificate or opinion required to be sent by it under the Agreement to
any other party to the Agreement or to any Rating Agency or Series Enhancer, it
will send the same to the Series Representative.
Section 6.3. Additional Reporting Requirements . The Seller will
----------------------------------
provide to the Trustee and the Series Representative (in multiple copies, if
requested by the Trustee or the Series Representative) the following:
(i) as soon as available and in any event within 45 days
after the end of the first three quarters of each fiscal year of Mail-
Well, Inc., balance sheet of Mail-Well, Inc. and its Subsidiaries as
of the end of such quarter and statements of income and retained
earnings of Mail-Well, Inc. and its Subsidiaries for the period
commencing at the end of the previous fiscal year and ending with the
end of such quarter, certified by the chief financial officer of Mail-
Well, Inc.;
(ii) as soon as available and in any event within 90 days
after the end of each fiscal year of Mail-Well, Inc., a copy of the
annual report for such year for Mail-Well, Inc. and its Subsidiaries,
containing financial statements for such year audited by Deloitte &
Touche or other independent public accountants acceptable to the
Trustee and the Series Representative;
(iii) as soon as possible and in any event within five days
after the occurrence of each Incipient Pay-Out Event or Series 1996-1
Pay-Out Event, a statement of the chief financial officer of the
Seller setting forth the details of such Incipient Pay-Out Event or
Series 1996-1 Pay-Out Event and the action that the Seller has taken
and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof, copies
of all reports that Mail-Well, Inc. sends to any of its security
holders, and copies of all reports and registration statements that
Mail-Well, Inc. or any of its Subsidiaries files with the Securities
and Exchange Commission or any national securities exchange;
(v) promptly after the filing or receiving thereof, copies
of all reports and notices that the Seller or any Affiliate files
under ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S.
23
<PAGE>
Department of Labor or that the Seller or any Affiliate receives
from any of the foregoing or from any multiemployer plan (within
the meaning of Section 4001(a)(3) of ERISA) to which the Seller or
any Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the assessment of
withdrawal liability or an event or condition which could, in the
aggregate, result in the imposition of liability on the Seller
and/or any such Affiliate in excess of $5,000,000;
(vi) at least ten Business Days prior to any change in the
name of any Originator or the Seller, a notice setting forth the
new name and the effective date thereof;
(vii) promptly after the Seller obtains knowledge thereof,
notice of any "Insolvency Event" or "Trigger Event" as described in
Article VIII, Section 2 of the Purchase Agreement;
(viii) as soon as possible and in any event no later than the
day of occurrence thereof, notice that any Originator has stopped
selling or contributing to the Seller, pursuant to the Purchase
Agreement, all newly arising Originator Receivables;
(ix) at the time of the delivery of the financial statements
provided for in clauses (i) and (ii) of this paragraph, a
certificate of the chief financial officer or the treasurer of the
Seller to the effect that, to the best of such officer's knowledge,
no Incipient Pay-Out Event or Series 1996-1 Pay-Out Event has
occurred and is continuing or, if any Incipient Pay-Out Event or
Series 1996-1 Pay-Out Event has occurred and is continuing,
specifying the nature and extent thereof;
(x) promptly after receipt thereof, copies of all notices
received by the Seller from any Originator under the Purchase
Agreement; and
(xi) such other information respecting the Receivables or
the condition or operations, financial or otherwise, of the Seller
as the Trustee or the Series Representative may from time to time
reasonably request.
ARTICLE VIII
COVENANTS AND OTHER AGREEMENTS
Section 7.1 Further Agreements. Notwithstanding anything to the
------------------
contrary in the Agreement, without the prior written consent of the Series
Representative in each instance: (1) the Seller shall not issue any new Series
of Investor Certificates as contemplated by
24
<PAGE>
Section 6.03 of the Agreement; (2) the Seller shall not consolidate with or
merge into any other corporation or convey or transfer its properties and assets
substantially as an entirety to any Person, except as contemplated by Section
7.02 of the Agreement and provided that no Incipient Pay-Out Event or Series
1996-1 Pay-Out Event shall have occurred and be continuing or would result
therefrom; (3) the Servicer, if Mail-Well I Corporation, shall not consolidate
with or merge into any other corporation or convey or transfer its properties
and assets substantially as an entirety to any Person or assign its obligations
as Servicer to any Person, other than as contemplated by Section 8.02 of the
Agreement and provided that no Incipient Pay-Out Event or Series 1996-1 Pay-Out
Event shall have occurred and be continuing or would result therefrom; (4) the
Trustee shall not appoint a Successor Servicer (other than itself), as
contemplated by Section 10.02(a) of the Agreement; and (5) the Trustee shall not
change any instructions regarding the Lockboxes, the Lockbox Accounts or the
Canadian Accounts or terminate any agreement relating to the Lockbox, the
Lockbox Account or the Canadian Accounts.
Section 7.2. Maintenance of Accounts. Notwithstanding anything to the
-----------------------
contrary contained in the Agreement, so long as Norwest Bank Colorado, National
Association shall be the Trustee, the Collection Account, the Distribution
Account and the Special Funding Account shall be maintained with the Trustee and
the Canadian Collection Account shall be maintained at Royal Bank of Canada.
Section 7.3. Eligible Investments. Notwithstanding anything to the
--------------------
contrary contained in the Agreement or this Supplement, funds on deposit in the
Collection Account, the Canadian Collection Account and Special Funding Account
shall be invested in Eligible Investments.
Section 7.4. Monthly Officer's Certificate. The Seller shall provide
-----------------------------
an Officer's Certificate to the Series Representative on each Determination Date
to the effect that no Series 1996-1 Pay-Out Event has occurred.
Section 7.5. Covenants. Until the Series 1996-1 Termination Date,
---------
the Seller:
(a) shall maintain tangible net worth (calculated solely for the
purpose of this Section as if the Series 1996-1 Certificates and any other
Investor Certificates (other than Seller Retained Certificates) constituted
Indebtedness of the Seller) no less than 10% of the aggregate amount of the Net
Receivables Pool Balance;
(b) shall not make or suffer to exist any loans or advances to, or
extend any credit to, or make any investments (by way of transfer of property,
contributions to capital, purchase of stock or securities or evidences of
indebtedness, acquisition of the business or assets, or otherwise) in, any
Person except (i) for purchases of Receivables pursuant to the Purchase
Agreement or (ii) for investments in Eligible Investments in accordance with the
terms of the Agreement and this Supplement;
25
<PAGE>
(c) shall not request more than two Increases during any one Monthly
Period; and
(d) shall maintain a balance (the "Minimum Balance") in the Special
---------------
Funding Account at all times equal to or greater than the amount of the
Commingling Reserve as of the date the Commingling Reserve was last calculated.
Section 7.6. Performance and Compliance with Contracts and Credit and
--------------------------------------------------------
Collection Policy. Each of the Servicer and the Seller, as applicable, will,
- -----------------
at its expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed by it under the
Contracts related to the Receivables, and timely and fully comply in all
material respects with the Credit and Collection Policy in regard to each
Receivable and the related Contract.
Section 7.7. Extension or Amendment of Receivables. The Seller will
-------------------------------------
not (and the Servicer will not, other than in accordance with the Credit and
Collection Policy) extend, amend or otherwise modify the terms of any
Receivable, or amend, modify or waive any term or condition of any Contract
related thereto.
Section 7.8. Change in Business or Credit and Collection Policy.
--------------------------------------------------
Neither the Servicer nor the Seller will make any change in the character of its
business or in the Credit and Collection Policy that would, in either case,
materially adversely affect the collectibility of the Receivables or the ability
of the Seller to perform its obligations under the Agreement or this Supplement.
Section 7.9. Deposits to Lockbox Accounts and Canadian Accounts. The
--------------------------------------------------
Seller will deposit, or cause to be deposited, all Collections of Receivables
into Lockbox Accounts and all Collections of Canadian Receivables into Canadian
Accounts. The Seller will not deposit or otherwise credit, or cause or permit to
be so deposited or credited, to any Lockbox Account or any Canadian Account cash
or cash proceeds other than Collections.
Section 7.10. Marking of Records. At its expense, the Seller will
------------------
mark its records evidencing Receivables and related Contracts with a legend
evidencing that such Receivables and related Contracts have been sold in
accordance with the Agreement and this Supplement.
Section 7.11. Further Assurances. (a) The Seller agrees from time to
------------------
time, at its expense, promptly to execute and deliver all further instruments
and documents, and to take all further actions, that may be necessary or
desirable, or that the Trustee, Series Representative or Certificateholder may
reasonably request, to perfect, protect or more fully evidence the Receivables
purchased under the Agreement, or to enable the Trustee, Series Representative
or Certificateholders to exercise and enforce their respective rights and
remedies under the
26
<PAGE>
Agreement and this Supplement. Without limiting the foregoing, the Seller will,
upon the request of the Trustee or Series Representative, execute and file such
financing or continuation statements, or amendments thereto, and such other
instruments and documents, that may be necessary or desirable, or that the
Trustee or Series Representative may reasonably request, to perfect, protect or
evidence such Receivables.
(b) The Seller authorizes the Trustee and Series Representative
to file financing or continuation statements, and amendments thereto and
assignments thereof, relating to the Receivables, the Related Security, the
related Contracts, the Collections and the other Trust Assets, with respect
thereto without the signature of the Seller where permitted by law. A photocopy
or other reproduction of this Agreement shall be sufficient as a financing
statement where permitted by law.
Section 7.12. Audits. The Servicer will, from time to time during
------
regular business hours as requested by the Liquidity Agent or Series
Representative, permit the Liquidity Agent or Series Representative, or their
respective agents or representatives (including independent public accountants,
which may be the Servicer's independent public accountants), (i) to conduct
periodic audits of the Receivables, the Related Security, other Trust Assets and
the related books and records and collections systems of the Servicer, (ii) to
examine and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession or
under the control of the Servicer relating to the Receivables and the Related
Security, including, without limitation, the Contracts, and (iii) to visit the
offices and properties of the Servicer for the purpose of examining such
materials described in clause (ii) above, and to discuss matters relating to the
Receivables, the Related Security, the other Trust Assets or the Servicer's
performance under the Agreement or hereunder with any of the officers or
employees of the Servicer having knowledge of such matters; provided, however,
--------
that the rights granted pursuant to this Section 7.12 to the Liquidity Agent or
Series Representative shall be without duplication of any such rights granted to
the Liquidity Agent or Series Representative under the Agreement.
ARTICLE VIII
PAY-OUT EVENTS
Section 8.1. Series 1996-1 Pay-Out Events. If any one of the
----------------------------
following events shall occur with respect to the Series 1996-1 Certificates:
(a) failure on the part of the Seller or the Servicer (i) to
provide the information necessary for the Series Representative or the Trustee
to make, any payment, withdrawal or deposit required to be made by the Series
Representative, the Trustee, Seller or the Servicer by the terms of (A) the
Agreement or (B) this Supplement, on or before the date
27
<PAGE>
occurring in the case of any failure to make a payment pursuant to Section 5.3
or 5.4, the earlier of one Business Day after the date on which written notice
of such failure, requiring the same to be remedied, has been given to the Seller
or the Servicer by the Trustee or the Series Representative, or to the Seller,
the Servicer, the Series Representative and the Trustee by any Holder of Series
1996-1 Certificates or one Business Day after the date such payment or deposit
is required to be made herein, (ii) to perform in all respects the Seller's
covenant not to sell, pledge, assign, or transfer to any person, or grant any
unpermitted lien on, any Receivable, or (iii) to duly to observe or perform in
any respect any covenants or agreements of the Seller set forth in the Agreement
or this Supplement, and which failure continues unremedied for a period of 10
days after the date on which written notice of such failure, requiring the same
to be remedied, has been given to the Seller by the Trustee or the Series
Representative, or to the Seller, the Series Representative and the Trustee by
any Holder of Series 1996-1 Certificates; provided, however, that if such
-------- -------
failure to observe or perform in any respect any such covenants or agreements is
not capable of being remedied within 10 days, no such 10 day period need elapse
after any such written notice of failure shall have been given.
(b) any representation or warranty made by the Seller in the
Agreement or the Supplement shall prove to have been incorrect when made, which
continues to be incorrect in any material respect for a period of 15 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Seller by the Trustee or the Series
Representative, or to the Seller, the Series Representative and the Trustee by
any Holder of Series 1996-1 Certificates; provided, however, that if such
-------- -------
representation or warranty is not capable of being remedied by the Seller within
15 days, no such 15 day period need elapse after any such written notice of
failure shall have been given; provided, further, that a Series 1996-1 Pay-Out
-------- -------
Event pursuant to this Section 7.1(b) shall not be deemed to have occurred
hereunder if the Seller has accepted reassignment of the related Receivable, or
all of such Receivables, if applicable, during such period in accordance with
the provisions of the Agreement;
(c) any Servicer Default (other than a Servicer Default pursuant to
Section 10.01(a)(v) of the Agreement) shall occur;
(d) any Pay-Out Event shall occur;
(e) the Trustee shall cease to have a perfected first priority
ownership or security interest in the Receivables and the other Trust Assets;
(f) the Seller shall fail to perform or observe any term or
covenant on its part to be performed or observed contained in Section 7.5(a)
hereof;
(g) CRC shall not have received any fees payable to CRC by the
Liquidity Agent pursuant to the fee letter dated the date hereof between the
Liquidity Agent and the Series Representative; or
28
<PAGE>
(h) a Termination Notice is given to the Servicer pursuant to Section
10.01 of the Agreement;
then, the Trustee shall promptly and in any event within five days notify the
Series Representative of such Pay-Out Event and after the applicable grace
period, if any, set forth in such subparagraphs, the Holders of Certificates
evidencing undivided interests aggregating more than 50% of the Invested Amount
by notice then given in writing to the Trustee, the Series Representative, the
Seller and the Servicer may declare that an early amortization event (a "Series
------
1996-1 Pay-Out Event") has occurred as of the date of such notice.
- --------------------
ARTICLE IX
OPTIONAL TERMINATION, REDUCTION
OR REPURCHASE; SERIES TERMINATION
Section 9.1. Optional Termination. The Series 1996-1 Certificates
--------------------
shall be subject to termination by the Seller at its option on any Distribution
Date on or after the Distribution Date on which the Invested Amount is reduced
to an amount less than or equal to 10% of the sum of the Initial Invested
Amount. The deposit required in connection with any such termination and final
distribution shall be made to the Distribution Account and shall be equal to the
sum of (i) the Invested Amount plus (ii) accrued and unpaid interest on the
----
Series 1996-1 Certificates through the day prior to the Distribution Date on
which the final distribution occurs, plus (iii) accrued and unpaid Fees, plus
---- ----
(iv) accrued and unpaid Expenses.
Section 9.2. Series 1996-1 Termination . The right of the Series
-------------------------
1996-1 Certificateholders to receive payments from the Trust will terminate on
the first Business Day following the Series 1996-1 Termination Date unless such
Series is a Series as specified in Section 12.02(c) of the Agreement and the
sale contemplated therein has not occurred by such date, in which event the
Series 1996-1 Certificateholders shall remain entitled to receive proceeds of
such sale when such sale occurs.
ARTICLE X
FINAL DISTRIBUTION
Section 10.1. Sale of Receivables or Certificateholders' Interest
---------------------------------------------------
pursuant to Section 2.06 of the Agreement and Section 9.1 or 9.2 of this
- ------------------------------------------------------------------------
Supplement. (a) The amount to be paid by the Seller with respect to Series
- ----------
1996-1 in connection with a reassignment of Receivables to the Seller pursuant
to Section 2.06 of the Agreement shall equal the Reassignment Amount for
29
<PAGE>
the first Distribution Date following the Monthly Period in which the
reassignment obligation arises under the Agreement.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 10.1 or any amounts allocable to the
Series 1996-1 Certificateholders' Interest deposited into the Distribution
Account pursuant to Sections 9.1 or 9.2, the Trustee shall, not later than 12:00
noon, New York City time, on the related Distribution Date, make deposits or
distributions of the following amounts (in the priority set forth below and, in
each case after giving effect to any deposits and distributions otherwise to be
made on such date) in immediately available funds: (i) (x) the Invested Amount
on such Distribution Date will be distributed to the Series Representative for
payment to the Certificateholders and (y) an amount equal to the sum of (A)
Interest for such Distribution Date and (B) any accrued and unpaid Fees and
Expenses as of such Distribution Date, will be distributed to the Series
Representative for payment to the Certificateholders and (ii) the balance, if
any, will be distributed to the Servicer for its own account as an excess
Servicer's fee.
(c) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Series Representative pursuant to
Section 9.1 for payment to the Series 1996-1 Certificateholders shall be deemed
distributed in full to the Series 1996-1 Certificateholders on the date on which
such funds are distributed to the Series Representative pursuant to this Section
and shall be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement.
Section 10.2. Distribution of Proceeds of Sale, Disposition or
------------------------------------------------
Liquidation of the Receivables Pursuant to Section 9.02 of the Agreement.
- ------------------------------------------------------------------------
(a) Not later than 12:00 noon, New York City time, on the Distribution Date
following the date on which the Insolvency Proceeds are deposited into the
Collection Account pursuant to Section 9.02(b) of the Agreement, the Trustee
shall (in the following priority and, in each case, after giving effect to any
deposits and distributions otherwise to be made on such Distribution Date) (i)
deduct an amount equal to the sum of the Invested Amount, Fees and Interest on
such Distribution Date from the Insolvency Proceeds and distribute such amount
to the Series Representative for payment to the Certificateholders, provided
that the amount of such distribution shall not exceed (i) the product of (x) the
Insolvency Proceeds and (y) the Floating Allocation Percentage with respect to
the related Monthly Period, plus (ii) Interest, Expenses and Fees. To the extent
that the product of (A) the Insolvency Proceeds and (B) the Floating Allocation
Percentage with respect to the related Monthly Period exceeds the aggregate
amounts distributed to the Series Representative pursuant to the preceding
sentence, the excess shall be allocated to the Servicer for its own account as
an excess Servicer's fee and shall be released to the Servicer on such
Distribution Date.
(b) Notwithstanding anything to the contrary in this Supplement or
the Agreement, all amounts distributed to the Series Representative pursuant to
this Section for
30
<PAGE>
payment to the Certificateholders shall be distributed in full
to the Series 1996-1 Certificateholders on the date on which funds are
distributed to the Series Representative pursuant to this Section and shall be
deemed to be a final distribution pursuant to Section 12.02 of the Agreement.
ARTICLE XI
THE SERIES REPRESENTATIVE
Section 11.1. Authorization and Action of the Series Representative.
-----------------------------------------------------
The Series 1996-1 Certificateholders, by acceptance of their respective Series
1996-1 Certificates, appoint and authorize the Series Representative to take
such action as agent on their behalf and to exercise such powers under this
Supplement as are delegated to the Series Representative by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto.
Section 11.2. The Series Representative's Reliance, Etc. Neither the
-----------------------------------------
Series Representative nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or the Series
Representative under or in connection with this Supplement, except for its or
their own gross negligence or willful misconduct. Without limiting the
generality of the foregoing, the Series Representative: (a) may consult with
independent legal counsel (including counsel for the Trust, the Seller or the
Servicer), independent certified public accountants and other experts selected
by it and shall not be liable for any action taken or omitted to be taken in
good faith by it in accordance with the advice of such counsel, accountants or
experts; (b) makes no warranty or representation to the Certificateholders or
any other holder of any interest in the Trust Assets and shall not be
responsible to the Certificateholders or any such other holder for any
statements, warranties or representations made in or in connection with this
Supplement; (c) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Supplement on the part of the Seller, the Trust, the Certificateholders or the
Servicer or to inspect the property (including the books and records) of the
Seller, the Trust, the Certificateholders or the Servicer; (d) shall not be
responsible to the Certificateholders or any other holder of any interest in
Trust Assets for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Supplement; and (e) shall incur no
liability under or in respect of this Supplement by acting upon any notice
(including notice by telephone), consent, certificate or other instrument or
writing (which may be by facsimile transmission) believed by it to be genuine
and signed or sent by the proper party or parties; except in each case, for
gross negligence or wilful misconduct on the part of the Series Representative.
Section 11.3. The Series Representative and Affiliates. Both
----------------------------------------
CNAI and Banque Paribas and their Affiliates may generally engage in any kind of
business with the Seller or the Servicer or any Obligor, any of their respective
Affiliates and any Person who may do business
31
<PAGE>
with or own securities of the Seller, the Servicer or any Obligor or any of
their respective Affiliates, all as if both CNAI and Banque Paribas were not the
Series Representative and without any duty to account therefor to the
Certificateholders or any other holder of an interest in Trust Asset.
Section 11.4 Amendments, Waivers and Other Actions by the Series
---------------------------------------------------
Representative. The Series Representative reserves the right, in its sole
- --------------
discretion, to exercise any rights and remedies available to the Series
Representative under this Supplement (including, without limitation, the
granting of any consent) or pursuant to applicable law, and also to agree to any
amendment, modification or waiver of this Supplement, to the extent this
Supplement provides for, or requires, the Series Representative's agreement (in
its capacity as the Series Representative) to such amendment, modification or
waiver.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1. Delivery and Payment for the Series 1996-1
------------------------------------------
Certificates. The Seller shall execute and deliver the Series 1996-1
- ------------
Certificates to the Trustee for authentication in accordance with Section 6.01
of the Agreement. The Trustee shall deliver the Series 1996-1 Certificates to or
upon the order of the Seller when authenticated in accordance with Section 6.02
of the Agreement.
Section 12.2. Form of Delivery of Series 1996-1 Certificates. The
-----------------------------------------------
Certificates shall be delivered as Registered Certificates as provided in
Section 6.01 of the Agreement.
Section 12.3. Legend on Series 1996-1 Certificates. (a) Each
-------------------------------------
Certificate will bear a legend substantially in the following form:
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY
STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
AND ANY OTHER APPLICABLE SECURITIES LAW.
Section 12.4. Ratification of Agreement. As supplemented by this
--------------------------
Supplement, the Agreement is in all respects ratified and confirmed and the
Agreement as so supplemented by this Supplement shall be read, taken, and
construed as one and the same instrument.
32
<PAGE>
Section 12.5. Counterparts. This Supplement may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
Section 12.6. GOVERNING LAW. THIS SUPPLEMENT SHALL BE CONSTRUED IN
-------------
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.7. Instructions in Writing. Unless otherwise provided in
-----------------------
this Supplement, all instructions or other communications given by the Servicer
or any other Person to the Trustee pursuant to this Supplement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission to the address and facsimile number of the Trustee set forth in the
Agreement.
Section 12.8. Confidentiality. Except as otherwise required by
---------------
applicable law, each of the Servicer, the Seller, the Trustee and their
respective successors and permitted assigns agrees to maintain the
confidentiality of this Supplement and each document related hereto or executed
in connection herewith (including, without limitation, the Certificate Purchase
Agreement), provided that this Supplement or any such document may be disclosed
to such party's accountants, auditors and lawyers for purposes necessary to
enforce or perform this Supplement or such document.
[SIGNATURE PAGE TO FOLLOW.]
33
<PAGE>
IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee have
caused this Series 1996-1 Supplement to be duly executed by their respective
officers as of the day and year first above written.
MAIL-WELL TRADE RECEIVABLES
CORPORATION
Seller
By:
-----------------------------
Name:
Title:
MAIL-WELL I CORPORATION
Servicer
By:
-----------------------------
Name:
Title:
NORWEST BANK COLORADO, NATIONAL
ASSOCIATION, Trustee
By:
-----------------------------
Name:
Title:
34
<PAGE>
Exhibit A
[FORM OF INVESTOR CERTIFICATE]
THIS CERTIFICATE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THIS CERTIFICATE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAW OF ANY
STATE AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS
REGISTERED PURSUANT TO OR EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT
AND ANY OTHER APPLICABLE SECURITIES LAW.
No. _____ $____________
MAIL-WELL RECEIVABLES MASTER TRUST
CERTIFICATE, SERIES 1996-1
Evidencing an undivided interest in a trust, the corpus of which consists of
receivables generated from time to time in the ordinary course of business by
Mail-Well I Corporation ("Mail-Well" or the "Servicer") and certain of its
--------- --------
Affiliates and other assets and interests constituting the Trust (as hereinafter
defined) under the Agreement defined below.
(Not an interest in or a recourse obligation of Mail-Well Trade
Receivables Corporation, Mail-Well or any affiliate of either of them.)
This certifies that _____________ (the "Certificateholder") is the
-----------------
registered owner of a fractional undivided interest in the Mail-Well Receivables
Master Trust (the "Trust") issued pursuant to the Pooling and Servicing
-----
Agreement, dated as of November 13, 1996 (the "Pooling and Servicing Agreement";
-------------------------------
such term to include any amendment thereto or restatement thereof) by and
between Mail-Well Trade Receivables Corporation, as Seller (the "Seller"), Mail-
------
Well, as the Servicer, and Norwest Bank Colorado, National Association, as
Trustee (the "Trustee"), and the Series 1996-1 Supplement, dated as of November
-------
13, 1996 (the "Series 1996-1 Supplement"), among the Seller, the Servicer and
------------------------
the Trustee. The Pooling and Servicing Agreement, as supplemented by the Series
1996-1 Supplement, is herein referred to as the "Agreement." The corpus of the
---------
Trust consists of all of the Seller's right, title and interest in, to and under
the Trust Assets (as defined in the Agreement).
This Certificate does not purport to summarize the Agreement and
reference is made to that Agreement for information with respect to the
interests, rights, benefits, obligations,
A-1
<PAGE>
proceeds, and duties evidenced hereby and the rights, duties and obligations of
the Seller, the Servicer and the Trustee. To the extent not defined herein, the
capitalized terms used herein have the meanings ascribed to them in the
Agreement. This Certificate is one of a Series of Certificates entitled "Mail-
Well Corporation Master Trust Certificates, Series 1996-1" (the "Certificates"),
------------
each of which represents a fractional undivided interest in the Trust, and is
issued under and is subject to the terms, provisions and conditions of the
Agreement, to which Agreement, as amended or restated from time to time, the
Certificateholder by virtue of the acceptance hereof assents and by which the
Certificateholder is bound.
The Seller has structured the Agreement and the Certificates with the
intention that the Certificates will qualify under applicable tax law as
indebtedness, and both the Seller and each holder of a Certificate (a
"Certificateholder") or any interest therein by acceptance of its Certificate or
- ------------------
any interest therein, agrees to treat the Certificates for purposes of federal,
state and local income or franchise taxes and any other tax imposed on or
measured by income, as indebtedness.
Each Certificate represents the right to receive interest at the
Certificate Rate. Interest and principal on the Certificates will accrue from
the Closing Date and will be distributed on December 15, 1996, and on the 15th
day of each calendar month thereafter, or if such day is not a Business Day, on
the next succeeding Business Day (each, a "Distribution Date"), in an amount
-----------------
determined as provided in the Series 1996-1 Supplement.
On the earliest of (i) the November 15, 2001 Distribution Date, (ii)
the first Distribution Date following the occurrence of a Series 1996-1 Pay-Out
Event and (iii) such other date agreed upon by the Series 1996-1
Certificateholders and the Series Representative, interest and principal will be
distributed to the Certificateholders monthly on each Distribution Date prior to
the Series Termination Date. Interest for any Distribution Date will include
accrued interest at the Certificate Rate from and including the preceding
Distribution Date or, in the case of the first Distribution Date from and
including the Closing Date, to but excluding such Distribution Date. Interest
for any Distribution Date due but not paid on any Distribution Date will be due
on the next succeeding Distribution Date together with, to the extent permitted
by applicable law, additional interest on such amount at the Certificate Rate.
"Invested Amount" means, on any date of determination, an amount equal
---------------
to (a) the initial principal balance of the Certificates, minus (b) the
-----
aggregate amount of principal payments made to Certificateholders prior to such
date, and plus (c) all Increases; provided that if such Invested Amount shall
----
have been reduced by any distribution and thereafter all or a portion of such
distribution is rescinded or must otherwise be returned for any reason, such
Invested Amount shall be increased by the amount of such rescinded or returned
distribution, as though it had not been made.
A-2
<PAGE>
All principal of and interest on the Certificates are due and payable
no later than the November 15, 2002 Distribution Date (or if such day is not a
Business Day, the next succeeding Business Day) (the "Series Termination Date").
-----------------------
After the Series Termination Date, neither the Trustee nor the Seller will have
any further obligation to distribute principal or interest on the Certificates.
In the event that the Invested Amount is greater than zero on the Series
Termination Date, the Trustee will sell or cause to be sold, to the extent
necessary, an amount of interests in the Receivables or certain of the
Receivables up to the sum of the Invested Amount at the close of business on
such date (but not more than the total amount of Receivables allocable to the
Series 1996-1 Certificates), and shall pay the proceeds to the
Certificateholders pro rata in final payment of the Certificates.
Unless the certificate of authentication hereon has been executed by
or on behalf of the Trustee, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement, or be valid for any purpose.
[SIGNATURE PAGE TO FOLLOW.]
A-3
<PAGE>
IN WITNESS WHEREOF, the Seller has caused this Certificate to be duly
executed under its official seal.
MAIL-WELL TRADE RECEIVABLES
CORPORATION
By:
--------------------------
Name:
Title:
Dated:
A-4
<PAGE>
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the Agreement.
NORWEST BANK COLORADO, NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------
Name:
Title:
A-5
<PAGE>
EXHIBIT 10.42
SERIES 1996-1 CERTIFICATE PURCHASE AGREEMENT
dated as of November 15, 1996
among
MAIL-WELL TRADE RECEIVABLES CORPORATION,
as Seller,
CORPORATE RECEIVABLES CORPORATION,
as Purchaser,
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
as Trustee,
and
MAIL-WELL I CORPORATION,
as Servicer
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
DEFINITIONS................................................................... 1
SECTION 1.01 Defined Terms................................................... 1
SECTION 1.02 Other Definitional Provisions................................... 3
SECTION 2.01 Purchase and Sale of the Certificate............................ 4
ARTICLE III
FEES, INTEREST AND INCREASED COSTS............................................ 4
SECTION 3.01 Fees............................................................ 4
SECTION 3.02 Interest........................................................ 4
SECTION 3.03 Increased Costs and Additional Interest......................... 5
ARTICLE IV
CONDITIONS PRECEDENT.......................................................... 5
SECTION 4.01 Conditions Precedent to the Purchaser's Obligation to
Purchase the Certificate....................................... 5
ARTICLE V
ASSIGNMENTS/TRANSFERS......................................................... 7
SECTION 5.01 Assignments/Transfers........................................... 7
SECTION 5.02 Rights of Transferee............................................ 7
SECTION 5.03 Notice of Assignment/Transfer................................... 7
ARTICLE VI
MISCELLANEOUS................................................................. 7
SECTION 6.01 Amendments, Etc................................................. 7
SECTION 6.02 Notices, Etc.................................................... 8
SECTION 6.03 No Waiver; Remedies............................................. 8
SECTION 6.04 Binding Effect; Survival........................................ 8
SECTION 6.05 No Proceedings.................................................. 8
SECTION 6.06 Captions and Cross References................................... 8
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 6.07 Governing Law.................................. 9
SECTION 6.08 Submission to JurisdictioN..................... 9
SECTION 6.09 Waiver of Jury TriaL........................... 9
SECTION 6.10 Execution in Counterparts...................... 9
</TABLE>
ii
<PAGE>
SERIES 1996-1 CERTIFICATE PURCHASE AGREEMENT dated as of
November 15, 1996 among MAIL-WELL TRADE RECEIVABLES CORPORATION, as seller (the
"Seller"), CORPORATE RECEIVABLES CORPORATION, as purchaser (the
------
"Purchaser"),NORWEST BANK COLORADO, NATIONAL ASSOCIATION, as trustee (the
---------
"Trustee"), and MAIL-WELL I CORPORATION, as servicer (the "Servicer").
------- --------
In consideration of the mutual agreements herein contained, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms.
-------------
Whenever used in this Agreement, the following words and phrases
shall have the following meanings, and the definitions of such terms are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
"Agreement" shall mean this Series 1996-1 Certificate Purchase
---------
Agreement as the same may be amended, supplemented, restated or otherwise
modified from time to time.
"Assignment" shall have the meaning specified in the Series
----------
1996-1 Asset Purchase Agreement.
"Certificate Purchase Price" shall have the meaning specified in
--------------------------
Section 2.01(a) of this Agreement.
"CNAI" shall mean Citicorp North America, Inc., as agent for the
----
Purchaser.
"GAAP" shall mean generally accepted accounting principles in
----
the United States, as in effect from time to time.
"Liquidity Provider" shall mean the liquidity providers party to
------------------
the Series 1996-1 Asset Purchase Agreement, as their names appear on the
signature page thereto and any successors, permitted transferees and assigns
thereof.
"Liquidity Provider Commitment" shall have the meaning specified
-----------------------------
in the Series 1996-1 Asset Purchase Agreement.
"Maximum Invested Amount" shall mean $100,000,000.
-----------------------
<PAGE>
"Note" shall mean the commercial paper or other promissory note
----
issued by the Purchaser.
"Obligations" shall mean all obligations of the Seller and the
-----------
Servicer to the Trustee, the Trust, the Purchaser, the Liquidity Providers and
their respective successors, permitted transferees and assigns, arising under or
in connection with the Transaction Documents, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, now or hereafter
existing, or due or to become due.
"Ownership Interest" shall have the meaning specified in the
------------------
Series 1996-1 Asset Purchase Agreement.
"Percentage Interest" shall have the meaning specified in the
-------------------
Series 1996-1 Asset Purchase Agreement.
"Permitted Assignee" shall have the meaning specified in the
------------------
Series 1996-1 Asset Purchase Agreement.
"Pooling and Servicing Agreement" shall mean the Pooling and
-------------------------------
Servicing Agreement, dated as of the date hereof, among the Seller, the Servicer
and the Trustee, as the same may from time to time be amended, supplemented,
restated or otherwise modified.
"Purchaser" shall have the meaning specified in the preamble to
---------
this Agreement.
"S&P" shall mean Standard & Poor's Ratings Service, a division
---
of The McGraw-Hill Companies, or its successor.
"Seller" shall have the meaning specified in the preamble to
------
this Agreement.
"Seller Receivable" shall mean a Receivable acquired by the
-----------------
Seller pursuant to the Purchase Agreement other than those reconveyed to the
Seller pursuant to Section 5.04 of the Purchase Agreement.
"Series 1996-1 Asset Purchase Agreement" shall mean the Series
--------------------------------------
1996-1 Asset Purchase Agreement, dated as of the date hereof, among Banque
Paribas, New York Branch as liquidity agent thereunder, the Liquidity Providers
party thereto, the Purchaser and , as the same may from time to time be
amended, supplemented, restated or otherwise modified.
"Series 1996-1 Supplement" shall mean the Series 1996-1
------------------------
Supplement dated as of the date hereof to the Pooling and Servicing Agreement,
among the Seller, the Servicer and
2
<PAGE>
the Trustee, as the same may from time to time be amended, supplemented,
restated or otherwise modified.
"Servicer" shall have the meaning, initially, specified in the
--------
preamble to this Agreement, and after the appointment of a Successor Servicer
pursuant to the terms of the Pooling and Servicing Agreement, shall mean the
Successor Servicer.
"Transaction Documents" shall mean, collectively, this
---------------------
Agreement, the Series Certificate, the Pooling and Servicing Agreement, the
Purchase Agreement, the Series 1996-1 Supplement, the Series 1996-1 Asset
Purchase Agreement, the Articles or Certificate of Incorporation and the By-Laws
of the Seller and any other agreement or instrument related or delivered
pursuant to any of the foregoing documents.
"Trust" shall mean the Mail-Well Receivables Master Trust
-----
created by the Pooling and Servicing Agreement.
"Trustee" shall mean Norwest Bank Colorado, National
-------
Association, solely in its capacity as trustee on behalf of the Trust, or its
successor in interest, or any successor trustee appointed as herein provided.
"UCC" shall mean the Uniform Commercial Code, as amended from
---
time to time, as in effect in any applicable or specified jurisdiction.
SECTION 1.02 Other Definitional Provisions. (a) As used herein,
-----------------------------
in the Certificate and any certificate or other document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement and
accounting terms partly defined in this Agreement to the extent not defined,
shall have the respective meanings given to them under GAAP. To the extent that
the definitions of accounting terms herein are inconsistent with the meanings of
such terms under GAAP, the definitions contained herein shall control.
(b) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
subsection, Schedule and Exhibit references are to a Section, subsection,
Schedule and Exhibit in or to this Agreement unless otherwise specified.
(c) All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Series 1996-1 Supplement.
3
<PAGE>
ARTICLE II
PURCHASE AND SALE OF THE
CERTIFICATE
SECTION 2.01 Purchase and Sale of the Certificate. (a) On the terms
------------------------------------
and subject to the conditions set forth in the Pooling and Servicing Agreement,
the Series 1996-1 Supplement and this Agreement, and in reliance on the
covenants, representations and agreements set forth herein, the Seller agrees to
sell to the Purchaser, and the Purchaser agrees to purchase from the Seller, the
Certificate on the Closing Date for an initial price not to exceed the Maximum
Invested Amount, as may be agreed by the Seller and the Purchaser on the Closing
Date (the "Certificate Purchase Price").
--------------------------
(b) On the Closing Date, the Seller will deliver to the Series
Representative, on behalf of the Purchaser, the Certificate, dated the Closing
Date, registered in the name of the Purchaser and duly authenticated in
accordance with the provisions of the Pooling and Servicing Agreement against
delivery by the Series Representative, on behalf of the Purchaser, to the Seller
of the Certificate Purchase Price.
ARTICLE III
FEES, INTEREST AND INCREASED COSTS
SECTION 3.01 Fees. The Seller shall pay to the Series Representative
----
such fees for its own account and for the account of the Purchaser in such
amounts and at such times as set forth in the Fee Letter.
SECTION 3.02 Interest. Interest shall accrue and be payable as provided
--------
in the Series 1996-1 Supplement.
SECTION 3.03 Increased Costs and Additional Interest. The Seller shall
---------------------------------------
pay such increased costs and additional costs and interest in such amounts, at
such times and to such parties as set forth in the Series 1996-1 Supplement.
ARTICLE IV
CONDITIONS PRECEDENT
SECTION 4.01 Conditions Precedent to the Purchaser's Obligation to
-----------------------------------------------------
Purchase the Certificate. The obligation of the Purchaser to purchase the
- ------------------------
Certificate on the Closing Date is
4
<PAGE>
subject to the condition precedent that the conditions precedent under the
Purchase Agreement, the Series 1996-1 Supplement and the Pooling and Servicing
Agreement have been satisfied to the reasonable satisfaction of (or waived in
writing by) the Liquidity Agent, the Series Representative, CNAI and the
Purchaser and to the satisfaction of the following conditions precedent:
(a) The representations and warranties of the Seller and the
Originator contained in the Purchase Agreement and the Pooling and Servicing
Agreement are correct in all material respects on and as of the Closing Date as
though made on such day (and shall be deemed to have been made on such day);
(b) No event shall have occurred and be continuing, or would
result from the transactions contemplated by this Agreement that constitutes a
Pay Out Event or an Incipient Pay Out Event;
(c) The Series Representative and the Liquidity Agent shall have
received on or before the Closing Date each of the following items, each (unless
otherwise indicated) dated the Closing Date, in form and substance satisfactory
to the Series Representative:
(i) Acknowledgment copies or stamped receipt copies of proper
financing statements (Form UCC-1) or other similar instruments or
documents, as may be necessary or, in the opinion of the Series
Representative and the Liquidity Agent, desirable under the UCC or any
comparable law to perfect the first priority position of the sale by the
Seller to the Trust of the Receivables and the proceeds thereof.
(ii) Acknowledgment copies or stamped receipt copies of proper
financing statements (Form UCC-3) or other similar instruments or
documents, if any, as may be necessary or, in the opinion of the Series
Representative and the Liquidity Agent, desirable under the UCC or any
comparable law to release all security interests and other rights of any
Person (other than the Seller and the Trust) in the Receivables and the
proceeds thereof.
(iii) A certificate of the Secretary or Assistant Secretary of
Seller, the Servicer and the Trustee, dated the date hereof, certifying (i)
the names and true signatures of incumbent officers of such Person
authorized to sign this Agreement and the other documents to be delivered
by it hereunder, (ii) that the copy of the certificate of incorporation of
such Person attached thereto is a complete and correct copy and that such
certificate of incorporation has not been amended, modified or supplemented
and is in full force and effect, (iii) that the copy of the by-laws of such
Person attached thereto is a complete and
5
<PAGE>
correct copy and that such by-laws have not been amended, modified or
supplemented and are in full force and effect, (iv) that the copy of the
resolutions of such Person's board of directors attached thereto approving
and authorizing the execution, delivery and performance by such Person of
the Transaction Documents to which such Person is a party and the documents
related thereto is a complete and correct copy and that such. resolutions
have not been amended, modified or supplemented and are in full force and
effect.
(iv) Completed requests for information, dated on or before the
Closing Date, listing all effective financing statements filed in the
jurisdictions referred to in clause (ii) above that name the Seller as
debtor, together with copies of such other financing statements (none of
which (after giving effect to the UCC-3 amendments described in clause (ii)
above) shall cover any Receivable).
(v) A Tax Opinion.
(vi) Copies of executed lockbox agreements in form and
substance satisfactory to the Series Representative and the Liquidity Agent
with respect to each Lockbox Account, duly executed by the Seller, the
Lockbox Bank holding such Lockbox Account and any other parties thereto.
(d) The Series Representative and the Liquidity Agent shall
have determined, in each case, in its sole discretion, that the Certificate has
a credit quality equivalent to a rating of at least Baa3 by Moody's and at least
BBB- by S&P; and
(e) The Series Representative and the Liquidity Agent shall
have received, as applicable, such other approvals, opinions or documents as
either or both of them may request.
ARTICLE V
ASSIGNMENTS/TRANSFERS
SECTION 5.01 Assignments/Transfers. The Purchaser may assign its rights
---------------------
or delegate its obligations hereunder or any interest herein to any Person,
subject to the terms of this Agreement, or transfer the Certificate to any
Person, subject to the terms of the Pooling and Servicing Agreement and the
Series 1996-1 Supplement, in each case without the consent of the Seller,
including, without limitation the transfer of the Certificate to the Liquidity
Providers pursuant to the terms of the Series 1996-1 Asset Purchase Agreement.
6
<PAGE>
SECTION 5.02 Rights of Transferee. Upon the transfer by the Purchaser
--------------------
of the Certificate (a) the transferee receiving such transfer shall have all of
the rights of the Purchaser with respect to the Certificate and (b) all
references to the Purchaser in the Transaction Documents shall be deemed to
apply to such transferee to the extent of its interest in the related
Collections.
SECTION 5.03 Notice of Assignment/Transfer. The Purchaser shall
-----------------------------
promptly provide notice to the Seller, the Trustee and the Series Representative
of any assignment of its rights or delegation of its obligations hereunder or
any interest herein or a transfer of the Certificate by the Purchaser to any
transferee.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Amendments, Etc. This Agreement and the rights and
---------------
obligations of the parties hereunder may not be changed orally, but only by an
instrument in writing signed by all parties hereto in accordance with this
Section 6.01. This Agreement may be amended from time to time by all parties
hereto (i) to cure any ambiguity, (ii) to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein or in any
other Transaction Document, (iii) to add any other provisions with respect to
matters or questions arising under this Agreement or any Transaction Document
that shall not be inconsistent with the provisions of this Agreement or any
Transaction Document, and (iv) to change, modify, delete or add any other
obligation of any of the parties hereto.
SECTION 6.02 Notices, Etc. All Notices provided for hereunder shall,
------------
unless otherwise stated herein, be in writing and shall be deemed to have been
duly given if personally delivered at, mailed by registered mail, return receipt
requested, or sent by facsimile transmission (i) in the case of the Seller, to
23 Inverness Way East, Suite 160, Englewood, Colorado 80112, (ii) in the case of
the Purchaser, to 450 Mamaroneck Avenue, Harrison, New York 10528, (iii) in the
case of the Trustee, to 1740 Broadway, Denver, Colorado 80274, (iv) in the case
of the Servicer, to 23 Inverness Way East, Englewood, Colorado 80112 and (v) as
to each party, at such other address or facsimile number as shall be designated
by such party in a written notice to each other party.
SECTION 6.03 No Waiver; Remedies. No failure to exercise and no delay
-------------------
in exercising, on the part of any party hereto, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of
7
<PAGE>
any other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.
SECTION 6.04 Binding Effect; Survival. This Agreement shall be binding
------------------------
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and the provisions of Sections 3.03 and 3.04 shall inure
to the benefit of the Liquidity Providers and their respective successors and
assigns. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until one year and one day after the earlier of the date on
which all Obligations are paid in full or the Trust shall terminate in
accordance with the Pooling and Servicing Agreement. The provisions of Sections
3.03 and 3.04 shall be continuing and shall survive any termination of this
Agreement.
SECTION 6.05 No Proceedings. The Seller, the Trustee and the Servicer
--------------
each hereby agrees that it will not institute against the Purchaser, or join any
other Person in instituting against the Purchaser, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law for one year
and one day after the latest maturing Note issued by the Purchaser is paid.
SECTION 6.06 Captions and Cross References. The various captions
-----------------------------
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement.
SECTION 6.07 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the law of the State of New York (without giving
effect to the conflict of law principles thereof).
SECTION 6.08 Submission to Jurisdiction. Each party hereto hereby
--------------------------
irrevocably submits to the non-exclusive jurisdiction of any federal court of
the United States of America sitting in New York City or, if jurisdiction is not
available in such federal court, New York state court, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any other transaction document, and hereby (a) irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in such New York state or federal court; and (b) irrevocably waives,
to the fullest extent it may effectively do so, the defense of an inconvenient
forum to the maintenance of such action or proceeding. As an alternative method
of service, the Seller also irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such
process to the Servicer at its address specified herein. Nothing in this Section
6.08 shall
8
<PAGE>
affect the right of any party hereto to bring any action or proceeding against
another party hereto or any of its properties in the courts of any other
jurisdiction.
SECTION 6.09 Waiver of Jury Trial. Each party hereto waives any right
--------------------
to a trial by jury in any action or proceeding to enforce or defend any rights
under or relating to this Agreement, any other Transaction Document, or any
amendment, instrument, document or agreement delivered or which may in the
future be delivered in connection herewith or therewith or arising from any
course of conduct, course of dealing, statements (whether verbal or written),
actions of any of the parties hereto or any other relationship existing in
connection with this Agreement or any other Transaction Document, and agrees
that any such action or proceeding shall be tried before a court and not before
a jury.
SECTION 6.10 Execution in Counterparts. This Agreement may be executed
-------------------------
in two or more counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together shall constitute
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
[SIGNATURE PAGE TO FOLLOW.]
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
date first above written.
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Seller
By________________________________
Name:
Title:
CORPORATE RECEIVABLES CORPORATION,
as Purchaser
By: Citicorp North America, Inc.
By __________________________
Name:
Title:
NORWEST BANK COLORADO, NATIONAL
ASSOCIATION, as Trustee
By __________________________
Name:
Title:
MAIL-WELL I CORPORATION,
as Servicer
By __________________________
Name:
Title:
10
<PAGE>
EXHIBIT 10.43
INTERCREDITOR AGREEMENT
Dated as of November 15, 1996
by and among
CITICORP NORTH AMERICA, INC.,
as Securitization Company Agent
BANQUE PARIBAS, NEW YORK BRANCH,
as Liquidity Agent
BANQUE PARIBAS,
as Credit Lenders' Agent
NORWEST BANK COLORADO, NATIONAL ASSOCIATION,
as Trustee
MAIL-WELL TRADE RECEIVABLES CORPORATION,
as Receivables Seller
MAIL-WELL I CORPORATION,
as Servicer, Originator and the Mail-Well Credit Borrower
SUPREMEX INC.,
as the Supremex Credit Borrower
and
THE OTHER PARTIES HERETO
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
<S> <C>
PAGE
ARTICLE 1. DEFINITIONS.................................................................... 3
1.1. Certain Defined Terms.......................................................... 3
1.2. References to Terms Defined in the Purchaser Documents and the Loan Documents.. 8
ARTICLE 2. INTERCREDITOR PROVISIONS....................................................... 8
2.1. Priorities with Respect to Purchased Property, Etc............................ 8
2.2. [Reserved].................................................................... 12
2.3. Distribution of Proceeds...................................................... 12
2.4. Collection Accounts........................................................... 13
2.5. Enforcement Actions........................................................... 14
2.6. Access to and Use of Credit Collateral and Purchased Property................. 15
2.7. Accountings................................................................... 17
2.8. Agency for Perfection......................................................... 17
2.9. UCC Notices................................................................... 17
2.10. Independent Credit Investigations............................................. 18
2.11. Limitation on Liability of Parties to Each Other.............................. 18
2.12. Amendments to Financing Arrangements or to this Agreement..................... 18
2.13. Marshalling of Assets......................................................... 19
2.14. Relative Rights............................................................... 19
2.15. Effect Upon Loan Documents and Purchaser Documents............................ 19
2.16. Nature of the Credit Claims and Modification of Loan Documents................ 20
2.17. Nature of the Purchaser Claims and Modification of Purchaser Documents........ 20
2.18. Further Assurances............................................................ 20
2.19. Filing........................................................................ 20
2.20. Reports....................................................................... 21
ARTICLE 3. MISCELLANEOUS.................................................................. 21
3.1. Notices........................................................................ 21
3.2. Agreement Absolute............................................................. 21
3.3. Successors and Assigns......................................................... 21
3.4. Beneficiaries.................................................................. 22
3.5. GOVERNING LAW.................................................................. 22
3.6. Section Titles................................................................. 22
3.7. Severability................................................................... 22
3.8. Execution in Counterparts...................................................... 22
3.9. Limited Recourse............................................................... 22
</TABLE>
i
<PAGE>
INTERCREDITOR AGREEMENT dated as of November 15, 1996 (as modified,
amended, restated or supplemented from time to time in accordance with the terms
hereof, this "AGREEMENT"), by and among:
CITICORP NORTH AMERICA, INC. (in its capacity as Securitization
Company Agent under the Asset Purchase Agreement (as defined below), together
with its successors and assigns (including pursuant to any refinancing,
replacement or refunding) in such capacity, the "SECURITIZATION COMPANY AGENT"),
BANQUE PARIBAS, NEW YORK BRANCH (in its capacity as Liquidity Agent for the
Liquidity Providers (as defined below) under the Asset Purchase Agreement,
together with its permitted successors and assigns (including pursuant to any
refinancing, replacement or refunding) in such capacity, the "LIQUIDITY AGENT"),
BANQUE PARIBAS (in its capacity as agent for the Credit Lenders (as defined
below), together with its permitted successors and assigns (including pursuant
to any refinancing, replacement or refunding) in such capacity, the "CREDIT
LENDERS' AGENT"), NORWEST BANK COLORADO, NATIONAL ASSOCIATION (in its capacity
as Trustee under the Pooling and Servicing Agreement (as defined below),
together with its successors and assigns (including pursuant to any refinancing,
replacement or refunding) in such capacity, the "TRUSTEE"), MAIL-WELL TRADE
RECEIVABLES CORPORATION (the "RECEIVABLES SELLER"), MAIL-WELL I CORPORATION
("MAIL-WELL" and in its capacity as Servicer under the Pooling and Servicing
Agreement, the "SERVICER", and as Originator under the Pooling and Servicing
Agreement together with any other Person (as defined below) named as an
originator under, or added as an originator in accordance with, the PCA (as
defined below), the "ORIGINATOR", and in its capacity as borrower under the
Mail-Well Credit Agreement (as defined below), the "MAIL-WELL CREDIT BORROWER")
and SUPREMEX INC., in its capacity as borrower under the Supremex Credit
Agreement (as defined below) the "SUPREMEX CREDIT BORROWER", and together with
the Mail-Well Credit Borrower, collectively, the "CREDIT BORROWERS").
R E C I T A L S :
A. The Originator has agreed to sell, transfer and assign to the
Receivables Seller, and the Receivables Seller has agreed to purchase or
otherwise acquire from the Originator, all of the right, title and interest of
the Originator in the Receivables (as hereinafter defined) pursuant to a
Purchase and Contribution Agreement (as amended, supplemented, modified or
restated from time to time, and as the same may be refinanced, replaced or
refunded, the "PCA") dated as of the date hereof between the Originator and the
Receivables Seller.
B. The Receivables Seller, the Servicer and the Trustee are parties
to a Pooling and Servicing Agreement dated as of the date hereof (as amended,
supplemented (including, without limitation, as supplemented by the Series 1996-
1 Supplement thereto), modified or restated from time to time, and as the same
may be refinanced, replaced or refunded, the "POOLING AND SERVICING AGREEMENT")
pursuant to which the Receivables Seller has agreed to transfer to the Trustee
the Receivables purchased by or contributed to the Receivables Seller pursuant
to the PCA.
<PAGE>
C. The PCA and the Pooling and Servicing Agreement provide for the
filing of UCC financing statements to perfect the ownership and security
interests of the parties thereto with respect to the property covered thereby.
D. The Receivables Seller, Corporate Receivables Corporation (the
"Receivables Purchaser"), the Servicer and the Trustee are parties to a
Certificate Purchase Agreement dated as of the date hereof (as amended,
supplemented, modified or restated from time to time, and as the same may be
refinanced, replaced or refunded, the "CERTIFICATE PURCHASE AGREEMENT") pursuant
to which the Receivables Purchaser has agreed to purchase the Series 1996-1
Certificate (as defined in the Purchaser Documents) which represents an interest
in the Receivables.
E. The Receivables Purchaser, the Liquidity Providers parties
thereto (the "LIQUIDITY PROVIDERS"), the Securitization Company Agent and the
Liquidity Agent are parties to an Asset Purchase Agreement dated as of the date
hereof (as amended, supplemented, modified or restated from time to time, and as
the same may be refinanced, replaced or refunded, the "ASSET PURCHASE
AGREEMENT") pursuant to which the Liquidity Providers have agreed to purchase
the Series 1996-1 Certificate from the Receivables Purchaser.
F. Mail-Well, certain subsidiaries of Mail-Well, Paribas
Properties, Inc. (as lessor), Banque Paribas, as agent, and the lenders,
including the "Financing Lenders" and the "Equity Lenders" as described and
defined therein, which are parties thereto (the "EQUIPMENT LENDERS") are
entering into the "Equipment Lease Facility Documents", as such term is defined
in the Mail-Well Credit Agreement (the "EQUIPMENT LEASE FACILITY DOCUMENTS")
pursuant to which the Equipment Lenders are making loans to Paribas Properties,
Inc. to finance its purchase of certain equipment from Mail-Well which is,
concurrently therewith, being leased to Mail-Well and, in part, sub-leased by
Mail-Well to certain subsidiaries of Mail-Well.
G. The Mail-Well Credit Borrower, the Credit Lenders' Agent, the
lenders party thereto from time to time (the "MAIL-WELL CREDIT LENDERS") and
certain subsidiaries of the Mail-Well Credit Borrower are parties to a Third
Amended and Restated Credit Agreement, dated as of the date hereof (as amended,
supplemented, modified or restated from time to time, and as the same may be
refinanced, replaced or refunded, the "MAIL-WELL CREDIT AGREEMENT").
H. The Supremex Credit Borrower, the Credit Lenders' Agent, the
lenders party thereto from time to time (the "SUPREMEX CREDIT LENDERS", and
together with the Mail-Well Credit Lenders and the Equipment Lenders,
collectively, the "CREDIT LENDERS"), Innova Envelope Inc., and Mail-Well are
parties to an Amended and Restated Credit Agreement, dated as of the date hereof
(as amended, supplemented, modified or restated from time to time, and as the
same may be refinanced, replaced or refunded, the "SUPREMEX CREDIT AGREEMENT",
and together with the Mail-Well Credit Agreement and the Equipment Lease
Facility Documents, the "CREDIT AGREEMENTS").
2
<PAGE>
I. To secure their obligations to the Credit Lenders and Credit
Lenders' Agent under the Credit Agreements and other Loan Documents and to the
Equipment Lenders under the Equipment Lease Facility Documents, the Credit
Borrowers and certain Affiliates thereof have granted to the Credit Lenders'
Agent for the benefit of the Credit Lenders' Agent, the Credit Lenders, as
applicable, a security interest in, among other things, certain collateral,
including, without limitation, certain accounts receivable, inventory, equipment
and certain general intangibles, including, without limitation, the Receivables,
and all proceeds of the foregoing.
J. The parties hereto wish to set forth certain agreements with
respect to the Purchased Property (as hereinafter defined) and with respect to
the Collateral (as hereinafter defined).
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein, and for other good and valuable
consideration, receipt of which is hereby acknowledged, it is hereby agreed as
follows:
ARTICLE 1. DEFINITIONS.
-----------
1.1. Certain Defined Terms. As used in this Agreement, the
---------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"AGREEMENT" has the meaning ascribed to such term in the preamble
hereto.
"ASSET PURCHASE AGREEMENT" has the meaning ascribed to such term in
the recitals hereto.
"BUSINESS DAY" has the meaning ascribed to such term in the Pooling
and Servicing Agreement.
"CERTIFICATE PURCHASE AGREEMENT" has the meaning ascribed to such
term in the recitals hereto.
"CLAIMS" means the Credit Claims or the Purchaser Claims, as
applicable.
"COLLATERAL" means all property (including proceeds thereof) and
interests in property (including proceeds thereof), now owned or hereafter
acquired or created, of any one or more of the Loan Parties in or upon which a
Credit Security Interest is granted or purported to be granted by any one or
more of the Loan Parties to the Credit Lenders or the Credit Lenders' Agent
under any of the Loan Documents.
3
<PAGE>
"COLLECTION ACCOUNT" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"COLLECTIONS" has the meaning ascribed to such term in the
definition of "Receivables."
"CONTRACT" has the meaning ascribed to such term in the Pooling and
Servicing Agreement.
"CREDIT AGREEMENTS" has the meaning ascribed to such term in the
recitals hereto.
"CREDIT BORROWERS" has the meaning ascribed to such term in the
preamble hereto.
"CREDIT CLAIMS" means all loans, advances, liabilities and
obligations for the payment of monetary amounts (whether or not such payment is
then required or contingent, or amounts are liquidated or determinable) owing by
any Loan Party to the Credit Lenders' Agent or any Credit Lender, of any kind or
nature, present or future, whether or not evidenced by any note, agreement or
other instrument, arising under any of the Loan Documents. This term includes
all principal, interest (including, without limitation, interest accruing after
the commencement of a bankruptcy, insolvency or similar proceeding relating to
the Credit Borrowers, whether or not such interest is an allowed claim in any
such proceeding), any reimbursement obligations, obligations with respect to
letters of credit or bankers' acceptances, fees and expenses due thereunder, and
any costs of collection or enforcement, attorneys' fees and any other sum
chargeable to any Loan Party under any of the Loan Documents.
"CREDIT COLLATERAL" means all Collateral which does not constitute
Purchased Property.
"CREDIT LENDERS" has the meaning ascribed to such term in the
recitals hereto.
"CREDIT LENDERS' AGENT" has the meaning ascribed to such term in the
preamble hereto.
"CREDIT SECURITY INTEREST" means, with respect to any property or
interests in property, now owned or hereafter acquired or created, of any Loan
Party, any lien, claim, encumbrance, security interest or other interest of the
Credit Lenders' Agent or the Credit Lenders in such property or interests in
property.
"DISPOSITION" has the meaning ascribed to such term in Section
2.1(e)(y) hereof.
4
<PAGE>
"ENFORCEMENT" means collectively or individually, (i) the occurrence
and continuation of an Amortization Period Commencement Date under the
Purchaser Documents; or (ii) (x) demand, by any of the Credit Lenders or the
Credit Lenders' Agent after the occurrence and during the continuance of an
Event of Default, for payment in full of, or acceleration of all or any portion
of, the Credit Claims (or the automatic acceleration thereof) and (y) the
commencement thereafter by any of the Credit Lenders or Credit Lenders' Agent of
judicial or nonjudicial enforcement of any of the default rights and remedies
under the Loan Documents.
"ENFORCEMENT NOTICE" means a written notice delivered in accordance
with Section 2.5 which notice shall (i) if delivered by the Securitization
Company Agent, the Liquidity Agent or the Trustee that an Amortization Period
Commencement Date has occurred, specify the nature of any Pay-Out Event
resulting in such Amortization Period Commencement Date, and state that an
Enforcement Period has commenced or (ii) if delivered by the Credit Lenders'
Agent, state that an Event of Default has occurred, the payment in full of the
Credit Claims has been demanded or all or any portion of the Credit Claims have
been accelerated, specify the nature of the Event of Default that caused such
demand or acceleration, and state that an Enforcement Period has commenced.
"ENFORCEMENT PERIOD" means the period of time following the receipt by
either the Credit Lenders' Agent, on the one hand, or the Trustee, the
Securitization Company Agent and the Liquidity Agent and on the other hand of an
Enforcement Notice delivered by the other until the earliest of the following:
(1) the Purchaser Claims have been satisfied in full in cash, the Receivables
Purchaser and the Liquidity Providers have no further obligations under the
Purchaser Documents and the Purchaser Documents have been terminated; (2) the
Credit Claims have been satisfied in full in cash, the Credit Lenders have no
further obligations under the Loan Documents, no Letters of Credit or Bankers'
Acceptances (as defined in, and issued or accepted pursuant to, the Credit
Agreements) are outstanding (other than any for which cash collateral to the
extent required at such time by the Credit Agreements has been provided) and the
Loan Documents have been terminated (the occurrence of the foregoing,
hereinafter referred to as "TERMINATION OF CREDIT CLAIMS"); and (3) the Credit
Lenders' Agent, the Securitization Company Agent, the Liquidity Agent and the
Trustee agree in writing to terminate the Enforcement Period.
"EVENT OF DEFAULT" has the meaning ascribed to such term in the
Credit Agreements.
"FACILITY TERMINATION DATE" has the meaning ascribed to such term in
the PCA.
"LIQUIDITY PROVIDERS" has the meaning ascribed to such term in the
recitals hereto.
"LOAN DOCUMENTS" means collectively, the "Loan Documents" as defined
in the Credit Agreements together with the Equipment Lease Facility Documents.
5
<PAGE>
"LOAN PARTIES" has the meaning ascribed to such term in the Credit
Agreements including, without duplication, Mail-Well, and any Affiliates
thereof that are parties to the Equipment Lease Facility Documents.
"LOCKBOX" has the meaning ascribed to such term in the Pooling and
Servicing Agreement.
"LOCKBOX ACCOUNT" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"LOCKBOX BANK" has the meaning ascribed to such term in the Pooling
and Servicing Agreement.
"OBLIGOR" has the meaning ascribed to such term in the Pooling and
Servicing Agreement; provided that "Obligor" shall in no event include any
person liable to any of the Credit Lenders or the Credit Lenders' Agent for and
solely to the extent of the purchase price of any Credit Collateral sold to such
person by the Credit Lenders' Agent or any Credit Lender.
"ORIGINATOR" has the meaning ascribed to such term in the preamble
hereto.
"OUTSTANDING BALANCE" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"PAY-OUT EVENT" has the meaning ascribed to such term in the Pooling
and Servicing Agreement.
"PCA" has the meaning ascribed to such term in the recitals hereto.
"PERSON" means any individual, sole proprietorship, partnership,
corporation (including a business trust), joint stock company, limited liability
company, trust, unincorporated organization, joint venture, association,
institution, public benefit corporation, government (whether Federal, state,
county, city, municipal or otherwise, including any instrumentality, division,
agency, body or department thereof) or other entity.
"POOLING AND SERVICING AGREEMENT" has the meaning ascribed to such
term in the recitals hereto.
"PURCHASED PROPERTY" means (i) the Purchased Receivables, (ii) the
Collections related to such Purchased Receivables and (iii) subject to Section
2.4(c) hereof, the Collection Account, the Special Funding Account, the
Lockboxes and the Lockbox Account to which any Collections of such Purchased
Receivables are deposited (but in no event shall Purchased Property include any
Collections or other monies deposited in such accounts or the Lockboxes which
are not Collections related to Purchased Receivables).
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"PURCHASED RECEIVABLES" means now owned or hereafter existing
Receivables sold, purported to be sold, transferred or contributed or purported
to be transferred or contributed by the Originator to the Receivables Seller
under the PCA; provided, that, for purposes hereof, Receivables will be
-------- ----
purported to be sold, transferred or contributed if (i) consideration, including
consideration in the form of Purchase Price, is received therefor or if such
Receivables are transferred by means of a contribution to equity, (ii)
transferred in accordance with the PCA and (iii) the parties to the Purchaser
Documents have acted in good faith with respect to such transfer.
"PURCHASER CLAIMS" means all indebtedness, obligations and other
liabilities of the Originator to the Receivables Seller and of the Originator
and/or the Receivables Seller to the Securitization Company Agent, the Liquidity
Agent, the Trustee, the Liquidity Providers and/or the Receivables Purchaser now
or hereafter arising under, or in connection with, the Purchaser Documents,
including, but not limited to, all sums or increases now or hereafter advanced
or made to or for the benefit of the Receivables Seller thereunder as the
purchase price paid for Purchased Receivables or otherwise under the Purchaser
Documents, any yield thereon (including, without limitation, yield accruing
after the commencement of a bankruptcy, insolvency or similar proceeding
relating to the Originator, whether or not such yield is an allowed claim in any
such proceeding), any repayment obligations, fees or expenses due thereunder,
and any costs of collection or enforcement, attorneys' fees and any other sums
chargeable to the Originator or the Receivable Seller, as the case may be, under
any of the Purchaser Documents.
"PURCHASER DOCUMENTS" means the PCA, the Pooling and Servicing
Agreement (including each supplement thereto), the Asset Purchase Agreement, the
Certificate Purchase Agreement and any other agreements, instruments or
documents (i) executed by the Originator and delivered to the Receivables Seller
or (ii) executed by the Receivables Seller and delivered to the Trustee,
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and/or the Receivables Purchaser.
"PURCHASER INTEREST" means, with respect to any property (including
proceeds) or interests in property (including proceeds), now owned or hereafter
acquired or created, of the Receivables Seller or the Originator, any lien,
claim, encumbrance, security interest or other interest of the Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and/or the Receivables Purchaser in such property or interests in property.
"RECEIVABLE" means the indebtedness of any Obligor resulting from the
provision or sale of merchandise, insurance or services by an Originator under a
Contract, and includes the right to payment of any interest or finance charges
and other obligations of such Obligor with respect thereto and all Related
Security with respect thereto.
"RECEIVABLES PURCHASER" has the meaning ascribed to such term in the
preamble hereto.
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"RECEIVABLES SELLER" has the meaning ascribed to such term in the
preamble hereto.
"RECORDS" has the meaning ascribed to such term in the definition of
"Receivables."
"SECOND LIEN OBLIGATIONS" has the meaning ascribed to such term in
Section 2.1(b) hereof.
"SELLER" has the meaning ascribed to such term in the Pooling and
Servicing Agreement.
"SERIES REPRESENTATIVE" has the meaning ascribed to such term in the
Pooling and Servicing Agreement.
"SERVICER" has the meaning ascribed to such term in the recitals
hereto.
"STOCK COLLATERAL" means the common stock of the Receivables Seller
and related property, including distributions, dividends and proceeds, in which
a Credit Security Interest is granted or purported to be granted by the Credit
Borrowers to the Credit Lenders or the Credit Lenders' Agent under any of the
Loan Documents.
"TERMINATION OF CREDIT CLAIMS" has the meaning ascribed to such term
in clause (2) of the definition of "Enforcement Period".
"UCC" means the Uniform Commercial Code as from time to time in
effect in the applicable jurisdiction.
"UNSOLD RECEIVABLES" means all Receivables other than Purchased
Receivables.
1.2. References to Terms Defined in the Purchaser Documents and the
--------------------------------------------------------------
Loan Documents . All capitalized terms used herein and not otherwise defined
- ---------------
herein shall have the meanings ascribed to them in the Pooling and Servicing
Agreement. Whenever in Section 1.1 or pursuant to the previous sentence a term
is defined by reference to the meaning ascribed to such term in any of the
Purchaser Documents or in any of the Loan Documents, then, unless otherwise
specified herein, such term shall have the meaning ascribed to such term in the
Purchaser Documents or Loan Documents, respectively, as in existence on the date
hereof, without giving effect to any amendments of such term (or any amendment
of terms used in such term) as may hereafter be agreed to by the parties to such
documents, unless such amendments have been consented to in writing by the
Trustee, Securitization Company Agent, the Liquidity Agent and the Credit
Lender's Agent.
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ARTICLE 2. INTERCREDITOR PROVISIONS.
------------------------
2.1. Priorities with Respect to Purchased Property, Etc. (a)
--------------------------------------------------
Notwithstanding any provision of the UCC, any applicable law or decision or any
of the Loan Documents or the Purchaser Documents, the Credit Lenders' Agent and
the Credit Lenders hereby agree that, upon the sale or other transfer or
purported sale or transfer of an interest in any Receivable by the Originator to
the Receivables Seller pursuant to the PCA, any Credit Security Interest of the
Credit Lenders in such Receivable and Collections thereof shall automatically
and without further action cease and be forever released and discharged and the
Credit Lenders' Agent and the Credit Lenders shall have no Credit Security
Interest therein; provided, however, that nothing in this Section 2.1 shall be
deemed to constitute a release by the Credit Lenders' Agent or the Credit
Lenders of: (i) any Credit Security Interest in the proceeds received or
receivable by the Originator from the Receivables Seller for the sale or other
transfer of Receivables (including, without limitation, cash payments made by
the Receivables Seller and any claim for payment of the purchase price of the
Receivables sold under the PCA) or (ii) any Credit Security Interest or right
the Credit Lenders' Agent and the Credit Lenders have in any residual interests
which the Originator may have in Purchased Property and the proceeds thereof.
Notwithstanding anything in the Purchaser Documents or otherwise, if the
Facility Termination Date shall occur, or if the Credit Claims shall have become
immediately due and payable and the Credit Lenders' Agent shall have delivered
written notice thereof to the Trustee, the Securitization Company Agent and the
Liquidity Agent, no Receivables shall, without the prior written consent of the
Credit Lenders' Agent, be sold or otherwise transferred to the Receivables
Seller. Notwithstanding any provision of the PCA to the contrary, the
Receivables Seller, the Trustee, the Securitization Company Agent and the
Liquidity Agent hereby agree that, unless otherwise instructed by the Credit
Lenders' Agent, upon the occurrence of an Event of Termination described in
Section 7.01(e) or (i) of the PCA, the Trustee shall immediately declare a
Facility Termination Date and from and after such date, no Receivables shall,
without the prior written consent of the Credit Lenders' Agent, be sold or
otherwise transferred to the Receivables Seller.
(b) Notwithstanding any provision of the UCC, any applicable law or
decision or any of the Purchaser Documents, each of the Receivables Seller,
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers and the Receivables Purchaser hereby agrees that (i) the Credit
Security Interest in Credit Collateral for all present and future Credit Claims
shall be and hereby is and shall be deemed to have priority over, and be senior
in all respects to, the Purchaser Interest therein, (ii) the Purchaser Interest
in Credit Collateral shall be and hereby is and shall be deemed to be junior and
subject and subordinate to the Credit Security Interest therein for all present
and future Credit Claims and (iii) the Purchaser Interests in Unsold Receivables
shall only secure the obligations (the "SECOND LIEN OBLIGATIONS") of the
Originator under Sections 5.01, 5.04 and 8.01 of the PCA. The Credit Security
Interest in the Credit Collateral for all present and future Credit Claims shall
be and hereby is senior and prior to the Purchaser Interest therein irrespective
of the time, order or method of attachment or perfection of the Credit Security
Interest or Purchaser Interest, or the time or order of the filing or non-filing
and recording or non-recording of the Loan Documents, the Purchaser Documents or
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related financing statements, or the giving of or failure to give notice of
purchase money security interests and irrespective of any other fact,
circumstance, act or occurrence that might otherwise affect the priorities
established under this Section 2.1(b). Subject to clause (c) below, nothing
contained in this Agreement shall, or shall be deemed to, restrict, impair or
impose any condition with respect to the exercise by the Credit Lenders' Agent
or the Credit Lenders of any right, remedy, power or privilege under any Loan
Document.
(c) Each of the Receivables Seller, Trustee, the Securitization
Company Agent, the Liquidity Agent, the Liquidity Providers and the Receivables
Purchaser agrees that it will not commence or continue any default, foreclosure
or liquidation proceedings or remedies, whether legal or equitable, in respect
of any of the Credit Collateral or otherwise take any action of any kind or
nature to collect or receive, or enforce its rights in, realize upon, seek
adequate protection with regard to, object to sale or use of or granting of
liens on, take or gain possession of, give it preference against, or priority
over, any of the Credit Collateral prior to the liquidation of all Purchased
Property and for so long as the Credit Lender's Agent and Credit Lenders are
diligently pursuing all remedies specified above.
(d) Subject to the limitation contained in clause (c) above, each of
the Receivables Seller, Trustee, the Securitization Company Agent and the
Liquidity Agent hereby irrevocably and unconditionally waives any rights which
it may now or hereafter have against the Credit Lenders' Agent or any Credit
Lender under, relating or with respect to any Credit Collateral, including,
without limitation, any rights under the UCC or other applicable law, and in the
event that any of the Receivables Seller, the Trustee, the Securitization
Company Agent and the Liquidity Agent shall assert any such rights, then
notwithstanding anything contained herein or in any Purchaser Documents or
otherwise, the Purchaser Interest in the Credit Collateral is as to all
Purchaser Claims hereby forever released and discharged immediately without any
further action.
(e) (x) Notwithstanding anything to the contrary contained in any
Purchaser Documents or otherwise except for and subject to the limitation
contained in clause (c) above, none of the Receivables Seller, the
Trustee, the Securitization Company Agent or the Liquidity Agent shall have
(and each of such persons does hereby irrevocably waive) any right to
restrict or permit, or approve or disapprove, any Disposition (as
hereinafter defined) of all or any portion or item of the Credit
Collateral. Each of the Receivables Seller, Trustee, the Securitization
Company Agent, the Liquidity Agent, the Liquidity Providers and the
Receivables Purchaser agrees that (1) upon any release by the Credit
Lenders' Agent of the Credit Security Interest in any Credit Collateral,
pursuant to a Disposition or otherwise in accordance with the Loan
Documents (other than in connection with the Termination of the Credit
Claims or other than in connection with the termination or release of any
Credit Security Interest hereunder), the Purchaser Interest therein shall
automatically terminate and (2) each of the Receivables Seller, Trustee,
the Securitization Company Agent and the Liquidity Agent will, immediately
upon the request of the Credit Lenders' Agent, release or
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otherwise terminate the Purchaser Interest in such Credit Collateral, and
each of such persons agrees to deliver to the Credit Lenders' Agent all
documents and instruments deemed necessary by the Credit Lenders' Agent in
connection therewith. Subject to the limitation contained in clause (c)
above, in the event that the Credit Lenders' Agent settles, adjusts or
compromises any claim in respect of all or any portion of the Credit
Collateral, including, without limitation, any condemnation, confiscation,
seizure, loss or destruction or theft of, or damage to, all or any portion
of the Credit Collateral, each of the Receivables Seller, Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and the Receivables Purchaser agrees that it is and shall be bound by any
such settlement, adjustment or compromise and shall, immediately upon the
request of the Credit Lenders' Agent, confirm its consent to same and
release any claim that it might otherwise have in respect of such Credit
Collateral, claim or proceeds thereof.
(y) Should there be any liquidation of any of the Originator or the
Credit Borrowers, as applicable, or its assets, the establishment of any
receivership for the Originator or the Credit Borrowers, as applicable, or
its assets, a bankruptcy proceeding of the Originator or the Credit
Borrowers, as applicable (either voluntary or involuntary), the payment of
any insurance, condemnation, confiscation, seizure or other claim upon the
condemnation, confiscation, seizure, loss or destruction or theft of, or
damage to, or any other sale, transfer, assignment or other disposition
(all of the foregoing referred to collectively as "Disposition") of all or
any part of the Credit Collateral, the Credit Lenders' Agent (for the
benefit of the Credit Lenders' Agent and the Credit Lenders) shall be
entitled, to the exclusion of the Receivables Seller, the Trustee, the
Securitization Company Agent and the Liquidity Agent, to receive all of the
proceeds of such Disposition, and the Credit Lenders' Agent may, without
any further consent or agreement on the part of any of the Receivables
Seller, the Trustee, the Securitization Company Agent and the Liquidity
Agent, apply any or all of such proceeds to any outstanding Credit Claims
or other obligations and liabilities owing under the Credit Agreements or
other Loan Documents, in such manner as the Credit Lenders' Agent may
determine, or release such proceeds to the Credit Borrowers for use in
repairing or replacing such Credit Collateral or otherwise, as the Credit
Lenders' Agent may determine in its sole discretion, and each of the
Receivables Seller, Trustee, the Securitization Company Agent and the
Liquidity Agent hereby consents to any such application or release.
(f) Notwithstanding any of the foregoing (i) each of the Credit
Lenders and Credit Lenders' Agent shall transfer without representation or
warranty, express or implied, and without recourse, all right, title and
interest each has in the Credit Collateral to or as directed by the Trustee, the
Securitization Company Agent or the Liquidity Agent (or such other persons as
shall be required by applicable law or court order) (except in the case of any
refinancing, refunding or replacement of the Credit Agreements, in which event
the provisions of Section 3.3 shall control) after Termination of the Credit
Claims (and the Credit Borrowers consents thereto),
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(ii) the provisions of paragraphs (a) through (e) of this Section 2.1 shall be
of no further force and effect after Termination of the Credit Claims, and (iii)
the Credit Lenders and Credit Lenders' Agent shall not be released from their
obligations under Section 2.4 until the Purchaser Claims have been paid in full
in cash and the Purchaser Documents have been terminated.
2.2. [Reserved]
2.3. Distribution of Proceeds. At all times, all proceeds of Credit
------------------------
Collateral and Purchased Property shall be distributed in accordance with the
following procedure:
(a) Except as otherwise provided in Section 2.4 with respect to
Collections of Receivables, (i) all proceeds of the Credit Collateral shall be
paid to the Credit Lenders' Agent for application on the Credit Claims and other
obligations and liabilities owing under the Credit Agreements and other Loan
Documents until the Termination of the Credit Claims; and (ii) any remaining
proceeds shall be paid to the Credit Borrowers or as otherwise required by
applicable law; provided that proceeds in respect of any Unsold Receivables
shall be paid to the Trustee for application solely to the payment of any Second
Lien Obligations due and owing and thereafter to the Credit Borrowers or as
otherwise required by applicable law.
(b) Except as otherwise provided in Section 2.4(a)(ii), (i) all
proceeds of the Purchased Property shall be paid to the Trustee for application
against the Purchaser Claims and for application in accordance with the
Purchaser Documents until the Purchaser Claims have been paid and satisfied in
full in cash and the Purchaser Documents have terminated; and (ii) any remaining
proceeds shall be paid to the Receivables Seller or as otherwise required by
applicable law, and the Credit Lenders' Agent and the Credit Lenders' agree
that they do not have and shall not have any Credit Security Interest in such
remaining proceeds.
(c) In the event that any of the Receivables Seller, the
Trustee, the Securitization Company Agent and the Liquidity Agent now or
hereafter obtains possession of any Credit Collateral prior to the Termination
of the Credit Claims, including proceeds of a Disposition of Credit Collateral
it shall immediately deliver to the Credit Lenders' Agent such Credit Collateral
or proceeds (and until delivered to the Credit Lenders' Agent such Credit
Collateral shall be held in trust for the Credit Lenders' Agent), regardless of
whether the Credit Lenders' Agent has a perfected and enforceable lien in such
Credit Collateral or the assets of the Credit Borrowers from which the proceeds
of any such Disposition have been received.
(d) In the event that any of the Credit Borrowers, the Credit
Lenders or the Credit Lenders' Agent now or hereafter obtains possession of any
Purchased Property, it shall immediately deliver to the Trustee such Purchased
Property or proceeds thereof (and until delivered such Purchased Property shall
be held in trust for the Trustee), regardless of whether the Trustee has a
perfected and enforceable lien in the assets from which the proceeds of such
Disposition have been received.
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(e) The parties hereto agree that any amounts to be distributed
pursuant to this Section 2.3 to the Originator, any proceeds or other amounts
payable to the Originator with respect to and as consideration for the sale of
the Purchased Receivables by the Originator to the Receivables Seller and any
amounts payable to the Receivables Seller under the Pooling and Servicing
Agreement shall be paid to Account #1018026652 at Norwest Bank Colorado,
National Association, Reference: Mail-Well I Corporation Concentration Account,
or as otherwise specified by the Credit Lenders' Agent.
2.4. Collection Accounts. (a) Each of the parties hereto hereby
-------------------
agrees that all Collections received on account of Purchased Property shall be
paid or delivered to the Trustee for application in accordance with Section
2.3(b) and all Collections received on account of Unsold Receivables shall be
paid or delivered to the Credit Lenders' Agent for application in accordance
with Section 2.3(a). For the purpose of determining whether specific
Collections have been received on account of Purchased Property or on account of
Unsold Receivables, the parties agree as follows:
(i) All payments made by an Obligor which at the time of the
making of such payment is obligated to make payments on Purchased Receivables
but is not obligated to make any payments on Unsold Receivables shall be
conclusively presumed to be payments on account of Purchased Receivables and all
payments made by an Obligor which at the time of the making of such payment is
obligated to make payments on Unsold Receivables but is not obligated to make
any payments on Purchased Receivables shall be conclusively presumed to be
payments on account of Unsold Receivables.
(ii) all payments made by an Obligor which at the time of the
making of such payment is obligated to make payments with respect to both
Purchased Receivables and Unsold Receivables shall be applied against the
specific Receivables, if any, which are designated by such Obligor by reference
to the applicable invoice (or otherwise identified by such Obligor in a writing
delivered with such payment) as the Receivables with respect to which such
payments should be applied; provided that where any Obligor makes payment and
designates the applicable invoices of a group of two or more Receivables to
which such payment shall be applied and such payment is in an amount less than
the aggregate Outstanding Balance of such Receivables, such payment shall be
applied pro rata to all such Receivables; provided further, that in the absence
of such designation after reasonable efforts by the Originator to obtain such
designation, such payments shall be applied against the outstanding Receivables
in the order in which they were created, in any case to the extent such
Receivables or portions thereby owed by such Obligor are not in dispute.
(b) Subject to the terms and conditions of this Section 2.4(b), the
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers and the Receivables Purchaser agree that the Trustee and the Series
Representative shall transfer dominion and control over the Lockboxes, Lockbox
Accounts, the Special Funding Account and Collection Account to the Credit
Lenders' Agent upon the earlier of the following events: (i) the
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Purchaser Claims have been satisfied in full and the Purchaser Documents have
terminated, and (ii) such earlier date as the Trustee, the Securitization
Company Agent, the Liquidity Agent, the Credit Agent and the Credit Lenders may
hereafter unanimously agree to in writing. Any such transfer shall be without
representation, recourse or warranty of any kind on the part of the Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers and
the Receivables Purchaser. Notwithstanding any such transfer, all Collections
subsequently deposited into the Collection Accounts, the Special Funding Account
or the Lockbox Account on account of the Purchased Property shall be delivered
to the Trustee as provided in Section 2.4(a). The Credit Lenders and Credit
Lenders' Agent agree that, at the time of such transfer, the Credit Lenders and
Credit Lenders' Agent shall take such steps as may be reasonably requested by
the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers or the Receivables Purchaser (including, without limitation,
notification to the banks at which Collection Accounts are maintained and the
Lockbox Banks of the continuing interest, if any, in the Collection Accounts and
the Lockbox Account) to maintain perfection of the Trustee's interest in the
Collections on account of the Purchased Property.
(c) In order to effect more fully the provisions of this Agreement,
each of the parties hereto agrees that subject to the Credit Security Interest
of the Credit Lenders or the Credit Lenders' Agent in any Unsold Receivables,
during an Enforcement Period, each of the parties hereto shall not send any
notices to the Obligors directing them to remit Collections of any Receivables
other than to the Lockbox Accounts.
(d) The Credit Lenders' Agent agrees that it shall not, at any time
prior to Enforcement, exercise any rights it may have under the Loan Documents
to take any actions regarding remedies with respect to Purchased Property,
including but not limited to sending any notices to Obligors (i) informing them
of the Credit Lenders' interest in the Receivables, or (ii) directing such
Obligors to make payments in any particular manner of any amounts due under the
Receivables; the Credit Lenders' Agent further agrees that it shall not take any
of the foregoing actions during Enforcement or prior to one year and one day
after the latest of payment in full of the Purchaser Claims and the termination
of the Purchaser Documents except that the Credit Lenders' Agent may inform any
Obligors of Unsold Receivables that such Unsold Receivables have been assigned
to the Credit Lenders' Agent so long as such notices expressly state that all
payments on account of such Receivables shall continue to be made to the Lockbox
Accounts. The Credit Lenders' Agent further agrees that, prior to one year and
one day after the latest of payment in full of the Purchaser Claims and the
termination of the Purchaser Documents, if it receives payments directly from
any Obligor on account of an Unsold Receivable, it shall immediately forward
such payment to the Trustee in order that such agent may determine whether such
payment was, in fact, properly allocated to such Unsold Receivable in accordance
with the terms of this Section 2.4 and, if necessary pursuant to the terms
hereof, reallocate such payment.
2.5. Enforcement Actions. Each of the Credit Lenders' Agent, the
-------------------
Credit Lenders, the Trustee, the Securitization Company Agent and the Liquidity
Agent agrees to use
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reasonable efforts to give an Enforcement Notice to the others prior to
commencement of Enforcement (but failure to do so shall not prevent such Person
from commencing Enforcement or affect its rights hereunder nor create any cause
of action or liability against such person). Subject to the foregoing, the
parties hereto agree that during an Enforcement Period:
(a) Subject to any applicable restrictions in the Purchaser Documents,
the Trustee may at its option and without the prior written consent of the
other parties hereto take any action to (i) accelerate payment of the
Purchaser Claims or any other obligations and liabilities under any of the
Purchaser Documents and (ii) liquidate the Purchased Property or to
foreclose or realize upon or enforce any of its rights with respect to the
Purchased Property.
(b) Subject to any applicable restrictions in the Loan Documents, the
Credit Lenders' Agent or the Credit Lenders may, at their option and
without the prior written consent of the other parties hereto, take any
action to accelerate payment of the Credit Claims or any other obligation
or liability arising under any of the Loan Documents and to foreclose or
realize upon or enforce any of their rights with respect to the Credit
Collateral or other collateral security or take such other actions as they
deem appropriate; provided, however, that the Credit Lenders' Agent shall
not otherwise take any action to foreclose upon the common stock included
in the Stock Collateral so as to obtain or transfer title thereto or to
enforce any rights it may have with respect to any of the Purchased
Property or to enforce any voting rights it may have with respect to the
Stock Collateral in order to nominate or elect any one or more members of
the Board of Directors of the issuer of the stock included in the Stock
Collateral, in each case, without the Trustee's, the Securitization Company
Agent's and the Liquidity Agent's prior written consent unless the
Purchaser Claims or any other obligation or liability arising under any of
the Purchaser Documents shall have been first paid and satisfied in full in
cash and the Purchaser Documents have terminated and, solely with respect
to the Stock Collateral, one year and one day has passed since the latest
of the date of such payment in full and termination and shall not otherwise
take any action which challenges the enforceability of any of the Purchaser
Documents.
2.6. Access to and Use of Credit Collateral and Purchased Property.
-------------------------------------------------------------
The Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers, the Receivables Purchaser, the Credit Lenders' Agent, the
Credit Lenders, the Originator or Credit Borrowers, as applicable, and the
Receivables Seller hereby agree that, notwithstanding the priorities set forth
in this Agreement, the Trustee, the Securitization Company Agent, the Liquidity
Agent, the Receivables Purchaser, the Credit Lenders' Agent and the Credit
Lenders shall have the following rights of access to and use of the Credit
Collateral and Purchased Property respectively (in addition to other rights set
forth in the Loan Documents or Purchaser Documents):
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(a) Except as otherwise provided in the Purchaser Documents, each of
the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers and the Receivables Purchaser may enter one or more
premises of the Loan Parties or the Receivables Seller, whether leased or
owned, at any time during reasonable business hours, without force or
process of law and without obligation to pay rent or compensation to the
Originator, the Receivables Seller or the Credit Lenders, whether before,
during or after an Enforcement Period, and may have access to and use of
all Records located thereon and may have access to and use of any other
property to which such access and use are granted under the Purchaser
Documents, in each case provided that such use is for the purposes of
enforcing the Receivables Purchaser's and the Trustee's rights with respect
to the Purchased Property provided, however, that such access does not
interfere (other than in a diminimus manner) with the enforcement by the
Credit Lenders' Agent or the Credit Lenders of any rights granted under the
Loan Documents.
(b) Except as otherwise provided in the Loan Documents, the Credit
Lenders' Agent and the Credit Lenders may enter one or more premises of the
Loan Parties, whether leased or owned, at any time during reasonable
business hours, without force or process of law and without obligation to
pay rent or compensation to the Loan Parties, the Receivables Seller, the
Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers or the Receivables Purchaser whether before, during or
after an Enforcement Period, and may have access to and use of all Records
located thereon and use of any other property to which such access and use
are granted under the Loan Documents, in each case provided that such use
is for the purposes of enforcing the Credit Lenders' and Credit Lenders'
Agent's rights with respect to the Credit Collateral provided, however,
that such access does not interfere (other than in a diminimus manner) with
the enforcement by the Trustee, the Securitization Company Agent, the
Liquidity Agent or the Liquidity Providers of any rights granted under the
Purchaser Documents.
(c) In order to facilitate the purposes of this Section 2.6, the
parties agree as follows: (i) any mortgage of, assignment of, security
interest in or lien upon any real property and interests in real property
of the Credit Borrowers or Loan Parties, as applicable, (whether leased or
owned) and any of the Collateral constituting equipment to the extent not
sold in favor of the Credit Lenders' Agent shall be subject to the
Receivables Purchaser's, the Trustee's, the Securitization Company's, the
Liquidity Agent's, the Liquidity Provider's and the Receivable Purchaser's
rights of access and use described above; and (ii) any ownership interest
of the Loan Parties in the Purchased Property shall be subject to the
Credit Lenders' Agent's and Credit Lenders' right of access and use
described above; provided that the foregoing shall not imply that the
Credit Lenders and Credit Lenders' Agent have any rights to allow such
access and use; provided further that neither the Credit Agent nor the
Credit Lenders shall have any liability for any actions taken or omitted by
the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers or the Receivables Purchaser under rights created in
this Section 2.6 and neither the Trustee, the Securitization Company
16
<PAGE>
Agent, the Liquidity Agent, the Liquidity Providers or the Receivables
Purchaser shall have any liability for any actions taken or omitted by the
Credit Agent or the Credit Lenders under rights created in this Section
2.6.
2.7. Accountings. The Credit Lenders' Agent agrees to render accounts
-----------
of the Credit Claims to the Trustee, the Securitization Company Agent and the
Liquidity Agent upon reasonable request, giving effect to the application of
proceeds of Credit Collateral as hereinbefore provided. The Liquidity Agent
agrees to render statements to the Credit Lenders' Agent upon reasonable
request, which statements shall identify in reasonable detail the Purchased
Receivables and shall render an account of the Purchaser Claims, giving effect
to the application of proceeds of Purchased Property and Collateral as
hereinbefore. Neither the Credit Lenders' Agent on the one hand nor the
Liquidity Agent on the other hand shall have any liability to each other or to
any other Person if their respective accounts or statements are incorrect.
2.8. Agency for Perfection. The Trustee on the one hand and the
---------------------
Credit Lenders' Agent on the other hand hereby appoint each other as agent for
purposes of perfecting by possession their respective security interests and
ownership interests and liens on the Collateral and Purchased Property described
hereunder. In the event that the Trustee or the Liquidity Agent obtains
possession of any of the Credit Collateral, the Trustee, or the Liquidity Agent,
as applicable, shall promptly notify the Credit Lenders' Agent and the Credit
Lenders of such fact, shall hold such Credit Collateral in trust and shall
deliver such Credit Collateral to the Credit Lenders' Agent upon request. In
the event that the Credit Lenders' Agent obtains possession of any of the
Purchased Property, the Credit Lenders' Agent shall promptly notify the Trustee,
the Securitization Company Agent and the Liquidity Agent of such fact, shall
hold such Purchased Property in trust and shall deliver such Purchased Property
to the Trustee upon request. Additionally, each of the parties hereto agrees
that the Trustee, as secured party with respect to any security interest in
proceeds of Unsold Receivables and claims in respect thereof, whether in the
Lockbox Accounts or otherwise, is, in addition to acting for and on behalf of
the secured parties referred to in recital B hereof, acting for and on behalf of
the Credit Agent and Credit Lenders in order to perfect the security interest of
the Credit Agent and Credit Lenders in such Proceeds and claims in respect
thereof.
2.9. UCC Notices. In the event that any party hereto shall be
-----------
required by the UCC or any other applicable law to give notice to the other of
intended disposition of Purchased Property or Credit Collateral, respectively,
such notice shall be given in accordance with Section 3.1 hereof and ten (10)
days' notice shall be deemed to be commercially reasonable.
17
<PAGE>
2.10. Independent Credit Investigations. Neither the Trustee, the
---------------------------------
Securitization Company Agent, or the Liquidity Agent, the Liquidity Providers,
the Credit Lenders' Agent nor the Credit Lenders nor any of their affiliates,
nor their nor their affiliates' respective directors, officers, agents or
employees shall be responsible to the other or to any other person, firm or
corporation for the solvency, financial condition or ability of the Originator,
the Receivables Seller or the Credit Borrowers, as applicable, to repay the
Purchaser Claims or the Credit Claims, or for the worth of the Purchased
Property or the Credit Collateral, or for statements of any of the Originator,
the Receivables Seller or the Credit Borrowers, oral or written, or for the
validity, sufficiency or enforceability of the Purchaser Claims, the Credit
Claims, the Purchaser Documents, the Loan Documents, the Trustee's, the
Securitization Company's, the Liquidity Agent's, the Liquidity Provider's and
the Receivable Purchaser's interest in the Purchased Property or the Credit
Lenders' interest in the Credit Collateral. The Credit Lenders and the
Receivables Purchaser have entered into their respective agreements with the
Credit Borrowers, the Receivables Seller and the Servicer as applicable, based
upon their own independent investigations. None of the Credit Lenders, the
Credit Lenders' Agent, the Trustee, the Securitization Company Agent, the
Liquidity Agent, the Liquidity Providers or the Receivables Purchaser makes any
warranty or representation to the other nor does it rely upon any representation
of the other parties with respect to matters identified or referred to in this
Section 2.10.
2.11. Limitation on Liability of Parties to Each Other. Except as
------------------------------------------------
provided in this Agreement, no party shall have any liability (other than the
liability of the Credit Borrowers and other Loan Parties with respect to the
Credit Claims and the liability of the Originator and the Receivables Seller
with respect to the Purchaser Claims) to any other party in connection with this
Agreement except for liability arising from the gross negligence or willful
misconduct of such party or its representatives except with respect to the
Receivables Purchaser which shall be solely liable for its or its
representative's own bad faith and willful misconduct; provided, however, that
any liability of the Receivables Purchaser hereunder is solely the corporate
liability of the Receivables Purchaser and no recourse shall be had for the
payment by the Receivables Purchaser of any other obligation or claim of or
against the Receivables Purchaser arising out of or based on this Agreement,
against any stockholder, employee, officer, director or incorporator of the
Receivables Purchaser.
2.12. Amendments to Financing Arrangements or to this Agreement. The
---------------------------------------------------------
Credit Lenders' Agent agrees to give, concurrently with any written amendment or
modification of the Loan Documents, prompt notice to the Trustee, the
Securitization Company Agent and the Liquidity Agent of the same, and the
Liquidity Agent agrees to use reasonable efforts to, concurrently with any
written amendment or modification of the Purchaser Documents, notify the Credit
Lenders' Agent of the same; provided, however, that in either case, the failure
to do so shall not create a cause of action against any party failing to give
such notice or create any claim or right on behalf of any third party or affect
the validity, enforceability or binding effect of any such amendment or
modification. The Liquidity Agent shall, upon reasonable request of any other
party hereto, provide copies of all such modifications or amendments and copies
of all
18
<PAGE>
other documentation relevant to the Purchased Property or the Credit Collateral.
All modifications or amendments of this Agreement must be in writing and duly
executed by an authorized officer of each party hereto to be binding and
enforceable.
2.13. Marshalling of Assets. Nothing in this Agreement will be deemed
---------------------
to require either the Trustee, the Securitization Company Agent, the Liquidity
Agent, or the Credit Lenders' Agent (i) to proceed against certain property
securing the Credit Claims (or any other obligation or liability under the
Credit Agreements or other Loan Documents) or the Purchaser Claims (or any other
obligation or liability under the Purchaser Documents), as applicable, prior to
proceeding against other property securing such Claim or obligations or
liabilities or against certain persons guaranteeing any such obligations before
proceeding against other persons guaranteeing any such obligations or (ii) to
marshall the Credit Collateral (or any other collateral) or the Purchased
Property (as applicable) upon the enforcement of the Credit Lenders' Agent's or
the Trustee's, the Securitization Company Agent's, the Liquidity Agent's
remedies under the Loan Documents or Purchaser Documents, as applicable.
2.14. Relative Rights. (a) The relative rights of the Credit Lenders,
---------------
each as against the other, shall be determined by agreement among such parties
in accordance with the terms of the Loan Documents. The Trustee, the
Securitization Company Agent, the Liquidity Agent, the Liquidity Providers and
the Receivables Purchaser shall be entitled to rely on the power and authority
of the Credit Lenders' Agent to act on behalf of all of the Credit Lenders to
the extent the provisions hereof require or authorize the Credit Lenders' Agent
so to act.
(b) The Credit Lenders' Agent and Credit Lenders shall be entitled to
rely on the power and authority of (x) the Trustee and the Securitization
Company Agent to act on behalf of the Receivables Purchaser to the extent the
provisions hereof require or authorize the Trustee and the Securitization
Company Agent so to act and (y) the Trustee and the Liquidity Agent to act on
behalf of the Liquidity Providers to the extent the provisions hereof require or
authorize the Trustee and the Liquidity Agent so to act.
2.15. Effect Upon Loan Documents and Purchaser Documents. By
--------------------------------------------------
executing this Agreement, the Originator, the Credit Borrowers, the other Loan
Parties, and the Receivables Seller agree to be bound by the provisions hereof
(i) as they relate to the relative rights of the Credit Lenders and Credit
Lenders' Agent with respect to the property of the Credit Borrowers and other
Loan Parties; and (ii) as they relate to the relative rights of the Receivables
Purchaser and the Liquidity Providers as creditors of the Receivables Seller.
The Originator or Credit Borrowers, as applicable, acknowledges that the
provisions of this Agreement shall not give the Originator any substantive
rights as against the Credit Lenders' Agent or the Credit Lenders. The
Receivables Seller and the Originator acknowledge that the provisions of this
Agreement shall not give the Receivables Seller or the Originator any
substantive rights as against the Trustee, the Securitization Company Agent, the
Liquidity Agent, the Liquidity Providers or the Receivables Purchaser. Each of
the Originator or Credit Borrowers, as applicable, and the Receivables Seller
further acknowledges that the provisions of this Agreement shall not give any
19
<PAGE>
such party any substantive rights as against the other and that nothing in this
Agreement shall amend, modify, change or supersede the terms of the Purchaser
Documents as between the Originator and the Receivables Seller. Each of the
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers, the Receivables Purchaser, the Credit Lenders and the Credit
Lenders' Agent agrees, that, as it affects rights and obligations of the parties
to the Loan Documents and Purchaser Documents, respectively, to the extent the
terms and provisions of the Loan Documents or the Purchaser Documents are
inconsistent with the terms and provisions of this Agreement, the terms and
provisions of this Agreement shall control.
2.16 Nature of the Credit Claims and Modification of Loan Documents.
--------------------------------------------------------------
Each of the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers, the Receivables Seller and the Receivables Purchaser
acknowledges that the Credit Claims and other obligations and liabilities owing
under the Loan Documents are, in part, revolving in nature and that the amount
of such revolving indebtedness which may be outstanding at any time or from time
to time may be increased or reduced and subsequently reborrowed. Subject to
Section 1.2 hereof, the terms of the Loan Documents may be modified, extended or
amended from time to time, and the amount thereof may be increased or reduced,
all without notice to or consent by any of the Trustee, the Securitization
Company Agent, the Liquidity Agent, the Liquidity Providers, the Receivables
Seller, or the Receivables Purchaser and without affecting the provisions of
this Agreement.
2.17. Nature of the Purchaser Claims and Modification of Purchaser
------------------------------------------------------------
Documents. Each of the Originator or Credit Borrowers, as applicable, the
- ---------
Credit Lenders, and the Credit Lenders' Agent acknowledges that the Purchaser
Claims and other obligations and liabilities owing under the Purchaser Documents
are, in part, revolving in nature and that the amount of such revolving
investment which may be outstanding at any time or from time to time may be
increased or reduced and subsequently reinvested. Subject to Section 1.2
hereof, the terms of the Purchaser Documents may be modified, extended or
amended from time to time, and the amount thereof may be increased or reduced,
all without notice to or consent by the Credit Borrowers, the Credit Lenders or
the Credit Lenders' Agent and without affecting the provisions of this
Agreement.
2.18. Further Assurances. Each of the parties agrees to take such
------------------
actions as may be reasonably requested by any other party, whether before,
during or after an Enforcement Period, in order to effect the rules of
distribution and allocation set forth above in this Article 2 and to otherwise
effectuate the agreements made in this Article.
2.19. Filing. To and until the date which is one year and one day
------
after the later of the date the Purchaser Claims shall have been paid in full in
cash and the Purchaser Documents have been terminated, the Credit Lenders,
Credit Lenders' Agent and the Originator or Credit Borrowers, as applicable,
each agree that it shall not consent to or vote for the filing of any petition
in bankruptcy for the Receivables Seller.
20
<PAGE>
2.20. Reports. The Trustee shall deliver to the Credit Lenders'
-------
Agent, promptly following receipt of same, each monthly report delivered to the
Trustee pursuant to section 3.04 of the Pooling and Servicing Agreement.
ARTICLE 3. MISCELLANEOUS.
-------------
3.1. Notices. All notices and other communications provided for
-------
hereunder shall, unless otherwise stated herein, be in writing (including
telecommunications and communication by facsimile copy) and mailed, telexed,
transmitted or delivered, as to each party hereto, at its address set forth
under its name on the signature pages hereof or at such other address as shall
be designated by such party in a written notice to the other parties hereto.
All such notices and communications shall be effective upon receipt, or, in the
case of notice by mail, five days after being deposited in the mails, postage
prepaid, or in the case of notice by telex, when telexed against receipt of the
answerback, or in the case of notice by facsimile copy, when verbal confirmation
of receipt is obtained, in each case addressed as aforesaid.
3.2. Agreement Absolute. Each of the Trustee, the Securitization
------------------
Company Agent and the Liquidity Agent shall be deemed to have entered into the
Purchaser Documents in express reliance upon this Agreement and the Credit
Lenders and the Credit Lenders' Agent shall be deemed to have entered into the
Loan Documents in express reliance upon this Agreement. This Agreement shall be
and remain absolute and unconditional under any and all circumstances, and no
acts or omissions on the part of any party to this Agreement shall affect or
impair the agreement of any party to this Agreement, unless otherwise agreed to
in writing by all of the parties hereto. This Agreement shall be applicable
both before and after the filing of any petition by or against the Originator or
Credit Borrowers, as applicable, or the Receivables Seller under the Bankruptcy
Code and all references herein to the Originator and/or Credit Borrowers or the
Receivables Seller shall be deemed to apply to a debtor-in-possession for such
party and all allocations of payments between the Credit Lenders, the Trustee,
the Securitization Company Agent, the Liquidity Agent, the Liquidity Providers
and the Receivables Purchaser shall, subject to any court order to the contrary,
continue to be made after the filing of such petition on the same basis that the
payments were to be applied prior to the date of the petition.
3.3. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of each of the parties hereto and their respective
successors and assigns. The successors and assigns for the Originator or Credit
Borrowers, as applicable, and the Receivables Seller shall include a debtor-in-
possession or trustee of or for such party. The successors and assigns for the
Credit Lenders, the Receivables Purchaser, the Credit Lenders' Agent, the
Trustee, the Securitization Company Agent, the Liquidity Agent, the Liquidity
Providers, as the case may be, shall include any successor Credit Lenders,
Receivables Purchaser, Credit Lenders' Agent, the Trustee, the Securitization
Company Agent, the Liquidity Agent, as the case may be, appointed under the
terms of the Loan Documents or the Purchaser Documents, as applicable or under
the terms of any refinancing, replacement or refunding of either. Each of the
Receivables Purchaser, the Credit Lenders' Agent, the Trustee, the
Securitization Company Agent and the
21
<PAGE>
Liquidity Agent agrees not to transfer any interest it may have in the Loan
Documents or the Purchaser Documents unless such transferee has been notified of
the existence of this Agreement and has agreed to be bound hereby.
3.4. Beneficiaries. The terms and provisions of this Agreement shall
-------------
be for the sole benefit of the parties hereto and for the successors and assigns
of the Trustee, the Securitization Company Agent, the Liquidity Agent, the
Liquidity Providers, the Credit Lender's Agent and the Receivables Purchaser,
and no other Person shall have any right, benefit, or priority by reason of this
Agreement.
3.5. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW
PROVISIONS) OF THE STATE OF NEW YORK.
3.6. Section Titles. The article and section headings contained in
--------------
this Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties hereto.
3.7. Severability. Any provision of this Agreement that is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
3.8. Execution in Counterparts. This Agreement may be executed in
-------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
3.9. Limited Recourse. Notwithstanding any other provision of this
----------------
Agreement, the duties of the Receivables Purchaser under this Agreement are
solely the corporate duties of the Receivables Purchaser. No recourse shall be
had for the payment of any amount owing in respect of any claim arising out of
or based upon this Agreement against any shareholder, employee, officer,
director, agent or incorporator of the Receivables Purchaser.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
CITICORP NORTH AMERICA, INC.,
as Securitization Company Agent
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
BANQUE PARIBAS, NEW YORK BRANCH,
as Liquidity Agent
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
BANQUE PARIBAS,
as Credit Lenders' Agent and Credit Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
23
<PAGE>
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION, as Trustee
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Receivables Seller
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
MAIL-WELL I CORPORATION,
as Servicer, Originator and a Credit
Borrower
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
24
<PAGE>
WISCO ENVELOPE CORP., as Originator
By:_________________________________
Name:
Title:
Address:
1509 North Washington Street
Tullahoma, TN 37388
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
PAVEY ENVELOPE AND TAG CORP.,
as Originator
By:_________________________________
Name:
Title:
Address:
25 Linden Avenue East
Jersey City, NJ 07305
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
MAIL-WELL WEST, INC., as Originator
By:_________________________________
Name:
Title:
Address:
221 North 48th Street
Phoenix, AZ 85063
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
25
<PAGE>
WISCO II, L.L.C., as Originator
By:_________________________________
Name:
Title:
Address:
1509 North Washington Street
Tullahoma, TN 37388
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
MAIL-WELL CANADA HOLDINGS, INC.,
as Originator
By:_________________________________
Name:
Title:
Address:
23 Inverness Way East
Englewood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
GRAPHIC ARTS CENTER, INC., as Originator
By:_________________________________
Name:
Title:
Address:
2000 North West Wilson Street
Portland, OR 97209
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
26
<PAGE>
WISCO III, L.L.C., as Originator
By:_________________________________
Name:
Title:
Address:
23 Inverness Way East
Englewood, CO 80112
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
SUPREMEX INC., as Credit Borrower and
Originator
By:_________________________________
Name:
Title:
Address:
Innova Montreal
345 Montee de Liesse - St. Laurent, Quebec H4T IP7
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
INNOVA ENVELOPE INC., as Originator
By:_________________________________
Name:
Title:
Address:
56 Steelcase Road West
Markham, Ontario L3R 1B2
Attention: Paul V. Reilly
Facsimile No.: (___) ___-____
27
<PAGE>
ARAB BANKING CORPORATION (B.S.C.),
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
BANK OF AMERICA ILLINOIS, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
CREDIT LYONNAIS NEW YORK BRANCH,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
MERRILL LYNCH SENIOR FLOATING
RATE FUND, INC, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
28
<PAGE>
NATIONAL BANK OF CANADA, as Credit Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
NATIONSBANK OF TEXAS, N.A.,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
PARIBAS BANK OF CANADA, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
29
<PAGE>
SOCIETE GENERALE, SOUTHWEST AGENCY,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE BANK OF NOVA SCOTIA, as Credit Lender
By:_________________________________
Name:
Title:
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
30
<PAGE>
THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE FUJI BANK, LIMITED, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH,
as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
31
<PAGE>
CERES FINANCE LTD., as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
STRATA FUNDING LTD., as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
RESTRUCTURED OBLIGATIONS BACKED BY
SENIOR ASSETS B.V., as Credit Lender
By: ABN Trust Company (Netherlands),
its Managing Director
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
32
<PAGE>
THE BANK OF NEW YORK. as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
GENERAL ELECTRIC CAPITAL
CORPORATION, as Credit Lender
By:_________________________________
Name:
Title:
Address:
Attention:
Facsimile No.:
33
<PAGE>
EXHIBIT 10.44
SERIES 1996-1 ASSET PURCHASE AGREEMENT
among
CORPORATE RECEIVABLES CORPORATION,
THE LIQUIDITY PROVIDERS PARTIES HERETO,
CITICORP NORTH AMERICA, INC., as Securitization Company Agent
BANQUE PARIBAS, NEW YORK BRANCH, as Liquidity Agent
and
NORWEST BANK COLORADO, NATIONAL ASSOCIATION, as Trustee
Dated as of November 15, 1996
___________________________
Relating to
Mail-Well Receivables Master Trust
Certificates
Series 1996-1
___________________________
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PRELIMINARY STATEMENTS..................................................... 1
1. Certain Defined Terms................................................. 1
2. Purchase.............................................................. 6
3. Participation Interests............................................... 7
4. Fees and Other Amounts................................................ 8
5. Representations, Warranties and Covenants............................. 9
6. Liability and Indemnification of the Series Representative............12
7. Liability and Indemnification of the Securitization Company Agent.....13
8. Liability and Indemnification of the Liquidity Agent..................13
9. Assignability.........................................................15
10. Amendments, Waivers and Other Actions by the Series Representative....16
11. Purchase Termination Date; Extension of Purchase Termination Date.....17
12. Miscellaneous.........................................................17
</TABLE>
<PAGE>
SERIES 1996-1 ASSET PURCHASE AGREEMENT
Dated as of November 15, 1996
Each of the parties who has executed this Agreement or, as an
"Assignee", an Assignment and Acceptance in the form of Exhibit A hereto (each,
an "Assignment") (each such party being referred to collectively as the
----------
"Liquidity Providers" and individually as a "Liquidity Provider"), BANQUE
------------------- ------------------
PARIBAS, NEW YORK BRANCH, as agent for the Liquidity Providers under this
Agreement (in such capacity, the "Liquidity Agent"), CORPORATE RECEIVABLES
---------------
CORPORATION, a Delaware corporation ("CRC"), CITICORP NORTH AMERICA, INC., as
---
agent for CRC (in such capacity, the "Securitization Company Agent") and
----------------------------
NORWEST BANK COLORADO, NATIONAL ASSOCIATION, as trustee (the "Trustee"), agree
-------
as follows:
PRELIMINARY STATEMENTS.
(1) CRC, pursuant to the Certificate Purchase Agreement (capitalized
terms used in the Preliminary Statements are defined in Section 1), purchased a
Certificate on the Closing Date. CRC funded such purchase as well as interests
in pools of receivables and other assets of other persons under and pursuant to
Receivables Agreements through the issuance of commercial paper notes (the
"Notes").
-----
(2) CRC has requested that the Liquidity Providers each purchase
participations (each a "Participation Interest") from time to time in
----------------------
Certificate Interests or purchase a ratable share of CRC's entire interest
(each an "Ownership Interest") in the Certificate upon the occurrence of
------------------
certain events, the proceeds of which shall be applied to repay maturing Notes,
and each Liquidity Provider, by becoming a party hereto, undertakes an
obligation to purchase a Participation Interest or Ownership Interest, as the
case may be, on the terms and conditions set forth in this Agreement (its
"Liquidity Commitment") when offered for sale by the Securitization Company
--------------------
Agent for CRC.
NOW, THEREFORE, the parties agree as follows:
1. Certain Defined Terms. (a) Whenever used in this Agreement, the
---------------------
following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms:
"Agreement" shall mean this Series 1996-1 Asset Purchase Agreement,
---------
same may be amended, modified, restated or supplemented from time to time.
"Assignment" shall have the meaning specified in the preamble to this
----------
Agreement.
<PAGE>
"Bankruptcy Code" shall mean Title 11 of the United States Code (11
---------------
U.S.C. Section 101, et seq.), as amended from time to time, or any
-- ---
successor statute.
"Certificate Interest" shall mean, on any Purchase Date, an undivided
--------------------
interest in the Certificate equal to the ratio (expressed as a percentage)
of (i) the aggregate Principal Amount of all Notes issued by CRC to fund or
maintain the purchase by CRC of the Certificate which matured on such
Purchase Date to (ii) the aggregate Principal Amount on the Initial
Purchase Date of all Notes issued by CRC to fund or maintain the purchase
by CRC of the Certificate.
"Certificate Purchase Agreement" shall mean the Series 1996-1
------------------------------
Purchase Agreement dated as of the date hereof among the Seller, as seller,
CRC, the Servicer and the Trustee, as amended, modified, restated or
supplemented from time to time in accordance with the provisions thereof.
"Certificate Purchase Event Date" shall mean any date on which the
-------------------------------
Liquidity Agent shall resign or be removed in a manner other than as
allowed under Section 8(c) hereof.
"CRC" shall have the meaning specified in the preamble to this
---
Agreement.
"Eligible Institution" shall mean a commercial bank having a combined
--------------------
capital and surplus of at least $250,000,000 which is in compliance with
all Risk-based Capital Requirements applicable to it, or a wholly-owned
subsidiary of such a bank.
"Initial Purchase Date" shall mean the first Purchase Date hereunder.
---------------------
"Liquidity Agent" shall have the meaning specified in the preamble to
---------------
this Agreement.
"Liquidity Commitment" shall have the meaning specified in paragraph
--------------------
(2) of the Preliminary Statements.
"Liquidity Event Date" shall mean any date on which any Note matures
--------------------
and CRC does not have sufficient funds available to it to pay such Note.
"Liquidity Provider" shall have the meaning, with respect to any
------------------
Person, specified in the preamble to this Agreement; provided that upon the
execution by such Liquidity Provider, as "Assignor" of an Assignment (to
the extent of the interest assigned thereby) or upon the purchase of an
Ownership Interest by such Liquidity Provider, such Person shall no longer
be a "Liquidity Provider" hereunder.
2
<PAGE>
"Liquidity Provider Event Date" shall mean, in respect of each
-----------------------------
Liquidity Provider, either (i) the Purchase Termination Date for such
Liquidity Provider, if such Liquidity Provider has not extended the term of
its Liquidity Commitment, unless prior to such Purchase Termination Date
for such Liquidity Provider hereunder, such Liquidity Provider shall have
assigned its rights and obligations hereunder to a Permitted Assignee
pursuant to Section 9 hereof or (ii) the date specified by the Liquidity
Agent or the Securitization Company Agent in either such party's sole
discretion.
"Majority Liquidity Providers" shall mean at any time Liquidity
----------------------------
Providers whose Percentages aggregate more than 66 2/3%.
"Maximum Liquidity Commitment" shall mean, with respect to each
----------------------------
Liquidity Provider, the maximum amount which such Liquidity Provider is
obligated to pay hereunder on account of the Purchase Price, as set forth
below its signature to this Agreement or in the Assignment pursuant to
which it became a Liquidity Provider, as such amount may be modified in
connection with any subsequent Assignment pursuant to Section 9; provided,
--------
however that (i) the Maximum Liquidity Commitment of such Liquidity
-------
Provider shall not exceed such Liquidity Provider's Percentage of the
Stated Amount and (ii) upon any purchase in full of an Ownership Interest,
such Liquidity Provider's Maximum Liquidity Commitment shall equal zero.
"Notes" shall have the meaning specified in paragraph (1) of the
-----
Preliminary Statements.
"Notice of Purchase" shall have the meaning specified in Section 2(a)
------------------
of this Agreement.
"Outstanding Balance" of any Receivable at any time means the then
-------------------
outstanding principal balance thereof after reductions, cancellations and
adjustments resulting from the Dilution Factors; provided, however, that
with respect to any Canadian Receivable, Outstanding Balance at any time
shall mean the United States Dollar equivalent of the then outstanding
principal balance thereof as determined by reference to the [weighted
average rate for the notional amount of Canadian Receivables pursuant to
any applicable hedge agreement] at the time such Canadian Receivable was
transferred to the Trust.
"Ownership Interest" shall have the meaning specified in paragraph (2)
------------------
of the Preliminary Statements.
"Participation Interest" shall have the meaning specified in
----------------------
paragraph (2) of the Preliminary Statements.
"Percentage" shall mean, with respect to each Liquidity Provider, the
----------
ratio (expressed as a percentage) of such Liquidity Provider's Maximum
Liquidity
3
<PAGE>
Commitment to the aggregate Maximum Liquidity Commitment of all Liquidity
Providers, as such percentage may be modified in connection with any
subsequent Assignment pursuant to Section 9 of this Agreement.
"Permitted Assignee" shall mean any assignee (i) which is satisfactory
------------------
to the Securitization Company Agent and the Liquidity Agent and (ii) (x)
which is a "qualified institutional buyer" as defined in Rule 144A of the
Act, (y) whose becoming a Liquidity Provider hereunder, would not cause any
Rating Agency to downgrade or withdraw the rating of the Notes and (z)
which has a short-term unsecured debt rating of A-1 or better by Standard &
Poor's and P-1 by Moody's.
"Pooling and Servicing Agreement" shall mean the Pooling and Servicing
-------------------------------
Agreement, dated as of the date hereof, among Mail-Well I Corporation, as
servicer, Mail-Well Trade Receivables Corporation, as the seller thereunder
and Norwest Bank Colorado, National Association, as trustee, as the same
may be amended, modified, restated or supplemented from time to time in
accordance with the provisions thereof.
"Principal Amount" shall mean, with respect to outstanding Notes, (a)
----------------
the face amount of any such Notes issued on a discount basis minus the
aggregate amount of discount on such Notes and (b) the principal amount of
any such Notes issued on an interest-bearing basis.
"Purchase Date" shall mean any of the following:
-------------
(i) in respect of all Liquidity Providers, a Liquidity Event
Date, or
(ii) in respect of each Liquidity Provider, a Liquidity
Provider Event Date or Certificate Purchase Event Date.
"Purchase Price" shall mean, with respect to any Liquidity Provider, an
--------------
amount equal to such Liquidity Provider's Percentage multiplied by the sum
of (i) the amount then accrued to CRC in respect of Interest plus (ii) the
----
Invested Amount minus the Outstanding Balance of all Defaulted Receivables
-----
included in the Trust, if any, in excess of the aggregate amount of the
Loss and Dilution Reserve. For purposes of the foregoing computations, (x)
the Loss and Dilution Reserve shall be determined on the date the Invested
Amount was last determined without any deduction for any Receivable in
respect to which the Trust has any reassignment right against the Seller
under the Pooling and Servicing Agreement and (y) Defaulted Receivables
shall only include Defaulted Receivables which were Eligible Receivables at
the time of transfer under the Pooling and Servicing Agreement and shall be
calculated on the date of the most recent Weekly Report. If, after the
relevant Purchase Date, the Securitization Company Agent determines such
Weekly Report did not reflect the actual Receivables or Defaulted
Receivables or did not accurately reflect the status of any reassignment
right of the Trust
4
<PAGE>
as of such Purchase Date, the Securitization Company Agent shall, if
necessary, adjust the Purchase Price for Participation Interests or
Ownership Interests, as the case may be, purchased by each Liquidity
Provider and shall remit to or collect from the Liquidity Provider the
difference except that the Securitization Company Agent shall not adjust
the Purchase Price for inaccuracies described in clauses (x) and (y) above
or a calculation of the Outstanding Balance of the Receivables if resulting
from errors or misstatements of the Servicer in the Weekly Report unless
the Seller corrects such errors or misstatements and has made CRC whole.
"Purchase Termination Date" shall have the meaning specified in
-------------------------
Section 11 of this Agreement.
"Rating Agency" or "Rating Agencies" shall mean, collectively, Moody's
------------- ---------------
and Standard & Poor's, and their respective successors in interest.
"Receivables Agreements" shall mean, collectively, each receivables
----------------------
agreement or certificate purchase agreement between CRC and a transferor,
which provides for the purchase by CRC of interests in pools of receivables
of such transferor, or for the making of loans to such transferor to be
secured by receivables of such transferor, as the same may be amended,
modified, restated or supplemented from time to time.
"Risk-based Capital Requirements" shall mean, with respect to any
-------------------------------
bank, the minimum ratios of total capital (and core capital) to risk-
weighted-assets required by the governmental authorities regulating such
bank in accordance with the implementation by such authorities of the Basle
Accord.
"Securitization Company Agent" shall have the meaning specified in the
----------------------------
preamble to this Agreement.
(b) As used in this Agreement and each document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement or in
any such document, and accounting terms partly defined in this Agreement or in
any such document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such other
document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such other document shall control.
(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; references to any Section,
Schedule or Exhibit are references to Sections, Schedules and Exhibits in or to
this Agreement unless otherwise specified; and the term "including" means
"including without limitation."
5
<PAGE>
(d) All capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the Certificate Purchase
Agreement.
2. Purchase. (a) The Securitization Company Agent shall offer
--------
Interests for sale on each Liquidity Event Date and shall offer to the relevant
Liquidity Providers Participation Interests or Ownership Interests for sale on
each Liquidity Provider Event Date and Certificate Purchase Event Date by
delivery of a notice to that effect (the "Notice of Purchase"). Such Notice of
Purchase must be given no later than 12:00 noon (New York City time) on the
Business Day of such purchase, shall be sent by telecopier, telex or cable to
the Liquidity Agent, the Series Representative and all Liquidity Providers
concurrently (with a copy to the Rating Agencies), and shall specify (i) the
date of such purchase, (ii) whether a Participation Interest or an Ownership
Interest is being purchased, (iii) the Certificate Interest to be purchased (if
a Participation Interest is being purchased), (iv) the Purchase Price for such
Liquidity Provider payable by such Liquidity Provider on such Purchase Date and
(v) the account into which the Purchase Price is to be deposited. On each such
Purchase Date for a Liquidity Provider, such Liquidity Provider shall purchase,
without recourse to CRC other than as set forth herein, and otherwise on the
terms and conditions herein set forth, Participation Interests or Ownership
Interests that the Securitization Company Agent, as the agent for CRC, offers
for sale. Upon delivery of a Notice of Purchase to any Liquidity Provider on a
Purchase Date, prior to 3:45 P.M. (New York City time) on such Purchase Date,
each such Liquidity Provider shall pay to the Securitization Company Agent for
the account of CRC in immediately available funds in United States dollars, by
depositing to the account designated in the Notice of Purchase, such Liquidity
Provider's Purchase Price. In the event that the Notice of Purchase delivered
on a Purchase Date does not contain the Purchase Price, such Liquidity Provider
shall nevertheless be obligated to make such purchase as of such Purchase Date,
but shall remit the Purchase Price therefore upon notice from the Securitization
Company Agent of such Purchase Price.
(b) Notwithstanding the foregoing, a Liquidity Provider shall not be
obligated to make a purchase under Section 2(a) above if, (i) on the date of
such purchase an Insolvency Event shall have occurred with respect to CRC, (ii)
after giving effect to such purchase, the aggregate Purchase Price paid by such
Liquidity Provider would exceed such Liquidity Provider's Maximum Liquidity
Commitment or (iii) to the extent the amount of such purchase is in excess of
the Purchase Price for such Liquidity Provider at any time other than when any
Liquidity Provider owns a Participation Interest therein.
(c) Each Liquidity Provider's obligation hereunder shall be several,
such that the failure of any Liquidity Provider to make payment pursuant to
subsection (a) above to the Securitization Company Agent in connection with any
purchase hereunder shall not relieve any other Liquidity Provider of its
obligation hereunder to make payment pursuant to subsection (a) above for any
purchase, and if any Liquidity Provider shall fail to purchase or make payment
pursuant to subsection (a) above for any purchase hereunder, each remaining
Liquidity Provider shall (subject to the provisions of subsection (b) above)
purchase a pro rata portion of the
6
<PAGE>
Participation Interest or Ownership Interest, as the case may be, that was to be
purchased by the defaulting Liquidity Provider.
(d) Each Liquidity Provider's Liquidity Commitment shall be
irrevocable from the effective date of this Agreement or as set forth in the
applicable Assignment, as the case may be, until the earlier of the Purchase
Termination Date or the date on which the Liquidity Agent notifies the Liquidity
Providers that the Certificate Purchase Agreement has been terminated and all
amounts due in respect of the Invested Amount and Interest have been paid in
full notwithstanding (i) any determination that the purchase hereunder or the
applicable Assignment is void or invalid or (ii) the failure on the part of CRC
or any other party to execute such documents or consent to such purchase.
(e) The Securitization Company Agent shall determine whether any date
is a Purchase Date, and if a Purchase Date shall occur, the Securitization
Company Agent, as agent for CRC, shall sell a Participation Interest in a
Certificate Interest or Ownership Interest in the Certificate, as the case may
be, to the Liquidity Providers in accordance with the provisions of this
Agreement.
(f) Upon the purchase of an Ownership Interest pursuant to Section
2(a) hereof, the Securitization Company Agent on behalf of CRC shall present the
Certificate to the Trustee for transfer to the Liquidity Providers and the
Trustee shall register new Certificates in the names of each applicable
Liquidity Provider, reflecting each applicable Liquidity Provider's ownership of
its Percentage of the Certificate. In the event the Trustee is unable to deliver
new Certificates on the date of any purchase of an Ownership Interest in
accordance with this Agreement, then each Liquidity Provider shall be deemed to
have purchased a Participation Interest in a Certificate Interest equal to 100%
of the Certificate which shall convert to an Ownership Interest on the date the
Certificates are delivered to each applicable Liquidity Provider.
(g) Each Liquidity Provider hereby covenants and agrees to remit to
the Securitization Company Agent, on behalf of CRC, CRC's pro rata share of any
payments of Interest paid to and received by such Liquidity Provider in respect
of the Invested Amount for any Interest Period during which CRC was the holder
of the interest in the Trust represented by the portion of the Invested Amount
assigned to such Liquidity Provider. For the purposes of this subsection (i),
CRC's pro rata share shall be based upon the number of days during such Interest
Period that CRC held the portion of the Invested Amount assigned to such
Liquidity Provider. The obligations of each Liquidity Provider under this
subsection (i) shall survive the termination of this Agreement as to such
Liquidity Provider.
(h) Notwithstanding the foregoing, nothing contained in this
Agreement shall limit or otherwise restrict the right of CRC to assign and
transfer the Certificate or any portion of the Invested Amount to any Person
other than a Liquidity Provider at any time other than when any Liquidity
Provider owns a Participation Interest therein.
7
<PAGE>
3. Participation Interests. (a) Whenever any amount of Invested
-----------------------
Amount or Interest is paid to CRC in connection with a Certificate Interest in
which a Liquidity Provider has purchased a Participation Interest hereunder, the
Securitization Company Agent will promptly pay, or cause to be paid, out of such
funds received by it, to each such Liquidity Provider, in United States dollars,
its pro rata portion of the principal portion of such amount, up to such
Liquidity Provider's unrecovered Purchase Price for such Certificate Interest
and such portion of the Interest in respect of such Certificate Interest for any
Interest Period during which each such Liquidity Provider was the holder of such
Participation Interest (adjusted to reflect the fact that each such Liquidity
Provider is entitled to interest only on its respective unrecovered Purchase
Price for such Certificate Interest).
(b) Upon the purchase by the Liquidity Providers of Participation
Interests in Certificate Interests aggregating 100% of the Certificate, such
Participation Interests shall be automatically converted to Ownership Interests.
Any such conversion shall be evidenced by the delivery of written notice to each
Liquidity Provider whose Participation Interests are being converted accompanied
by a Certificate reflecting the applicable Liquidity Provider's ownership of its
pro rata portion of the Certificate.
4. Fees and Other Amounts. (a) Each Liquidity Provider shall be
----------------------
entitled to receive from the Liquidity Agent, in connection with its Liquidity
Commitment until the date of a Purchase of an Ownership Interest hereunder and
solely to the extent of funds received by the Liquidity Agent pursuant to the
Fee Letter, the fees set forth in that certain fee letter to be executed by such
Liquidity Provider and the Liquidity Agent in connection with this Agreement;
provided, however, that failure to receive such fees shall not affect any
- --------
Liquidity Provider's obligation to purchase Participation Interests and
Ownership Interests hereunder.
(b) Each Liquidity Provider claiming either increased amounts
described in Section 4.4(a) or (b) of the Series 1996-1 Supplement will furnish
to the Seller and the Servicer (through the Series Representative) an officer's
certificate prepared in good faith setting forth in reasonable detail the basis
and amount of each request by such Liquidity Provider therefor. Determinations
so made by a Liquidity Provider of any increased amounts referred to in Section
4.4(a) or (b) of the Series 1996-1 Supplement, as the case may be, shall be (i)
made without regard to any participations in the Liquidity Commitment sold by
such Liquidity Provider and as if such Liquidity Provider held for its own
account the amount of the Liquidity Commitment so participated and (ii)
conclusive, absent manifest error.
(c) If the Liquidity Providers shall obtain any payment or other
recovery (whether voluntary, involuntary, by application of set-off or
otherwise) on account of any Obligation (other than pursuant to Section 4.4 of
the Series 1996-1 Supplement) which is in excess of its pro rata share of the
--- ----
sum of payments then or theretofore obtained by the Liquidity Providers, any
such Liquidity Provider shall purchase from the other Liquidity Providers such
participations in Obligations held by them as shall be necessary to cause such
purchaser to share the excess payment or other recovery ratably with each of
them; provided, however, that if all or
-------- -------
8
<PAGE>
any portion of the excess payment or other recovery is thereafter recovered from
such purchasing Liquidity Provider, the purchase of such participations shall be
rescinded and the seller of such participation to such purchaser shall repay to
such purchaser the purchase price of such participation to the ratable extent of
such recovery together with an amount equal to such Liquidity Provider's ratable
share (according to the proportion of the amount of such seller's required
repayment to such purchaser to the total amount so recovered from such
purchaser) of any interest or other amount payable by such purchaser in respect
of the total amount so recovered.
(d) Notwithstanding anything to the contrary contained herein, the
failure on the part of the Liquidity Agent to pay any amounts due and payable to
any Liquidity Provider pursuant to this Section 4 shall not relieve such
Liquidity Provider of its obligation to purchase Participation Interests or
Ownership Interests pursuant hereto.
5. Representations, Warranties and Covenants. (a) CRC represents
-----------------------------------------
that:
(i) CRC is a corporation duly incorporated, validly existing and in
good standing under the laws of Delaware, and is duly qualified to do business,
and is in good standing, in every jurisdiction where the nature of its business
requires it to be so qualified, except where the failure to so qualify would not
have a material adverse effect on its business, condition or operations;
(ii) the execution, delivery and performance by CRC of this Agreement
and the Certificate Purchase Agreement are within CRC's corporate powers, have
been duly authorized by all necessary corporate action, and do not contravene
(A) CRC's charter or by-laws, (B) any law, rule or regulation applicable to CRC,
(C) any contractual restriction binding on or affecting CRC or its property or
(D) any order, writ, judgment, award, injunction or decree binding on or
affecting CRC or its property;
(iii) there is no pending or threatened action or proceeding affecting
CRC before any court, governmental agency or arbitrator which may materially
adversely affect the financial condition or operations of CRC or the ability of
CRC to perform its obligations under this Agreement and the Certificate Purchase
Agreement, or which purports to affect the legality, validity or enforceability
of this Agreement and the Certificate Purchase Agreement;
(iv) no consent of any other person (including, without limitation,
stockholders or creditors of CRC), and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with any governmental authority, is required in connection with the
execution, delivery, performance, validity or enforceability of this Agreement
and the Certificate Purchase Agreement by or against CRC;
9
<PAGE>
(v) this Agreement and the Certificate Purchase Agreement have
been duly executed and delivered on behalf of CRC; and
(vi) each of this Agreement and the Certificate Purchase
Agreement constitutes a legal, valid and binding obligation of CRC enforceable
against CRC in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally or by
general principles of equity.
(b) Each Liquidity Provider represents that:
(i) is a corporation or bank duly incorporated or organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation or organization;
(ii) the execution, delivery and performance by it of this
Agreement are within its corporate powers, have been duly authorized by all
necessary corporate action, and do not contravene (A) its charter, by-laws, or
other organizational documents, or (B) any law, rule or regulation applicable to
it;
(iii) no consent, license, permit, approval or authorization of,
or registration, filing or declaration with any governmental authority, is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement by or against it;
(iv) this Agreement has been duly executed and delivered by it;
(v) this Agreement constitutes its legal, valid and binding
obligation enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by general principles of equity;
(vi) there is no pending or threatened action or proceeding
against it before any court, governmental agency or arbitrator which relates to
this Agreement, or which purports to affect the legality, validity or
enforceability of this Agreement;
(vii) it is a "qualified institutional buyer" as defined in Rule
144A of the Act; and
(viii) when it purchases an Ownership Interest pursuant to this
Agreement, such Ownership Interest will be acquired for investment only and not
with a view to any public distribution thereof, and such Liquidity Provider will
not sell or otherwise dispose of the Certificate so acquired by it in violation
of any of the registration
10
<PAGE>
requirements of the Act or any applicable state or other securities law.
Each Liquidity Provider acknowledges that it has no right to require the
Seller to register under the Act or any other securities law any
Certificate acquired by it pursuant to this Agreement.
(c) CRC covenants and agrees that at all times during which it shall
hold the Certificate all amounts paid to CRC in respect of the Certificate shall
be held by CRC and applied solely to the payment of maturing Notes and the fees
and other amounts payable under Sections 3 and 4 hereof.
(d) None of the Liquidity Agent, the Securitization Company Agent,
the Trustee or CRC makes any representation or warranty or assumes any
responsibility with respect to:
(i) any statements, warranties or representations made in or in
connection with the Certificate Purchase Agreement or, except as specified in
Section 5(a)(vi) hereof, the execution, legality, validity, enforceability,
genuineness or sufficiency of the Certificate Purchase Agreement or any
instrument or document furnished pursuant thereto;
(ii) the value or collectibility of any Receivable;
(iii) the financial condition of the Seller or the ability of the
Seller to perform its obligations under, or the performance or observance by the
Seller of any of its obligations under, the Certificate Purchase Agreement, the
Pooling and Servicing Agreement or any instrument or document furnished pursuant
thereto; or
(iv) the financial condition of the Servicer or the ability of the
Servicer to perform its obligations under, or the performance or observance by
the Servicer of any of its obligations under, the Certificate Purchase
Agreement, the Pooling and Servicing Agreement or any instrument or document
furnished pursuant thereto.
(v) the financial condition of the Originator or the ability of the
Originator to perform its obligations under, or the performance or observance by
the Originator of any of its obligations under, the Purchase Agreement or any
instrument or document furnished pursuant thereto.
Each of the Securitization Company Agent and CRC severally represent to each
Liquidity Provider, however, that the Certificate in which Participation
Interests or Ownership Interests are sold to each Liquidity Provider hereunder
pursuant to Section 2 is, at the time of sale, free and clear of any adverse
claims created by or arising solely as a result of claims against the
Securitization Company Agent or CRC, as the case may be.
11
<PAGE>
(e) Each Liquidity Provider confirms that such Liquidity Provider has
received such documents and information as such Liquidity Provider has deemed
appropriate to make its own credit analysis and decision, independently and
without reliance on the Liquidity Agent, the Trustee, the Securitization Company
Agent or CRC, to enter into this Agreement and will, independently and without
reliance on the Liquidity Agent, the Trustee, the Securitization Company Agent
or CRC and based on such documents and information as such Liquidity Provider
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action hereunder. The Trustee or the Securitization
Company Agent, as the case may be, will furnish to each Liquidity Provider upon
its reasonable request copies of any financial or other documents that the
Trustee or the Securitization Company Agent, as the case may be, receives from
time to time under the Certificate Purchase Agreement, but neither the Trustee
nor the Securitization Company Agent, as the case may be, assumes any
responsibility for the authenticity, validity, accuracy or completeness thereof.
(f) Each Liquidity Provider that is a "United States person" as
defined in section 7701(a)(30) of the Internal Revenue Code of 1986, as amended,
shall deliver to the Liquidity Agent on the date hereof two duly completed Forms
W-9, or a successor applicable form. When such Form W-9 expires or becomes
obsolete or inaccurate in any respect or after an event requiring a change in
the most recent form previously delivered to the Liquidity Agent, a substitute
Form W-9, or successor applicable form, shall be delivered to the Liquidity
Agent. Each Liquidity Provider that is organized outside of the United States
shall deliver to the Liquidity Agent on the date hereof (or, in the case of an
assignee, on the date of the assignment) and from time to time as required for
renewal under applicable law (i) a United States Internal Revenue Service Form
W-8 or W-9 and (ii) two duly completed copies of United States Internal Revenue
Service Form 1001 or 4224 (or any successor or additional forms), as
appropriate, establishing in each case that such Liquidity Provider is entitled
to receive payments under this Agreement without any deduction or withholding of
any United States federal income taxes. The Liquidity Agent shall be entitled to
rely on such forms in their possession until receipt of any revised or successor
form pursuant to this Section 5(f). Each Liquidity Provider shall deliver to the
Liquidity Agent, with respect to taxes imposed by any United States state or
local governmental authority, if requested, similar forms, if available (or the
information that would be contained in similar forms if such forms were
available) to the forms which are required to be provided under this subsection
with respect to taxes of the United States. The preceding sentence shall apply
only if the Liquidity Provider is eligible for exemption from any such state or
local taxes. If a Liquidity Provider fails to provide a certificate, document or
other evidence required pursuant to this Section 5(f), then the Liquidity Agent
shall be entitled to deduct or withhold on payments to such Liquidity Provider
as a result of such failure, as required by law.
6. Liability and Indemnification of the Series Representative. The
----------------------------------------------------------
Series Representative shall not be liable to any Liquidity Provider in
connection with (i) the administration of the Certificate Purchase Agreement or
(ii) the Series 1996-1 Supplement, in either case except for its own gross
negligence or willful misconduct. Without limiting the foregoing, the Series
Representative:
12
<PAGE>
(i) may consult with legal counsel (including counsel for the
Seller or Servicer), independent public accountants or other experts and
shall not be liable for any action taken or omitted to be taken in good
faith in accordance with the advice of such counsel, accountants or other
experts;
(ii) shall not be responsible for the performance or observance
by the Liquidity Agent, the Securitization Company Agent, the Seller or the
Servicer of any of the terms, covenants or conditions of any of the
Transaction Documents or any instrument or document furnished pursuant
thereto;
(iii) shall incur no liability by acting upon any notice,
consent, certificate or other instrument or writing believed to be genuine
and signed or sent by the proper party; and
(iv) shall not be deemed to be acting as any Liquidity
Provider's trustee or otherwise in a fiduciary capacity hereunder or under
or in connection with any documents related hereto.
7. Liability and Indemnification of the Securitization Company
-----------------------------------------------------------
Agent. The Securitization Company Agent shall not be liable to the Liquidity
- -----
Agent and any Liquidity Provider in connection with (i) the administration of
the Certificate Purchase Agreement or (ii) the Series 1996-1 Supplement, in
either case except for its own gross negligence or willful misconduct. Without
limiting the foregoing, the Securitization Company Agent:
(i) may consult with legal counsel (including counsel for the
Seller or Servicer), independent public accountants or other experts and shall
not be liable for any action taken or omitted to be taken in good faith in
accordance with the advice of such counsel, accountants or other experts;
(ii) shall not be responsible for the performance or observance
by the Liquidity Agent, the Series Representative, the Seller or the
Servicer of any of the terms, covenants or conditions of any of the
Transaction Documents or any instrument or document furnished pursuant
thereto;
(iii) shall incur no liability by acting upon any notice,
consent, certificate or other instrument or writing believed to be genuine
and signed or sent by the proper party; and
(iv) shall not be deemed to be acting as any Liquidity
Provider's trustee or otherwise in a fiduciary capacity hereunder or under
or in connection with any documents related hereto.
13
<PAGE>
8. Liability and Indemnification of the Liquidity Agent. (a) The
----------------------------------------------------
Liquidity Agent shall not be liable to any Liquidity Provider in connection with
this Agreement or any purchases hereunder, except for its own gross negligence
or willful misconduct. Without limiting the foregoing, the Liquidity Agent:
(i) may consult with legal counsel (including counsel for the
Seller or Servicer), independent public accountants or other experts and
shall not be liable for any action taken or omitted to be taken in good
faith in accordance with the advice of such counsel, accountants or other
experts;
(ii) shall not be responsible for the performance or observance
by the Securitization Company Agent, the Series Representative, the Seller
or the Servicer of any of the terms, covenants or conditions of any of the
Transaction Documents or any instrument or document furnished pursuant
thereto;
(iii) shall incur no liability by acting upon any notice,
consent, certificate or other instrument or writing believed to be genuine
and signed or sent by the proper party; and
(iv) shall not be deemed to be acting as any Liquidity Provider's
trustee or otherwise in a fiduciary capacity hereunder.
(b) The Liquidity Providers agree to indemnify the Liquidity Agent
ratably according to their respective Percentages, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time be
imposed on, incurred by or asserted against the Liquidity Agent in any way
relating to or arising out of this Agreement or any documents contemplated by or
referred to herein or the transactions contemplated hereby or any action taken
or omitted by the Liquidity Agent under or in connection with any of the
foregoing; provided that no Liquidity Provider shall be liable for the payment
--------
of any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from the
Liquidity Agent's gross negligence or willful misconduct. The agreements in
this subsection shall survive the payment of all amounts payable hereunder.
(c) Resignation and Replacement of Liquidity Agent. Subject to the
----------------------------------------------
proviso hereof, The Liquidity Agent may resign at any time by giving ten days'
prior written notice thereof to the Liquidity Providers, the Securitization
Company Agent and CRC and may be removed at any time with cause by the Majority
Liquidity Providers upon ten days' prior written notice thereof to the Liquidity
Agent, the Securitization Company Agent and CRC; provided, that (i) such
--------
resignation or removal shall become effective upon the acceptance of appointment
by a successor Liquidity Agent acceptable to the Securitization Company Agent as
set forth below and (ii) in the case of any such resignation or removal, the
Majority Liquidity Providers shall have the right to appoint a successor
Liquidity Agent, which shall be an Eligible Institution,
14
<PAGE>
provided that the Securitization Company Agent shall have the right to approve
- --------
the successor Liquidity Agent, such approval not to be unreasonably withheld. If
no successor Liquidity Agent shall have been so appointed by the Majority
Liquidity Providers and approved by the Securitization Company Agent, and shall
have accepted such appointment, within 30 days after the retiring Liquidity
Agent's giving of notice of resignation or the Majority Liquidity Providers'
removal of the retiring Liquidity Agent, then the retiring Liquidity Agent may,
on behalf of the Liquidity Providers, appoint a successor Liquidity Agent, which
shall be an Eligible Institution, provided that the Securitization Company Agent
--------
shall have the right to approve such successor Liquidity Agent, such approval
not to be unreasonably withheld. Upon the acceptance of any appointment as
Liquidity Agent hereunder by a successor Liquidity Agent, such successor
Liquidity Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Liquidity Agent, and the
retiring Liquidity Agent shall be discharged from its duties and obligations
under this Agreement. After any retiring Liquidity Agent's resignation or
removal hereunder as Liquidity Agent, the provisions of this Section 8 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Liquidity Agent under this Agreement.
9. Assignability. (a) A Person shall become a party hereto and shall
-------------
become a Liquidity Provider hereunder upon satisfaction of the conditions set
forth in this Section 9 and the occurrence of the effective date of such
Liquidity Provider's Liquidity Commitment (as set forth in such Assignment).
(b) Each Liquidity Provider may assign to any Permitted Assignee all
or a portion of its rights and obligations under this Agreement; provided,
--------
however, that in the case of any assignment other than an assignment pursuant to
- -------
Section 2(c) hereof:
(i) each such assignment shall be of a constant, and not a
varying, percentage of all rights and obligations under this Agreement,
(ii) the amount being assigned pursuant to each assignment shall
in no event be less than $5,000,000,
(iii) the parties to each such assignment shall execute and
deliver to the Liquidity Agent and the Securitization Company Agent, an
Assignment in the form of Exhibit A attached hereto, and
(iv) the assignee shall deliver to the Liquidity Agent and the
Securitization Company Agent at least five days prior to the effective date
specified in the Assignment (A) an opinion of counsel for such assignee,
addressed to the Liquidity Agent and the Securitization Company Agent, CRC
and each Rating Agency, in form and substance reasonably satisfactory to
the Liquidity Agent and the Securitization Company Agent and such
addressees (and the Liquidity Agent and the Securitization Company Agent
shall promptly deliver copies of the same to each of such addressees), (B)
the
15
<PAGE>
information and financial statements regarding such assignee requested by
the Liquidity Agent and the Securitization Company Agent and (C) the
documents specified in Section 5(f) hereof.
Upon such execution and delivery, from and after the effective date specified in
the Assignment, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to this Agreement, have the rights and obligations of a Liquidity Provider
hereunder and (y) the Liquidity Provider which is the assignor thereunder shall,
to the extent that rights and obligations hereunder have been assigned by it
pursuant to this Agreement, relinquish its rights (other than the right to
receive payments which accrued in favor of such Liquidity Provider pursuant to
Sections 3 and 4 hereof prior to such assignment) and be released from its
obligations under this Agreement, except for the obligations in Section 12(i)
hereof.
(c) Upon receipt by the Liquidity Agent and the Securitization Company
Agent of an Assignment executed by an assigning Liquidity Provider and by an
assignee who is a Permitted Assignee and the satisfaction of the other
conditions set forth in this Section 9, the Liquidity Agent and the
Securitization Company Agent shall accept such Assignment and give prompt notice
thereof to CRC.
10. Amendments, Waivers and Other Actions by the Series
---------------------------------------------------
Representative and the Liquidity Agent. The Series Representative and the
- --------------------------------------
Liquidity Agent reserve the right (subject to the next sentence), to exercise
any rights and remedies available to the Series Representative and the Liquidity
Agent under the Transaction Documents or pursuant to applicable law, and also to
agree to any amendment, modification or waiver of any Transaction Document or
any action by any party to any Transaction Document, to the extent such
Transaction Documents provide for, or require, the Series Representative's
agreement or consent (in its capacity as the Series Representative) or the
Liquidity Agent's agreement or consent (in its capacity as Liquidity Agent) to
such amendment, modification, waiver or action. Notwithstanding the foregoing,
the Series Representative and the Liquidity Agent agree for the benefit of the
Liquidity Providers that they shall not, subject to the terms of the applicable
Transaction Document, without the prior written consent of each of the Liquidity
Providers,
(i) reduce the amount of Interest that is payable on account of
the Certificate or extend the dates on which such interest is payable, or
(ii) reduce any fees payable to the Series Representative or CRC
which relate to payments to Liquidity Providers or extend the dates on
which such fees are payable, or
(iii) increase the dollar amount of any Liquidity Provider's
Liquidity Commitment, or
16
<PAGE>
(iv) modify any interest protection or indemnity provision in the
Certificate Purchase Agreement which expressly inures to the Liquidity
Providers, or
(v) modify the definitions of Dilution Ratio and/or Dilution
Reserve.
(vi) consent to the initial Purchase of Receivables from Canadian
Sellers pursuant to Section 3.01(b) of the Purchase Agreement.
Furthermore, notwithstanding the foregoing, the Series Representative agrees for
the benefit of the Liquidity Providers that it shall not, subject to the terms
of the applicable Transaction Document, without the prior written consent of the
Majority Liquidity Providers (x) modify the following definitions: Average
Default Ratio, Bank Rate, Certificate Rate, Commingling Reserve, Default Ratio,
Defaulted Receivable, Diluted Receivable, Dilution Horizon Ratio, Dilution
Volatility Ratio, Floating Allocation Percentage, Loss and Dilution Percentage,
Loss and Dilution Reserve, Loss Horizon Ratio, Loss Reserve Percentage, Margin,
Minimum Balance, Servicing Fee Reserve, Stated Amount, Yield Amount and Yield
Reserve or (y) deliver a Termination Notice pursuant to Section 10.01 of the
Pooling and Servicing Agreement in the event of a Servicer Default under Section
10.01(v) thereunder.
11. Purchase Termination Date; Extension of Purchase Termination
------------------------------------------------------------
Date. (a) Each Liquidity Provider's Liquidity Commitment under this Agreement
- ----
shall expire at the close of business on the date which is 364 days after the
date hereof or the date set forth in the applicable Assignment (such date or any
extension of such date pursuant to this Section 11 being the "Purchase
--------
Termination Date"); provided, however, if CRC desires the Purchase Termination
- ---------------- -------- -------
Date to be extended, it shall so notify the Securitization Company Agent and
the Liquidity Agent in writing as least 90 days prior to the Purchase
Termination Date then in effect. The Liquidity Agent shall promptly forward
copies of such notice to each such Liquidity Provider. Each Liquidity Provider
may, in its sole discretion, by written notice to the Liquidity Agent and the
Securitization Company Agent on or before the date specified in such notice
(which date shall be no less than 60 days prior to the Purchase Termination
Date), offer to extend such Purchase Termination Date for the specified period
or decline to extend such Purchase Termination Date. If any Liquidity Provider
shall not notify the Securitization Company Agent and the Liquidity Agent of the
action it wishes to take prior to the date specified in such notice, it shall be
deemed to have declined to extend such Purchase Termination Date. If any
Liquidity Provider shall have offered to extend the Purchase Termination Date,
then the Purchase Termination Date shall be so extended.
(b) If a Liquidity Provider declines, or is deemed to decline, to
extend the Purchase Termination Date and such Liquidity Provider's rights and
obligations hereunder have not been assigned to a Permitted Assignee pursuant to
Section 9 hereof or such Liquidity Provider has not purchased an Ownership
Interest or Participation Interest pursuant to Section 2(a) on or before such
Liquidity Provider's Purchase Termination Date, the Liquidity Agent shall notify
each Rating Agency and with the consent of all Liquidity Providers or each
affected
17
<PAGE>
Liquidity Provider, as the case may be, proportionately increase each such
Liquidity Provider's Maximum Liquidity Commitment.
12. Miscellaneous. (a) Amendments, Etc. No amendment or waiver of any
------------- ---------------
provision of this Agreement, nor consent to any departure by CRC therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Majority Liquidity Providers and CRC, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by all the Liquidity Providers and CRC, amend
Sections 2(d), 3 or 4 hereof or amend the formula for calculating the Purchase
Price set forth in the definition thereof; and provided, further, that no
-------- -------
amendment, waiver or consent shall affect the rights or duties of the
Securitization Company Agent, the Series Representative or the Liquidity Agent,
as the case may be under this Agreement unless the same is in writing and signed
by the Securitization Company Agent, the Series Representative or the Liquidity
Agent, as the case may be in addition to the other parties required above to
take such action. CRC shall provide each Rating Agency with a copy of each
amendment, waiver or consent to this Agreement.
(b) Notices, Etc. All Notices provided for hereunder shall, unless
------------
otherwise stated herein, be in writing and shall be deemed to have been duly
given if personally delivered at, mailed by registered mail, return receipt
requested, or sent by facsimile transmission:
(i) in the case of the Liquidity Agent, to
Banque Paribas, New York Branch
787 Seventh Avenue
New York, New York 10019
Attention: Ms. Helene E. Penido
Facsimile No.: 212-841-2275
(ii) in the case of CRC, to
Corporate Receivables Corporation
450 Mamaroneck Avenue
Harrison, New York 10528
Attention: Jorge Ferreira
Facsimile No.: (914) 899-7890;
18
<PAGE>
(iii) in the case of the Trustee, to
Norwest Bank Colorado, National Association
1740 Broadway
Denver, Colorado 80274-8693
Attention: Corporate Trust
Facsimile No.: 303-863-5645
(iv) in the case of the Securitization Company Agent, to
Citicorp North America, Inc.
399 Park Avenue
New York, New York 10043
Attention: Vice President - U.S. Securitization
Facsimile No.: (212) 758-7245; and
(v) in the case of any Liquidity Provider, at its address
specified in the Assignment pursuant to which it became a Liquidity
Provider; and
(vi) as to each party, at such other address or facsimile number
as shall be designated by such party in a written notice to each other
party.
(c) Costs and Expenses of the Liquidity Agent. Each Liquidity
-----------------------------------------
Provider will on demand reimburse the Liquidity Agent its Percentage of any and
all reasonable costs and expenses (including, without limitation, reasonable
fees and disbursements of counsel), which may be incurred by the Liquidity Agent
in connection with administering or enforcing rights under this Agreement.
(d) Compensation of CRC. The Liquidity Agent will pay the fees to CRC
-------------------
set forth in the fee letter between the Liquidity Agent and the Securitization
Company Agent dated as of the date hereof.
(e) Liquidity Agent, Securitization Company Agent, the Trustee and
--------------------------------------------------------------
their Affiliates. (i) The Liquidity Agent, the Securitization Company Agent,
- ----------------
the Trustee and their respective Affiliates may accept deposits from, lend money
or otherwise extend credit to, act as trustee under indentures of, and generally
engage in any kind of business with, CRC, the Seller, the Servicer and any
Affiliate of CRC, the Seller or the Servicer and any Person who may do business
with or own securities of CRC, the Seller, the Servicer or any Affiliate of CRC,
the Seller or the Servicer, all as though this Agreement had not been entered
into and without any duty to account therefor to any Liquidity Provider.
(ii) Each Liquidity Provider acknowledges that Citicorp North
America, Inc. acts (i) as administrator and agent for CRC and in such capacity
acts and may
19
<PAGE>
continue to act on behalf of CRC in connection with CRC's business and (ii)
as the agent for CRC and the other Series 1996-1 Certificateholders under the
Series 1996-1 Supplement. Banque Paribas, New York Branch in its capacity as
the Liquidity Agent shall not, by virtue of its acting in any such other
capacities be deemed to have duties or responsibilities hereunder or be held to
a standard of care in connection with the performance of its duties as the
Liquidity Agent other than as expressly provided in this Agreement. Banque
Paribas, New York Branch may act as the Liquidity Agent without regard to and
without additional duties or liabilities arising from its role as administrator
or agent or arising from its acting in any other capacity.
(f) Binding Effect. This Agreement shall become effective when it
--------------
shall have been executed and delivered by each of the parties hereto and
thereafter shall be binding upon and inure to the benefit of CRC, the Agent, the
Series Representative, the Liquidity Agent and each Liquidity Provider and their
respective successors and assigns.
(g) Taxes. Any taxes due and payable on any payments to be made to
-----
any Liquidity Provider hereunder shall be such Liquidity Provider's sole
responsibility. Each Liquidity Provider warrants that it is not subject to any
taxes, charges, levies or withholdings with respect to payments under this
Agreement that are imposed by means of withholding by any applicable taxing
authority ("Withholding Tax"). Each Liquidity Provider agrees to provide the
---------------
Securitization Company Agent, from time to time upon the Securitization Company
Agent's request, completed and signed copies of any documents that may be
required by an applicable taxing authority to certify such Liquidity Provider's
exemption from Withholding Tax with respect to payments to be made to such
Liquidity Provider under this Agreement; and each Liquidity Provider agrees to
hold the Securitization Company Agent harmless from any Withholding Tax imposed
due to such Liquidity Provider's failure to establish that it is not subject to
Withholding Tax.
(h) Distributions. Notwithstanding any other provision to the
-------------
contrary contained herein, CRC's obligations hereunder to pay fees, interest and
other amounts pursuant to Sections 4 and 12(d) or distributions pursuant to
Section 3 shall be payable by CRC solely from funds paid to CRC under and
pursuant to the Certificate Purchase Agreement or the Series 1996-1 Supplement.
Any amount which CRC does not pay pursuant to the operation of the preceding
sentence shall not constitute a claim as defined in Section 101(5) of the
Bankruptcy Code against CRC for any such insufficiency.
(i) No Proceedings. Each Liquidity Provider, the Series
--------------
Representative and the Liquidity Agent hereby agrees that it shall not institute
against, or join any other person in instituting against, CRC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law, for one year
and a day after the latest maturing Note issued by CRC is paid. This Section
12(i) shall survive termination of this Agreement.
20
<PAGE>
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
-------------
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO
THE CONFLICT OF LAWS PRINCIPLES THEREOF).
(k) Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.
(l) WAIVER OF JURY TRIAL. EACH OF CRC, THE LIQUIDITY AGENT, THE
--------------------
SECURITIZATION COMPANY AGENT AND EACH LIQUIDITY PROVIDER HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT, THE PURCHASES OR THE ACTIONS OF ANY LIQUIDITY PROVIDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
(m) Waiver of Setoff. All payments hereunder by any Liquidity
----------------
Provider to CRC shall be made without setoff, counterclaim or other defense and
each Liquidity Provider hereby waives any and all of its rights to assert any
right of setoff, counterclaim or other defense to the making of a payment due
hereunder to CRC.
[Signature Pages to Follow]
21
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
LIQUIDITY AGENT: BANQUE PARIBAS, NEW YORK BRANCH
By: /s/ Bruce Altman
____________________________
Name: Bruce Altman
Title: Group Vice President
By: /s/ Victor S. Brown
____________________________
Name: Victor S. Brown
Title: Assistant Vice President
SECURITIZATION COMPANY
AGENT: CITICORP NORTH AMERICA, INC.
By: /s/ David Duncan
___________________________
Name: David Duncan
Title: Vice President
TRUSTEE: NORWEST BANK COLORADO, NATIONAL ASSOCIATION
By:___________________________
Name:
Title:
22
<PAGE>
ISSUER: CORPORATE RECEIVABLES CORPORATION
By: Citicorp North America, Inc.,
as Attorney-in-Fact
By: /s/ David Duncan
____________________________
Name: David Duncan
Title: Vice President
LIQUIDITY PROVIDERS: BANQUE PARIBAS, NEW YORK BRANCH
By: /s/ Bruce Altman
____________________________
Name: Bruce Altman
Title: Group Vice President
By: /s/ Victor S. Brown
____________________________
Name: Victor S. Brown
Title: Assistant Vice President
Liquidity Provider Percentage: 20%
Maximum Liquidity
Commitment: $20,000,000.00
Address:
The Equitable Tower
787 Seventh Avenue
New York, NY 10019
Attention:
Facsimile:
23
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
LIQUIDITY AGENT: BANQUE PARIBAS, NEW YORK BRANCH
By:____________________________
Name:
Title:
By:____________________________
Name:
Title:
SECURITIZATION COMPANY
AGENT: CITICORP NORTH AMERICA, INC.
By:____________________________
Name:
Title:
TRUSTEE: NORWEST BANK COLORADO, NATIONAL
ASSOCIATION
By: /s/ Leigh M. Lutz
____________________________
Name: Leigh M. Lutz
Title: Vice President
24
<PAGE>
BANK OF AMERICA ILLINOIS
By: /s/ Erle R.L. Archer
____________________________
Name: Erle R.L. Archer
Title: Attorney-in-Fact
Liquidity Provider Percentage: 20%
Maximum Liquidity
Commitment: $20,000,000.00
Address:
231 S. Lacily Street
Chicago, IL 60697
Attention:
Facsimile:
THE BANK OF NEW YORK
By: /s/ Robert Louk
____________________________
Name: Robert Louk
Title: Vice President
Liquidity Provider Percentage: 12.5%
Maximum Liquidity
Commitment: $12,500,000.00
Address:
10990 Willshire Blvd., Suite 1125
Los Angeles, CA 90024
Attention:
Facsimile:
25
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ A.S. Norsworthy
____________________________
Name: A.S. Norsworthy
Title: Sr. Team Leader-Loan Operations
Liquidity Provider Percentage: 8.75%
Maximum Liquidity
Commitment: $8,750,000.00
Address:
600 Peachtree Street, N.E., Suite 2700
Atlanta, GA 30308
Attention:
Facsimile:
GE CAPITAL CORPORATION
By: /s/ John Hanley
____________________________
Name: John Hanley
Title: Vice President
Liquidity Provider Percentage: 5%
Maximum Liquidity
Commitment: $5,000,000.00
Address:
One Lincoln Center,
5400 LBJ Freeway, Suite 1280
Dallas, TX 75240
Attention:
Facsimile:
26
<PAGE>
NATIONSBANK OF TEXAS, N.A.
By:____________________________
Name:
Title:
Liquidity Provider Percentage: 5%
Maximum Liquidity
Commitment: $5,000,000.00
Address:
901 Main Street, 67th Floor
Dallas, TX 75283-1000
Attention:
Facsimile:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
By: /s/ Alan R. Thometz
____________________________
Name: Alan R. Thometz
Title: Vice President
Liquidity Provider Percentage: 20%
Maximum Liquidity
Commitment: $20,000,000.00
Address:
Sixth and Marquette
Minneapolis, MN 55479
Attention:
Facsimile:
27
<PAGE>
SOCIETE GENERALE
By: /s/ Richard A. Erbert
____________________________
Name: Richard A. Erbert
Title: Vice President
Liquidity Provider Percentage:8.75%
Maximum Liquidity
Commitment: $8,750,000.00
Address:
2001 Ross Avenue
Dallas, Texas 75201
Attention: Loan Operations
Facsimile: (214) 754-0171
28
<PAGE>
Exhibit A
Assignment of Liquidity Commitment
with respect to
Series 1996-1 Asset Purchase Agreement
Dated as of __________, 19__
Section 1.
- ---------
Percentage Assigned: _______%
Assignor's remaining Percentage: _______%
Section 2.
- ---------
Assignee's Maximum Liquidity Commitment: $__________
Assignor's remaining Maximum Liquidity
Commitment: $__________
Section 3.
- ---------
Effective Date of this Assignment: __________, 19__
Purchase Termination Date of assigned
Liquidity Commitment: __________, 19__
Section 4.
- ---------
Standard & Poor's and/or Moody's rating
of Assignee's Short-Term Debt __________
Upon execution and delivery of this Assignment by Assignor and
Assignee and acceptance by Citicorp North America, Inc., as Securitization
Company Agent and Banque Paribas, New York Branch, as Liquidity Agent and
recording of this Assignment by Banque Paribas, New York Branch, as Liquidity
Agent and Securitization Company Agent, from and after the effective date
specified above, Assignee shall become a party to, and have the rights and
obligations of a Liquidity Provider under, the Series 1996-1 Asset Purchase
Agreement dated as of November 13, 1996, as such document may later be amended,
modified or supplemented, among the Liquidity Providers referred to therein,
Banque Paribas, New York Branch, as Liquidity Agent, Citicorp North America,
Inc., as Securitization Company Agent, Norwest Bank Colorado, National
Association, as Trustee and Corporate Receivables Corporation.
A-1
<PAGE>
Each of the Assignor and Assignee agrees that it shall not institute
against, or join any other person in instituting against, CRC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding or other
proceedings under any federal or state bankruptcy or similar law, for one year
and a day after the latest maturing Note issued by CRC is paid.
ASSIGNOR: [NAME OF ASSIGNOR]
By:____________________________
Name:
Title:
ASSIGNEE: [NAME OF ASSIGNEE]
By:____________________________
Name:
Title:
Address:
_____________________
_____________________
_____________________
Attention: _________________
A-2
<PAGE>
Agreed and accepted as of the date
first written above:
CITICORP NORTH AMERICA, INC.,
as Securitization Company Agent
By:_________________________
Name:
Title:
BANQUE PARIBAS, NEW YORK
BRANCH, as Liquidity Agent
By:_________________________
Name:
Title:
CORPORATE RECEIVABLES CORPORATION
By: Citicorp North America, Inc.,
as Attorney-In-Fact
By:_________________________
Name:
Title:
A-3
<PAGE>
EXHIBIT 10.45
================================================================================
PARTICIPATION AGREEMENT
dated as of November 15, 1996
among
MAIL-WELL I CORPORATION
as Lessee and Guarantor,
CERTAIN SUBSIDIARIES
OF MAIL-WELL I CORPORATION,
as Subsidiary Guarantors
PARIBAS PROPERTIES, INC.,
as Lessor
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Equity Lenders
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN,
as Financing Lenders
and
BANQUE PARIBAS
as Agent for the Financing Lenders and the Equity Lenders.
____________________________________________
Lease Financing of
Certain Envelope and Commercial Printing Equipment
Owned by Mail-Well I Corporation and Its Subsidiaries
================================================================================
<PAGE>
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----
<S> <C> <C>
ARTICLE I - DEFINITIONS; INTERPRETATION.................................................2
ARTICLE II - EFFECTIVE DATE.............................................................2
SECTION 2.1. Date..................................................2
(a) Participation Agreement.................................2
(b) Master Lease............................................2
(c) Loan Agreement..........................................2
(d) Guaranty................................................2
(e) Assignment of Lease and Rent............................2
(g) Intercreditor Agreement.................................2
(h) Security Documents......................................2
(i) Fees....................................................3
(j) Certain Transaction Expenses............................3
SECTION 2.2. Effective Date..........................................3
ARTICLE III - FUNDING OF ADVANCES.......................................................3
SECTION 3.1. Lessor Commitment.......................................3
SECTION 3.2. Equity Lenders' Commitments.............................3
SECTION 3.3. Financing Lenders' Commitments..........................3
SECTION 3.4. Procedures for Advances.................................3
ARTICLE IV - INTEREST; APPLICATION OF CERTAIN PREPAYMENTS...............................4
SECTION 4.1. Interest on Loans.......................................4
SECTION 4.2. Certain Prepayments of the Loans........................4
ARTICLE V - CERTAIN INTENTIONS OF THE PARTIES...........................................4
SECTION 5.1. Nature of Transaction...................................4
SECTION 5.2. Amounts Due Under the Master Lease......................5
ARTICLE VI - CONDITIONS PRECEDENT TO ADVANCES ANDEFFECTIVE DATE.........................5
SECTION 6.1. Conditions Precedent to the Effective Date..............5
(a) Lessee's Resolutions and Incumbency Certificate, etc....5
(b) Guarantors' Resolutions and Incumbency Certificate......6
(c) Lessor's Resolutions and Incumbency Certificate, etc....6
(d) Notes...................................................6
(e) Opinion of Counsel to the Lessee........................6
(f) Opinion of Counsel to the Lessor........................6
(g) Funding Request.........................................6
(h) Fees....................................................7
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<C> <S> <C>
(i) Representation and Warranties.......................... 7
(j) Litigation............................................. 7
SECTION 6.2. Conditions to the Purchase of the Equipment........... 7
(a) Impositions............................................ 7
(b) Appraisal.............................................. 7
(c) Governmental Approvals................................. 7
(d) Litigation............................................. 8
(e) Requirements of Law.................................... 8
(f) Responsible Officer's Certificate...................... 8
(g) Evidence of Equipment Insurance........................ 8
(h) No Material Adverse Change............................. 8
(i) Bill of Sale........................................... 8
(j) Financing Statements................................... 9
(k) Title Representations.................................. 9
(l) No Default............................................. 9
SECTION 6.3. Substitution of Equipment............................. 9
(a) Appraisal.............................................. 9
(b) Type and Location of Substituted Equipment............. 9
(c) Satisfaction of Conditions.............................10
(d) Required Documentation.................................10
(e) Expenses...............................................10
ARTICLE VII - REPRESENTATIONS..........................................................10
SECTION 7.1. Representations of the Guarantors.....................10
(a) Organization, etc......................................10
(b) Due Authorization, Non-Contravention, etc..............11
(c) Government Approval, Regulation, etc...................11
(d) Validity, etc..........................................11
(e) Equipment..............................................12
(f) Bill of Sale...........................................12
(g) Use of Loans and Proceeds..............................12
(h) Representations and Warranties.........................12
(i) Title; Liens...........................................12
(j) Advances...............................................12
(k) Mail-Well Credit Agreement.............................12
SECTION 7.2. Representations of the Lessor.........................12
(a) Due Organization, etc..................................13
(b) Authorization; No Conflict.............................13
(c) Enforceability, etc....................................13
(d) Assignment.............................................13
(e) Defaults...............................................13
(f) Use of Proceeds........................................13
(g) Chief Place of Business................................14
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE VIII - PAYMENT OF CERTAIN EXPENSES.............................................14
SECTION 8.1. Transaction Expenses...................................14
SECTION 8.2. Brokers' Fees and Stamp Taxes..........................14
SECTION 8.3. Loan Agreement and Related Obligations.................14
ARTICLE IX - AFFIRMATIVE AND NEGATIVE COVENANTS........................................15
SECTION 9.1. Mail-Well Credit Agreement.............................15
ARTICLE X - LESSEE DIRECTIONS; CERTAIN RIGHTS OF LESSEE................................15
SECTION 10.1. Lessee Directions......................................15
ARTICLE XI - YIELD PROTECTION AND ILLEGALITY...........................................15
SECTION 11.1. Additional Costs.......................................15
SECTION 11.2. Limitation on Types of Loans...........................17
SECTION 11.3. Illegality.............................................17
SECTION 11.4. Treatment of Affected Loans............................17
SECTION 11.5. Compensation...........................................18
SECTION 11.6. Capital Adequacy.......................................18
SECTION 11.7. Additional Interest on Eurodollar Loans................19
ARTICLE XII - INDEMNIFICATION..........................................................19
SECTION 12.1. General Indemnification................................19
SECTION 12.2. End of Term Indemnity..................................21
SECTION 12.3. Environmental Indemnity................................22
SECTION 12.4. Proceedings in Respect of Claims.......................23
SECTION 12.5. General Tax Indemnity..................................24
SECTION 12.6 Yield Protection and Illegality........................26
SECTION 12.7. Indemnity Payments in Addition to Lease Obligations....26
ARTICLE XIII - MISCELLANEOUS...........................................................27
SECTION 13.1. Survival of Agreements.................................27
SECTION 13.2. Controlling Agreement..................................27
SECTION 13.3. Notices................................................28
SECTION 13.4. Counterparts...........................................28
SECTION 13.5. Amendments.............................................28
SECTION 13.6. Headings, etc..........................................29
SECTION 13.7. Parties in Interest....................................29
SECTION 13.8. Successors and Assigns.................................30
SECTION 13.9. GOVERNING LAW..........................................33
SECTION 13.10. Severability...........................................33
SECTION 13.11. Liability Limited......................................34
SECTION 13.12. Further Assurances.....................................34
</TABLE>
iii
<PAGE>
SECTION 13.13. Submission to Jurisdiction............................ 34
SECTION 13.14. Setoff................................................ 35
SECTION 13.15. WAIVER OF JURY TRIAL.................................. 35
SECTION 13.16. Confidentiality....................................... 35
SECTION 13.17. Approvals and Consent................................. 36
iv
<PAGE>
SCHEDULES
SCHEDULE I Commitments
SCHEDULE II Disclosure of Certain Information
Item A - Subsidiaries of Lessee
SCHEDULE III Post-Closing Matters
SCHEDULE IV Notice Information, Wire Instructions, Funding Offices, and LIBOR
Office
EXHIBITS
EXHIBIT A Description of the Equipment
EXHIBIT B Form of Funding Request
EXHIBIT C Form of Responsible Officer's Certificate
EXHIBIT D Form of Bill of Sale
EXHIBIT E Form of Assignment and Acceptance
v
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT (this "Participation Agreement"), dated as of
-----------------------
November 15, 1996, is entered into by and among MAIL-WELL I CORPORATION, a
Delaware corporation ("Lessee"), as the Lessee and a Guarantor (in its capacity
------
as the Lessee, being called the "Lessee"; in its capacity as a Guarantor, being
------
called a "Guarantor"), the subsidiaries of the Lessee listed on the signature
---------
page hereof (collectively, the "Subsidiary Guarantors" ); PARIBAS PROPERTIES,
---------------------
INC., a Delaware corporation, as Lessor (the "Lessor"); the financial
------
institution or institutions who are parties hereto as Equity Lenders (together
with their respective permitted successors and assigns, the "Equity Lenders");
--------------
the various financial institutions who are parties hereto as Financing Lenders
(together with their respective permitted successors and assigns, the "Financing
---------
Lenders") under the Loan Agreement (the Equity Lenders and the Financing Lenders
- -------
being sometimes collectively called the "Lenders"); and BANQUE PARIBAS, as Agent
-------
for the Financing Lenders and the Equity Lenders (in such capacity, the
"Agent").
-----
W I T N E S S E T H:
- - - - - - - - - -
A. The Lessee or a Subsidiary Guarantor owns each item of the Equipment
described on Exhibit "A", attached to the Master Lease.
-----------
B. The Lessor and the Lessee have agreed that the Lessor will purchase
from the Lessee and certain of the Subsidiary Guarantors which have an interest
in the Equipment all of the Equipment and will lease the Equipment to the Lessee
pursuant to the terms of the Master Lease.
C. The Equity Lenders are willing to provide a portion of the financing
for the Equipment in an aggregate amount not to exceed $5,500,000.00, and the
Financing Lenders are willing to provide the remaining portion of the financing
for the Equipment in an aggregate amount not to exceed $24,500,000.00,
aggregating a total principal amount not to exceed $30,000,000.00 (collectively,
the "Loans"). The Loans to be made by the Financing Lenders (the "Financing
----- ---------
Loans") will be unconditionally guaranteed by the Lessee, Holdings and the
- -----
Subsidiary Guarantors (collectively, the "Guarantors").
----------
D. For the purpose of securing such financing arrangement, (i) the Equity
Lenders will have the benefit of a first and prior security interest in and to
the Lessor's right, title and interest in the Equipment, (ii) the Financing
Lenders will have the benefit of (x) the Guaranty from the Guarantors, which
Guaranty will be secured on a pari passu basis by all of the Collateral provided
---- -----
in the Security Documents, pursuant to the terms of the Intercreditor Agreement,
and (y) subject to the prior security interest of the Equity Lenders, a second
subordinated security interest on the Lessor's right, title and interest in the
Equipment, and (iii) all Lenders will have the benefit of an assignment from the
Lessor of all of the Lessor's rights against the Lessee under the Master Lease.
<PAGE>
In consideration of the mutual agreements contained in this Participation
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Unless the context shall otherwise require, capitalized terms used and not
defined herein shall have the meanings assigned thereto in Appendix A hereto for
----------
all purposes hereof; and the rules of interpretation set forth in Appendix A
----------
hereto shall apply to this Participation Agreement.
ARTICLE II
EFFECTIVE DATE
SECTION 2.1 Date. On or before the Effective Date the following
----
conditions precedent shall have been satisfied:
(a) Participation Agreement. This Participation Agreement shall have
-----------------------
been duly authorized, executed and delivered by the parties hereto.
(b) Master Lease. The Master Lease shall have been duly authorized,
------------
executed and delivered by the parties thereto.
(c) Loan Agreement. The Loan Agreement shall have been duly
--------------
authorized, executed and delivered by the parties thereto.
(d) Guaranty. The Guaranty shall have been duly authorized,
--------
delivered by the Guarantors.
(e) Assignment of Lease and Rent. The Assignment of Lease and Rent
----------------------------
shall have been duly authorized, executed and delivered by the Lessor, as
assignor, to the Agent for the benefit of the Financing Lenders, as
assignee, and the Assignment of Lease and Rent shall have been consented to
and acknowledged by the Lessee.
(f) Lessor Security Agreements. The Lessor First Security
--------------------------
Agreement and the Lessor Second Security Agreement shall have been duly
authorized, executed and delivered by the Lessor.
2
<PAGE>
(g) Intercreditor Agreement. The Agent and each Financing Lender
-----------------------
shall have received executed counterparts of the Intercreditor Agreement,
duly authorized, executed and delivered by the parties thereto.
(h) Security Documents. The Agent and each Lender shall have
------------------
received executed counterparts of the Security Documents, duly authorized,
executed and delivered by the parties thereto.
(i) Fees. The Agent and the Lessor shall have received all fees
----
due and payable pursuant to this Participation Agreement and the Fee
Letters.
(j) Certain Transaction Expenses. Counsel for each of the Lessor
----------------------------
and the Agent shall have received, to the extent then invoiced, payment in
full in cash of all Transaction Expenses payable to such counsel pursuant
to Section 8.1 hereof.
--------------
SECTION 2.2 Effective Date. The closing date with respect to the
--------------
acquisition of the Equipment shall occur on the Effective Date.
ARTICLE III
FUNDING OF ADVANCES
SECTION 3.1 Lessor Commitment. Subject to the conditions and terms
-----------------
hereof, the Lessor shall take the following actions:
(a) the Lessor shall purchase the Equipment (using funds provided by
the Equity Lenders and the Financing Lenders); and
(b) the Lessor shall lease the Equipment to the Lessee under the
Master Lease.
Notwithstanding any other provision hereof, the Lessor shall not be obligated to
purchase the Equipment if the aggregate Purchase Price would exceed the
Commitments.
SECTION 3.2 Equity Lenders' Commitments. Subject to the conditions and
---------------------------
terms hereof, each Equity Lender shall make an Advance to the Lessor at the
request of the Lessee on the Effective Date in an amount (each, an "Equity
------
Loan") in immediately available funds equal to such Equity Lender's Commitment
Percentage of the amount of the total Equity Loans. No amounts paid or prepaid
with respect to any Equity Loan may be readvanced.
3
<PAGE>
SECTION 3.3 Financing Lenders' Commitments. Subject to the conditions
------------------------------
and terms hereof, each Financing Lender shall make an Advance to the Lessor at
the request of the Lessee on the Effective Date in an amount (each, a "Financing
---------
Loan") in immediately available funds equal to such Financing Lender's
- ----
Commitment Percentage of the amount of the total Financing Loans. No amounts
paid or prepaid with respect to any Financing Loan may be readvanced.
SECTION 3.4 Procedures for Advances. Concurrently herewith, the Lessee
-----------------------
has given to the Lessor and the Agent prior written notice pursuant to a Funding
Request substantially in the form of Exhibit B (a "Funding Request"), specifying
--------- ---------------
the Effective Date and the amount of each Advance requested. The payment of the
Purchase Price by the Lessor to the Lessee shall be a single payment made with
respect to all of the Equipment from the Advances made by the Financing Lenders
and the Equity Lenders, and such payment shall be made on the Effective Date in
immediately available funds by wire transfer to the account of the Lessee
specified on Schedule IV or to such other account(s) as may be specified by the
-----------
Lessee in a written notice to the Lessor.
ARTICLE IV
INTEREST; APPLICATION OF CERTAIN PREPAYMENTS
SECTION 4.1 Interest on Loans.
-----------------
(a) Each Loan shall accrue interest computed and payable in
accordance with the terms of the Loan Agreement.
(b) The Lessor shall distribute to the Agent the Equity Lender Basic
Rent and Financing Lender Basic Rent, together with all other amounts due
with respect to the Loans which are collected from the Lessee under the
Master Lease from time to time.
SECTION 4.2 Certain Prepayments of the Loans. In the event that the
--------------------------------
Lessee pays the Equipment Balance for any Equipment to the Agent in connection
with the Lessee's purchase of an item of Equipment in accordance with Section
15.1 of the Master Lease as the result of a Significant Casualty or
Condemnation, the Agent will disburse the amounts realized with respect thereto
in accordance with Section 4.7(b) of the Loan Agreement.
4
<PAGE>
ARTICLE V
CERTAIN INTENTIONS OF THE PARTIES
SECTION 5.1 Nature of Transaction.
---------------------
(a) The parties hereto intend that (i) for financial accounting
purposes with respect to the Lessee, the Lessor will be treated as the
owner and the lessor of the Equipment and the Lessee will be treated as the
lessee of the Equipment and (ii) for federal and all state and other tax
purposes, and for bankruptcy purposes, (x) the Master Lease will be treated
as a financing arrangement, (y) the Equity Lenders and the Financing
Lenders will be deemed to be lenders making loans to or for the benefit of
the Lessee in an amount equal to the sum of the original principal amount
of the Loans, which loans are secured by the Equipment and the other
Collateral provided in the Operative Documents, and (z) the Lessee will be
treated as the owner of the Equipment and will be entitled to all tax
benefits ordinarily available to an owner of equipment like the Equipment
for such tax purposes. NEVERTHELESS, THE LESSEE ACKNOWLEDGES AND AGREES
THAT NEITHER THE LESSOR, THE EQUITY LENDERS NOR ANY OF THE FINANCING
LENDERS HAS MADE ANY REPRESENTATIONS OR WARRANTIES TO THE LESSEE CONCERNING
THE TAX, ACCOUNTING OR LEGAL CHARACTERISTICS OF THE OPERATIVE DOCUMENTS AND
THAT THE LESSEE HAS OBTAINED AND RELIED UPON SUCH INDEPENDENT TAX,
ACCOUNTING AND LEGAL ADVICE CONCERNING THE OPERATIVE DOCUMENTS AS IT DEEMS
APPROPRIATE.
(b) Specifically, without limiting the generality of clause (a) of
----------
this Section 5.1, the parties hereto intend and agree that in the event of
-----------
any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute
of the United States of America or any State or Commonwealth thereof
affecting the Lessee, the Lessor, the Equity Lenders or the Financing
Lenders or any collection actions, the transactions evidenced by the
Operative Documents shall be regarded as loans made directly by the Equity
Lenders and the Financing Lenders as unrelated third party lenders of the
Lessee.
SECTION 5.2 Amounts Due Under the Master Lease. It is the intention of
----------------------------------
the Lessee, the Lessor, the Equity Lenders and the Financing Lenders that: (i)
the amount and timing of installments of Basic Rent due and payable from time to
time from the Lessee under the Master Lease shall be equal to the aggregate
payments due and payable as interest on the Loans on each Payment Date; (ii) if
the Lessee elects the Purchase Option or otherwise becomes obligated to purchase
any of the Equipment under the Master Lease, the Financing Loans, the Equity
Loans, all interest, and other Obligations of the Lessee and the Lessor owing
to the Lenders shall be paid in full by the Lessee, and the Lessor shall be paid
in full any other amounts owed by the Lessee;
5
<PAGE>
(iii) if the Lessee properly elects and consummates the Remarketing Option in
accordance with the Operative Documents, the Lessee shall only be required to
pay to the Lessor the proceeds of the sale of the Equipment, the Loan Balance of
the Financing Loans and any amounts due pursuant to Article XII hereof and
Article XX of the Master Lease (which aggregate amounts may be less than the
- -----------
Lease Balance) and other amounts, if any, payable under the Operative Documents;
and (iv) upon an Event of Default resulting in a mandatory purchase of the
Equipment by the Lessee under Section 18.3 of the Master Lease, the amounts then
due and payable by the Lessee under the Master Lease shall include all amounts
necessary to pay in full the Lease Balance, plus all other amounts then due from
the Lessee to the Lenders and the Lessor under the Operative Documents.
ARTICLE VI
CONDITIONS PRECEDENT TO
ADVANCES AND EFFECTIVE DATE
SECTION 6.1 Conditions Precedent to the Effective Date. The obligations
------------------------------------------
of the Lessor to acquire the Equipment on the Effective Date hereunder, and the
obligation of the Lenders to make any Loans on the Effective Date are subject to
each of the following conditions precedent:
(a) Lessee's Resolutions and Incumbency Certificate, etc. The Lessee
------------------------------------------------------
shall have delivered to the Lessor and the Agent (i) a certificate of its
Secretary or an Assistant Secretary attaching and certifying as to (A) the
resolutions of the Board of Directors or committee thereof duly authorizing
the execution, delivery and performance by it of each Operative Document to
which it is or will be a party, (B) its certificate of incorporation and
by-laws, and (C) the incumbency and signature of persons authorized to
execute and deliver on its behalf the Operative Documents to which it is a
party and (ii) a certificate of good standing with respect to it issued by
the Secretary of State of the State of Delaware dated as of a recent date.
(b) Guarantors' Resolutions and Incumbency Certificate. The Lessor
--------------------------------------------------
and the Agent shall have received (i) a certificate of the Secretary or an
Assistant Secretary of each Guarantor attaching and certifying as to (A)
the resolutions of its Board of Directors or committee thereof duly
authorizing the execution, delivery and performance by it of each Operative
Document to which it is or will be a party, (B) its certificate of
incorporation and by-laws, and (C) the incumbency and signature of persons
authorized to execute and deliver on its behalf the Operative Documents to
which it is a party and (ii) a certificate of good standing with respect to
it issued by the Secretary of State of the State of its incorporation dated
as of a recent date.
6
<PAGE>
(c) Lessor's Resolutions and Incumbency Certificate, etc. The Lessee
----------------------------------------------------
and the Agent shall have received a certificate of the Secretary or an
Assistant Secretary of the Lessor attaching and certifying as to (i) the
resolutions of the Board of Directors duly authorizing the execution,
delivery and performance by the Lessor of each Operative Document to which
it is or will be a party, (ii) its articles of incorporation, certified as
of a recent date by an appropriate officer of the Lessor, (iii) its by-laws
and (iv) the incumbency and signature of persons authorized to execute and
deliver on its behalf the Operative Documents to which it is a party.
(d) Notes. Each Lender shall have received its Note, dated the
-----
Effective Date and duly executed and delivered by the Lessor in accordance
with the Loan Agreement.
(e) Opinion of Counsel to the Lessee. The Lessor and the Agent shall
--------------------------------
have received an opinion, dated the Effective Date, from Bracewell &
Patterson, L.L.P., South Tower, Pennzoil Place, 711 Louisiana Street,
Houston, Texas 77002-2781, counsel to the Guarantors, in form and substance
reasonably acceptable to the Agent.
(f) Opinion of Counsel to the Lessor. The Agent and the Lessee shall
--------------------------------
have received an opinion, dated the Effective Date, from Jenkens &
Gilchrist, a Professional Corporation, Fountain Place, 1445 Ross Avenue,
Suite 3200, Dallas, Texas 75202-2799, counsel to the Lessor, in form and
substance acceptable to the Agent.
(g) Funding Request. Each of the Agent, the Lenders and the Lessor
---------------
shall have received a fully executed counterpart of the Funding Request,
executed by the Lessee, in accordance with Section 3.4 herein.
-----------
(h) Fees. All fees due and payable pursuant to this Agreement
----
(including, if then invoiced, all fees, costs and expenses due and payable
pursuant to Section 8.1 herein) shall have been paid.
-----------
(i) Representation and Warranties. On the Effective Date, the
-----------------------------
representations and warranties of each of the Lessee and the Lessor
contained herein and in each of the other Operative Documents shall be true
and correct in all material respects as though made on and as of such date,
except to the extent such representations or warranties relate solely to an
earlier date, in which case such representations and warranties shall have
been true and correct in all material respects on and as of such earlier
date.
(j) Litigation. On the Effective Date, there shall not be any
----------
actions, suits or proceedings pending or, to the knowledge of the Lessee
threatened with respect to the
7
<PAGE>
Lessee (i) that are reasonably likely to have a material adverse effect on the
Equipment or (ii) that question the validity of the Operative Documents or the
rights or remedies of the Lessor or the Lenders with respect to the Lessee or
such Equipment under the Operative Documents.
(k) Credit Agreements. The Credit Agreements and all documents to be
-----------------
executed in connection therewith shall have been executed and delivered by
all of the parties thereto, all amounts required to be funded thereunder as
of the Effective Date shall have been fully disbursed and no Event of
Default shall have occurred and be continuing under either of the Credit
Agreements.
SECTION 6.2 Conditions to the Purchase of the Equipment. The obligation
-------------------------------------------
of the Lessor to purchase the Equipment on the Effective Date and to pay the
Purchase Price payable for the Equipment on the Effective Date, and the
obligation of the Lenders to make the Loans on the Effective Date, are subject
to satisfaction or waiver of the following conditions precedent (it being
understood that the Lessor's obligations to acquire such Equipment shall not be
subject to the conditions precedent set forth in this Section 6.2 and Section
----------- -------
6.1 above to the extent such conditions are actions required of the Lessor):
- ---
(a) Impositions. All Impositions in connection with the execution,
-----------
delivery, recording, filing and registration of the Operative Documents
shall have been paid or provisions for such payment shall have been made by
the Lessee to the satisfaction of the Lessor and the Agent.
(b) Appraisal. On or prior to the Effective Date, the Lessor and the
---------
Agent shall have received an Appraisal of the Equipment, which Appraisal
shall show that, as of the Effective Date, the Fair Market Sales Value of
the Equipment is not less than 100% of the Purchase Price being paid for
the Equipment.
(c) Governmental Approvals. All necessary Governmental Actions
----------------------
required by any Requirement of Law or any Equipment Legal Requirements for
the purpose of authorizing the Lessor to acquire the Equipment shall have
been obtained or made and be in full force and effect.
(d) Litigation. No action or proceeding shall have been instituted,
----------
nor shall any action or proceeding be threatened, before any Governmental
Authority, nor shall any order, judgment or decree have been issued or
proposed to be issued by any Governmental Authority either (i) to set
aside, restrain, enjoin or prevent the full performance of this
Participation Agreement, any other Operative Document or any transaction
contemplated
8
<PAGE>
hereby or thereby, or (ii) which is reasonably likely to cause or create a
Material Adverse Effect on the Lessee or cause or create a material adverse
effect on the Equipment.
(e) Requirements of Law. In the reasonable opinion of the Lessor,
-------------------
the Agent and their respective counsel, the transactions contemplated by
the Operative Documents do not and will not violate in any material respect
any Requirement of Law and do not and will not subject the Lessor, the
Agent and their respective counsel to any adverse regulatory prohibitions
or constraints.
(f) Responsible Officer's Certificate. The Lessor and the Agent
---------------------------------
shall each have received a Responsible Officer's Certificate of the Lessee,
in substantially the form of Exhibit C attached hereto, dated as of the
---------
Effective Date, stating that (i) to such Responsible Officer's knowledge
each and every representation and warranty of any Obligor contained in each
Operative Document to which it is a party is true and correct in all
material respects on and as of the Effective Date; (ii) to such Responsible
Officer's knowledge no Default or Event of Default has occurred and is
continuing under any Operative Document to which any Obligor is a party
with respect to such Obligor; (iii) to such Responsible Officer's knowledge
each Operative Document to which any Obligor is a party is in full force
and effect with respect to such Obligor; and (iv) each Obligor has duly
performed and complied with all conditions contained herein or in any other
Operative Document required to be performed or complied with by it on or
prior to the Effective Date.
(g) Evidence of Equipment Insurance. The Lessor and the Agent
-------------------------------
shall have received evidence that the insurance maintained by the Lessee
with respect to such Equipment satisfies the requirements set forth in
Article XIII of the Master Lease, setting forth the respective coverage,
limits of liability, carrier, policy number and period of coverage.
(h) No Material Adverse Change. As of the Effective Date, there
--------------------------
shall not have occurred any material adverse change in the Equipment or in
the businesses or results of operations, or in the actual or prospective
financial or other condition of, the Lessee, the Subsidiary Guarantors and
their respective Subsidiaries, taken as a whole, from that set forth in the
financial statements submitted under Section 7.2 of the Mail-Well Credit
Agreement.
(i) Bill of Sale. On the Effective Date, the Lessor shall have
------------
received a Bill of Sale and Assignment ("Bill of Sale") with respect to the
------------
Equipment being purchased, conveying marketable title to such Equipment to
the Lessor and containing all customary seller's warranties free and clear
of all encumbrances whatsoever. The Bill of Sale shall
9
<PAGE>
be in the form of Exhibit D, attached hereto, duly executed by the Lessee,
---------
as the seller thereunder.
(j) Financing Statements. On or prior to the Effective Date, the
--------------------
Lessor and the Lessee shall have delivered to the Agent all Financing
Statements relating to the Equipment as the Agent may reasonably request in
order to protect the Lessor's interest under the Master Lease relating to
the Equipment to the extent the Master Lease constitutes a security
agreement and to protect the Agent's security interest in the Equipment and
other Collateral pursuant to the Operative Documents; and the Agent shall
have received evidence reasonably satisfactory to it that each of the
Financing Statements has been, or are being, recorded in a manner
sufficient to properly secure each of their interests therein.
(k) Title Representations. Title to the Equipment shall conform to
---------------------
the representations and warranties set forth in Section 7.1 below.
-----------
(l) No Default. There shall not have occurred and be continuing any
----------
Default or Event of Default under any of the Operative Documents, and no
Default or Event of Default under any of the Operative Documents will have
occurred after giving effect to the acquisition of the Equipment requested
by such Funding Request.
All documents and instruments required to be delivered on the Effective Date
shall be delivered at the offices of Jenkens & Gilchrist, a Professional
Corporation, Fountain Place, 1445 Ross Avenue, Suite 3200, Dallas, Texas 75202-
2799, Attention: William A. Thau, Esquire, or at such other location as may be
determined by the Lessor, the Agent and the Lessee.
SECTION 6.3 Substitution of Equipment. The Lessee shall have the right
-------------------------
from time to time to release items of the Equipment (the "Released Equipment")
------------------
and substitute items of other equipment the "Substituted Equipment") hereunder
---------------------
and under the other Operative Documents, subject in each case to the approval of
the Agent in its discretion, and subject further to the satisfaction of each of
the following conditions:
(a) Appraisal. The Agent shall have received an Appraisal of the
---------
Substituted Equipment which shows that, as of the effective date of the
proposed substitution, the Fair Market Sales Value of the Substituted
Equipment is not less than one hundred percent (100%) of the Purchase Price
allocated to the Released Equipment being released.
(b) Type and Location of Substituted Equipment. The Substituted
------------------------------------------
Equipment shall be of the same type as the Released Equipment, shall be in
first-class repair and condition, and shall have a useful life which is not
less than the remaining useful life of
10
<PAGE>
the Released Equipment. The Lessee may not substitute more than two (2)
items of Substituted Equipment for each item of Released Equipment. All
Substituted Equipment shall be located within the United States.
(c) Satisfaction of Conditions. The Substituted Equipment shall
--------------------------
satisfy and be in compliance with all provisions applicable to the Released
Equipment in the Operative Documents, including without limitation the
terms and conditions set forth herein.
(d) Required Documentation. The substitution of the Substituted
----------------------
Equipment shall be expressly subject to, and shall occur only upon, the
delivery to and approval by the Agent and the Agent's legal counsel of all
supplements and modifications to the Operative Documents and other
instruments and agreements as such counsel shall deem necessary or
appropriate for the purpose of effecting such substitution and
establishing, preserving and protecting all of the rights, interests, liens
and security interests of the Agent in and to the Equipment (exclusive of
the Released Equipment) and the Substituted Equipment under the Operative
Documents. Without limitation of the foregoing, the Lessee shall convey
good and marketable title to the Lessor free of all Liens and subject to
the security interest of the Lessor's First Security Agreement and the
Lessor's Second Security Agreement, such conveyance to be made by a bill of
sale in the form of the Bill of Sale.
(e) Expenses. All costs and expenses of whatever kind or character
--------
incurred by the Agent in connection with the substitution of the
Substituted Equipment, including without limitation the fees of the
Appraiser, the cost of obtaining an Environmental Certificate, the Agent's
legal fees, and all filing and recording fees and charges, shall be paid by
the Lessee.
ARTICLE VII
REPRESENTATIONS
SECTION 7.1 Representations of the Guarantors. Each of the Guarantors
---------------------------------
hereby represents and warrants to each Lender, the Lessor and the Agent as of
the date hereof and the Effective Date that:
(a) Organization, etc. Each Guarantor and its respective
------------------
Subsidiaries is a corporation (or a limited liability company, as
applicable) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its formation, and is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the
11
<PAGE>
nature of its business requires such qualification, except to the extent
that failure to so qualify to do business in such jurisdiction would not
have a Material Adverse Effect on the Guarantors taken as a whole. Each of
the Guarantors has full corporate power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into
and perform its obligations under this Participation Agreement and each
other Operative Document to which it is a party and to own and hold under
lease its Equipment and to conduct its business substantially as currently
conducted by it.
(b) Due Authorization, Non-Contravention, etc. The execution,
-----------------------------------------
delivery and performance by the Guarantors of this Participation Agreement
and each other Operative Document executed or to be executed by it are
within such Person's corporate powers, have been duly authorized by all
necessary corporate action, and do not
(i) contravene such Person's Organic Documents;
(ii) contravene any material contractual restriction
(including any restriction set forth in the Credit Agreements or the
other Credit Documents and any covenant relating to the incurrence of
Indebtedness, which restrictions the Guarantors hereby acknowledge are
material), law or governmental regulation or court decree or order
binding on or affecting the Guarantors; or
(iii) result in, or require the creation or imposition of, any
Lien (other than Lessor Liens) on any of the Guarantors' property
(including the Equipment), except for the Permitted Liens as defined
in the Mail-Well Credit Agreement.
(c) Government Approval, Regulation, etc. No authorization or
------------------------------------
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required for
the due execution, delivery or performance by the Lessee or any other
Obligors of this Participation Agreement, or any other Operative Document
to which it is a party, other than authorizations or approvals that have
been received and notices and filings that have been made. None of the
Guarantors nor any of their respective Subsidiaries is an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended.
(d) Validity, etc. This Participation Agreement constitutes and each
--------------
other Operative Document executed by the Lessee and the other Obligors
will, on the due execution and delivery thereof, constitute, the legal,
valid and binding obligations of such Person enforceable in accordance'
with their respective terms, and each Operative Document executed pursuant
hereto will, on the due execution and delivery thereof, be the legal, valid
and binding obligation of the Lessee or such other Obligor enforceable in
accordance with
12
<PAGE>
its terms, subject, in each case, as to enforceability, to bankruptcy,
insolvency, reorganization and other similar laws affecting enforcement of
creditor rights generally (insofar as any such law relates to the
bankruptcy, insolvency, reorganization or similar event of any Obligor)
and, as to the availability of specific performance or other injunctive
relief, the discretionary power of a court to deny such relief when damages
are considered an adequate remedy at law.
(e) Equipment. The Equipment complies in all material respects with
---------
all Equipment Legal Requirements and Insurance Requirements with respect to
which the failure to comply could reasonably be expected to have a Material
Adverse Effect.
(f) Bill of Sale. The Bill of Sale is in form and substance
------------
sufficient to convey to the Lessor good and marketable title to the
Equipment, subject to no liens or encumbrances whatsoever.
(g) Use of Loans and Proceeds. No part of any Advance will be used
-------------------------
directly or indirectly for the purpose of purchasing or carrying, or for
payment in full or in part of Indebtedness that was incurred for the
purposes of purchasing or carrying, any margin security as such term is
defined in Section 207.2 of Regulation G of the F.R.S. Board (12 C.F.R.,
Chapter II, Part 207).
(h) Representations and Warranties. The representations and
------------------------------
warranties of the Guarantors set forth in the Operative Documents are and
shall be true and correct on and as of the Effective Date. Each of the
Guarantors is in full compliance with its obligations under the Operative
Documents to which it is a party and there exists no Default or Event of
Default under the Master Lease, the Guaranty, or the Credit Agreements, or,
to the knowledge of any Guarantor, any other Operative Document. No Default
or Event of Default under the Master Lease, the Guaranty, the Credit
Agreements or, to the knowledge of the Guarantors, any other Operative
Document, will occur as a result of, or after giving effect to, the
Advances requested by the Funding Request on the Effective Date.
(i) Title; Liens. The Lessee has, and is conveying to the Lessor
------------
pursuant to the Bill of Sale, good and marketable title to all of the
Equipment, free and clear of all liens or other encumbrances whatsoever;
and has the full right, title and authority to enter into and deliver the
Bill of Sale, the Master Lease and all other Operative Documents. None of
the Guarantors has caused, permitted or suffered any Liens to be placed
against the Equipment except the Lessor Liens.
13
<PAGE>
(j) Advances. The total amount of the Advances requested for the
--------
payment of the Purchase Price payable by Lessor for the Equipment is not
greater than the Fair Market Sales Value of the Equipment.
(k) Mail-Well Credit Agreement. Each of the representations and
--------------------------
warranties of the Guarantors contained in Article VII of the Mail-Well
Credit Agreement is true and correct in all material respects on the date
hereof, and each such representation and warranty is hereby incorporated by
reference in this Agreement to the same extent as if fully set forth
herein.
SECTION 7.2 Representations of the Lessor. The Lessor represents and
-----------------------------
warrants to each of the other parties hereto as follows:
(a) Due Organization, etc. It is a corporation duly organized and
----------------------
validly existing and in good standing under the laws of the State of
Delaware and has the corporate power and authority to enter into and
perform its obligations under this Participation Agreement and to act as
the Lessor and to enter into and perform the obligations under each of the
other Operative Documents to which the Lessor is or will be a party, and
each other agreement, instrument and document to be executed and delivered
by it in connection with or as contemplated by each such Operative Document
to which the Lessor is or will be a party.
(b) Authorization; No Conflict. The execution, delivery and
--------------------------
performance of each Operative Document to which it is or will be a party
has been duly authorized by all necessary action on its part and neither
the execution and delivery thereof, nor the consummation of the
transactions contemplated thereby, nor compliance by it with any of the
terms and provisions thereof (i) does or will require any approval or
consent of any trustee or holders of any of its indebtedness or
obligations, (ii) does or will contravene any current United States law,
governmental rule or regulation relating to its corporate power and
authority, (iii) does or will contravene or result in any breach of or
constitute any default under, or result in the creation of any Lien upon
any of its property under, its articles of incorporation or corporate by-
laws, or any indenture, mortgage, deed of trust, conditional sales
contract, credit agreement or other agreement or instrument to which it is
a party or by which it or its property may be bound or affected or (iv)
does or will require any Governmental Action by any Governmental Authority
of the United States and regulating its corporate power and authority.
(c) Enforceability, etc. This Participation Agreement and each other
--------------------
Operative Document to which the Lessor is or will be a party have been, or
on or before the Effective Date on which such Operative Agreement is to be
signed will be duly executed and delivered by the Lessor, and this
Participation Agreement and each such other Operative Document
14
<PAGE>
to which the Lessor is a party constitutes, or upon execution and delivery
will constitute, a legal, valid and binding obligation enforceable against
the Lessor in accordance with the terms thereof.
(d) Assignment. It has not assigned or transferred any of its right,
----------
title or interest in or under the Master Lease or this Participation
Agreement except in accordance with the Operative Documents.
(e) Defaults. No Default or Event of Default under the Operative
--------
Documents attributable to it has occurred and is continuing.
(f) Use of Proceeds. The proceeds of the Financing Loans and the
---------------
Equity Loans shall be applied by the Lessor solely in accordance with the
provisions of the Operative Documents.
(g) Chief Place of Business. The Lessor's chief place of business,
-----------------------
chief executive office and office where the documents, accounts and records
relating to the transactions contemplated by this Participation Agreement
and each other Operative Document are kept are located at its address set
forth in Schedule IV attached hereto.
-----------
ARTICLE VIII
PAYMENT OF CERTAIN EXPENSES
The Lessee agrees, for the benefit of the Lessor, the Lenders and the Agent
that:
SECTION 8.1. Transaction Expenses.
--------------------
(a) The Lessee shall pay, or cause to be paid, from time to time
all Transaction Expenses in respect of the transactions on the Effective
Date; provided, however, that, if the Lessee has not received written
invoices therefor prior to such date, such Transaction Expenses shall be
paid within thirty (30) days after the Lessee has received written invoices
therefor.
(b) The Lessee shall pay or cause to be paid (i) the initial and
annual fee of the Lessor and all other costs and fees provided in the
Lessor's Fee Letter and all reasonable out-of-pocket expenses of the Lessor
(including reasonable counsel fees and expenses) or any successor Lessor
for acting as Lessor, (ii) all Transaction Expenses incurred by the Lessor,
the Lessee or the Agent in connection with any purchase of the Equipment by
the Lessee or
15
<PAGE>
other Person pursuant to Articles XVIII and XXI of the Master Lease, and
(iii) all Transaction Expenses incurred by any of the other parties hereto
in respect of the enforcement of any of their rights or remedies against
the Lessee or any other Affiliate of the Lessee in respect of the Operative
Documents.
SECTION 8.2. Brokers' Fees and Stamp Taxes. The Lessee shall pay or
-----------------------------
cause to be paid not later than the Effective Date any brokers' fees and any and
all sales, excise, stamp, transfer and other similar taxes, fees and charges, if
any, including any interest and penalties, which are payable in connection with
the transactions contemplated by this Participation Agreement and the other
Operative Documents.
SECTION 8.3. Loan Agreement and Related Obligations. The Lessee shall
--------------------------------------
pay, before the due date thereof, all costs, expenses and other amounts (other
than principal and interest on the Loans which are payable to the extent
otherwise required by the Operative Documents) required to be paid by the Lessor
under the Loan Agreement and the Assignment of Lease and Rent.
ARTICLE IX
AFFIRMATIVE AND NEGATIVE COVENANTS
SECTION 9.1. Mail-Well Credit Agreement. Each of the Lessee and each
--------------------------
Subsidiary Guarantor hereby agrees that so long as this Participation Agreement
is in effect, the Lessee and the Subsidiary Guarantors shall comply with each of
the covenants set forth in Articles 8, 9 and 10 of the Mail-Well Credit
Agreement to the same extent as if each of such covenants were set forth herein
verbatim for the benefit of the Lessor, the Lenders and the Agent (and all such
covenants are hereby fully incorporated by reference). In the event that the
Mail-Well Credit Agreement shall cease to remain in effect for any reason
whatsoever during the term hereof, the covenants incorporated herein by
reference shall nevertheless continue in full force and effect as obligations of
the Lessee and each Subsidiary Guarantor under this Participation Agreement.
ARTICLE X
LESSEE DIRECTIONS; CERTAIN RIGHTS OF LESSEE
SECTION 10.1. Lessee Directions. The Lessor, the Agent, the Financing
-----------------
Lenders, the Equity Lenders, and the Lessee hereby agree that, so long as no
Lease Default or Lease Event of Default exists, the Lessee shall have the
exclusive right to exercise any right of the Lessor under the Loan Agreement
upon not less than two (2) Business Days' prior written notice from the Lessee
to
16
<PAGE>
the Lessor, unless the Lessor objects to such exercise within two (2)
Business Days of receipt of such notice.
ARTICLE XI
YIELD PROTECTION AND ILLEGALITY
SECTION 11.1. Additional Costs.
----------------
(a) Subject to Section 12.6 herein, the Lessor shall pay directly
------------
to each Lender from time to time, promptly upon the request of such Lender,
the costs incurred by such Lender which such Lender determines are
attributable to its making or maintaining of any Eurodollar Loans hereunder
or its obligation to make any of such Loans hereunder, or any reduction in
any amount receivable by such Lender hereunder in respect of any such Loans
or such obligation (such increases in costs and reductions in amounts
receivable being herein called Additional Costs"), resulting from any
----------------
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Lender under this Agreement or its Notes in respect of any of
such Loans (other than taxes imposed on the overall net income of
such Lender or its Applicable Lending Office for any of such Loans
by the jurisdiction in which such Lender has its principal office
or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit,
minimum capital, capital ratio or similar requirement relating to
any extensions of credit or other assets of, or any deposits with
or other liabilities or commitments of, such Lender (including any
of such Loans or any deposits referred to in the definition of
"Eurodollar Rate", but excluding the Reserve Requirement to the
extent it is included in the calculation of the Adjusted Eurodollar
Rate); or
(iii) imposes any other condition affecting this Agreement or
the Notes or any of such extensions of credit or liabilities or
commitments.
Each Lender will notify the Lessor (with a copy to the Agent) of any event
occurring after the Effective Date which will entitle such Lender to
compensation pursuant to this Section 11.1 (a) as promptly as practicable after
----------------
it obtains knowledge thereof and determines to request such compensation, and
(if so requested by the Lessor) will designate a different Applicable Lending
Office for the Eurodollar Loans of such Lender if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
sole opinion of such Lender, violate any law,
17
<PAGE>
rule or regulation or be in any way disadvantageous to such Lender, provided
--------
that such Lender shall have no obligation to so designate an Applicable Lending
Office located in the U.S. Each Lender will furnish the Lessor with a
certificate setting forth the basis and the amount of each request of such
Lender for compensation under this Section 11.1(a). If any Lender requests
---------------
compensation from the Lessor under this Section 11.1(a), the Lessor may, by
---------------
notice to such Lender (with a copy to the Agent), suspend the obligation of such
Lender to make or continue making, or convert Prime Rate Loans into, Eurodollar
Loans until the Regulatory Change giving rise to such request ceases to be in
effect (in which case the provisions of Section 11.4 hereof shall be
------------
applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 11.1, in the event that, by reason of any Regulatory Change, any
------------
Lender either (i) incurs Additional Costs based on or measured by the
excess above a specified level of the amount of a category of deposits or
other liabilities of such Lender which includes deposits by reference to
which the interest rate on Eurodollar Loans is determined as provided in
this Agreement or a category of extensions of credit or other assets of
such Lender which includes Eurodollar Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets
which it may hold, then, if such Lender so elects by notice to the Lessor
(with a copy to the Agent), the obligation of such Lender to make or
continue making, or convert Prime Rate Loans into, Eurodollar Loans
hereunder shall be suspended until such Regulatory Change ceases to be in
effect (in which case the provisions of Section 11.4 hereof shall be
------------
applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 11.1 of the effect of any Regulatory Change on its costs of
------------
maintaining its obligation to make Loans or of making or maintaining Loans
or on amounts receivable by it in respect of Loans, and of the additional
amounts required to compensate such Lender in respect of any Additional
Costs, shall be conclusive in the absence of manifest error, provided that
such determinations and allocations are made on a reasonable basis.
SECTION 11.2. Limitation on Types of Loans. Anything herein to the
----------------------------
contrary notwithstanding, if with respect to any Eurodollar Loans for any
Interest Period therefor:
(a) The Agent determines (which determination shall be conclusive
absent manifest error) that quotations of interest rates for the relevant
deposits referred to in the definition of "Eurodollar Rate" are not being
provided in the relative amounts or for the relative maturities for
purposes of determining the rate of interest for such Loans as provided in
this Agreement; or
(b) The Required Participants determine (which determination shall be
conclusive absent manifest error) and notify the Agent that the relevant
rates of interest referred to in
18
<PAGE>
the definition of "Eurodollar Rate" or "Adjusted Eurodollar Rate" on the
basis of which the rate of interest for such Loans for such Interest Period
is to be determined do not accurately reflect the cost to the Lenders of
making or maintaining such Loans for such Interest Period;
then the Agent shall give the Lessor prompt notice thereof and, so long as such
condition remains in effect, the Lenders shall be under no obligation to make
Eurodollar Loans or to convert Prime Rate Loans into Eurodollar Loans and the
Lessor shall, on the last day(s) of the then current Interest Period(s) for the
outstanding Eurodollar Loans, either prepay such Loans or convert such Loans
into Prime Rate Loans in accordance with the terms of this Agreement.
SECTION 11.2. Illegality. Notwithstanding any other provision of this
----------
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
hereunder or (b) maintain Eurodollar Loans hereunder, then such Lender shall
promptly notify the Lessor (with a copy to the Agent) thereof and such Lender's
obligation to make or maintain Eurodollar Loans and to convert Prime Rate Loans
into Eurodollar Loans hereunder shall be suspended until such time as such
Lender may again make and maintain Eurodollar Loans (in which case the
provisions of Section 11.4 hereof shall be applicable).
------------
SECTION 11.4. Treatment of Affected Loans. If the obligation of any Lender
---------------------------
to make or continue making, or to convert Prime Rate Loans into, Eurodollar
Loans is suspended pursuant to Section 11.1 or 11.3 hereof, such Lender's
------------ ----
Eurodollar Loans shall be automatically converted into Prime Rate Loans on the
last day(s) of the then current Interest Period(s) for the Eurodollar Loans (or,
in the case of a conversion required by Section 11.1(b) or 11.3 hereof, on such
--------------- ----
earlier date as such Lender may specify to the Lessor with a copy to the Agent)
and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 11.1 or 11.3 hereof which gave rise to such
------------ ----
conversion no longer exist:
(a) To the extent that such Lender's Eurodollar Loans have been so
converted, all payments and prepayments of principal which would otherwise
be applied to such Lender's Eurodollar Loans shall be applied instead to
its Prime Rate Loans; and
(b) All Loans which would otherwise be made or continued by such
Lender as Eurodollar Loans shall be made as or converted into Prime Rate
Loans and all Loans of such Lender which would otherwise be converted into
Eurodollar Loans shall be converted instead into (or shall remain as) Prime
Rate Loans .
If such Lender gives notice to the Lessor (with a copy to the Agent) that the
circumstances specified in Section 11.1 or 11.3 hereof which gave rise to the
------------ ----
conversion of such Lender's Eurodollar Loans pursuant to this Section 11.4 no
------------
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such Lender's
19
<PAGE>
Participation Agreement
Prime Rate Loans shall be automatically converted, on the first day(s) of the
next succeeding Interest Period(s) for such outstanding Eurodollar Loans, to the
extent necessary so that, after giving effect thereto, all Loans held by the
Lenders holding Eurodollar Loans and by such Lender are held pro rata (as to
principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
SECTION 11.5. Compensation. Subject to Section 12.6 herein, the Lessor
------------ ------------
shall pay to the Agent for the account of each Lender, promptly upon the
request of such Lender through the Agent, such amount or amounts as shall
be sufficient (in the reasonable opinion of such Lender) to compensate it
for any loss, cost or expense incurred by it as a result of:
(a) Any payment, prepayment or conversion of a Eurodollar Loan
for any reason (including, without limitation, the acceleration of the
outstanding Loans) on a date other than the last day of an Interest Period
for such Loan; or
(b) Any failure by the Lessor for any reason (including,
without limitation, the failure of any conditions to be satisfied) to
borrow, convert or prepay a Eurodollar Loan on the date for such borrowing,
conversion or prepayment specified in the relevant notice of borrowing,
prepayment or conversion under this Agreement.
SECTION 11.6. Capital Adequacy. If, after the Effective Date, any Lender
----------------
shall have determined that the adoption or implementation of any applicable law,
rule or regulation regarding capital adequacy (including, without limitation,
any law, rule or regulation implementing the Basle Accord), or any change
therein, or any change in the interpretation or administration thereof by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on such Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, within ten Business Days after demand by
such Lender (with a copy to the Agent), the Lessor shall pay to such Lender such
additional amount or amounts as will compensate such Lender (or its parent) for
such reduction. A certificate of such Lender claiming compensation under this
Section 11.6 and setting forth the additional amount or amounts to be paid to it
- ------------
hereunder shall be conclusive absent manifest error, provided that the
--------
determination thereof is made on a reasonable basis. In determining such amount
or amounts, such Lender may use any reasonable averaging and attribution
methods.
20
<PAGE>
Participation Agreement
SECTION 11.7. Additional Interest on Eurodollar Loans. The Lessor shall
---------------------------------------
pay, directly to each Lender from time to time, additional interest on the
unpaid principal amount of each Eurodollar Loan held by such Lender, from the
date of the making of such Eurodollar Loan until such principal amount is paid
in full, at an interest rate per annum determined by such Lender in good faith
equal to the positive remainder (if any) of (a) the Adjusted Eurodollar Rate
applicable to such Eurodollar Loan minus (b) the Eurodollar Rate applicable to
-----
such Eurodollar Loan. Each payment of additional interest pursuant to this
Section 11.7 shall be payable by the Lessor on each date upon which interest is
- ------------
payable on such Eurodollar Loan; provided, however, that the Lessor shall not be
-------- -------
obligated to make any such payment of additional interest until the first
Business Day after the date when the Lessor has been informed (i) that such
Lender is subject to a Reserve Requirement and (ii) of the amount of such
Reserve Requirement (after which time the Lessor shall be obligated to make all
such payments of additional interest, including, without limitation, such
payments of additional interest that otherwise would have been payable by the
Lessor on or prior to such time had the Lessor been earlier informed).
ARTICLE XII
INDEMNIFICATION
SECTION 12.1. General Indemnification. The Lessee agrees, whether or not
-----------------------
any of the transactions contemplated hereby shall be consummated, to assume
liability for, and to indemnify, protect, defend, save and keep harmless each
Indemnitee, from and against, any and all Claims that may be imposed on,
incurred by or asserted against such Indemnitee (whether because of action or
omission by such Indemnitee or otherwise), whether or not such Indemnitee shall
also be indemnified as to any such Claim by any other Person and whether or not
such Claim arises or accrues prior to the Effective Date or after the Expiration
Date, in any way relating to or arising out of:
(a) any of the Operative Documents or any of the transactions
contemplated thereby, and any amendment, modification or waiver in respect
thereof;
(b) the Equipment or any part thereof or interest therein;
(c) the purchase, design, construction, preparation,
installation, inspection, delivery, non-delivery, acceptance, rejection,
ownership, management, possession, operation, rental, lease, sublease,
repossession, maintenance, repair, alteration, modification, addition or
substitution, storage, transfer of title, redelivery, use, financing,
refinancing, disposition, operation, condition, sale (including, without
limitation, any sale pursuant to Section 16.2(c),
21
<PAGE>
Participation Agreement
16.2(e) or 18.3 of the Master Lease or any sale pursuant to Article XV,
XVIII or XX of the Master Lease), return or other disposition of all or any
part or any interest in the Equipment or the imposition of any Lien (or
incurring of any liability to refund or pay over any amount as a result of
any Lien) thereon, including, without limitation: (1) Claims or penalties
arising from any violation of law or in tort (strict liability or
otherwise), (2) latent or other defects, whether or not discoverable, (3)
any Claim based upon a violation or alleged violation of the terms of any
restriction, condition or covenant or other matter affecting title to the
Equipment, (4) the making of any Modifications in violation of any
standards imposed by any insurance policies required to be maintained by
Lessee pursuant to the Master Lease which are in effect at any time with
respect to the Equipment or any part thereof, and (5) any Claim for patent,
trademark or copyright infringement;
(d) the breach by the Lessee of any covenant, representation or
warranty made by it or deemed made by it in any Operative Document or any
certificate required to be delivered by any Operative Document;
(e) the retaining or employment of any broker, finder or financial
advisor by the Lessee to act on its behalf in connection with this
Participation Agreement;
(f) the existence of any Lien on or with respect to the Equipment,
any Basic Rent or Supplemental Rent, title thereto, or any interest therein
including any Liens which arise out of the possession, use, repair or
rebuilding of the Equipment or by reason of labor or materials furnished or
claimed to have been furnished to the Lessee, or any of its contractors or
agents or by reason of the financing of any personalty or equipment
purchased or leased by the Lessee or Modifications made by the Lessee,
except Lessor Liens;
(g) as to each Lender, the transactions contemplated by the Master
Lease or by any other Operative Document, in respect of the application of
Parts 4 and 5 of Subtitle B of Title I of ERISA and any prohibited
transaction described in Section 4975(c) of the Code;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
- -------- -------
under this Section 12.1 for any of the following: (1) any Claim to the extent
------------
resulting from the willful misconduct or gross negligence of such Indemnitee (it
being agreed and understood that the Lessee shall be required to indemnify an
Indemnitee even if the ordinary (but not gross) negligence of such Indemnitee
caused or contributed to such Claim) or the breach of any representation,
warranty or covenant of such Indemnitee set forth in any Operative Document, (2)
any Claim resulting from Lessor Liens which such Indemnitee is responsible for
discharging under the Operative Documents, (3) any Claim arising from a breach
or alleged breach by the Financing Lenders or the Equity Lenders of any
agreement entered into in connection with the assignment or participation of any
Financing Loan or Equity Loan, and (4) except as provided in Section 12.2 below,
------------
any Claim to pay
22
<PAGE>
Participation Agreement
the Shortfall Amount after the Lessee properly elects the Remarketing Option and
the proceeds of the sale of the Equipment have been distributed to the Lenders.
It is expressly understood and agreed that the indemnity provided for herein
shall survive the expiration or termination of and shall be separate and
independent from any remedy under the Master Lease or any other Operative
Document. Without limiting the express rights of any Indemnitee under
this Section 12.1, this Section 12.1 shall be construed as an indemnity
------------ ------------
only and not a guaranty of residual value of the Equipment or as a guaranty of
the Notes. THE INDEMNITY OBLIGATIONS OF THE LESSEE UNDER THIS ARTICLE XII COVER
-----------
AND RELATE TO, WITHOUT LIMITATION, ANY NEGLIGENT ACTION AND/OR OMISSION (WHETHER
JOINT, COMPARATIVE OR CONCURRENT) OF ANY INDEMNITEE.
SECTION 12.2. End of Term Indemnity.
---------------------
(a) If the Lessee elects the Remarketing Option and there would,
upon acceptance of the highest binding written unconditional irrevocable
offer procured by the Lessee pursuant to Section 20.1(f) of the Master
Lease, be a Shortfall Amount, then prior to the Expiration Date and as a
condition to the Lessee's right to complete the remarketing of the
Equipment pursuant to Section 20.1 of the Master Lease, the Lessee shall
cause to be delivered to the Lessor and the Equity Lenders at least two (2)
months prior to the Expiration Date, at the Lessee's sole cost and expense,
a report from the Appraiser in form and substance satisfactory to the
Lenders (the "End of the Term Report") which shall state the appraiser's
----------------------
conclusions as to the reason for any decline in the Fair Market Sales Value
of any of the Equipment from that anticipated for such date in the
Appraisal delivered on the Effective Date. If an End of the Term Report is
not required pursuant to the preceding sentence but the offer described
therein is not consummated on or prior to the Expiration Date, then the
Lessee shall, within forty-five (45) days after the Expiration Date, cause
an End of the Term Report to be delivered to the Lessor and the Equity
Lenders.
(b) If the Lessee is obligated to deliver an End of the Term
Report pursuant to clause (a), then on or prior to the Expiration Date or,
in the case of an End of the Term Report delivered pursuant to the last
sentence of clause (a), on or prior to the date occurring two (2) months
after the Expiration Date, the Lessee shall pay to the Lessor an amount
(not to exceed the Shortfall Amount) equal to the portion of the Shortfall
Amount that the End of the Term Report demonstrates was the result of a
decline in the Fair Market Sales Value of the Equipment due to:
(i) extraordinary use, failure to maintain, to repair, to
restore, to rebuild or to replace, failure to comply with all
applicable laws, failure to use, workmanship, method of
installation or removal or maintenance, repair, rebuilding or
replacement (excepting in each case ordinary wear and tear), or
23
<PAGE>
Participation Agreement
(ii) any Modification made to, or any rebuilding or
restoration of, the Equipment or any part thereof by the Lessee,
or
(iii) any use of any of the Equipment or any part thereof by
the Lessee or any sublessee other than as permitted by the express
terms of the Master Lease, or
(iv) the failure of the Lessor to have good and marketable
title to any of the Equipment free and clear of all Liens (other
than Permitted Property Liens of the type described in Clauses (i)
and (v) of that definition) .
SECTION 12.3. Environmental Indemnity. Without limitation of the other
-----------------------
provisions of this Article XII, the Lessee hereby agrees to indemnify, hold
-----------
harmless and defend each Indemnitee from and against any and all Claims
(including without limitation third party Claims for personal injury or real or
personal property damage), losses (including but not limited to, to the extent
the Lease Balance has not been fully paid, any loss of value of the Equipment
related thereto), damages, liabilities, fines, penalties, charges,
administrative and judicial proceedings (including informal proceedings) and
orders, judgments, remedial action, requirements, enforcement actions of any
kind, and all reasonable and documented costs and expenses incurred in
connection therewith (including but not limited to reasonable and documented
attorneys' and/or paralegals' fees and expenses), including, but not limited to,
all costs incurred in connection with any investigation or monitoring of site
conditions or any clean-up, remedial, removal or restoration work by any
federal, state or local government agency, arising in whole or in part, out of
(a) the presence on or in any of the Equipment of any Hazardous
Materials, or any releases or discharges of any Hazardous Materials on,
under, from or onto any of the Equipment,
(b) loss of or damage to any Equipment or the environment
(including, without limitation, clean-up costs, response costs, remediation
and removal costs, cost of corrective action, costs of financial assurance,
fines and penalties and nature resource damages), or death or injury to any
Person arising in connection with the Equipment or the use thereof, and any
mitigative action required by or under Hazardous Materials Laws with
respect to the Equipment,
(c) any claim concerning lack of compliance with Hazardous
Materials Laws by the Lessee, or
(d) any residual contamination on, or affecting any natural
resources, and to any contamination of any property or natural resources
arising in connection with the generation, use, handling, storage,
transport or disposal of any such Hazardous Materials, and
24
<PAGE>
irrespective or whether any of such activities were or will be undertaken
in accordance with applicable laws, regulations, codes and ordinances;
provided, however, the Lessee shall not be required to indemnify any Indemnitee
- -------- -------
under this Section 12.3 for any Claim to the extent resulting from the willful
------------
misconduct or gross negligence of such Indemnitee, provided that Lessee has
complied with all of its Obligations under the Operative Documents and no Event
of Default shall have occurred and be continuing thereunder. It is expressly
understood and agreed that the indemnity provided for herein shall survive the
expiration or termination of and shall be separate and independent from any
remedy under the Master Lease or any other Operative Document.
SECTION 12.4. Proceedings in Respect of Claims.
--------------------------------
(a) With respect to any amount that the Lessee is requested by an
Indemnitee to pay by reason of Section 12.1 hereof, such Indemnitee shall,
------------
if so requested by the Lessee and prior to any payment, submit such
additional information to the Lessee as the Lessee may reasonably request
and which is in the possession of such Indemnitee to substantiate properly
the requested payment.
(b) In case any action, suit or proceeding shall be brought against
any Indemnitee, such Indemnitee shall notify the Lessee of the commencement
thereof, and the Lessee shall be entitled, at its expense, to participate
in, and, to the extent that the Lessee desires to, assume and control the
defense thereof; provided, however, that the Lessee shall have acknowledged
-------- -------
in writing its obligation to fully indemnify such Indemnitee in respect of
such action, suit or proceeding, and, the Lessee shall keep such Indemnitee
fully apprised of the status of such action, suit or proceeding and shall
provide such Indemnitee with all information with respect to such action,
suit or proceeding as such Indemnitee shall reasonably request, and
provided, further, that the Lessee shall not be entitled to assume and
-----------------
control the defense of any such action, suit or proceeding if and to the
extent that, (i) in the reasonable opinion of such Indemnitee, (x) such
action, suit or proceeding involves any risk of imposition of criminal
liability or will involve a risk of the sale, forfeiture or loss of, or the
creation of any Lien (other than a Permitted Property Lien) on the
Equipment or any part thereof unless, in the case of civil liability, the
Lessee shall have posted a bond or other security satisfactory to the
relevant Indemnities in respect to such risk or (y) the control of such
action, suit or proceeding would involve an actual or potential conflict of
interest, (ii) such proceeding involves Claims not fully indemnified by the
Lessee which the Lessee and the Indemnitee have been unable to sever from
the indemnified claim(s), or (iii) a Lease Event of Default has occurred
and is continuing. The failure of any Indemnitee to give to the Lessee
notice as set forth in the preceding sentence shall not limit or affect the
Lessee's indemnification obligations hereunder, provided that such failure
does not materially
25
<PAGE>
prejudice the Lessee's defense of any such action, suit or proceeding. The
Indemnitee will join in the Lessee's efforts to sever such action. The
Indemnitee may participate in a reasonable manner at its own expense and
with its own counsel in any proceeding conducted by the Lessee in
accordance with the foregoing. The Lessee shall not enter into any
settlement or other compromise with respect to any Claim which is entitled
to be indemnified under Section 12.1 without the prior written consent of
------------
the Indemnitee, which consent shall not be unreasonably withheld in the
case of a money settlement not involving an admission of liability of such
Indemnitee.
(c) Each Indemnitee shall at the expense of the Lessee supply the
Lessee with such information and documents reasonably requested by the
Lessee as are necessary or advisable for the Lessee to participate in any
action, suit or proceeding to the extent permitted by Section 12.1. Unless
------------
a Lease Event of Default shall have occurred and be continuing, no
Indemnitee shall enter into any settlement or other compromise with respect
to any Claim which is entitled to be indemnified under Section 12.1 without
------------
the prior written consent of the Lessee, which consent shall not be
unreasonably withheld, unless such Indemnitee waives its right to be
indemnified under Section 12.1 with respect to such Claim.
------------
(d) Upon payment in full of any Claim by the Lessee pursuant to
Section 12.1 to or on behalf of an Indemnitee, the Lessee, without any
------------
further action, shall be subrogated to any and all claims that such
Indemnitee may have relating thereto (other than claims in respect of
insurance policies maintained by such Indemnitee at its own expense), and
such Indemnitee shall execute such instruments of assignment and
conveyance, evidence of claims and payment and such other documents,
instruments and agreements as may be necessary to preserve any such claims
and otherwise cooperate with the Lessee and give such further assurances as
are necessary or advisable to enable the Lessee vigorously to pursue such
claims.
(e) Any amount payable to an Indemnitee pursuant to Section 12.1
------------
shall be paid to such Indemnitee promptly upon receipt of a written demand
therefor from such Indemnitee, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
SECTION 12.5 General Tax Indemnity.
---------------------
(a) If any Impositions (including, without limitation, (i) taxes
based on, or measured by the net income of a Tax Indemnitee imposed by the
United States (or any state or other jurisdiction, political subdivision or
taxing authority thereof or therein) to the extent they would not have been
imposed if on the Effective Date, as the case may be, the Tax Indemnitee
had advanced funds directly to the Lessee in the form of a loan secured by
the
26
<PAGE>
Equipment in an amount equal to the amount advanced for the Equipment on
the Effective Date, as the case may be, with the debt service for such loan
equal to the Basic Rent payable on each Scheduled Payment Date and a
principal balance at the making of such loan in an amount equal to the then
outstanding amount of the Financing Loans and Equity Loans and (ii) taxes
imposed with respect to the payment, receipt or accrual of any indemnity
payment hereunder (net of any tax benefit)) are now or hereafter imposed or
levied by the United States (or by any state or other jurisdiction,
political subdivision or taxing authority thereof or therein) on any
payments made by the Lessee hereunder or payable in respect of a Financing
Loan or an Equity Loan or otherwise under the Master Lease or the other
Operative Documents to which it is a party or payments relating to the
ownership, lease, sale or use of the Equipment, then the Lessee shall pay
such additional amounts (at the time of such payment) as may be necessary
so that every payment of all amounts due hereunder or under such other
Operative Document, after withholding or deduction for or on account of any
such Impositions, will not be less than the amount provided for herein or
therein. The Tax Indemnitee shall promptly notify the Lessee in writing of
the occurrence of any event of which the Tax Indemnitee has knowledge that
will give rise to the obligation of the Lessee to pay such additional
amounts pursuant to this Section 12.5. As soon as practicable after the
-----------
date the payment of any Impositions is due pursuant to Applicable Law, the
Lessee shall furnish to the Tax Indemnitee certified copies of any tax
receipts obtained by the Lessee, evidencing payment by the Lessee and
compliance with this Section 12.5.
------------
(b) The Impositions and the indemnification obligations of the Lessee
hereunder shall expressly include and cover, without limitation, any
present or future taxes, duties, imposts, assessments or other charges
levied or imposed by any Governmental Authority, including any withholdings
or withholding taxes (other than taxes on the overall net income of the
Agent or any Lender), so that all payments to be made to the Agent on
behalf of the Lenders hereunder of principal of and interest on the Loans
and of all fees and other amounts payable under the Operative Documents
shall be made free and clear of, and without deduction by reason of, such
taxes, assessments and other charges.
(c) Should any Tax Indemnitee ever receive any refund, credit or
deduction from any taxing authority (whether before or after payment in
full of all amounts owed hereunder and under the Master Lease) to which Tax
Indemnitee would not be entitled but for the payment by the Lessee of
additional amounts as required by this Section 12.5, Tax Indemnitee (as
------------
applicable) thereupon shall repay to the Lessee an amount with respect to
such refund, credit or reduction equal to any net reduction in Impositions
actually obtained by Tax Indemnitee and determined by Tax Indemnitee to be
directly related to such refund, credit or reduction (but not to exceed
such additional amounts to which such refund, credit or reduction relates).
No such payment shall be required, however, to the extent the Lessee is
delinquent in any payments to Tax Indemnitee under this Participation
Agreement, the
27
<PAGE>
Participation Agreement
Master Lease or any other Operative Document, but shall promptly be paid to
the Lessee after such delinquency no longer exists. Notwithstanding the
provisions of this Section 12.5(b) to the contrary, the decision as to
---------------
whether or not to claim any such refund, credit or reduction (and if
claimed, the determination of the amount of the net reduction in
Impositions attributable to the additional amounts paid by the Lessee under
this Section 12.5) shall be made by Tax Indemnitee (as applicable) in its
------------
sole discretion.
(d) The agreements and obligations contained in this Section 12.5
------------
shall survive the payment in full of the Lessee's obligations hereunder and
under the other Operative Documents.
(e) Each Lender represents and warrants that it will not, prior to
the termination of the Master Lease, claim ownership of (or any tax
benefits, including depreciation, with respect to) the Equipment for any
income tax purposes, it being understood that the Lessee is and will remain
the owner of the Equipment for such income tax purposes until the
termination of the Master Lease. If, notwithstanding the income tax
intentions of the parties as set forth in this Section 12.5(d) and in
---------------
Section 5.1. hereof, any Lender actually receives any income tax
------------
deductions, reductions in income tax or other income tax benefit as a
result of any claim for, or recharacterization requiring such party to
take, any tax benefits attributable to ownership of the Equipment for
income tax purposes, such Lender shall pay to the Lessee, together with an
amount equal to any reduced Taxes payable by such Tax Indemnitee as a
result of such payment, the amount of such income tax savings actually
realized by such Lender (less the amount of any anticipated increase in
income tax which the Lender determines is currently payable as a result of
such claim or recharacterization), provided that the Lessee shall agree to
reimburse such Lender for any subsequent increase in such Lender's income
taxes resulting from such claim or recharacterization not taken into
account in the payment made to the Lessee, up to the amount paid to the
Lessee by such Lender. The parties agree that this Section 12.5(d) is
---------------
intended to require a payment to the Lessee if and only if a Lender shall
have actually received an unanticipated tax savings with respect to the
Equipment that would not have been received if the Lessor had advanced
funds to the Lessee in the form of a loan secured by any of the Equipment
in an amount equal to the Purchase Price paid for the Equipment. Nothing in
this Section 12.5(d) shall be construed to require a Lender to take any
---------------
affirmative action to realize any tax savings if in its good faith judgment
such action may have a material adverse effect on such Lender.
SECTION 12.6. Yield Protection and Illegality. In the event any amounts
-------------------------------
are determined to be payable by the Lessor under the provisions of Article XI
----------
hereof, the Lessee assumes full responsibility for and shall pay such amounts
directly to each Lender or the Agent, as the case may be, within five (5) days
of its receipt of notice thereof, and such notice shall be presumed correct and
binding upon the Lessee absent manifest error. Notwithstanding the provisions
of Article XI to the
----------
28
<PAGE>
Participation Agreement
contrary, all covenants and obligations of the Lessor under such Article shall
at all times be the direct obligations of the Lessee.
SECTION 12.7. Indemnity Payments in Addition to Lease Obligations. The
---------------------------------------------------
Lessee acknowledges and agrees that the Lessee's obligations to make indemnity
payments under this Article XII are separate from, in addition to, and do not
-----------
reduce, the Lessee's obligation to pay under the Master Lease that portion of
the Lease Balance.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Survival of Agreements. The representations, warranties,
----------------------
covenants, indemnities and agreements of the parties provided for in the
Operative Documents, and the parties' Obligations under any and all thereof,
shall survive the execution and delivery of this Participation Agreement, the
transfer of the Equipment to the Lessor, any disposition of any interest of the
Lessor in the Equipment or any interest of any Lender in the Equipment and the
payment of the Notes and any disposition thereof, and the expiration or
termination of any of the Operative Documents, and shall be and continue in
effect notwithstanding any investigation made by any party and the fact that any
party may waive compliance with any of the other terms, provisions or conditions
of any of the Operative Documents.
SECTION 13.2. Controlling Agreement. (a) All agreements between each of the
---------------------
Lessor, the Lessee, the Agent, and the Lenders, whether now existing or
hereafter arising and whether written or oral, are hereby limited so that in no
contingency, whether by reason of demand or acceleration of the maturity of the
Notes or otherwise, shall the interest contracted for, charged, received, paid
or agreed to be paid to the Lenders or the Lessor exceed the maximum amount
permissible under applicable law. If, from any circumstance whatsoever, interest
would otherwise be payable to the Lenders or the Lessor in excess of the maximum
lawful amount, the interest payable to the Lenders or the Lessor shall be
reduced to the maximum amount permitted under applicable law; and if from any
circumstance the Lenders or the Lessor shall ever receive anything of value
deemed interest by applicable law in excess of the maximum lawful amount, an
amount equal to any excessive interest shall be applied to the reduction of the
principal of the Loans and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of principal of the Loans, such excess shall
be refunded to the party paying the same. All interest paid or agreed to be paid
to the Lenders or the Lessor shall, to the extent permitted by applicable law,
be amortized, prorated, allocated and spread throughout the full period until
payment in full of the principal so that the interest on the Loans for such full
period shall not exceed the maximum amount permitted by applicable law. The
Lenders and the Lessor hereby expressly disclaim any
29
<PAGE>
Participation Agreement
intent to contract for, charge or receive interest in an amount which exceeds
the maximum amount of interest permitted by applicable law. The Lessee
represents to the Lenders and the Lessor that the Loans and the transactions
evidenced by the Operative Documents are not usurious and agrees that if, at any
time, the Lessee shall have reason to believe that the Loans and/or such
transactions are in fact usurious, it will give the Agent written notice of such
condition and Lenders and the Lessor shall have ninety (90) days in which to
make an appropriate refund or other adjustment in order to correct such
condition if in fact it exists. This section shall control all other provisions
of the Operative Documents.
(b) The parties hereto agree that if Article 1.04, Subtitle 1, Title
79 of the Revised Civil Statutes of Texas, 1925, as amended, is applicable to
the determination of the lawful maximum rate, the indicated rate ceiling
computed from time to time pursuant to Section (a) of such Article shall apply
provided that, to the extent permitted by such Article, the Agent may from time
- --------
to time by notice to the Lessor and the Lessee revise the election of such
interest rate ceiling as such ceiling affects the then current or future
balances of any indebtedness of the Lessor or the Lessee hereunder.
SECTION 13.3. Notices. Unless otherwise specifically provided herein
-------
all notices, consents, directions, approvals, instructions, requests and
other communications required or permitted by the terms hereof to be given to
any Person shall be given in writing (including by facsimile) and delivered by
United States mail, by nationally recognized-courier service by hand or by
facsimile, directed to the address or facsimile number of such Person as
indicated on Schedule IV attached hereto. Any such notice shall become
-----------
effective as follows:
(a) if delivered by United Sates mail, five (5) Business Days
after being deposited in the mails, certified or registered with
appropriate postage prepaid,
(b) if delivered by nationally recognized courier service, one
(1) Business Day after delivery to such courier service specifying
overnight delivery,
(c) if delivered by hand, when received, or
(d) if delivered by facsimile, when transmitted (upon electronic
confirmation thereof).
From time to time any party may designate a new address or facsimile number for
purposes of notice hereunder by written notice to each of the other parties
hereto in accordance with this Section 13.3.
------------
SECTION 13.4. Counterparts. This Participation Agreement may be executed
------------
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
30
<PAGE>
Participation Agreement
SECTION 13.5. Amendments. The provisions of this Participation Agreement
----------
and any other Operative Document may from time to time be terminated, amended,
supplemented, modified or waived with the written consent of the Lessee and the
Required Participants; provided, however, that (i) no amendment or waiver of any
-------- -------
provision relating to payment or performance of an obligation owed to any Lender
shall be effective against such Lender unless it has been consented to in
writing by such Lender, (ii) no Operative Document nor any of the terms thereof
may be terminated except upon payment in full of the Lease Balance or the
effective exercise and consummation of the Remarketing Option in accordance with
Article XX of the Master Lease and payment in full of all amounts due in
accordance therewith, (iii) no termination, amendment, supplement, waiver or
modification shall, without the written agreement or consent of the Required
Equity Lenders, be made to the Master Lease or Article VI of this Participation
----------
Agreement or the definition of "Lease Default," and (v) no termination,
amendment, supplement, waiver or modification shall without written consent of
each Lender:
(a) modify any of the provisions of this Section 13.5, change the
------------
definitions of "Required Lenders," "Required Equity Lenders,"
"Required Financing Lenders" or "Required Participants," or modify or
waive any of the provisions of the Operative Agreement requiring
action by the foregoing;
(b) amend, modify, waive or supplement any of the provisions of
Sections 2.5, 2.6 or 2.7, Article IV or Article V of the Loan
Agreement; or amend, modify, waive or supplement any of the provisions
of Article XX or XXI of the Master Lease or any other provision of the
Operative Documents that would adversely affect the first priority
security interest granted by the Lessor First Security Agreement;
(c) reduce, modify, amend or waive any fees or indemnities in favor
of any Lender, including without limitation amounts payable pursuant
to Article XII (except that any Person may consent to any reduction,
-----------
modification, amendment or waiver of any indemnity payable to it);
(d) modify, postpone, reduce or forgive, in whole or in part, any
payment of Rent (other than pursuant to the terms of any Operative
Document), any Loan, the Lease Balance, the Loan Balance, amounts due
pursuant to Section 20.2 of the Master Lease, interest or, subject to
clause (c) above, any other amount payable under the Master Lease or
this Participation Agreement, or modify the definition or method of
calculation of Rent (other than pursuant to the terms of any Operative
Document), Loans, Lease Balance, Loan Balance, Shortfall Amount, Lease
Balance, or any other definition which would affect the amounts to be
advanced or which are
31
<PAGE>
Participation Agreement
payable under the Operative Documents or any provision of the
Operative Documents which requires unanimous consent; or
(e) consent to any assignment of the Master Lease by the Lessee,
releasing the Lessee from its obligations in respect of the payments
of Rent, Loan Balance or Lease Balance or changing the absolute and
unconditional character of such obligations.
SECTION 13.6. Headings, etc. The Table of Contents and headings of the
--------------
various Articles and Sections of this Participation Agreement are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
SECTION 13.7. Parties in Interest. Except as expressly provided herein,
-------------------
none of the provisions of this Participation Agreement is intended for the
benefit of any Person except the parties hereto. The Lessee shall not assign or
transfer any of its rights or obligations under the Operative Documents without
the prior written consent of the Lessor, the Lenders and the Equity Lenders.
SECTION 13.8. Successors and Assigns.
----------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. No Loan
Party may assign or transfer any of its rights or obligations under this
Agreement or any other Operative Document without the prior written consent
of the Agent and the Lenders. Any Lender may sell participations in all or
a portion of its rights and obligations under this Agreement and the other
Operative Documents (including, without limitation, all or a portion of its
Loans owing to it); provided, however, that (i) such Lender's obligations
-------- -------
under this Agreement and the other Operative Documents shall remain
unchanged, (ii) such Lender shall remain solely responsible to the Lessor
for the performance of such obligations, (iii) such Lender shall remain the
holder of its Note(s) for all purposes of this Agreement, (iv) the Loan
Parties and the Lessor shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Operative Documents, and (v) such Lender shall not
sell a participation that conveys to the participant the right to vote or
give or withhold consents under this Agreement or any other Operative
Document, other than (if and to the extent that such Lender so agrees) the
right to vote upon or consent to (A) any increase of such Lender's
Commitments (other than an increase resulting from an assignment to or in
favor of such Lender from another Lender in accordance with this
Agreement), (B) any reduction of the principal amount of, or interest to be
paid on, the Loans of such Lender, (C) any reduction of any commitment fee
or other amount payable to such Lender under any Operative Document if and
to the extent that such reduction would decrease the fee or other amount
payable to the participant, (D) any postponement of any date for the
32
<PAGE>
Participation Agreement
payment of any amount payable in respect of the Loan(s) of such Lender, (E)
any release of a material portion of the Collateral from the Liens created
by the Security Documents and not otherwise expressly authorized by the
Operative Documents, and (F) any release of any Loan Party from liability
under the Operative Documents.
(b) Each of the Loan Parties and each of the Lenders agree that any
Lender (the "Assigning Lender") may at any time assign to one or more
----------------
Eligible Assignees all, or a proportionate part of all, of its rights and
obligations under this Agreement and the other Operative Documents (each an
"Assignee"); provided, however, that (i) each such assignment may be of a
-------- -------- -------
varying percentage of the Assigning Lender's rights and obligations under
this Participation Agreement and the other Operative Documents and may
relate to some but not all of such rights and/or obligations, (ii) except
in the case of an assignment of all of a Lender's rights and obligations
under this Participation Agreement and the other Operative Documents, the
amount of the Loans of the Assigning Lender being assigned pursuant to each
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $2,000,000, and
(iii) the parties to each such assignment shall execute and deliver to the
Agent for its acceptance and recording in the Register (as defined below),
an Assignment and Acceptance, together with the Notes subject to such
assignment, and a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the effective
date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, or, if so
specified in such Assignment and Acceptance, the date of acceptance thereof
by the Agent, (1) the Assignee thereunder shall be a party hereto as a
"Lender" and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and under the Operative Documents,
and (2) the Assigning Lender thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under this Agreement and the other Operative Documents (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of a Lender's rights and obligations under the Operative Documents,
such Lender shall cease to be a party thereto, provided that such Lender's
--------
rights under Articles XI and XII and Section 2.1(i) accrued through the
----------- --- --------------
date of assignment shall continue). Notwithstanding anything to the
contrary contained in this Section 13.8, if the Assigning Lender is also a
------------
Financing Lender, each Financing Lender shall, in addition to and
concurrently with any assignment to an Eligible Assignee of such Financing
Lender's interest in the Financing Loans (or any portion thereof or
interest therein) also assign to such Eligible Assignee the same percentage
of the Term Loans, the Acquisition Loans and the Supremex Term Loans (as
those terms are defined in the Mail-Well Credit Agreement), if and to the
extent then owned by such Financing Lender at the time of such assignment,
as the percentage of the Financing Loans
33
<PAGE>
then owned and presently being assigned by such Financing Lender. For
example, in the event that such Financing Lender proposes to assign fifty
percent (50%) of its Financing Loans to an Eligible Assignee, such
Financing Lender shall also, concurrently therewith, assign fifty percent
(50%) in each of its Term Loans, Acquisition Loans and Supremex Term Loans
(as those terms are defined in the Mail-Well Credit Agreement) to such
Eligible Assignee.
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such Assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with the Operative Documents or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the
Operative Documents or any other instrument or document furnished pursuant
thereto; (ii) such Assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of its
obligations under the Operative Documents; (iii) such Assignee confirms
that it has received a copy of the other Operative Documents, together with
copies of the financial statements referred to in Section 7.2 in the
-----------
Mail-Well Credit Agreement and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent or such Assigning Lender
and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Operative Documents; (v) such
Assignee confirms that it is an Eligible Assignee; (vi) such Assignee
appoints and authorizes the Agent to take such action as agent on its
behalf and exercise such powers under the Operative Documents as are
delegated to the Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; and (vii) such Assignee agrees that it
will perform in accordance with their terms all of the obligations which by
the terms of the Operative Documents are required to be performed by it as
a Lender.
(d) The Agent shall maintain at its Principal Office a copy of each
Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders, and the
principal amount of the Loans owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding
--------
for all purposes, absent manifest error, and the Lessor, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes under the Operative Documents. The
Register shall be available for
34
<PAGE>
inspection by the Lessor or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible Assignee,
together with the Notes subject to such assignment, the Agent shall, if
such Assignment and Acceptance has been completed and is in substantially
the form of Exhibit F hereto, (i) accept such Assignment and Acceptance,
---------
(ii) record the information contained therein in the Register, and (iii)
give prompt written notice thereof to the Lessor. Within five Business Days
after its receipt of such notice the Lessor, at its expense, shall execute
and deliver to the Agent in exchange for each surrendered Note evidencing
particular Loans, a new Note evidencing each such Loans payable to the
order of such Eligible Assignee in an amount equal to such Loans assigned
to it and, if the Assigning Lender has retained any Loans, a new Note
evidencing each such Loans payable to the order of the Assigning Lender in
the amount of such Loans retained by it (each such promissory note shall
constitute a "Note" for purposes of the Operative Documents). Such new
Notes shall be dated the effective date of such Assignment and Acceptance
and shall otherwise be in substantially the form of the Note being
assigned.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 13.8, disclose to the Assignee or participant or proposed Assignee
------------
or participant any information relating to the Lessor, any other Loan Party
or any of their respective Subsidiaries furnished to such Lender by or on
behalf of the Lessor, any other Loan Party or any of their respective
Subsidiaries; provided that each such actual or proposed Assignee or
--------
participant shall agree to be bound by the provisions of Section 13.16
-------------
hereof.
(g) Any Lender may assign and pledge all or any of the Notes held by
it to any Federal Reserve Bank or the U.S. Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve System
and/or Federal Reserve Bank; provided, that, any payment made by the Lessor
--------
for the benefit of such assigning and/or pledging Lender in accordance with
the terms of the Operative Documents shall satisfy the Lessor's obligations
under the Operative Documents in respect thereof to the extent of such
payment. No such assignment and/or pledge shall release the assigning
and/or pledging Lender from its obligations hereunder.
(h) The Lessor shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of the Lessor,
------------------------
shall be kept by the Agent on behalf of the Lessor at no extra charge to
the Lessor at the address to which notices to the Agent are to be sent
hereunder) on which it enters the name of the registered owner of each
35
<PAGE>
of the Loan(s) evidenced by a Registered Note. Notwithstanding anything to
the contrary contained in this Section 13.8, a Registered Note and the
Loan(s) evidenced thereby may be assigned or otherwise transferred in
------------
whole or in part only by registration of such assignment or transfer of
such Registered Note and the Loan(s) evidenced thereby on the Registered
Note Register (and each Registered Note shall expressly so provide). Any
assignment or transfer of all or part of such Loan(s) and the Registered
Note evidencing the same shall be registered on the Registered Note
Register only upon surrender for registration of assignment or transfer of
the Registered Note evidencing such Loan(s), duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed
by) the registered noteholder thereof, and thereupon one or more new
Registered Notes in the same aggregate principal amount shall be issued to
the designated assignee(s) or transferee(s). Prior to the due presentment
for registration of transfer of any Registered Note, the Lessor and the
Agent shall treat the Person in whose name such Loan(s) and the Registered
Note(s) evidencing the same are registered as the owner thereof for the
purpose of receiving all payments thereon and for all other purposes,
notwithstanding any notice to the contrary. The Registered Note Register
shall be available for inspection by the Lessor and any Lender at any
reasonable time upon reasonable prior notice.
SECTION 13.9. GOVERNING LAW. THIS PARTICIPATION AGREEMENT SHALL IN ALL
-------------
RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF TEXAS (EXCLUDING ANY CONFLICT-
OF-LAW OR CHOICE-OF-LAW RULES WHICH MIGHT LEAD TO THE APPLICATION OF THE
INTERNAL LAWS OF ANY OTHER JURISDICTION) AS TO ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE.
SECTION 13.10. Severability. Any provision of this Participation Agreement
------------
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 13.11. Liability Limited.
-----------------
(a) Each party hereto acknowledges and agrees that the Lessor is
entering into this Participation Agreement and the other Operative
Documents to which it is a party solely as an accommodation to the Lessee
and that the Lessor shall not be liable or accountable under any
circumstances whatsoever for or on account of any statements,
representations, warranties, covenants or obligations stated to be those of
the Lessor, except for its own gross negligence or willful misconduct and
as otherwise expressly provided herein or in the other Operative Documents,
and it is understood and agreed that all Obligations of the Lessor under
the Operative Documents are solely nonrecourse obligations (except as
otherwise
36
<PAGE>
expressly provided therein). Nothing contained herein shall, however,
affect in any manner the liability of the Lessee hereunder and under the
other Operative Documents, which liability shall be full recourse.
(b) No Lender shall have any obligation to any other Lender or to the
Lessee or the Lessor with respect to transactions contemplated by the
Operative Documents, except those obligations of such Lender expressly set
forth in the Operative Documents or except as expressly set forth in the
instruments delivered in connection therewith, and no Lender shall be
liable for performance by any other party hereto of such other party's
obligations under the Operative Documents except as otherwise so set forth.
SECTION 13.12. Further Assurances. The parties hereto shall promptly cause
------------------
to be taken, executed, acknowledged or delivered, at the sole expense of the
Lessee, all such further acts, conveyances, documents and assurances as the
other parties may from time to time reasonably request in order to carry out and
preserve the security interests and liens (and the priority thereof) intended to
be created pursuant to this Participation Agreement, the other Operative
Documents, and the transactions thereunder (including, without limitation, the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements and other filings or registrations which the parties hereto
may from time to time request to be filed or effected); provided, however, that
-------- -------
the Lessee shall not be required to pay expenses pursuant to this Section 13.12
-------------
to the extent arising from a breach or alleged breach by the Lenders of any
agreement entered into in connection with the assignment or participation of any
Loan. The Lessee, at its own expense and without need of any prior request from
any other party, shall take such action as may be necessary (including any
action specified in the preceding sentence), or (if the Lessor shall so request)
as so requested, in order to maintain and protect all security interests
provided for hereunder or under any other Operative Document.
SECTION 13.13. Submission to Jurisdiction. Each of the Lessee and each
--------------------------
Subsidiary Guarantor hereby submits to the nonexclusive jurisdiction of the
United States District Courts for the Southern District of Texas in Houston,
Texas and for the Northern District of Texas, and of any Texas State Court
sitting in Houston or Dallas, Texas, for purposes of all legal proceedings
arising out of or relating to the Operative Documents or the transactions
contemplated hereby. Each of the Lessee and each Subsidiary Guarantor
irrevocably waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
SECTION 13.14. Setoff. Subject to the provisions of Article V of the Loan
------
Agreement, the Lessor and the Lenders shall, upon the occurrence of any Lease
Default or Lease Event of Default, have the right to appropriate and apply to
the payment of the Lessee's obligations under the
37
<PAGE>
Master Lease, this Participation Agreement, the Guaranty and the other Operative
Documents, and to the payment of the obligations of any Subsidiary Guarantor
under the Guaranty, any and all balances, credits, deposits, accounts or moneys
of the Lessee or any Subsidiary Guarantor then or thereafter maintained with the
Lessor or any Lender. The rights of the Lessor, the Financing Lenders and the
Equity Lenders under this Section 13.14 are in addition to other rights and
-------------
remedies (including other rights of setoff under applicable law or otherwise)
which such Person may have. Any such setoff shall be applied pro rata in payment
of the Obligations to the Financing Lenders and the Equity Lenders in accordance
with the priorities and provisions of the Intercreditor Agreement.
SECTION 13.15. WAIVER OF JURY TRIAL. THE PARTIES HERETO VOLUNTARILY AND
--------------------
INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS PARTICIPATION AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY OF THE PARTIES HERETO. THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT
SEEK TO CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER LITIGATION IN WHICH A
JURY TRIAL HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF THIS SECTION 13.15
-------------
HAVE BEEN FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO NO
EXCEPTIONS. THE LESSEE ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH
OTHER OPERATIVE DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THIS PARTICIPATION AGREEMENT
AND EACH SUCH OTHER OPERATIVE DOCUMENT.
SECTION 13.16. Confidentiality. Each Lender agrees to exercise its best
---------------
efforts to keep any information delivered or made available by any Loan Party to
it which is clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by such Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Lender
--------
from disclosing such information (a) to any other Lender, (b) to any Person if
reasonably incidental to the administration of the Loans, (c) upon the order of
any court or administrative agency, (d) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Lender, (e) which
has been publicly disclosed, (f) in connection with any litigation to which the
Agent, any Lender or their respective Affiliates may be a party, (g) to the
extent reasonably required in connection with the exercise of any remedy under
the Operative Documents, (h) to such Lender's legal counsel, independent
auditors and affiliates, and (i) to any actual or proposed participant or
Assignee of all or part of its rights hereunder, so long as such actual or
proposed participant or Assignee agrees to be bound by the provisions of this
Section 13.16.
- -------------
38
<PAGE>
SECTION 13.17. Approvals and Consent. Except as may be expressly
---------------------
provided to the contrary in this Agreement or in the other Operative Documents
(as applicable), in any instance under this Agreement or the other Operative
Documents where the approval, consent or exercise of judgment of the Agent or
any Lender is requested or required, (a) the granting or denial of such approval
or consent and the exercise of such judgment shall be within the sole discretion
of the Agent and such Lender, and the Agent and such Lender shall not, for any
reason or to any extent, be required to grant such approval or consent or to
exercise such judgment in any particular manner, regardless of the
reasonableness of the request or the action or judgment of the Agent or such
Lender, and (b) no approval or consent of the Agent or any Lender shall in any
event be effective unless the same shall be in writing and the same shall be
effective only in the specific instance and for the specific purpose for which
given.
[remainder of page left intentionally blank]
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
MAIL-WELL I CORPORATION, as
Lessee and Guarantor
By:
----------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
40
<PAGE>
ADDITIONAL GUARANTORS:
---------------------
MAIL-WELL, INC.,
as a Guarantor
By:
------------------------------------------
Name:
---------------------------------
Title:
--------------------------------
41
<PAGE>
WISCO ENVELOPE CORP.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
42
<PAGE>
PAVEY ENVELOPE AND TAG CORP.,
as a Guarantor
By:_____________________________________
Name:
------------------------------
Title:
-----------------------------
43
<PAGE>
MAIL-WELL WEST, INC.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
44
<PAGE>
WISCO II, L.L.C.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
45
<PAGE>
MAIL-WELL CANADA HOLDINGS, INC.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
46
<PAGE>
GRAPHIC ARTS CENTER, INC.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
47
<PAGE>
WISCO III, L.L.C.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
48
<PAGE>
WISCO ENVELOPE CORP.,
as a Guarantor
By:
-----------------------------------------
Name:
---------------------------------
Title:
--------------------------------
49
<PAGE>
PARIBAS PROPERTIES, INC.
a Delaware corporation
By:______________________________________
Edward V. Canale, President
By:______________________________________
Matthew J. Cooleen, Vice President
50
<PAGE>
FINANCING LENDER:
----------------
ARAB BANKING CORPORATION
(B.S.C.)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
-------------------
Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
New York, New York 10172
Telecopy No.: 212-583-0921
Telephone No.:_____________
Attention: Ms. Louise Weiss
With a copy to:
Arab Banking Corporation (B.S.C.)
600 Travis Street, Suite 1900
Houston, Texas 77002
Telecopy No.: 713-227-6507
Telephone No.: 713-227-8444
Attention: Stephen Plauche
Lending Office for Prime Rate Loans:
-----------------------------------
Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
New York, New York 10172-3299
Attention: Ms. Louise Weiss
51
<PAGE>
FINANCING LENDER:
----------------
BANK OF AMERICA ILLINOIS
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
-------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Telecopy No.: 312-974-9626
Telephone No.: 312-828-6386
Attention: Juanita L. Hester
with a copy to:
Bank of America
U.S. Div. - S.F. Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attention: Kevin Leader
Lending Office for Prime Rate Loans:
-----------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Juanita L. Hester
52
<PAGE>
FINANCING LENDER:
----------------
THE BANK OF NOVA SCOTIA
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
-------------------
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Telecopy No.: 404-888-8998
Telephone No.: 404-877-1500
Attention: F.C.H. Ashby
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telecopy No.: 713-752-2425
Telephone No.: 713-759-3432
Attention: Rosine Matthews
Lending Office for Prime Rate Loans:
-----------------------------------
The Bank of Nova Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Attention: Cleve Bushey
53
<PAGE>
FINANCING LENDER:
----------------
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
-------------------
The Boatmen's National Bank of St. Louis
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Telecopy No.: 314-466-6645
Telephone No.: 314-466-7368
Attention: Pamela Boggeman
Lending Office for Prime Rate Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis,
Leveraged Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
Lending Office for Eurodollar Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis,
Leveraged Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
54
<PAGE>
FINANCING LENDER:
----------------
THE CIT GROUP/BUSINESS CREDIT,
INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Address for Notices:
-------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Telecopy No.: 972-455-1690
Telephone No.: 972-455-1678
Attention: Pam Wozniak or Susan Brooks
Lending Office for Prime Rate Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
Lending Office for Eurodollar Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
55
<PAGE>
FINANCING LENDER:
----------------
CREDIT LYONNAIS NEW YORK
BRANCH
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Addresses for Notices:
---------------------
Credit Lyonnais
1301 Avenue of the
Americas
New York, New York 10019
Telecopy No.: 212-459-3170
Telephone No.: 212-459-7000
Attention: Mark Koneval
With a copy to:
Credit Lyonnais
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Telecopy No.: 214-220-2323
Telephone No.: 214-220-2300
Attention: Brian Brown
Lending Office for Prime Rate Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
Lending Office for Eurodollar Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
56
<PAGE>
Attention: Credit Lyonnais
57
<PAGE>
FINANCING LENDER:
----------------
THE FUJI BANK, LIMITED
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
Address for Notices:
-------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Telecopy No.: 713-759-0048
Telephone No.: 713-650-7854
Attention: Nate Ellis
Lending Office for Prime Rate Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
Lending Office for Eurodollar Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
58
<PAGE>
FINANCING LENDER:
----------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address for Notices:
-------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Telecopy No.: 212-608-2371
Telephone No.: 212-335-4550
Attention: Frank H. Madden
Lending Office for Prime Rate Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
Lending Office for Eurodollar Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
59
<PAGE>
FINANCING LENDER:
----------------
NATIONAL BANK OF CANADA
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address for Notices:
-------------------
National Bank of Canada
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Telecopy No.: 214-871-2015
Telephone No.: 214-871-1208
Attention: Larry Sears (2 copies requested)
Lending Office for Prime Rate Loans:
-----------------------------------
National Bank of Canada, New York Branch
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
Lending Office for Eurodollar Loans:
-----------------------------------
National Bank of Canada
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
60
<PAGE>
FINANCING LENDER:
----------------
NATIONSBANK OF TEXAS, N.A.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Address for Notices:
-------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Telecopy No.: 214-508-0980
Telephone No.: 214-508-3363
Attention: Kimberly Knop
Lending Office for Prime Rate Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
Lending Office for Eurodollar Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
61
<PAGE>
FINANCING LENDER:
----------------
SOCIETE GENERALE, SOUTHWEST
AGENCY
By:
----------------------------------------
Name:
--------------------------------------
Title:
-------------------------------------
Address for Notices:
-------------------
Societe Generale
1111 Bagby, Suite 2020
Houston, Texas 77002
Telecopy No.: 713-650-0824
Telephone No.: 713-759-6318
Attention: Dick Erbert
with a copy to:
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Prime Rate Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Eurodollar Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
62
<PAGE>
Participation Agreement
63
<PAGE>
FINANCING LENDER:
----------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
-------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Telecopy No.: 713-216-6387
Telephone No.: 713-216-5656
Attention: Mary Arnold
Lending Office for Prime Rate Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
Lending Office for Eurodollar Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
64
<PAGE>
EQUITY LENDERS:
--------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Address for Notices:
-------------------
General Electric Capital Corporation
5400 LBJ Freeway, Suite 1280
Dallas, Texas 75240
Telecopy No.: 214-991-6367
Telephone No.: 214-419-3229
Attention: Steven R. Bellah
Lending Office for Prime Rate Loans:
-----------------------------------
-----------------------------------
-----------------------------------
Attention:
----------------------
Lending Office for Eurodollar Loans:
-----------------------------------
-----------------------------------
-----------------------------------
Attention:
----------------------
65
<PAGE>
BANQUE PARIBAS,
as Agent and a Financing Lender
By: ________________________________________
Pierre-Jean de Filippis, General Manager
By: ________________________________________
Christopher S. Goodwin, Vice President
66
<PAGE>
BANQUE PARIBAS, as an Equity Lender
By: ________________________________________
Pierre-Jean de Filippis, General Manager
By: ________________________________________
Christopher S. Goodwin, Vice President
67
<PAGE>
SCHEDULE I
COMMITMENTS
-----------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
TYPE OF COMMITMENT
LENDERS LENDER AMOUNT COMMITMENT PERCENTAGE
- -------------------------------------------------------------------------------------------------------------------------------
EQUITY FINANCING ALL
LOANS LOANS LOANS
===============================================================================================================================
<S> <C> <C> <C> <C> <C>
BANQUE PARIBAS FINANCING 4,106,180.60 $ 0.00 16.759920816% 4,106,180.60
ARAB BANKING CORPORATION (B.S.C.) FINANCING 1,713,420.29 $ 0.00 6.993552204% 1,713,420.29
BANK OF AMERICA ILLINOIS FINANCING 2,855,700.49 $ 0.00 11.655920367% 2,855,700.49
THE BANK OF NOVA SCOTIA FINANCING 1,427,850.24 $ 0.00 5.827960163% 1,427,850.24
THE BOATMEN'S NATIONAL BANK OF ST. FINANCING 1,657,678.93 $ 0.00 6.766036449% 1,657,678.93
LOUIS
THE CIT GROUP/BUSINESS FINANCING 1,657,678.93 $ 0.00 6.766036449% 1,657,678.93
CREDIT, INC.
CREDIT LYONNAIS NEW YORK BRANCH FINANCING 1,713,420.29 $ 0.00 6.993552204% 1,713,420.29
THE FUJI BANK, LIMITED FINANCING 1,713,420.29 $ 0.00 6.993552204% 1,713,420.29
THE LONG-TERM CREDIT BANK OF JAPAN, FINANCING 1,713,420.29 $ 0.00 6.993552204% 1,713,420.29
LIMITED, NEW YORK BRANCH
NATIONAL BANK OF CANADA FINANCING 1,427,850.24 $ 0.00 5.827960163% 1,427,850.24
NATIONSBANK OF TEXAS, N.A. FINANCING 1,713,420.29 $ 0.00 6.993552204% 1,713,420.29
SOCIETE GENERATE, SOUTHWEST AGENCY FINANCING 1,142,280.19 $ 0.00 4.662368122% 1,142,280.19
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
TYPE OF COMMITMENT
LENDERS LENDER AMOUNT COMMITMENT PERCENTAGE
- --------------------------------------------------------------------------------------------------------------------------------
EQUITY FINANCING ALL
LOANS LOANS LOANS
================================================================================================================================
<S> <C> <C> <C> <C> <C>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION FINANCING 1,657,678.93 $ 0.00 6.766036449% 1,657,678.93
TOTAL: FINANCING $ 24,500,000 0.00% 100.00000000% 81.67%
- ------
=================================================================================================================================
=================================================================================================================================
=================================================================================================================================
GENERAL ELECTRIC
CAPITAL CORPORATION EQUITY $5,500,000.00 0.000000000%
TOTAL EQUITY LOANS: EQUITY $ 5,500,000 100% 0.00% 18.33%
- -------------------
TOTAL LOANS: ALL LENDERS $ 30,000,000 18.33% 81.67% 100%
- ------------
</TABLE>
<PAGE>
SCHEDULE II
DISCLOSURE OF CERTAIN INFORMATION
SUBSIDIARIES OF THE LESSEE
<TABLE>
<CAPTION>
Stock
Stock Issuer Class of Stock Certificate Par Number of Percentage of
No(s). Value Shares Outstanding Shares
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Pavey Envelope and Tag Common 3 $1.00 3,000 100%
Corp.
WISCO Envelope Corp. Common 1 no 1,000 100%
Mail-Well West, Inc. Common 1 $0.01 1,000 100%
Mail-Well Canada Holdings, Common 001 $0.01 1,000 100%
Inc.
Graphic Arts Center, Inc. Common 1 $0.01 1,000 100%
Wisco II, L.L.C. Limited Liability 1 N/A N/A 1% of Membership
Company Membership Interests
Interests
Wisco III, L.L.C. Limited Liability 1 N/A N/A 1% of Membership
Company Membership Interests
Interests
</TABLE>
<PAGE>
SCHEDULE III
POST-CLOSING MATTERS
<PAGE>
SCHEDULE IV
NOTICES INFORMATION, WIRE INSTRUCTIONS,
AND FUNDING OFFICES
<TABLE>
<CAPTION>
===============================================================================================
LENDER WIRING INSTRUCTIONS
===============================================================================================
<S> <C>
Arab Banking Corporation Chase Manhattan Bank, New York
(B.S.C.) ABA #021-000-021
For the account of: Arab Banking Corporation, New York
Account #001-1-534682 - Mailwell
Attn: Loan Department
- -----------------------------------------------------------------------------------------------
Bank of America Illinois Bank of American Illinois - Chicago, Illinois
ABA #071000039
Account Name: Mailwell
Attn: Loan Division - PC 1159
Attn: Juanita L. Hester for further credit to 47-03421 - Mailwell
- -----------------------------------------------------------------------------------------------
The Bank of New York The Bank of New York
ABA #021000018
GLA #111556 - Commercial Loan Department
Attn: Lorna Alleyne
Reference: Mail-Well
- -----------------------------------------------------------------------------------------------
The Bank of Nova Scotia Fed-wire - The Bank of Nova Scotia, New York Agency
ABA#026002532
for further credit to Atlanta Agency
Acct.#0606634
Re: Mailwell
Attn: Cleve Bushey
- -----------------------------------------------------------------------------------------------
The Boatmen's National The Boatmen's National Bank of St. Louis, MO
Bank of St. Louis ABA #081000032
For credit to: Commercial Loan Wash Account
Account #101409997409
----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
===============================================================================
LENDER WIRING INSTRUCTIONS
===============================================================================
The CIT Group/Business Chase Manhattan Bank
Credit, Inc. The CIT Group/Business Credit, Inc.
ABA #021000128
For Credit to Account #144016503 - Mail
- -------------------------------------------------------------------------------
Credit Lyonnais New York Federal Reserve Bank of New York for the account
Branch of Credit Lyonnais NY
ABA #0260-0807-3
Reference: Mail-Well
Attn: Loan Servicing (interest, fees,
repayments, etc.)
- -------------------------------------------------------------------------------
The Fuji Bank, Limited Texas Commerce Bank, N.A.
Houston, Texas ABA #113000609
Account #0010-197-3098
For Benefit of The Fuji Bank, Limited-Houston
Agency
Reference: Mail-Well
Attn: Loan Administration
- -------------------------------------------------------------------------------
The Long-Term Credit Bank Chase Manhattan Bank, New York
of Japan, Limited, New ABA #021-000-021
York Branch Name of Account: The Long-Term Credit Bank of
Japan, Ltd., New York Branch
Account #544-7-75066
Attn: Robert Pacifici
- ------------------------------------------------------------------------------
National Bank of Canada National Bank of Canada, New York Branch
ABA # (none shown)
For Credit to account #1561-00097602
I/n/o Mailwell I Corporation
Reference: Interest, Principal, Fees, etc.
- -------------------------------------------------------------------------------
NationsBank of Texas, N.A. NationsBank of Texas, N.A.
ABA 111000025
Corp Loans Funds Transfer 1292000883
Reference: Mail Well
Attn: Stacey Smith
- -------------------------------------------------------------------------------
<PAGE>
===============================================================================
LENDER WIRING INSTRUCTIONS
===============================================================================
Societe Generale, Society Generale, New York
Southwest Agency ABA# 026004226
Reference: Mail Well #9037578 or
Obligors of Mail Well #9037551 or
Supremex #9037608
- -------------------------------------------------------------------------------
Texas Commerce Bank Texas Commerce Bank - Houston
National Association ABA #113-000-609
Credit: Commercial Loan Clearing Account
GL #7001-13681-7800
Reference: Mail Well Corporation
- -------------------------------------------------------------------------------
General Electric Capital General Electric Capital Corporation
Corporation Bankers Trust, New York, NY
ABA#021-001-033
Acct.#50-202-962
Reference: Mail-Well
Attn: John Hanley, V.P.
- -------------------------------------------------------------------------------
Banque Paribas Bank: Bankers Trust Company New York
ABA Number: 021001033
Account Number:
For Credit to Account No.:
Ref: Mail-Well I Financing
- ------------------------------------------------------------------------------
<PAGE>
EXHIBIT A
DESCRIPTION OF THE EQUIPMENT
----------------------------
<PAGE>
EXHIBIT B
FORM OF FUNDING REQUEST
-----------------------
November 15 , 1996
------
To each of the Lessor, the Equity Lenders,
the Financing Lenders and the Agent named on Annex I hereto
Re: Participation Agreement (the "Participation Agreement") dated as of
-----------------------
November 15 , 1996, among Mail-Well I Corporation (the "Lessee"),
---- ------
certain subsidiaries of Mail-Well I Corporation, Banque Paribas and
various financial institutions identified therein as Equity Lenders
(the "Equity Lenders") and Financing Lenders (the "Financing
-------------- ---------
Lenders"), Paribas Properties, Inc. (the "Lessor"), and Banque
------
Paribas, as Agent for Financing Lenders - Funding Request
------- -------
Gentlemen:
In accordance with Section 3.4 of the Participation Agreement, the Lessee
hereby notifies the Financing Lenders and the Equity Lenders that it requests
Advances be made to the Lessor in accordance with the terms of the Participation
Agreement. Unless otherwise indicated, capitalized terms used herein shall have
the respective meanings given to them in the Participation Agreement. The
amount of each requested Advance and the date upon which it is to be made are as
follows:
1. The date each requested Advance is to be made, being the Effective
Date, is November 15 , 1996.
------
2. The aggregate amount of the requested Advances is Thirty Million
Dollars ($30,000,000), which Advances are to be made by the Financing Lenders
and Equity Lenders as follows:
Financing Lenders Amount of Advance
----------------- -----------------
____________________________ $________________
____________________________ $________________
____________________________ $________________
____________________________ $________________
____________________________ $________________
<PAGE>
Financing Lenders Amount of Advance
----------------- -----------------
____________________________ $________________
____________________________ $________________
____________________________ $________________
____________________________ $________________
TOTAL: $24,500,000.00
Equity Lenders Amount of Advance
----------------- -----------------
____________________________ $________________
____________________________ $________________
____________________________ $________________
TOTAL: $5,500,000.00
The Advances are to be made to the Lessor to be used for the payment of
the Purchase Price payable by the Lessor to the Lessee and the Subsidiary
Guarantors for the Equipment as set forth on Annex II, attached hereto, on the
--------
Effective Date.
Lessee hereby certifies that (i) on the date hereof all applicable
conditions to the proposed Advances set forth in Article VI of the Participation
Agreement and in Article III of the Loan Agreement have been satisfied, (ii) the
proposed Advances will comply with all terms of the Participation Agreement, the
Loan Agreement and the other Operative Documents, and (iii) no Default or any
Event of Default has occurred and is continuing under any such document.
Yours very truly,
MAIL-WELL I CORPORATION
By:
---------------------------------------
- -
Name:
--------------------------------------
Title:
-------------------------------------
<PAGE>
ANNEX II
--------
DESCRIPTION AND PURCHASE PRICE OF EACH ITEM OF THE EQUIPMENT
Item of Equipment Purchase Price
----------------- --------------
<PAGE>
EXHIBIT C
FORM OF RESPONSIBLE OFFICER'S CERTIFICATE
-----------------------------------------
<PAGE>
EXHIBIT D
FORM OF BILL OF SALE
--------------------
BILL OF SALE AND ASSIGNMENT OF EQUIPMENT
THIS BILL OF SALE AND ASSIGNMENT OF EQUIPMENT (this "Bill of Sale"), made
and entered into on this the 15th day of November, 1996, by MAIL-WELL I
CORPORATION, a Delaware corporation ("Assignor"), whose address is 23 Inverness
Way East, Englewood, Colorado 80112, to and for the benefit of PARIBAS
PROPERTIES, INC., a Delaware corporation ("Assignee"), whose address is 1200
Smith Street, Suite 3100, Houston, Texas 77002;
W I T N E S S E T H:
- - - - - - - - - -
Recitals
--------
A. Assignor, Assignee and various financial institutions identified
therein as "Lenders" (and herein so called), and Banque Paribas, as Agent for
such Lenders, have entered into a certain Participation Agreement (the
"Participation Agreement") dated as of November 15, 1996, which provides, among
- ------------------------
other things, for the lease financing of certain envelope and commercial
printing equipment owned by Assignor (the "Equipment"). The Equipment is more
---------
particularly described on Annex I attached hereto and made a part hereof for all
-------
purposes.
B. In accordance with the provisions of the Participation Agreement, the
Financing Lenders have, concurrently herewith, advanced to Assignee the sum of
$24,500,000.00 and the Equity Lenders have, concurrently herewith, advanced to
Assignee the sum of $5,500,000.00, aggregating $30,000,000.00 (the "Purchase
--------
Price"), to be used by Assignee for the purchase of the Equipment from Assignor.
- -----
Also, concurrently herewith, the Purchase Price has been paid by Assignee to
Assignor and the Equipment is being leased by Lessor to Lessee pursuant to a
certain Master Equipment Lease and Security Agreement, dated of even date
herewith (the "Master Lease").
------------
C. Pursuant to the Participation Agreement, Assignor desires to hereby
sell, assign, transfer and convey to Assignee all of the Equipment together with
all right, title and interest of Assignor in and to all fittings, accessories,
warranties, service contracts, guarantees and other items of tangible and
intangible personal property owned by Assignor and affixed or attached to, or
(with respect to intangible personal property) acquired or used in connection
with the operation of, the
1
<PAGE>
Equipment (the Equipment, together with all of Assignor's right, title and
interest in and to such other properties and assets, being collectively called
the "Assigned Properties").
-------------------
NOW, THEREFORE, for and in consideration of the premises and the sum of
Thirty Million Dollars ($30,000,000.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed by Assignor, Assignor does hereby SELL, ASSIGN, TRANSFER, SET OVER and
DELIVER unto Assignee, its successors and assigns, all of the Assigned
Properties, free and clear of any and all liens or other encumbrances whatsoever
except as expressly provided in the Master Lease.
TO HAVE AND TO HOLD the Assigned Properties unto Assignee, its successors
and assigns, forever; and Assignor does hereby bind itself and its successors
and assigns to WARRANT and FOREVER DEFEND, all and singular, title to the
Assigned Properties unto Assignee, its successors and assigns, against every
person whomsoever lawfully claiming or to claim the same or any part thereof.
1. Representations and Warranties. Assignor hereby represents and
------------------------------
warrants to Assignee as follows:
a. Affirmation of Representations and Warranties in Participation
--------------------------------------------------------------
Agreement. Each of the representations and warranties of Assignor set
---------
forth in the Participation Agreement is true and correct in all material
respects as of the date hereof.
b. Authorization. This Bill of Sale has been duly authorized,
-------------
executed and delivered on behalf of Assignor, and Assignor has full power
and authority to enter into and perform its respective obligations
hereunder.
c. No Breach. Neither the execution and delivery of this Bill of Sale
-- ------
nor the consummation of the transactions contemplated hereby will (i)
violate, conflict with or result in the breach or termination of, or
otherwise give any other contracting party the right to terminate, or
constitute a default (by way of substitution, novation or otherwise) under
the terms of, any mortgage, lease, bond, indenture, agreement, franchise or
other instrument or obligation to which any Assignor is a party or by which
any of the Assigned Properties may be bound or affected, (ii) result in the
creation of any lien, charge or encumbrance upon the Assigned Properties
pursuant to the terms of any such mortgage, bond, indenture, agreement,
franchise or other instrument or obligation or otherwise other than liens
in favor of Assignee, (iii) violate any judgment, order, injunction, decree
or award of any court, administrative agency or governmental body against,
or binding upon, Assignor or the Assigned Properties, or (iv) constitute a
violation by Assignor of any law or regulation applicable to Assignor or
the Assigned Properties.
2
<PAGE>
d. Ownership of the Equipment and Other Assigned Properties. Assignor
--------------------------------------------------------
has good and marketable title to the Equipment and other Assigned
Properties, free and clear of any liens or other encumbrances whatsoever
other than liens in favor of Assignee.
e. Compliance with Laws. Assignor is not in violation of (i) any
--------------------
applicable judgment, order, injunction, writ or decree, or (ii) any
federal, state or local law, ordinance or regulation or any other
requirement of any governmental body, court or arbitrator, in each such
case, which is applicable to the Equipment or other Assigned Properties,
including, without limitation, the Occupational Safety and Health Act, the
Americans with Disabilities Act, and all applicable laws, rules and
regulations relating to the protection of human health or the environment.
No permits, licenses, orders and approvals of any federal, state, local or
foreign government or regulatory body (other than those which have been
obtained) are necessary or required for the acquisition, ownership,
operation or leasing by Assignee of the Equipment and other Assigned
Properties.
f. Outstanding Commitments. There are no outstanding contracts or
-----------------------
commitments applicable to the Equipment or any part thereof which would
bind Assignee or the Equipment or other Assigned Properties to any
obligation or liability whatsoever. Attached hereto as Annex II and made a
--------
part hereof is a true, correct and complete list of all warranties, service
contracts, and guaranties relating to the Assigned Properties for the
benefit of the owner thereof, all of which are assignable to Assignee and
have been duly assigned and transferred to Assignee pursuant to the terms
hereof.
g. Actions and Proceedings. There are no charges, actions, suits,
-----------------------
claims or legal, administrative or arbitration proceedings or
investigations (whether or not the defense thereof or liabilities in
respect thereof are covered by policies of insurance), potential, pending
or, to the knowledge of any Assignor, threatened, against or involving the
Equipment or other Assigned Properties, and there are no outstanding
orders, writs, injunctions or decrees of any court, governmental agency or
arbitration tribunal against or involving the Equipment or other Assigned
Properties. To the best knowledge of Assignor, there are no bases or
grounds for any suit, action, claim, investigation or proceeding that would
adversely affect the Equipment or other Assigned Properties.
h. Full Disclosure. All documents and schedules delivered or to be
---------------
delivered by or on behalf of Assignor to Assignee in connection with this
Bill of Sale and the transactions contemplated hereby, taken as a whole,
are and will be true, correct and complete in all material respects.
3
<PAGE>
i. Due Organization. Assignor is a corporation duly organized,
----------------
validly existing, and in good standing under the laws of the State of its
incorporation, with full power and authority to enter into and perform this
Bill of Sale.
j. Adequacy of Assets. The Equipment and other Assigned Properties
------------------
constitute all items of personal property, both tangible and intangible, as
of the date hereof, that historically have been used in the operation of
the Equipment. Each item of the Equipment is suitable and adequate for the
business purpose for which it is now being used.
k. Taxes. Assignor has filed all requisite federal, state and local
-----
tax returns due for all fiscal periods ending on or before September 31,
1996, and have paid all taxes required thereby. None of the Equipment or
other Assigned Properties is subject or will be subject to a lien for
unpaid taxes.
l. Compliance with Laws. Assignor has owned and operated, and will
--------------------
continue to operate, the Equipment and other Assigned Properties in
compliance with all applicable federal and state laws, rules and
regulations (including without limitation environmental laws) and in
accordance with the terms of the Master Lease.
2. No Agents. No agent or finder has acted on behalf of any Assignor in
---------
connection with the transactions contemplated hereby. In the event that any
claim is at any time made by any agent or finder for any fee or other commission
in connection with the transactions contemplated herein, such claim shall be
handled and satisfied solely by the Assignor whose commitments or alleged
commitments gave rise thereto.
3. Indemnification. Assignor agrees to indemnify, defend and hold
---------------
harmless Assignee from and against any and all costs, expenses and losses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements, arising out of or otherwise in respect of any inaccuracy
in or breach of any representation, warranty, covenant or agreement of Assignor
contained in this Bill of Sale.
4. Further Assurances. Assignor agrees to perform such other acts and to
------------------
execute, acknowledge and/or deliver subsequent to the date hereof such other
instruments, documents and other materials, as Assignee may reasonably request
from time to time in order to effectuate the conveyance and assignment of the
Equipment and the other Assigned Properties to Assignee and to vest good and
marketable title thereto in Assignee.
5. Access to Records. Assignor agrees to preserve all books, records and
-----------------
documents in its possession relating to any of the Equipment or other Assigned
Properties. In the event that Assignee shall any time require access to such
books, records and documents for any purpose
4
<PAGE>
whatsoever, including, without limitation, verifying the accuracy of the
representations and warranties contained herein, preparing tax returns or
complying with any audit request, Assignor shall allow representatives of
Assignee access to such books, records and documents during regular business
hours for the purpose of obtaining such information and will permit Assignee and
its representatives to make extracts and copies thereof as may be deemed
necessary or appropriate by Assignee.
6. Governing Law. This Bill of Sale shall be governed by and construed
-------------
in accordance with the laws of the State of Texas.
7. Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Bill of Sale.
8. Execution in Counterparts. This Bill of Sale may be executed in one
-------------------------
or more counterparts, all of which shall be considered one and the same
agreement, and shall become a binding agreement when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
9. No Assumption by Assignee. Assignee does not hereby assume or agree
-------------------------
to perform any debt, duty or obligation of Assignor or any other party with
respect to the Assigned Properties, and any such assumption or agreement is
hereby expressly disclaimed.
10. Binding Effect. All of the covenants, terms and conditions set forth
--------------
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and assigns.
EXECUTED as of the day and year first above written.
ASSIGNOR:
MAIL-WELL I CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
5
<PAGE>
ASSIGNEE:
PARIBAS PROPERTIES, INC.
By:____________________________________
Edward V. Canale, President
By:____________________________________
Matthew J. Cooleen, Vice President
6
<PAGE>
EXHIBIT E
FORM OF ASSIGNMENT AND ACCEPTANCE
---------------------------------
Date: _______________, 19__
Reference is made to the Participation Agreement dated as of November 15,
1996 (as the same may be amended, modified, supplemented, renewed, extended or
restated from time to time, the "Participation Agreement"), among Paribas
-----------------------
Properties, Inc.. (the "Lessor"), Mail-Well I Corporation (the "Lessee"),
------ ------
certain subsidiaries of the Lessee, the Lenders named therein (the "Lenders"),
-------
and Banque Paribas, as agent for the Lenders (in such capacity, the "Agent").
-----
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Participation Agreement. This Assignment
and Acceptance is being executed pursuant to Section 13.8 of the Participation
------------
Agreement.
_____________________ (the "Assignor") and _________________ (the "Assignee")
agree as follows: -------- --------
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, the following interests in and
to the Assignor's rights and obligations under the Participation Agreement and
the other Operative Documents as of the Effective Date (as defined below):
(a) a ____% interest in the aggregate outstanding principal amount of
the Financing Loans (which percentage interest represents a _____%
interest in the $24,500,000 aggregate principal amount of the
Financing Loans presently outstanding); or
(b) a ____% interest in the aggregate outstanding principal amount of
the Equity Loans (which percentage interest represents a ______%
interest in the $5,500,000 aggregate principal amount of the Equity
Loans presently outstanding).
After giving effect to this Assignment and Acceptance, the interest of the
Assignor in the outstanding principal amount of the Financing Loans will be
$__________________ and of the Equity Loans will be $________________.
2. The Assignor (i) represents that, as of the date hereof, (A) its
interest in the Financing Loans is $_______________ and in the Equity Loans is
$_______________; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements,
1
<PAGE>
warranties or representations made in or in connection with the Participation
Agreement or any other Operative Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Participation Agreement
or any other Operative Document, other than that it is the legal and beneficial
owner of the interest being assigned by it hereunder and that such interest is
free and clear of any adverse claim; (iii) makes no representation or warranty
and assumes no responsibility with respect to the financial condition of any
Loan Party or the performance or observance by any Loan Party of any of its
obligations under the Participation Agreement or any other Operative Document;
and (iv) attaches the Notes held by Assignor and requests that the Agent
exchange such Notes for a Note payable to the order of the Assignee in an amount
equal to Financing Loans or the Equity Loans, as the case may be, assigned to
the Assignee pursuant.
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Participation Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.1 thereof, and such other
-----------
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will, independently and without reliance upon the Agent, the Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Participation Agreement and the other Operative
Documents; (iv) confirms that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action on the Assignee's behalf and to
exercise such powers under the Operative Documents as are delegated to the Agent
by the terms thereof, together with such powers as are reasonably incidental
thereto; (vi) agrees that it will perform in accordance with their terms all
obligations which by the terms of the Participation Agreement and the other
Operative Documents are required to be performed by it as a Lender; (vii) agrees
that it will keep confidential all information with respect to the Loan Parties
furnished to it by any Loan Party or the Assignor marked as being confidential
(other than information generally available to the public) in accordance with
Section 13.20 of the Participation Agreement; and (viii) attaches the forms
- -------------
prescribed by the Internal Revenue Service of the United States certifying as to
the Assignee's exemption from United States withholding taxes with respect to
all payments to be made to the Assignee under the Participation Agreement, or a
certificate as to the Assignee's exemption from United States withholding taxes
with respect to all payments to be made to the Assignee under the Participation
Agreement, or such other documents as are necessary to indicate that all such
payments are subject to such tax at a rate reduced by an applicable tax
treaty; /1/ and (iv) represents and warrants that it is resident
in ______________.
- --------------------
/1/ If the Assignee is organized under the laws of a jurisdiction outside the
United States.
2
<PAGE>
4. The effective date for this Assignment and Acceptance shall be
___________ ____, 19__ (the "Effective Date"). /2 Following the execution of
--------------
this Assignment and Acceptance, it will be delivered to the Agent for
acceptance by the Agent.
5. Upon such acceptance, from and after the Effective Date, (i) the
Assignee shall be a party to the Participation Agreement and, to the extent
provided in this Assignment and Acceptance, shall have the rights and
obligations of a Lender thereunder and under the other Operative Documents, (ii)
the Assignee shall be a party to the Loan Agreement as if it were a signatory
thereto, and to the extent provided in this Assignment and Acceptance, shall
have the rights and obligations of a Lender thereunder, and (iii) the Assignor
shall, to the extent provided in this Assignment and Acceptance and in the
Participation Agreement, relinquish its rights and be released from its
obligations under the Participation Agreement and the other Operative Documents.
6. Upon such acceptance, from and after the Effective Date, the Agent
shall make all payments in respect of the interest assigned hereby (including
payments of principal, interest, fees and other amounts) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Participation Agreement and the Note(s) for periods prior to the Effective
Date directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
8. The Assignee's address for notices and Applicable Lending Office for
purposes of the Participation Agreement (until such address or office are
subsequently changed in accordance with the Participation Agreement) are
specified below its name on the signature pages of this Assignment and
Acceptance.
- ----------------------------
/2/ Such date shall be at least five Business Days after the execution of this
Agreement and Acceptance and delivery thereof to the Agent (unless
otherwise agreed by the Agent).
3
<PAGE>
[NAME OF ASSIGNOR]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
[NAME OF ASSIGNEE]
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
Address for Notices:
-------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Fax No. (_____)_____________________________
Telephone No. (_____)_______________________
Attention:__________________________________
Lending Office for Prime Rate Loans:
-----------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
Lending Office for Eurodollar Loans:
-----------------------------------
--------------------------------------------
--------------------------------------------
--------------------------------------------
4
<PAGE>
ACCEPTED BY:
BANQUE PARIBAS, as Agent for the Lenders
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
APPROVED BY:
MAIL-WELL I CORPORATION
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
5
<PAGE>
EXHIBIT 10.46
================================================================================
LOAN AGREEMENT
dated as of November 15, 1996
among
PARIBAS PROPERTIES, INC.
as Lessor,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN
as Financing Lenders,
VARIOUS FINANCIAL INSTITUTIONS
IDENTIFIED HEREIN
as Equity Lenders
and
BANQUE PARIBAS
as Agent for the Lenders
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - DEFINITIONS; INTERPRETATION....................................... 2
ARTICLE II - AMOUNT AND TERMS OF LENDERS' COMMITMENTS......................... 2
SECTION 2.1. Commitments................................................ 2
SECTION 2.2. Notes...................................................... 2
SECTION 2.3. Prepayments................................................ 2
SECTION 2.4. Interest Rates, Optional Prepayments and Conversions,
and Payment Date........................................... 3
SECTION 2.5. Computation of Interest.................................... 4
SECTION 2.6. Additional Interest on Eurodollar Loans.................... 4
SECTION 2.7. Pro Rata Treatment and Payments............................ 5
SECTION 2.8. Security................................................... 5
ARTICLE III -CONDITIONS PRECEDENT............................................. 6
SECTION 3.1. Conditions to Effectiveness................................ 6
SECTION 3.2. Conditions to Each Loan.................................... 6
ARTICLE IV - DISTRIBUTIONS.................................................... 6
SECTION 4.1. Basic Rent................................................. 6
SECTION 4.2. Purchase Payments by the Lessee............................ 6
SECTION 4.3. Payment of Loan Balance by Lessee Upon Remarketing of
Equipment.................................................. 7
SECTION 4.4. Remaining Sales Proceeds of Remarketing of Equipment....... 7
SECTION 4.5. Supplemental Rent.......................................... 7
SECTION 4.6. Excepted Payments.......................................... 7
SECTION 4.7. Distribution of Payments after Loan Event of Default....... 8
SECTION 4.8. Other Payments............................................. 9
SECTION 4.9. Casualty and Condemnation Prior to Lease Event of Default.. 10
ARTICLE V - FORBEARANCE OF LENDERS, ETC....................................... 10
SECTION 5.1. Forbearance................................................ 10
SECTION 5.2. Subordination with Respect to Certain Amounts After
Lease Event of Default..................................... 11
ARTICLE VI - LOAN AGREEMENT EVENTS OF DEFAULT................................. 11
SECTION 6.1. Loan Agreement Events of Default........................... 11
SECTION 6.2. Remedies................................................... 12
ARTICLE VII - CERTAIN REMEDIAL MATTERS; RELEASE............................... 14
</TABLE>
<PAGE>
<TABLE>
<S> <C>
SECTION 7.1. Certain Remedial Matters................................... 14
SECTION 7.2. Release of Equipment, etc.................................. 14
ARTICLE VIII - THE LESSOR..................................................... 15
SECTION 8.1. Notice of Default; Action After Default.................... 15
SECTION 8.2. Action Upon Instructions................................... 15
SECTION 8.3. Certain Duties and Responsibilities of Lessor.............. 16
SECTION 8.4. Furnishing of Documents.................................... 17
SECTION 8.5. Moneys Received by the Lessor.............................. 17
SECTION 8.6. NO REPRESENTATIONS OR WARRANTIES AS TO
EQUIPMENT OR DOCUMENTS..................................... 17
ARTICLE IX - INDEMNIFICATION OF LESSOR; COMPENSATION.......................... 17
SECTION 9.1. Lenders to Indemnify Lessor................................ 17
SECTION 9.2. Compensation............................................... 18
ARTICLE X - THE AGENT......................................................... 18
SECTION 10.1. Appointment............................................... 18
SECTION 10.2. Delegation of Duties...................................... 19
SECTION 10.3. Exculpatory Provisions.................................... 19
SECTION 10.4. Reliance by Agent......................................... 19
SECTION 10.5. Notice of Default......................................... 19
SECTION 10.6. Non-Reliance on Agent and Other Lenders................... 20
SECTION 10.7. Indemnification........................................... 20
SECTION 10.8. Agent in Its Individual Capacity.......................... 21
SECTION 10.9. Successor Agent........................................... 21
ARTICLE XI - COLLECTIONS, LIMITED RECOURSE, ETC............................... 22
SECTION 11.1. Collections and Remittances by Lessor..................... 22
SECTION 11.2. Payments from Equipment Only.............................. 22
ARTICLE XII - MISCELLANEOUS................................................... 22
SECTION 12.1. Amendments and Waivers.................................... 22
SECTION 12.2. Headings.................................................. 22
SECTION 12.3. Notices................................................... 22
SECTION 12.4. No Waiver; Cumulative Remedies............................ 22
SECTION 12.5. Survival of Representations and Warranties................ 23
SECTION 12.6. Successors and Assigns; Assignment by Lessor.............. 23
SECTION 12.7. Adjustments............................................... 23
SECTION 12.8. Counterparts.............................................. 23
SECTION 12.9. Severability.............................................. 23
SECTION 12.10. Intention................................................ 24
SECTION 12.11. WAIVER OF TRIAL BY JURY.................................. 24
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 12.12. GOVERNING LAW............................................ 24
SECTION 12.13. Nonrecourse.............................................. 24
SECTION 12.14. Tax Reports.............................................. 25
SECTION 12.15. SUBMISSION TO JURISDICTION............................... 25
SECTION 12.16. FINAL AGREEMENT.......................................... 25
SECTION 12.17. Intercreditor Agreements................................. 25
SECTION 12.18. Payments................................................. 26
</TABLE>
Exhibits:
- --------
Exhibit A - Financing Note
Exhibit B - Equity Note
Exhibit C - Guaranty
iii
<PAGE>
Loan Agreement
LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of November 15, 1996 (this "Loan Agreement"),
--------------
among PARIBAS PROPERTIES, INC., a Delaware corporation (the "Lessor"); BANQUE
------
PARIBAS and the various financial institutions that are or may from time to time
become parties hereto as Financing Lenders hereunder (collectively, the
"Financing Lenders"); the financial institution or institutions that are or may
- ------------------
from time to time become parties hereto as Equity Lenders (collectively, the
"Equity Lenders"); and BANQUE PARIBAS as Agent (the "Agent") for the Financing
- --------------- -----
Lenders and the Equity Lenders (sometimes collectively called the "Lenders").
-------
W I T N E S S E T H:
-------------------
Recitals
--------
A. Pursuant to that certain Participation Agreement dated as of the date
hereof (the "Participation Agreement"), entered into by and among Mail-Well I
-----------------------
Corporation, a Delaware corporation (the "Lessee" or a "Guarantor"), certain
------ ---------
subsidiaries of the Lessee (the "Subsidiary Guarantors"), the Lessor, the
---------------------
Financing Lenders, the Equity Lenders, and the Agent, the Lenders have agreed to
make loans (the "Loans") available to the Lessor to enable the Lessor to
-----
purchase the Equipment described therein from the Lessee and certain of the
Subsidiary Guarantors.
B. The Participation Agreement provides, among other things, that (a) the
Lessee, Mail-Well, Inc., a Delaware corporation ("Holdings"), and the Subsidiary
--------
Guarantors (collectively, the "Guarantors") have agreed to guaranty the payment
----------
of the Financing Loans and other Obligations to the Financing Lenders therein
described and (b) the Guarantors and the Lessee have made certain
representations, warranties and covenants for the benefit of the Lenders.
C. The Lessor desires to hereby obtain the Loans from the Lenders in a
maximum aggregate principal amount not to exceed Thirty Million and No/100
Dollars ($30,000,000.00), of which the sum of $24,500,000.00 will be loaned to
the Lessor by the Financing Lenders and the sum of $5,500,000.00 will be loaned
to the Lessor by the Equity Lenders, upon and subject to the terms and
conditions herein set forth.
D. Each Lender is willing, on the terms and subject to the conditions
hereinafter set forth (including Article III), to make a Loan or Loans to the
-----------
Lessor in an aggregate amount not to exceed its Commitment as set forth on
Schedule I to the Participation Agreement, as such Schedule may be amended from
time to time.
<PAGE>
Loan Agreement
Agreement
---------
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Capitalized terms used but not otherwise defined in this Loan
Agreement have the respective meanings specified in Appendix A to this Loan
----------
Agreement; and the rules of interpretation set forth in Appendix A to this Loan
----------
Agreement shall apply to this Loan Agreement.
ARTICLE II
AMOUNT AND TERMS OF LENDERS' COMMITMENTS
SECTION 2.1. Commitments. Subject to the terms and conditions hereof
-----------
and of the Participation Agreement, each Lender severally agrees to make a Loan
to the Lessor at the request of the Lessee on the Effective Date in accordance
with the procedures set forth in Article III of the Participation Agreement for
the purpose of enabling the Lessor to acquire the Equipment and to pay the
Purchase Price payable by the Lessor to the Lessee and/or its Subsidiaries for
the Equipment, in an aggregate principal amount not to exceed the amount of such
Lender's Commitment. No amounts paid or prepaid with respect to any Loans may
be reborrowed.
SECTION 2.2. Notes.
-----
(a) The Loan made by each Lender shall be evidenced by a promissory
note of the Lessor, substantially in the form of Exhibit A with respect to each
---------
Financing Loan (a "Financing Note"), and substantially in the form of Exhibit B
-------------- ---------
with respect to each Equity Loan (a "Equity Note") (each Financing Note and each
-----------
Equity Note being sometimes referred to as a "Note"), with appropriate
----
insertions as to payee, date and principal amount, payable to the order of such
Lender and in a principal amount equal to the Commitment of such Lender. Each
Note shall (i) be dated the Effective Date (as defined in Section 3.1 hereof),
-----------
(ii) be stated to mature on the Maturity Date and (iii) provide for the payment
of interest in accordance with this Loan Agreement.
(b) Any Lender that is not a U.S. Person and that could become
completely exempt from withholding of U.S. Taxes in respect of payment of any
Obligations due to such Lender hereunder relating to any of its Loans if such
Loans were in registered form for U.S. Federal income tax purposes may request
the Lessor (through the Agent), and the Lessor agrees thereupon, to exchange
such Lender's Note evidencing its Loans for a promissory note registered
2
<PAGE>
Loan Agreement
as provided in Section 13.8(h) of the Participation Agreement (a "Registered
----------
Note"). Registered Notes may not be exchanged for Notes that are not in
- ----
registered form.
SECTION 2.3. Prepayments.
-----------
(a) Voluntary. The Lessor may at any time and from time to time
---------
prepay the Loans, in whole or in part, without premium or penalty (subject to
Section 11.5 of the Participation Agreement), upon at least three (3) Business
Days' written notice to the Agent, specifying the date and amount of prepayment.
Upon receipt of any such notice the Agent shall promptly notify each Lender. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to Article XI (including without limitation Section 11.5) of the
Participation Agreement. All voluntary prepayments of the Loans shall be
distributed by the Agent pro rata to prepay the Loans in the following order of
priority: first, to pay the accrued but unpaid interest (including Equity
-----
Yield) to the date of such prepayment; and second, to pay the unpaid principal
------
amount on any Loan. Neither the Lessor, the Lessee nor any other party shall be
entitled to the release of any of the Liens created by the Security Documents,
or of any collateral pledged thereunder, as the result of any voluntary partial
prepayment of the Loans.
(b) Mandatory. Notwithstanding the foregoing, all amounts payable by
---------
the Lessee pursuant to Article XV, XVI, XVIII or XX of the Master Lease shall be
used to prepay the Loans and shall be applied to the Financing Loans and Equity
Loans in the manner set forth in Article IV hereof.
----------
SECTION 2.4. Interest Rates, Optional Prepayments and Conversions,
-----------------------------------------------------
and Payment Dates.
- -----------------
(a) Each Loan shall bear interest for each day at a rate per annum
as follows:
(i) during the periods such Loan is a Prime Rate Loan, the Prime
Rate determined for such day plus the Applicable Margin,
----
(ii) during the periods such Loan is a Eurodollar Loan, the
Eurodollar Rate determined for such day plus the Applicable Margin.
----
(b) Lessor's right to convert Loans from one Type to another is
subject to the conditions and provisions of Section 11.2 of the Participation
------------
Agreement.
(c) The Lessor shall have the right from time to time to prepay the
Loans, to convert all or part of a Loan of one Type into a Loan of another Type
or to continue Eurodollar Loans; provided that (i) the Lessor shall give the
Agent notice of any such prepayment, conversion or
3
<PAGE>
Loan Agreement
continuation with regard to Prime Rate Loans at least one (1) Business Day and
with respect to Eurodollar Loans at least three (3) Business Days prior to the
date of the relevant prepayment, conversion or continuation, and each such
notice shall be irrevocable and shall be effective only if received by the Agent
not later than 11:00 a.m., Houston, Texas time, on the Business Day prior to the
relevant date, (ii) Eurodollar Loans may only be converted on the last day of an
Interest Period, (iii) except for conversions of Eurodollar Loans into Prime
Rate Loans, no conversions or continuations shall be made while a Default has
occurred and is continuing, and (iv) optional prepayments of the Loans shall be
applied to the then remaining installments of principal of the Loans, pro rata.
(d) If all or a portion of (i) the principal amount of any Loan, (ii) any
interest payable thereon or (iii) any other amount payable hereunder shall not
be paid when due (whether at the stated maturity, by acceleration or otherwise),
such past due amount shall bear interest at a rate per annum which is equal to
the Default Rate until all such amounts, plus interest at the Default Rate, are
paid in full.
(e) Interest shall be payable in arrears on each Scheduled Payment Date,
provided that (i) interest accruing pursuant to paragraph (d) of this Section
- -------- ------------- -------
2.4 shall be payable from time to time on demand and (ii) each prepayment of the
- ---
Loans shall be accompanied by accrued interest to the date of such prepayment on
the amount prepaid.
(f) Reference is hereby made to Article XI of the Participation Agreement
for the consequences of events and the limitation on the rights of Lessor
hereunder relating to, inter alia, determination of the Eurodollar Rate, the
----- ----
Prime Rate, increased costs, funding losses and increased capital costs.
SECTION 2.5. Computation of Interest.
-----------------------
(a) Interest on the Loans by reference to the Eurodollar Rate shall be
calculated on the basis of a 360-day year for the actual days elapsed. Interest
on the Loans by reference to the Prime Rate shall be calculated on the basis of
a 365- (or 366-, as the case may be) day year for the actual days elapsed at all
times interest is so calculated. The Agent shall as soon as practicable notify
the Lessor, Lessee and the Lenders of each determination of a Eurodollar Rate.
Any change in the interest rate on a Loan resulting from a change in the Reserve
Requirement or the Prime Rate shall become effective as of the opening of
business on the day on which such change becomes effective. The Agent shall as
soon as practicable notify the Lessor, Lessee and the Lenders of the effective
date and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Agent pursuant to any
provision of this Loan Agreement shall be conclusive and binding on the Lessor
and each Lender in the absence of manifest error. The Agent shall, at the
request of the Lessor or the Lessee, deliver
4
<PAGE>
Loan Agreement
to the Lessor or the Lessee a statement showing the quotations used by the Agent
in determining any interest rate pursuant to Section 2.5(a).
--------------
SECTION 2.6. Additional Interest on Eurodollar Loans. The Lessor shall
---------------------------------------
pay, directly to each Lender from time to time, additional interest on the
unpaid principal amount of each Eurodollar Loan held by such Lender, from the
date of the making of such Eurodollar Loan until such principal
amount is paid in full, at an interest rate per annum determined by such Lender
in good faith equal to the positive remainder (if any) of (a) the Adjusted
Eurodollar Rate applicable to such Eurodollar Loan minus (b) the Eurodollar Rate
-----
applicable to such Eurodollar Loan. Each payment of additional interest
pursuant to this Section 2.6 shall be payable by the Lessor on each date upon
-----------
which interest is payable on such Eurodollar Loan pursuant to Section 2.4(e);
--------------
provided, however, that the Lessor shall not be obligated to make any such
- -------- -------
payment of additional interest until the first Business Day after the date when
the Lessor has been informed (i) that such Lender is subject to a Reserve
Requirement and (ii) of the amount of such Reserve Requirement (after which time
the Lessor shall be obligated to make all such payments of additional interest,
including, without limitation, such payments of additional interest that
otherwise would have been payable by the Lessor on or prior to such time had the
Lessor been earlier informed).
SECTION 2.7. Pro Rata Treatment and Payments. Each borrowing by the
-------------------------------
Lessor from the Lenders hereunder shall be made pro rata among the Lenders
--- ----
according to the respective Commitment Percentage of each such Lender. Except
as otherwise provided in Article IV hereof, each payment (including each
----------
prepayment) by the Lessor on account of principal of and interest on the Loans
shall be made pro rata among the Lenders according to the respective outstanding
--- ----
principal amounts of the Loans then held by each such Lender. Subject to
Article V, all payments (including prepayments) to be made by the Lessor
- ---------
hereunder and under the Notes, whether on account of principal, interest or
otherwise, shall be made without setoff or counterclaim and shall be made by the
Lessor to the applicable Lender prior to 11:00 a.m., Houston, Texas time, to
such Lender's Applicable Lending Office specified in Schedule IV to the
Participation Agreement (or to such other office as may be designated by such
Lender from time to time in a written notice to the Lessor) in funds consisting
of lawful currency of the United States of America which shall be immediately
available on the scheduled date when such payment is due, unless such scheduled
date shall not be a Business Day, in which case such payment shall be made on
the next succeeding Business Day. Payments received after 11:00 a.m., Houston,
Texas time, on the date due shall for the purpose of Section 6.1 be deemed
-----------
received on such day; provided, however, that for the purposes of Section
-------- ------- -------
2.4(d), such payments shall be deemed received on the next succeeding Business
- ------
Day and, unless the Lenders are otherwise able to invest or employ such funds on
the date received, subject to interest at the then applicable interest rate as
provided in Section 2.4(d).
--------------
SECTION 2.8. Security. Each of the Lessee and the Lessor shall grant to
--------
the Agent for the benefit of the Equity Lenders, as security for the payment and
performance of all Equity Loans and all other indebtedness, liabilities and
obligations of the Lessor and/or the Lessee to the
5
<PAGE>
Loan Agreement
Equity Lenders under the Operative Documents (the "Equity Obligations"), a
------------------
valid, enforceable, perfected first priority security interest in and to the
Equipment, together with all accessories, replacements and substitutions
therefor (including without limitation all Modifications and Substituted
Equipment), all general intangibles relating thereto, and all revenues and
proceeds derived therefrom (including, without limitation, any insurance and
condemnation proceeds), in accordance with the terms of the Lessor First
Security Agreement. The Lessor and the Lessee shall grant to Agent for the
benefit of the Financing Lenders, as security for the payment and performance of
all Financing Loans and all other indebtedness, liabilities and obligations of
the Lessor and/or the Lessee to the Financing Lenders under the Operative
Documents (the "Financing Obligations"), a valid, enforceable, perfected
---------------------
second priority security interest in and to the Equipment, together with all
accessories, replacements and substitutions therefor (including without
limitation all Modifications and Substituted Equipment), all general intangibles
relating thereto, and all revenues and proceeds derived therefrom (including,
without limitation, any insurance and condemnation proceeds), subject only to
the first priority security interest granted by the Lessor to the Agent for the
benefit of the Equity Lenders, in accordance with the terms of the Lessor Second
Security Agreement. The Financing Obligations shall additionally be
unconditionally guaranteed by a secured Guaranty executed by the Guarantors for
the benefit of the Agent and the Financing Lenders in the form attached hereto
as Exhibit C. The Obligations of the Guarantors under the Guaranty shall be
---------
secured, on a pari passu basis, with all collateral securing the Credit
---- -----
Facility Loans pursuant to the Credit Documents. The Lessor and the Lessee shall
further execute and deliver to the Agent, as Agent for the Lenders, an
Assignment of Lease and Rents covering all of the right, title and interest of
the Lessor under the Master Lease.
ARTICLE III
CONDITIONS PRECEDENT
SECTION 3.1. Conditions to Effectiveness. This Loan Agreement shall be
---------------------------
effective on the Effective Date.
SECTION 3.2. Conditions to Each Loan. The agreement of each Lender to
-----------------------
make its Loan on the Effective Date is subject to the concurrent disbursement
by each other Lender of its Loan on the Effective Date and to the satisfaction
of the applicable conditions precedent thereto set forth in Article VI of the
Participation Agreement.
ARTICLE IV
DISTRIBUTIONS
SECTION 4.1. Basic Rent. Each payment of Basic Rent (and any payment of
----------
interest on past due installments of Basic Rent) received by the Agent on behalf
of the Lessor under the
6
<PAGE>
Loan Agreement
Master Lease shall be distributed by the Agent to the Financing Lenders and the
Equity Lenders pro rata for application to the Financing Lender Basic Rent and
the Equity Lender Basic Rent then due.
SECTION 4.2. Purchase Payments by the Lessee. Any payment received by the
-------------------------------
Agent as a result of:
(i) the purchase of all of the Equipment in connection with the
Lessee's exercise of its Purchase Option under Section 18.1 of the Master
Lease, or
(ii) the Lessee's compliance with its obligation to purchase (or
cause its designee to purchase) all of the Equipment in accordance with
Section 18.2 or 18.3 of the Master Lease, or
(iii) the Lessee's compliance with its obligation to purchase all
unsold Equipment in accordance with Section 16.2(e) of the Master Lease, or
(iv) the Lessee's failure to fulfill one or more of the
conditions required in order for Lessee to exercise the Remarketing Option
with respect to any Equipment as set forth in Section 20.1 of the Master
Lease, and the Lessor's receipt of the Lease Balance from the Lessee
pursuant to the next-to-last paragraph of Section 20.1 of the Master Lease,
shall be distributed by the Agent to pay each of the Lenders in full the
Participant Balance of each Financing Lender and each Equity Lender.
SECTION 4.3. Payment of Loan Balance by Lessee Upon Remarketing of
-----------------------------------------------------
Equipment. The payment by the Lessee of the Loan Balance to the Agent in
- ---------
accordance with Section 20.1(j) of the Master Lease upon the Lessee's exercise
of the Remarketing Option shall be distributed by the Agent in the following
amounts and order of priority:
first, so much of such payments or amounts as shall constitute
-----
Supplemental Rent, to the Persons entitled thereto in accordance with
Section 4.5; and
-----------
second, to the Financing Lenders for application to pay in full
------
the Participant Balance of each Financing Lender.
SECTION 4.4. Remaining Sales Proceeds of Remarketing of Equipment. Any
----------------------------------------------------
remaining payments received by the Agent on behalf of the Lessor under the
Master Lease as proceeds from the sale of the Equipment sold pursuant to the
Lessee's exercise of the Remarketing Option pursuant to Article XX of the Master
Lease (after the payment of amounts set forth in Section 4.3 above), together
-----------
with any payment made by the Lessee as a result of an appraisal pursuant to
7
<PAGE>
Loan Agreement
Section 12.2(b) of the Participation Agreement, shall be distributed by the
Agent from the funds so received in the following order of priority:
first, to the Equity Lenders for application to pay in full the
-----
Participant Balance of each Equity Lender, and in the case where the amount
so distributed shall be insufficient to pay in full as aforesaid, then pro
---
rata among the Equity Lenders without priority of one Equity Lender over
----
the other in the proportion that the Participant Balance of each such
Equity Lender bears to the aggregate Participant Balances of all Equity
Lenders, and
second, the balance, if any, shall be promptly distributed to, or as
------
directed by, the Lessee (provided that the Lessee has paid the Loan Balance
--------
to the Lessor in accordance with Section 20.1(j) of the Master Lease).
SECTION 4.5. Supplemental Rent. All payments of Supplemental Rent
-----------------
received by the Agent (excluding any amounts payable pursuant to the preceding
provisions of this Article IV) shall be distributed promptly by the Agent upon
----------
receipt thereof to the Persons entitled thereto pursuant to the Operative
Documents.
SECTION 4.6. Excepted Payments. Notwithstanding any other provision of
-----------------
this Loan Agreement, any Excepted Payment received at any time by the Agent
shall be distributed promptly to the Person entitled to receive such Excepted
Payment pursuant to the Operative Documents.
SECTION 4.7. Distribution of Payments after Loan Event of Default.
----------------------------------------------------
(a) All amounts received by the Agent on behalf of the Lessor under the
Master Lease after the occurrence of a Loan Event of Default in connection with
any sale of all or any part of the Equipment shall be distributed by the Agent
in the following order of priority:
first, so much of such payment or amount as shall be required to
-----
reimburse the Lessor for any tax, expense or other loss incurred by the
Lessor (to the extent not previously reimbursed and to the extent incurred
in connection with any duties as the Lessor) and any unpaid ongoing fees of
the Lessor shall be distributed to the Lessor for its own account;
second, so much of such payments or amounts as shall be required to
------
pay the then existing or prior Equity Lenders the amounts payable to them
pursuant to any expense reimbursement or indemnification provisions of the
Operative Documents shall be distributed to each such Equity Lender without
priority of one over the other in accordance with the amount of such
payment or payments payable to each such Person;
8
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Loan Agreement
third, to the Equity Lenders for application to pay in full the
-----
Participant Balance of each Equity Lender and, in the case where the
amounts so distributed shall be insufficient to pay in full as aforesaid,
then pro rata among the Equity Lenders without priority of one Equity
Lender over the other in the proportion that the Participant Balance of
each such Equity Lender bears to the aggregate Participant Balances of all
Equity Lenders;
fourth, so much of such payments or amounts as shall be required to
------
pay the then existing or prior Financing Lenders the amounts payable to
them pursuant to any expense reimbursement or indemnification provisions of
the Operative Documents shall be distributed to each such Financing Lender
without priority of one over the other in accordance with the amount of
such payment or payments payable to each such Person;
fifth, to the Financing Lenders for application to pay in full the
-----
Participant Balance of each Financing Lender and, in the case where the
amounts so distributed shall be insufficient to pay in full as aforesaid,
then pro rata among the Financing Lenders without priority of one Financing
Lender over the other in the proportion that the Participant Balance of
each such Financing Lender bears to the aggregate Participant Balances of
all Financing Lenders; and
sixth, the balance, if any, of such payment or amounts remaining
-----
thereafter shall be promptly distributed to, or as directed by, the Lessee.
(b) All amounts received by the Agent on behalf of the Lessor under the
Master Lease in connection with any Casualty or Condemnation after the
occurrence of a Loan Event of Default, shall be distributed by the Agent as
follows:
(i) in the event that the Agent, at the direction of the Required
Equity Lenders, elects to pay all or a portion of such amounts to the
Lessee for the repair of damage caused by such Casualty or Condemnation in
accordance with Section 14.1(a) of the Master Lease, then such amounts
shall be distributed to the Lessee, and
(ii) in the event that the Agent, at the direction of Required Equity
Lenders, elects to apply all or a portion of such amounts to the purchase
price of the related Equipment in accordance with the last sentence of
Section 14.1(a) and Article XV of the Master Lease, then such amounts shall
be distributed in accordance with paragraph (a) above.
(c) All amounts received (other than payments or amounts described in
paragraph (a) or (b) above or Excepted Payments) by the Agent on behalf of the
- ------------- ---
Lessor under the Master Lease
9
<PAGE>
Loan Agreement
after the occurrence of a Loan Event of Default shall be distributed by the
Agent in the following order of priority:
first, so much of such payment or amount as shall be required to
-----
reimburse the Lessor for any tax, expense or other loss incurred by the
Lessor (to the extent not previously reimbursed and to the extent incurred
in connection with any duties as the Lessor) and any unpaid ongoing fees of
the Lessor shall be distributed to the Lessor for its own account;
second, so much of such payments or amounts as shall be required to
------
pay the then existing or prior Financing Lenders and the Equity Lenders the
amounts payable to them pursuant to any expense reimbursement or
indemnification provisions of the Operative Documents shall be distributed
to each such Lender without priority of one over the other in accordance
with the amount of such payment or payments payable to each such Person;
third, to the Financing Lenders and the Equity Lenders pro rata in
-----
accordance, with, and for application to, the Participant Balance of each
Financing Lender and each Equity Lender; and
fourth, after payment in full of the Participant Balance of each
------
Financing Lender and each Equity Lender and all other amounts due and owing
to any Financing Lender or any Equity Lender, the balance, if any, of such
payment or amounts remaining thereafter shall be promptly distributed to,
or as directed by, the Lessee.
(d) During the occurrence and continuance of a Loan Event of Default, all
amounts (other than Excepted Payments) received or realized by the Lessor and
otherwise distributable pursuant to Sections 4.1 and 4.2 shall be distributed as
------------ ---
provided for in paragraphs (a), (b) and (c) above.
-------------- --- ---
SECTION 4.8. Other Payments.
--------------
(a) Except as otherwise provided in Sections 4.1, 4.2, 4.7 and paragraph
------------ --- --- ---------
(b) below, any payment received by the Agent on behalf of the Lessor for which
- ----
no provision as to the application thereof is made in the Operative Documents or
elsewhere in this Article IV shall be distributed pro rata among the Financing
---------- --- ----
Lenders and the Equity Lenders without priority of one over the other, in the
proportion that the Participant Balance of each bears to the aggregate of all
the Participant Balances.
(b) Except as otherwise provided in Sections 4.1, 4.2 and 4.7, all
------------ --- ---
payments received and amounts realized by the Agent on behalf of the Lessor,
under the Master Lease or otherwise with respect to the Equipment to the extent
received or realized at any time after payment in full
10
<PAGE>
Loan Agreement
of the Participant Balances of all of the Financing Lenders and the Equity
Lenders and any other amounts due and owing to the Financing Lenders, the Equity
Lenders or the Lessor, shall be distributed forthwith by the Lessor in the order
of priority set forth in Section 4.7(c), except that such payment shall be
--------------
distributed omitting paragraph third of such Section 4.7(c).
--------------
(c) Except as otherwise provided in Sections 4.1 and 4.2, any payment
------------ ---
received by the Agent on behalf of the Lessor for which provision as to the
application thereof is made in an Operative Document but not elsewhere in this
Article IV shall be distributed forthwith by the Lessor to the Person and for
- ----------
the purpose for which such payment was made in accordance with the terms of such
Operative Document.
SECTION 4.9. Casualty and Condemnation Prior to Lease Event of Default.
---------------------------------------------------------
Subject to Section 4.7(b), any amounts payable to the Agent on behalf of the
--------------
Lessor as a result of a Casualty or Condemnation pursuant to Section 14.1 of the
Master Lease prior to the occurrence of a Lease Event of Default shall be
distributed as follows:
(a) all amounts payable to the Lessee for the repair of damage caused by
such Casualty or Condemnation in accordance with Section 14.1(a) of the Master
Lease shall be distributed to the Lessee, and
(b) all amounts that are to be applied to the purchase price of the
related Equipment in accordance with Section 14.1(a) and Article XV of the
Master Lease shall be distributed by the Agent in accordance with Section 4.7(a)
--------------
above.
ARTICLE V
FORBEARANCE OF LENDERS, ETC.
SECTION 5.1. Forbearance. Notwithstanding any other provision herein or
-----------
in any other Operative Document, the Agent and each Financing Lender hereby
agrees that it shall not, without the written consent of the Equity Lenders
(which consent may be withheld in the sole and absolute discretion of the Equity
Lenders), take any action, or otherwise request that any action be taken, to
enforce the lien and security interest of the Master Lease, the Lessor Second
Security Agreement, or the Assignment of Lease and Rent, including, without
limitation, (i) any action (statutory or otherwise) relating to a sale under
power of sale, (ii) accepting a bill of sale of foreclosure or otherwise taking
title to, or authorizing the conveyance of, the Equipment or any portion
thereof, (iii) appointing a receiver or taking any other action to obtain
possession or control of the Equipment or any portion thereof, or (iv)
commencing or participating in any foreclosure proceeding, prior to the payment
in full of the Equity Balance and all other amounts payable to the Equity
Lenders under the Participation Agreement and the other Operative
11
<PAGE>
Loan Agreement
Documents, the permanent termination of all Commitments of the Equity Lenders,
and the satisfaction of all other obligations to the Equity Lenders under the
Operative Documents. The foregoing forbearance shall not apply to or affect in
any manner the rights of each Financing Lender with respect to the Guaranty or
to any other Operative Document other than the Master Lease, the Lessor Second
Security Agreement and the Assignment of Lease and Rent.
SECTION 5.2. Subordination with Respect to Certain Amounts After Lease
---------------------------------------------------------
Event of Default. The Lessor and each Financing Lender covenants and agrees for
- ----------------
the benefit of the Equity Lenders that, notwithstanding any other provision of
this Loan Agreement, upon the occurrence of a Loan Event of Default, including
without limitation a Lease Event of Default, the rights of the Financing Lenders
with respect to amounts received by the Agent in connection with (i) the sale or
other disposition of all or any part of any one or more items of Equipment, or
(ii) any subleases or reletting affecting the Equipment or any rents, issues or
profits accruing thereunder, or any other proceeds of the property described in
clauses (i) and (ii), shall be subordinate and subject in right of payment to
the prior payment in full in cash of the Participant Balance of each Equity
Lender.
ARTICLE VI
LOAN AGREEMENT EVENTS OF DEFAULT
SECTION 6.1. Loan Agreement Events of Default. The occurrence of any
--------------------------------
one or more of the following events (whether such event shall be voluntary or
involuntary or come about or be effected by operation of law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body) shall constitute a
"Loan Agreement Event of Default":
- --------------------------------
(a) The Lessor shall (i) default in the payment when due (including,
without limitation, pursuant to Section 2.4(d)) of any principal of the
--------------
Loans or (ii) default in the payment when due of any interest on the Loans
and such default shall continue for five (5) or more days or (iii) default
in the payment of any other amounts owing hereunder or under any other
Operative Document to which it is a party and such default shall continue
for five (5) or more days after the Lessor's and Lessee's receipt of notice
of such default;
(b) The Lessor shall default in the due performance or observance by
it of any term, covenant or agreement contained in this Loan Agreement or
the Notes (other than those referred to in paragraph (a) above), and such
-------------
default shall have continued unremedied for a period of at least ten (10)
days after the receipt by the Lessor and Lessee of notice thereof from the
Agent;
12
<PAGE>
Loan Agreement
(c) Any representation, warranty or statement made or deemed made by
the Lessee herein or in any other Operative Document or the Participation
Agreement, or, in any statement or certificate delivered or required to be
delivered pursuant hereto or thereto, shall prove to be untrue in any
material respect on the date as of when made or deemed made; or
(d) Any Lease Event of Default shall have occurred and be continuing;
(e) The Lessee shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, examiner,
liquidator or the like of itself or of all or any substantial part of the
Equipment, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the United States Bankruptcy Code (as
now or hereafter in effect, the "Bankruptcy Code"), (iv) institute any
---------------
proceeding or file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, liquidation,
dissolution, winding-up or composition or readjustment of debts, (v) fail
to controvert in a timely and appropriate manner, or acquiesce in writing
to, any petition filed against it in an involuntary case under the
Bankruptcy Code, or (vi) take any corporate or other action for the purpose
of effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the application,
approval or consent of the Lessee in any court of competent jurisdiction,
seeking (i) its reorganization, liquidation, dissolution, arrangement or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a receiver, custodian, trustee, examiner, liquidator or the
like of the Lessee or of all or any substantial part of the Equipment, or
(iii) similar relief in respect the Lessee under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering any of
the foregoing shall be entered and continue unstayed and in effect, for a
period of 60 or more days; or an order for relief against the Lessee shall
be entered in an involuntary case under the Bankruptcy Code.
(g) Exclusive of paragraphs (e) and (f) above, an Event of Default
-------------- ---
shall occur under either of the Credit Agreements, or, in the event that
the Credit Agreements no longer exist, the occurrence of an event which
would have constituted an Event of Default under either of the Credit
Agreements had they remained in full force and effect.
SECTION 6.2. Remedies.
--------
(a) Upon the occurrence of any Loan Agreement Event of Default, (i) if
such event is a Loan Agreement Event of Default specified in Sections 6.1(e) or
---------------
6.1(f) above, all Obligations
- ------
13
<PAGE>
Loan Agreement
shall immediately become due and payable, and (ii) if such event is any other
Loan Agreement Event of Default, the Agent may, or upon the written instructions
of either the Required Equity Lenders or the Required Financing Lenders, the
Agent shall, by notice to the Lessor, declare all or any part of the Obligations
to be due and payable forthwith, whereupon all or any part of such Obligations
shall immediately become due and payable (any of the foregoing occurrences or
actions referred to in paragraphs (i) or (ii) above, an "Acceleration").
-------------- ---- ------------
Except as expressly provided above in this Article VI, presentment, demand,
----------
protest and all other notices of any kind are hereby expressly waived.
(b) Upon the occurrence of any Loan Agreement Event of Default and at any
time thereafter so long as any Loan Agreement Event of Default shall be
continuing, the Agent may, or upon the written instructions of either the
Required Equity Lenders or the Required Financing Lenders, the Agent shall, as
set forth below, exercise any or all of the rights and powers and pursue any and
all of the remedies available to the Lenders hereunder and (subject to the terms
thereof) under the Master Lease and the other Operative Documents, together with
any and all rights and remedies available under the Uniform Commercial Code or
any provision of law, in accordance with the following provisions:
(i) Equity Lender Remedies. Upon receipt of written instructions from
----------------------
the Required Equity Lenders, the Agent shall enforce the provisions of the
Lessor First Security Agreement and the Master Lease, including without
limitation requiring that the Lessee purchase the Equipment pursuant to
Section 18.3 of the Master Lease. Without limitation
of the foregoing, upon the request of the Required Equity Lenders, the
Agent shall (w) take any action (statutory or otherwise) relating to a sale
of the Equipment under the Lessor First Security Agreement, (x) accept a
bill of sale of foreclosure or otherwise take title to, or authorize the
conveyance of, the Equipment or any portion thereof, (y) appoint a receiver
or take any other action to obtain possession or control of the Equipment
or any portion thereof, and/or (z) commence or participate in any
foreclosure proceeding and take any and all other actions as the Required
Equity Lenders may request to enforce their rights and remedies hereunder,
under the Notes, the Master Lease and the other Operative Documents.
(ii) Financing Lender Remedies. Upon receipt of written instructions
-------------------------
from the Required Financing Lenders, the Agent shall, subject to the
provisions of Article V hereof, exercise any or all of the rights and
---------
powers and pursue any and all of the remedies available to the Financing
Lenders hereunder and under the Operative Documents, including without
limitation the institution of any action to enforce the provisions of the
Guaranty and the Lessor's Second Security Agreement, and the commencement
or participation in any foreclosure proceeding available to the Agent with
respect to the Collateral under the Credit Agreements. Without the written
consent of the Required Equity Lenders, however, the Financing Lenders
shall not take any action or request that
14
<PAGE>
Loan Agreement
the Agent exercise any remedies reserved to the Equity Lenders under
subparagraph (i) above or in violation of the provisions of subsection 5.1
--------------
of this Loan Agreement; provided, however, that the Required Financing
--------- --------
Lenders, shall have the right to cause the Agent to demand the purchase of
Equipment by the Lessee pursuant to Section 18.3 of the Master Lease.
(iii) Remedies of All Lenders. Subject to the provisions of Article
-----------------------
V and the exclusive rights of the Equity Lenders to take the actions
specified in subparagraph (i) above and the rights of the Financing Lenders
to take the actions specified in subparagraph (ii) above, the Agent shall,
upon receipt of written request from the Required Participants, proceed to
protect and enforce all rights and remedies of the Lenders under this Loan
Agreement, the Notes, the Master Lease and the other Operative Documents by
suit or suits or proceedings in equity, at law or in bankruptcy, and
whether for the specific performance of any covenant or agreement herein
contained or in execution or aid of any power herein granted, or for
foreclosure under the Operative Documents, or for the appointment of a
receiver or receivers for the Equipment or any Equipment or for the
recovery of judgment for the indebtedness secured thereby or for the
enforcement of any other proper, legal or equitable remedy available under
Applicable Law.
All amounts collected by the Agent under this Section 6.2 shall be held and
-----------
distributed by the Agent in accordance with the provisions of Article IV hereof.
----------
(c) Subject to the nonrecourse provisions set forth in Section 12.13
-------------
hereof, the Lessor shall be liable for any and all accrued and unpaid amounts
due hereunder before, after or during the exercise of any of the foregoing
remedies, including all reasonable legal fees and other reasonable
costs and expenses incurred by the Agent or any Lender by reason of the
occurrence of any Loan Agreement Event of Default or the exercise of remedies
with respect thereto.
ARTICLE VII
CERTAIN REMEDIAL MATTERS; RELEASE
SECTION 7.1. Certain Remedial Matters. Notwithstanding any other
------------------------
provision of this Loan Agreement or any other Operative Document:
(i) the Lessor, the Lenders or any other party entitled thereto shall
at all times retain all rights to Excepted Payments and to demand, collect
or commence an action at law to obtain such payments and to enforce any
judgment with respect thereto; and
(ii) the Lessor shall at all times retain the right, but not to the
exclusion of the Agent, (A) to receive from the Lessee all notices,
certificates and other documents and all
15
<PAGE>
Loan Agreement
information that the Lessee is permitted or required to give or furnish to
the "Lessor" pursuant to the Master Lease, the Participation Agreement or
any other Operative Document, (B) to provide such insurance as the Lessee
shall have failed to maintain, and (C) subject to the other applicable
provisions of this Loan Agreement, to perform for the Lessee under Article
XVII of the Master Lease.
SECTION 7.2. Release of Equipment, etc. (a) If the Lessee shall at any
-------------------------
time purchase the Equipment pursuant to Article XV of the Master Lease, or
exercise its Purchase Option with respect to the Equipment under Article XVIII
of the Master Lease, or if all of the Equipment shall be sold in accordance with
and the Lessee otherwise satisfies each of the obligations and conditions set
forth at Article XX of the Master Lease, then, upon application of such amounts
to prepay the Loans pursuant to Article XV of the Master Lease and the Agent's
and the Lenders' receipt of all accrued interest and any other payments due and
owing from Lessee and/or the Lessor to the Agent and the Lenders on such date,
including without limitation pursuant to Article XII of the Participation
Agreement, the Equipment shall be released from the Liens in favor of the
Lenders.
(b) Upon payment in full of the Loan Balance and all other Obligations,
the Equipment shall be released from the Liens in favor of the Lenders.
(c) Upon request of the Lessor following a release of any Equipment
described in paragraphs (a) or (b) above, the Agent shall, at the sole cost and
-------------- ---
expense of the Lessee, execute and deliver to the Lessor or the Lessee, as
applicable, such documents as the Lessor shall reasonably request to evidence
such release.
ARTICLE VIII
THE LESSOR
SECTION 8.1. Notice of Default; Action After Default. If the Lessor
---------------------------------------
shall have actual knowledge of a Default or Event of Default under any Operative
Document (collectively, the "Specified Events), the Lessor shall give prompt
----------------
written notice thereof to each Lender, the Agent, the Lessee and any other
Person to whom notice is expressly required to be given by the Lessor under such
Operative Documents. Subject to the terms of Article V and Section 8.3(d),
--------- --------------
following the occurrence of a Specified Event, the Lessor shall take or refrain
from taking such action, not inconsistent with the provisions of the Operative
Documents, with respect thereto as the Lessor shall be instructed in writing by
the Agent. If the Lessor shall not have received instructions as provided above
within twenty (20) days after mailing of notice of such event to each Lender,
the Lessor may, subject to instructions received pursuant to the provisions of
the Operative Documents, take or refrain from taking such action (but shall be
under no duty to, and shall have no liability for its failure or refusal to,
take or refrain from taking any action with respect thereto)
16
<PAGE>
Loan Agreement
as the Lessor shall deem advisable and in the best interests of the Lenders and
consistent with the terms of the Operative Documents.
SECTION 8.2. Action Upon Instructions. Subject to the provisions of
------------------------
Article V and Sections 8.3 and 8.4, upon the written instructions at any time
------------ ---
and from time to time of the Agent, the Lessor shall take such of the following
actions as may be specified in such instructions:
(a) give such notice or direction or exercise such right or power
under the Master Lease or any other Operative Document as shall be specified in
such instructions;
(b) approve as satisfactory to it, or disapprove, as the case may be,
all matters required by the terms of any Operative Document to be so approved or
disapproved by the Lessor;
(c) after the expiration of the Lease Term, unless the Lessee shall
have purchased the Equipment in accordance with the Master Lease, convey all of
the Lessor's right, title and interest in and to the Equipment or any portion
thereof for such amount, on such terms and to such purchaser or purchasers as
shall be designated in such instructions, or otherwise lease or dispose of the
Equipment or any portion thereof on such terms as shall be designated in such
instructions; and
(d) any other action as specified by the Agent.
SECTION 8.3. Certain Duties and Responsibilities of Lessor.
---------------------------------------------
(a) Except during the continuance of a Loan Event of Default:
(i) the Lessor undertakes to perform such duties and only such
duties as are specifically set forth herein and in the other Operative
Documents, and no implied covenants or obligations shall be read into
this Loan Agreement against the Lessor, and the Lessor agrees that it
shall not, nor shall it have a duty to, manage, control, use, sell,
maintain, insure, register, lease, operate, modify, dispose of or
otherwise deal with the Equipment in any manner whatsoever, except as
required by the terms of the Operative Documents and as otherwise
provided herein; and
(ii) in the absence of bad faith or gross negligence on its part,
the Lessor may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Lessor and conforming to the
requirements of this Loan Agreement.
(b) No provision hereof or of any other Operative Document shall be
construed to relieve the Lessor of liability for its gross negligence or willful
misconduct or its negligence in
17
<PAGE>
Loan Agreement
the handling of funds, or for the creation by the Lessor of any Liens or the
disposition by the Lessor of its interest in any Equipment in violation of the
terms hereof and of the other Operative Documents, it being understood that,
without limiting the foregoing:
(i) the Lessor shall not be liable for any error of judgment made in
good faith by any of its officers, unless it shall be proved that the
Lessor was grossly negligent;
(ii) the Lessor shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the direction
of the Agent pursuant to the express provisions hereof; and
(iii) no provision hereof shall require the Lessor to expend or risk
its own funds in the performance of any of its duties hereunder or under
any of the other Operative Documents, or in the exercise of any of its
rights or powers.
(c) The Lessor shall not be required to take any action hereunder or under
the Operative Documents, nor shall any other provision of this Loan Agreement or
any Operative Document be deemed to impose a duty on the Lessor to take any
action, if the Lessor shall determine, or shall have been advised by counsel,
that such action is likely to result in personal liability or is contrary to any
Requirement of Law or the Operative Documents.
(d) Whether or not therein expressly so provided, every provision of this
Loan Agreement relating to the conduct or affecting the liability of or
affording protection to the Lessor shall be subject to the provisions of this
Section 8.3.
- -----------
SECTION 8.4. Furnishing of Documents. The Lessor will furnish to the
-----------------------
Agent and each Lender, respectively, promptly upon receipt thereof, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Lessor hereunder or under
any other Operative Document, unless by the express terms of any Operative
Document a copy of the same is required to be furnished by some other Person
directly to such Agent or Lender, respectively, or the Lessor shall have
determined that the same has already been furnished to such Lender.
SECTION 8.5. Moneys Received by the Lessor. The Lessor agrees to deposit
-----------------------------
and disburse, as appropriate, all moneys actually received by it under the terms
of the Master Lease and in accordance with the terms of this Loan Agreement and
the other Operative Documents.
SECTION 8.6. NO REPRESENTATIONS OR WARRANTIES AS TO EQUIPMENT OR
---------------------------------------------------
DOCUMENTS. THE LESSOR IS NOT A MANUFACTURER OR OPERATOR OF ANY EQUIPMENT OR A
- ---------
DEALER IN ANY SIMILAR EQUIPMENT NOR HAS INSPECTED ANY EQUIPMENT PRIOR TO
DELIVERY TO AND ACCEPTANCE THEREOF BY THE LESSEE.
18
<PAGE>
Loan Agreement
THE LESSOR HAS NOT MADE NOR DOES IT MAKE (A) ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO ANY ENVIRONMENTAL MATTER OR CONDITION, VALUE, DESIGN,
OPERATION, CONDITION, QUALITY, DURABILITY, SUITABILITY, MERCHANTABILITY OR
FITNESS FOR USE OR FITNESS FOR A PARTICULAR PURPOSE, ABSENCE OF LATENT OR OTHER
DEFECTS WHETHER OR NOT DISCOVERABLE, ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT, OR ANY OTHER WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
WITH RESPECT TO ANY EQUIPMENT, OR AS TO TITLE THERETO, OR (B) ANY REPRESENTATION
OR WARRANTY AS TO THE VALIDITY, LEGALITY OR ENFORCEABILITY OF THE OPERATIVE
DOCUMENTS (OTHER THAN AS TO THIS LOAN AGREEMENT AGAINST THE LESSOR), OR AS TO
THE CORRECTNESS OF ANY STATEMENT CONTAINED IN ANY THEREOF, EXCEPT AS SET FORTH
IN SECTION 7.2 OF THE PARTICIPATION AGREEMENT.
ARTICLE IX
INDEMNIFICATION OF LESSOR; COMPENSATION
SECTION 9.1. Lenders to Indemnify Lessor. Each Lender agrees to pay (or
---------------------------
reimburse the Lessor for), to the extent not reimbursed by the Lessee and
without limiting the obligation of the Lessee to do so, ratably according to
such Lender's Commitment Percentage of all Loans on the date on which
indemnification is sought under this Section 9.1, all reasonable expenses of the
-----------
Lessor hereunder, including the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Lessor
may employ in connection with the exercise and performance of its rights and
duties under the Operative Documents, unless and to the extent that the Lessor
receives payment or reimbursement from the Lessee or any other Person under the
Operative Documents, whether or not the transactions contemplated hereby are
consummated. Each Lender agrees to assume liability for, and to indemnify the
Lessor against and from (to the extent not reimbursed by the Lessee and without
limiting the obligation of the Lessee to do so), ratably according to the
percentage each such Lenders's Commitment Percentage of all Loans on the date on
which indemnification is sought under this Section 9.1, any and all liabilities,
-----------
obligations, losses, damages, taxes, claims, actions, suits, costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever which may be imposed on, incurred by or asserted at any time
against the Lessor (whether or not indemnified against by other parties) in any
way relating to or arising out of the administration of the Equipment or the
action or inaction of the Lessor hereunder or under the Operative Documents;
provided, however, that the Lessor shall not make any claim under this Section
- -------- ------- -------
9.1 for any claim or expense indemnified against by the Lessee under Article
- ---
XII of the Participation Agreement without first making demand on the Lessee for
payment of such claim or expense. The indemnities contained in this Section 9.1
-----------
shall not be applicable to any claim arising out of
19
<PAGE>
Loan Agreement
the gross negligence or willful misconduct of the Lessor, and such indemnities
shall survive the termination of this Loan Agreement.
SECTION 9.2. Compensation. The Lessor shall receive as compensation for
------------
its services hereunder such ordinary fees as are fair, reasonable and customary
for the performance of such services and as may heretofore and from time to time
hereafter be agreed upon in writing between the Lessor and the Lessee.
ARTICLE X
THE AGENT
SECTION 10.1. Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Agent as the agent of such Lender under this Loan Agreement and the
other Operative Documents, and each such Lender irrevocably authorizes the
Agent, in such capacity, to take such action on its behalf under the provisions
of this Loan Agreement and the other Operative Documents and to exercise such
powers and perform such duties as are expressly delegated to the Agent by the
terms of this Loan Agreement and the other Operative Documents, together with
such other powers as are reasonably incidental thereto. Without limitation, all
amounts payable to the Lenders by the Lessor, the Lessee and/or the other
Guarantors under the Operative Documents, exclusive only of Excepted Payments,
shall be paid to and collected by the Agent on behalf of the Lenders and
disbursed promptly by the Agent in accordance with the provisions of the
Operative Documents. Notwithstanding any provision to the contrary elsewhere in
this Loan Agreement, the Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender or any other party to the Operative Documents, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Loan Agreement or any other Operative Document or otherwise exist
against the Agent.
SECTION 10.2. Delegation of Duties. The Agent may execute any of its
--------------------
duties under this Loan Agreement and the other Operative Documents by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.
SECTION 10.3. Exculpatory Provisions. Neither the Agent nor any of its
----------------------
officers, directors, employees, agents, attorneys-in fact or Affiliates shall be
(a) liable for any action lawfully taken or omitted to be taken by it or such
Person under or in connection with this Loan Agreement or any other Operative
Document (except for its or such Person's own gross negligence or willful
misconduct) or (b) responsible in any manner to any of the Lenders or any other
party to the Operative Documents for any recitals, statements, representations,
or warranties
20
<PAGE>
Loan Agreement
made by the Lessor or the Lessee or any officer thereof contained in this Loan
Agreement or any other Operative Document or in any certificate, report,
statement or other document referred to or provided for in, or received by the
Agent under or in connection with, this Loan Agreement or any other Operative
Document or for the value, validity, effectiveness, genuineness, enforceability
or sufficiency of this Loan Agreement or any other Operative Document or for any
failure of the Lessor or the Lessee to perform its obligations hereunder or
thereunder. The Agent shall not be under any obligation to any Lender or any
other party to the Operative Documents to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Loan Agreement or any other Operative Document, or to inspect the
Equipment, books or records of the Lessor or the Lessee.
SECTION 10.4. Reliance by Agent. The Agent shall be entitled to rely, and
-----------------
shall be fully protected in relying, upon any Note, writing, resolution, notice,
consent, certificate, affidavit, letter, facsimile, telex or teletype message,
statement, order or other document or conversation believed by it to be genuine
and correct and to have been signed, sent or made by the proper Person or
Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to the Lessor or the Lessee), independent accountants and
other experts selected by the Agent. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Loan Agreement or any other Operative Document unless it shall
first receive the advice or concurrence of Lenders holding a majority of the
outstanding Loans or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Loan Agreement and the other Operative Documents in accordance with a request of
Lenders holding a majority of the outstanding Loans, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Notes.
SECTION 10.5. Notice of Default. The Agent shall not be deemed to have
-----------------
knowledge or notice of the occurrence of any Loan Agreement Default or Loan
Agreement Event of Default hereunder unless the Agent has received notice from a
Lender or the Lessor referring to this Loan Agreement, describing such Loan
Agreement Default or Loan Agreement Event of Default and stating that such
notice is a "notice of default". In the event that the Agent receives such a
notice, the Agent shall promptly give notice thereof to the Lenders and the
Lessee. The Agent shall take such action with respect to such Loan Agreement
Default or Loan Agreement Event of Default as shall be directed by Lenders
holding a majority of the outstanding Loans; provided, however, that unless and
-------- -------
until the Agent shall have received such directions, the Agent may (but shall
not be obligated to) take such action, or refrain from taking such action, with
respect to such Loan Agreement Default or Loan Agreement Event of Default as it
shall deem advisable in the best interests of the Lenders.
21
<PAGE>
Loan Agreement
SECTION 10.6. Non-Reliance on Agent and Other Lenders. Each Lender
---------------------------------------
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates has made any
representations or warranties to it and that no act by the Agent hereinafter
taken, including any review of the affairs of the Lessor or the Lessee, shall be
deemed to constitute any representation or warranty by the Agent to any Lender.
Each Lender represents to the Agent that it has, independently and without
reliance upon the Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, Equipment, financial and other
condition and creditworthiness of the Lessor and the Lessee and made its own
decision to make its Loans hereunder and enter into this Loan Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Agent or any other Lender, and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Loan
Agreement and the other operative Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, Equipment,
financial and other condition and creditworthiness of the Lessor and the Lessee.
Except for notices, reports and other documents expressly required to be
furnished to the Lenders by the Agent hereunder, the Agent shall not have any
duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, Equipment, condition (financial
or otherwise), prospects or creditworthiness of the Lessor or the Lessee which
may come into the possession of the Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or Affiliates.
SECTION 10.7. Indemnification. Each Lender agrees to indemnify the Agent
---------------
in its capacity as such (to the extent not reimbursed by the Lessee and without
limiting the obligation of the Lessee to do so), ratably according to such
Lender's Commitment Percentage of all Loans, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever (including without
limitation all reasonable fees and disbursements of any law firm or other
external counsel of the Agent, the allocated cost of internal legal services and
all disbursements of internal counsel of the Agent) which may at any time
(including, without limitation, at any time following the payment of the Notes)
be, imposed on, incurred by or asserted against the Agent in any way relating to
or arising out of, the Commitments, this Loan Agreement, any of the other
Operative Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Agent under or in connection with any of the foregoing;
provided, however, that no Lender shall be liable for the payment of any
- --------
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the Agent's
gross negligence or willful misconduct. The agreements in this Section 10.7
------------
shall survive the payment of the Obligations.
22
<PAGE>
Loan Agreement
SECTION 10.8. Agent in Its Individual Capacity. The Agent and its
--------------------------------
Affiliates may make loans to, issue letters of credit for the account of, accept
deposits from, acquire equity interests in and generally engage in any kind of
banking, trust, financial advisory, underwriting or other business with the
Lessor, the Lessee and their Affiliates as though Banque Paribas were not the
Agent hereunder and under the other Operative Documents and without notice to or
consent of the Lenders. Each Lender acknowledges that, pursuant to such
activities, Banque Paribas or its Affiliates may receive information regarding
the Lessee, the Lessor or their Affiliates (including information that may be
subject to confidentiality obligations in favor of the Lessee, the Lessor or
their Affiliates) and acknowledge that the Agent shall be under no obligation to
provide such information to them. With respect to any Loans made or renewed by
it and any Note issued to it, Banque Paribas shall have the same rights and
powers under this Loan Agreement and the other Operative Documents as any Lender
and may exercise the same as though it were not the Agent, and, in the event
Banque Paribas, becomes a Lender, the terms "Lender" and "Lenders" shall include
Banque Paribas in its individual capacity.
SECTION 10.9. Successor Agent. The Agent may resign as Agent upon twenty
---------------
(20) days' notice to the Lenders. The Agent may be removed by the Required
Participants in the event that (i) the Agent fails to comply in any material
respect with its duties hereunder and under the other Operative Documents and
such failure continues for a period of fifteen (15) days after receipt by Agent
of written notice thereof from the Required Participants, or (ii) the Agent is
guilty of willful misconduct or gross negligence in the performance of its
duties hereunder and under the Operative Documents. If the Agent shall be
removed or resign as Agent under this Loan Agreement and the other Operative
Documents, then the Required Participants shall appoint a successor agent for
Lenders, which successor agent shall be a commercial bank organized under the
laws of the United States of America or any State thereof or under the laws of
another country which is doing business in the United States of America and
having a combined capital, surplus and undivided profits of at least
$100,000,000 (and if no Lease Default or Lease Event of Default exists, shall be
approved by the Lessee (which consent shall not be unreasonably withheld)),
whereupon such successor agent shall succeed to the rights, powers and duties of
the Agent, and the term "Agent" shall mean such successor agent effective upon
such appointment and approval, and the former Agent's rights, powers and duties
as Agent shall be terminated, without any other or further act or deed on the
part of such former Agent or any of the parties to this Loan Agreement or any
holders of the Notes. If no successor Agent has accepted appointment as Agent
by the date which is twenty (20) days following a resigning Agent's notice of
resignation, the resigning Agent's resignation shall nevertheless thereupon
become effective and the Lenders shall perform all of the duties of the Agent
hereunder until such time, if any, as Lenders holding a majority of the
outstanding Loans appoint a successor Agent as provided above. After any
retiring Agent's resignation as Agent, all of the provisions of this
Article X shall inure to its benefit as to any actions taken or omitted to
- ---------
be taken by it while it was Agent under this Loan Agreement and the other
Operative Documents.
23
<PAGE>
Loan Agreement
ARTICLE XI
COLLECTIONS, LIMITED RECOURSE, ETC.
SECTION 11.1. Collections and Remittances by Lessor. The Lessor agrees
-------------------------------------
that, subject to the provisions of this Loan Agreement and the other Operative
Documents, it will during the Lease Term, administer the Equipment and, at the
direction of the Agent, take steps to collect all sums payable to the Lessor by
the Lessee under the Participation Agreement and the Master Lease (to the extent
not payable directly to the Agent or the other Lenders pursuant to the Operative
Documents or the Participation Agreement).
SECTION 11.2. Payments from Equipment Only. All payments to be made by
----------------------------
the Lessor (or by the Agent on behalf of the Lessor) under this Loan Agreement
shall be made only from (i) the income and the proceeds from the Equipment and
(ii) payments made by the Lessee to the Lessor under or in connection with the
Master Lease. Each Lender agrees that the Lessor shall not be personally liable
to the Lenders for any amounts payable under this Loan Agreement or any other
Operative Document and shall not be subject to any liability under this Loan
Agreement or any other Operative Document except as specifically provided herein
or therein.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Amendments and Waivers. Neither this Loan Agreement, any
----------------------
other Operative Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of Section
13.5 of the Participation Agreement, but if in the opinion of the Lessor any
instrument required to be so executed adversely affects any right, duty or
liability of, or immunity or indemnity in favor of, the Lessor under this Loan
Agreement or any of the documents contemplated hereby to which the Lessor is a
party, or would cause or result in any conflict with or breach of any terms,
conditions or provisions of, or default under, the charter documents or by-laws
of the Lessor or any document contemplated hereby to which the Lessor is a
party, the Lessor may in its sole discretion decline to execute such instrument.
SECTION 12.2. Headings. The headings of the various Sections herein are
--------
for convenience of reference only and shall not define or limit any of the terms
or provisions hereof.
SECTION 12.3. Notices. All notices, requests and demands to or upon the
-------
respective parties hereto shall be given in accordance with Section 13.3 of the
Participation Agreement.
SECTION 12.4. No Waiver; Cumulative Remedies. No failure to exercise and
------------------------------
no delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege
24
<PAGE>
Loan Agreement
hereunder or under the other Operative Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges herein provided are cumulative and not exclusive of any
rights, remedies, powers and privileges provided by law.
SECTION 12.5. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made hereunder, in the other Operative Documents
and in any document, certificate or statement, delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Loan
Agreement and the Notes and the making of the Loans hereunder.
SECTION 12.6. Successors and Assigns; Assignment by Lessor. This Loan
--------------------------------------------
Agreement shall be binding upon and inure to the benefit of the Lessor, each
Lender, the Agent, each future holder of a Note and their respective successors
and assigns; provided that (i) no assignment shall be made by the Lessor or the
Agent of its obligations hereunder without the prior written consent of the
Required Participants, and (ii) any assignment by any Lender or future holder of
a Note shall be made subject to and in accordance with the provisions of Section
13.8 of the Participation Agreement.
SECTION 12.7. Adjustments. Subject to the provisions of Article V hereof,
-----------
if any Financing Lender or Equity Lender, as the case may be (a "Benefitted
----------
Lender"), shall at any time receive any payment of all or part of its Loans, or
- ------
interest thereon, or receive any collateral in respect thereof (whether
voluntarily or involuntarily, by setoff, pursuant to events or proceedings of
the nature referred to in Section 6.1(e), or otherwise), in a greater proportion
--------------
than any such payment to or collateral received by any other Financing Lender or
Equity Lender, as the case may be, in respect of such other Lender's Loans, or
interest thereon, such Benefitted Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other Lender's
Loan, or shall provide such other Financing Lenders or Equity Lenders, as the
case may be, with the benefits of any such collateral, or the proceeds thereof,
as shall be necessary to cause such Benefitted Lender to share the excess
payment or benefits of such collateral or proceeds ratably with each of the
other Financing Lenders or Equity Lenders, as the case may be; provided,
--------
however, that if all or any portion of such excess payment or benefits is
- -------
thereafter recovered from such Benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of such
recovery, but without interest.
SECTION 12.8. Counterparts. This Loan Agreement may be executed by one or
------------
more of the parties to this Loan Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Loan Agreement signed by all the parties shall be delivered
to the Lessor and the Agent.
25
<PAGE>
Loan Agreement
SECTION 12.9. Severability. Any provision of this Loan Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 12.10. Intention. This Loan Agreement and the other Operative
---------
Documents represent the agreement of the Lessor, the Agent and the Lenders with
respect to the subject matter hereof, and there are no promises, undertakings,
representations or warranties by the Agent or any Lender relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Operative Documents.
SECTION 12.11. WAIVER OF TRIAL BY JURY. THE PARTIES HERETO VOLUNTARILY
-----------------------
AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY, IN RESPECT
OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH,
THIS LOAN AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY OF THE
PARTIES HERETO. THE PARTIES HERETO HEREBY AGREE THAT THEY WILL NOT SEEK TO
CONSOLIDATE ANY SUCH LITIGATION WITH ANY OTHER LITIGATION IN WHICH A JURY TRIAL
HAS NOT OR CANNOT BE WAIVED. THE PROVISIONS OF THIS SECTION 12.11 HAVE BEEN
-------------
FULLY NEGOTIATED BY THE PARTIES HERETO AND SHALL BE SUBJECT TO NO EXCEPTIONS.
THE PARTIES HERETO ACKNOWLEDGE AND AGREE THAT THEY HAVE EACH RECEIVED FULL AND
SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND THAT THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS LOAN AGREEMENT AND EACH
SUCH OTHER OPERATIVE DOCUMENT).
SECTION 12.12. GOVERNING LAW. THIS LOAN AGREEMENT AND THE NOTES AND THE
-------------
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS LOAN AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF TEXAS.
SECTION 12.13. Nonrecourse. Anything to the contrary contained in this
-----------
Loan Agreement or in any other Operative Document notwithstanding, neither the
Lessor nor any officer, director or shareholder hereof, nor any of the Lessor's
successors or assigns (all such Persons being hereinafter referred to
collectively as the "Exculpated Persons"), shall be personally liable in any
------------------
respect for any Obligation hereunder or under any other Operative Document
including the payment of the principal of, or interest on, any of the Notes, or
for monetary damages for the breach of performance of any of the covenants
contained in this Loan Agreement,
26
<PAGE>
Loan Agreement
the Notes or any of the other Operative Documents. The Agent and the Lenders
agree that, in the event any of them pursues any remedies available to them
under this Loan Agreement, the Notes or any other Operative Documents, none of
the Agent or the Lenders shall have any recourse against the Lessor, nor any
other Exculpated Person, for any deficiency, loss or claim for monetary damages
or otherwise resulting therefrom and recourse shall be had solely and
exclusively against the Equipment, the Lessee and the Guarantors; but nothing
contained herein shall be taken to prevent recourse against or the enforcement
of remedies against the Equipment in respect of the Obligations. Notwithstanding
the foregoing provisions of this Section 12.13 herein, nothing in this Loan
-------------
Agreement or any other Operative Document shall (a) constitute a waiver,
release, or discharge of any obligation evidenced or secured by this Loan
Agreement, any other Operative Document or any Security Document, (b) limit the
right of the Agent or any Lender to name the Lessor as a party defendant in any
action or suit for judicial foreclosure and sale under any Operative Document,
or (c) affect in any way the validity or enforceability of the Guaranty or any
other guaranty (whether of payment and/or performance) given to the Agent or any
Lender in connection with the Loans or any Obligation of the Lessee under the
Operative Documents (which shall be full recourse).
SECTION 12.14. Tax Reports. In the event any tax report or tax return is
-----------
required to be made by the Lessor with respect to the Equipment and the Lessee
is not required to prepare and file the same pursuant to the Master Lease, the
Lessor will, at the sole expense of Lessee, prepare such tax report or return in
respect of its interest in the Equipment and deliver a copy thereof to the
Agent.
SECTION 12.15. SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
--------------------------
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN HOUSTON,
TEXAS, AND TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN
DALLAS, TEXAS, FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS LOAN AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 12.16. FINAL AGREEMENT. THIS LOAN AGREEMENT AND THE OTHER
---------------
OPERATIVE DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO
WITH RESPECT TO THE LOANS AND MAY NOT
27
<PAGE>
Loan Agreement
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES HERETO.
SECTION 12.17. Intercreditor Agreements. Each of the Financing Lenders
------------------------
hereby (a) agrees to all terms and provisions of each of the "Intercreditor
Agreement" and the "Accounts Receivable Securitization Facility Intercreditor
Agreement" (as such terms are defined in the Mail-Well Credit Agreement), (b)
agrees to be bound by all of the terms and provisions of each of the
"Intercreditor Agreement" and the "Accounts Receivable Securitization Facility
Intercreditor Agreement" (as such terms are defined in the Mail-Well Credit
Agreement) as if it were a direct party and a signatory thereto (whether or not
it is a direct party or a signatory thereto) and (c) grants to the Agent a
special power of attorney to execute and deliver each of the "Intercreditor
Agreement" and the "Accounts Receivable Securitization Facility Intercreditor
Agreement" (as such terms are defined in the Mail-Well Credit Agreement) for, on
behalf of and in the name of such Lender.
SECTION 12.18. Payments. All payments to be made to the Lenders or to the
--------
Agent on behalf of the Lenders hereunder and under the other Operative Documents
shall be deemed to have been made only when good, collected and indefeasible
funds have been received by the Agent and/or the Lenders, as the case may be.
[remainder of page left intentionally blank]
28
<PAGE>
Loan Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
LESSOR:
------
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By: ___________________________________
Edward V. Canale, President
By: ___________________________________
Matthew J. Cooleen, Vice President
<PAGE>
Loan Agreement
AGENT:
-----
BANQUE PARIBAS,
as Agent and as a Lender
By: _____________________________
Pierre-Jean de Filippis,
General Manager
By: _____________________________
Christopher S. Goodwin,
Vice President
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
ARAB BANKING CORPORATION
(B.S.C.)
By:
-------------------------------
Name:
-----------------------------
Title:
-------------------------------
Address for Notices:
-------------------
Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
New York, New York 10172
Telecopy No. : 212-583-0921
Telephone No.:
------------
Attention: Ms. Louise Weiss
With a copy to:
Arab Banking Corporation (B.S.C.)
600 Travis Street, Suite 1900
Houston, Texas 77002
Telecopy No. : 713-227-6507
Telephone No.: 713-227-8444
Attention: Stephen Plauche
Lending Office for Prime Rate Loans:
-----------------------------------
Arab Banking Corporation (B.S.C.)
277 Park Avenue, 32nd Floor
New York, New York 10172-3299
Attention: Ms. Louise Weiss
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
BANK OF AMERICA ILLINOIS
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address for Notices:
-------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Telecopy No.: 312-974-9626
Telephone No.: 312-828-6386
Attention: Juanita L. Hester
with a copy to:
Bank of America
U.S. Div. - S.F. Credit Products #3838
555 California Street, 41st Floor
San Francisco, CA 94104
Attention: Kevin Leader
Lending Office for Prime Rate Loans:
-----------------------------------
Bank of America Illinois
231 S. LaSalle Street
Chicago, Illinois 60697
Attention: Juanita L. Hester
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
THE BANK OF NOVA SCOTIA
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Address for Notices:
-------------------
The Bank of Nova
Scotia, Atlanta Agency
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Telecopy No.: 404-888-8998
Telephone No.: 404-877-1500
Attention: F.C.H. Ashby
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Telecopy No.: 713-752-2425
Telephone No.: 713-759-3432
Attention: Rosine Matthews
Lending Office for Prime Rate Loans:
-----------------------------------
The Bank of Nova
Scotia, Atlanta Agency
600 Peachtree Street
N.E., Suite 2700
Atlanta, Georgia 30308
Attention: Cleve Bushey
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
THE BOATMEN'S NATIONAL BANK
OF ST. LOUIS
By:
--------------------------
Name:
------------------------
Title:
-----------------------
Address for Notices:
-------------------
The Boatmen's
National Bank of St. Louis
800 Market Street,
Mail Station LBP 37-01
St. Louis, Missouri 63101
Telecopy No.: 314-466-6645
Telephone No.: 314-466-7368
Attention: Pamela Boggeman
Lending Office for Prime Rate Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis, Leveraged
Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
Lending Office for Eurodollar Loans:
-----------------------------------
The Boatmen's National Bank of St. Louis, Leveraged
Finance
800 Market Street, Mail Station LBP 37-01
St. Louis, Missouri 63101
Attention: Pamela Boggeman
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
THE CIT GROUP/BUSINESS CREDIT, INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
Address for Notices:
-------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Telecopy No.: 972-455-1690
Telephone No.: 972-455-1678
Attention: Pam Wozniak or Susan Brooks
Lending Office for Prime Rate Loans:
-----------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
Lending Office for Eurodollar Loans:
------------------------------------
The CIT Group/Business Credit, Inc.
Two Lincoln Centre, 5420 LBJ Freeway, Suite 200
Dallas, Texas 75240
Attention: Pam Wozniak
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
CREDIT LYONNAIS NEW YORK
BRANCH
By:____________________________
Name:__________________________
Title:_________________________
Addresses for Notices:
---------------------
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Telecopy No.: 212-459-3170
Telephone No.: 212-459-7000
Attention: Mark Koneval
With a copy to:
Credit Lyonnais
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Telecopy No.: 214-220-2323
Telephone No.: 214-220-2300
Attention: Brian Brown
Lending Office for Prime Rate Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
Lending Office for Eurodollar Loans:
-----------------------------------
Credit Lyonnais New York Branch
2200 Ross Avenue, Suite 4400 West
Dallas, Texas 75201
Attention: Credit Lyonnais
<PAGE>
Loan Agreement
37
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
THE FUJI BANK, LIMITED
By:_______________________________
Name:_____________________________
Title:____________________________
Address for Notices:
-------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Telecopy No.: 713-759-0048
Telephone No.: 713-650-7854
Attention: Nate Ellis
Lending Office for Prime Rate Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
Lending Office for Eurodollar Loans:
-----------------------------------
The Fuji Bank, Limited
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Attention: Nate Ellis
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
THE LONG-TERM CREDIT BANK OF
JAPAN, LIMITED, NEW YORK BRANCH
By:_____________________________
Name:___________________________
Title:__________________________
Address for Notices:
-------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Telecopy No.: 212-608-2371
Telephone No.: 212-335-4550
Attention: Frank H. Madden
Lending Office for Prime Rate Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
Lending Office for Eurodollar Loans:
-----------------------------------
The Long-Term Credit Bank of Japan, Limited,
New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Frank H. Madden
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
NATIONAL BANK OF CANADA
By: ____________________________
Name: __________________________
Title: _________________________
By: ____________________________
Name: __________________________
Title: _________________________
Address for Notices:
-------------------
National Bank of Canada
2121 San Jacinto, Suite 1850
Dallas, Texas 75201
Telecopy No.: 214-871-2015
Telephone No.: 214-871-1208
Attention: Larry Sears (2 copies requested)
Lending Office for Prime Rate Loans:
-----------------------------------
National Bank of Canada, New York Branch
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
Lending Office for Eurodollar Loans:
-----------------------------------
National Bank of Canada
125 West 55th Street
New York, New York 10019-5366
Attention: Eleanor Valentine
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
NATIONSBANK OF TEXAS, N.A.
By:_________________________________
Name:_______________________________
Title:______________________________
Address for Notices:
-------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Telecopy No.: 214-508-0980
Telephone No.: 214-508-3363
Attention: Kimberly Knop
Lending Office for Prime Rate Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
Lending Office for Eurodollar Loans:
-----------------------------------
NationsBank of Texas, N.A.
901 Main Street
Dallas, Texas 75202
Attention: Kimberly Knop
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
SOCIETE GENERALE, SOUTHWEST
AGENCY
By:____________________________
Name:__________________________
Title:_________________________
Address for Notices:
-------------------
Societe Generale
1111 Bagby, Suite 2020
Houston, Texas 77002
Telecopy No.: 713-650-0824
Telephone No.: 713-759-6318
Attention: Dick Erbert
with a copy to:
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Prime Rate Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
Lending Office for Eurodollar Loans:
-----------------------------------
Societe Generale
2001 Ross Avenue, Suite 4800
Dallas, Texas 75201
Attention: Angela Aldridge
<PAGE>
Loan Agreement
FINANCING LENDER:
----------------
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By:___________________________
Name:_________________________
Title:________________________
Address for Notices:
-------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Telecopy No.: 713-216-6387
Telephone No.: 713-216-5656
Attention: Mary Arnold
Lending Office for Prime Rate Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
Lending Office for Eurodollar Loans:
-----------------------------------
Texas Commerce Bank National Association
707 Travis Street, 7-TCB-North #79
Houston, Texas 77002
Attention: Mary Arnold
<PAGE>
Loan Agreement
EQUITY LENDERS:
--------------
GENERAL ELECTRIC CAPITAL
CORPORATION
By:__________________________
Name:________________________
Title:_______________________
Address for Notices:
-------------------
General Electric Capital Corporation
5400 LBJ Freeway, Suite 1280
Dallas, Texas 75240
Telecopy No.: 214-991-6367
Telephone No.: 214-419-3229
Attention: Steven R. Bellah
Lending Office for Prime Rate Loans:
-----------------------------------
___________________________________
___________________________________
___________________________________
Attention:_________________________
Lending Office for Eurodollar Loans:
-----------------------------------
___________________________________
___________________________________
___________________________________
Attention:_________________________
<PAGE>
Loan Agreement
EXHIBIT A
TO LOAN AGREEMENT
FINANCING NOTE
$______________ __________________
FOR VALUE RECEIVED, the undersigned, PARIBAS PROPERTIES, INC., a Delaware
corporation ("Maker"), promises to pay to the order of
-----
_________________________________ (the "Lender") on the Maturity Date the
------
principal sum of ______________________________________ DOLLARS
($__________________) pursuant to that certain Loan Agreement, dated as of
November 15, 1996 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "Loan Agreement"), entered into
--------------
by and among the Maker, the Agent and the various financial institutions
(including the Lender) who are, or may from time to time become, parties
thereto. Capitalized terms used but not otherwise defined herein have the
respective meanings specified in Appendix A to the Loan Agreement.
----------
Maker also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity (whether by
acceleration or otherwise) and, after maturity, until paid, at the rates per
annum and on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made without setoff or
counterclaim in lawful money of the United States of America in same day or
immediately available funds to the account of the Lender specified in Schedule
--------
IV to the Participation Agreement (or to such other account as the Lender may
- --
from time to time designate in a written notice to the Maker).
This Note is one of the Financing Notes referred to in, and evidences
indebtedness incurred under, the Loan Agreement, to which reference is made for
a description of the security for this Note and for a statement of the terms and
conditions on which the Maker is permitted and required to make prepayments and
repayments of principal of the indebtedness evidenced by this Note and on which
such indebtedness may be declared to be or automatically become immediately due
and payable.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
Except as provided in the Loan Agreement, by its acceptance of this Note
the Lender hereby agrees that, notwithstanding anything to the contrary
contained in this Note or in any other Operative Document, neither the Maker nor
any of its officers, directors or shareholders, nor any of the Maker's
successors or assigns (all such Persons being hereinafter referred to
collectively as the "Exculpated Persons"), shall be personally liable in any
------------------
respect for any indebtedness, liability or obligation under this Note or under
any other Operative Document including the payment of the principal of, or
interest on, this Note, or for monetary damages for the
<PAGE>
Loan Agreement
breach of performance of any of the covenants contained in the Loan Agreement or
any of the other Operative Documents, and that the Lender shall have no recourse
against the Maker, nor any other Exculpated Person, for any deficiency, loss or
claim for monetary damages or otherwise resulting therefrom and recourse shall
be had solely and exclusively against the Equipment, the Lessee and the
Guarantors.
THIS NOTE HAS BEEN DELIVERED IN HOUSTON, TEXAS, AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS.
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By:__________________________________
Edward V. Canale, President
By:__________________________________
Matthew J. Cooleen, Vice President
<PAGE>
Loan Agreement
EXHIBIT B
TO LOAN AGREEMENT
EQUITY NOTE
$______________ ___________________
FOR VALUE RECEIVED, the undersigned, PARIBAS PROPERTIES, INC., a Delaware
corporation ("Maker"), promises to pay to the order of
-----
__________________________________ (the "Lender") on the Maturity Date the
------
principal sum of ____________________________________________ DOLLARS
($_________________) pursuant to that certain Loan Agreement, dated as of
November 15, 1996 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "Loan Agreement"), entered into
--------------
by and among the Maker, the Agent and the various financial institutions
(including the Lender) who are, or may from time to time become, parties
thereto. Capitalized terms used but not otherwise defined herein have the
respective meanings specified in Appendix A to the Loan Agreement.
----------
Maker also promises to pay interest on the unpaid principal amount hereof
from time to time outstanding from the date hereof until maturity (whether by
acceleration or otherwise) and, after maturity, until paid, at the rates per
annum and on the dates specified in the Loan Agreement.
Payments of both principal and interest are to be made without setoff or
counterclaim in lawful money of the United States of America in same day or
immediately available funds to the account of the Lender specified in Schedule
--------
IV to the Participation Agreement (or to such other account as the Lender may
- --
from time to time designate in a written notice to the Maker).
This Note is one of the Equity Notes referred to in, and evidences
indebtedness incurred under, the Loan Agreement, to which reference is made for
a description of the security for this Note and for a statement of the terms and
conditions on which the Maker is permitted and required to make prepayments and
repayments of principal of the indebtedness evidenced by this Note and on which
such indebtedness may be declared to be or automatically become immediately due
and payable.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
Except as provided in the Loan Agreement, by its acceptance of this Note
the Lender hereby agrees that, notwithstanding anything to the contrary
contained in this Note or in any other Operative Document, neither the Maker nor
any of its officers, directors or shareholders hereof, nor any of the Maker's
successors or assigns (all such Persons being hereinafter referred to
collectively as the "Exculpated Persons"), shall be personally liable in any
------------------
respect for any indebtedness, liability or obligation under this Note or under
any other Operative Document including the payment of the principal of, or
interest on, this Note, or for monetary damages for the
<PAGE>
Loan Agreement
breach of performance of any of the covenants contained in the Loan Agreement or
any of the other Operative Documents, and that the Lender shall have no recourse
against the Maker, nor any other Exculpated Person, for any deficiency, loss or
claim for monetary damages or otherwise resulting therefrom and recourse shall
be had solely and exclusively against the Equipment, the Lessee and the
Guarantors.
THIS NOTE HAS BEEN DELIVERED IN HOUSTON, TEXAS, AND SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF TEXAS.
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By:_____________________________________
Edward V. Canale, President
By:_____________________________________
Matthew J. Cooleen, Vice President
<PAGE>
Loan Agreement
EXHIBIT C
TO LOAN AGREEMENT
GUARANTY
================================================================================
LEASE FACILITY GUARANTY
dated as of November 15, 1996
made by
MAIL-WELL I CORPORATION, MAIL-WELL, INC., and
CERTAIN OF THEIR SUBSIDIARIES,
as Guarantors
in favor of
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders
and
BANQUE PARIBAS,
as Agent for the Lenders
================================================================================
<PAGE>
Loan Agreement
LEASE FACILITY GUARANTY
-----------------------
(Mail-Well I Corporation)
THIS LEASE FACILITY GUARANTY (this "Guaranty"), dated the 15th day of
--------
November, 1996, is made by MAIL-WELL I CORPORATION, a Delaware corporation
("Lessee"), MAIL-WELL, INC., a Delaware corporation ("Holdings"), and each of
- -------- --------
their subsidiaries which is a party to this Guaranty (collectively, the
"Guarantors"), in favor of the various financial institutions who are Financing
- -----------
Lenders under the Loan Agreement (together with their respective successors and
assigns, the "Financing Lenders"), and BANQUE PARIBAS, as Agent (in such
-----------------
capacity, the "Agent") for the equal and ratable benefit of itself and the
-----
Financing Lenders.
W I T N E S S E T H:
-------------------
Recitals
--------
A. The Financing Lenders, the financial institutions designated as the
"Equity Lenders," the Agent and Paribas Properties, Inc., a Delaware corporation
(the "Lessor"), have entered into that certain Loan Agreement (the "Loan
------ ----
Agreement"), dated of even date herewith, providing, among other things, for
- ---------
loans to be made by the Financing Lenders and the Equity Lenders in a maximum
aggregate principal amount not to exceed $30,000,000.00 (collectively, the
"Loans") to be used by the Lessor to purchase certain Equipment (as therein
- ------
defined) from Lessee and certain of the Lessee's Subsidiaries.
B. Upon the consummation of the purchase of the Equipment by the Lessor,
the Lessor has agreed, as Lessor, to lease the Equipment to the Lessee pursuant
to the Master Lease. The Loan Agreement and the Master Lease have been entered
into pursuant to the terms and provisions of that certain Participation
Agreement dated of even date herewith, entered into by Guarantors, the Lessor,
the Equity Lenders, the Financing Lenders and the Agent.
C. As a condition to the consummation of the transactions provided in the
Participation Agreement, the Financing Lenders have required the execution and
delivery by Guarantors of this Guaranty.
D. Guarantors have duly authorized the execution, delivery and
performance of this Guaranty, and the boards of directors of Guarantors have
determined that it is in their best interest to execute and deliver this
Guaranty in order to obtain the substantial benefits provided by the
Participation Agreement and other Operative Documents.
1
<PAGE>
Loan Agreement
Agreement
---------
NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Financing Lenders to enter into
the Loan Agreement, each of the Guarantors agree for the benefit of Financing
Lenders as follows:
1. Certain Defined Terms and Related Matters.
-----------------------------------------
(a) The terms used herein that are defined in the Participation
Agreement and are not otherwise defined herein shall have the meanings therefor
specified in Appendix A to the Participation Agreement and the rules of
----------
interpretation set forth in Appendix A shall apply to this Guaranty.
(b) The Financing Lenders and the Agent are referred to herein
collectively as the "Guaranteed Parties", and individually as a "Guaranteed
------------------ ----------
Party".
- -----
2. Guaranty. Guarantors hereby jointly and severally, unconditionally
--------
and irrevocably, (i) guarantee the punctual payment and performance of all
Obligations of the Lessor and the Lessee, whether several or joint, to the
Guaranteed Parties, solely in their capacity as Financing Lenders and as Agent
for the Financing Lenders, as the case may be, arising under or in connection
with the Loan Agreement, the Financing Notes, and the other Operative Documents
executed in connection therewith (collectively the "Guaranteed Obligations"),
----------------------
including without limitation the payment of all principal and accrued interest
under the Financing Notes, and (ii) agree to indemnify and hold harmless each
Guaranteed Party from and against any and all costs and expenses (including
without limitation reasonable attorneys' fees) incurred by each Guaranteed Party
in enforcing any rights under this Guaranty. Guarantors shall have no
obligation to any Equity Lender or the Agent in its capacity as Agent for the
Equity Lenders under this Guaranty. This Guaranty is an absolute guaranty of
payment and performance and not a guaranty of collection.
3. Guaranty Absolute. Guarantors guarantee that the Guaranteed
-----------------
Obligations will be paid strictly in accordance with the terms of the Operative
Documents regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Guaranteed
Parties with respect thereto. The liability of Guarantors under this Guaranty
shall be personal, absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of any
other Operative Document or any other agreement, document or instrument
relating to any Operative Document, or avoidance or subordination of any of
the Guaranteed Obligations;
(ii) any limitation of liability or recourse in any Operative
Document;
(iii) the insolvency, bankruptcy, dissolution, liquidation,
receivership, reorganization, merger, change of form, structure or
ownership, sale of all assets, or lack of
2
<PAGE>
Loan Agreement
corporate or other power of the Lessor or any other Person at any time
liable for the payment or performance of any or all of the Guaranteed
Obligations;
(iv) either with or without notice to or consent of each of
Guarantors, any one or more renewals, extensions, modifications or
rearrangements of the terms of any or all of the Guaranteed Obligations or
any of the Operative Documents, including, without limitation, material
alterations of the terms of payment (including, without limitation, changes
in maturity date(s) and interest rate(s)) or performance or any other terms
thereof, or any waiver, termination, or release of, or consent to departure
from, any of the Operative Documents, or any adjustment, indulgence,
forbearance, extension or compromise that may be granted from time to time
to the Guarantors, the Lessor, or any other Person at any time liable for
the payment or performance of any or all of the Guaranteed Obligations;
(v) the taking or accepting of any other security or guaranty for,
or right of recourse with respect to, any or all of the Guaranteed
Obligations;
(vi) any release, surrender, abandonment, exchange, alteration, sale
or other disposition, subordination, deterioration, waste, failure to
protect or preserve, impairment, or loss of, or any failure to create or
perfect any Lien or exercise any right with respect to, or any other
dealings with, any collateral or security at any time existing or
purported, believed or expected to exist in connection with any or all of
the Guaranteed Obligations;
(vii) any partial release of the liability of any Guarantor
hereunder, or any complete or partial release of any other guarantor of,
any amendment or waiver of any term of any other guaranty of, or any
consent to departure from any requirement of any other guaranty of, all or
any of the Guaranteed Obligations;
(viii) any neglect, lack of diligence, delay, omission, failure or
refusal to take or prosecute (or in taking or prosecuting) any action for
the collection or enforcement of any of the Guaranteed Obligations, or to
foreclose or take or prosecute any action to foreclose (or in foreclosing
or taking or prosecuting any action to foreclose) upon any security
therefor, or to exercise (or in exercising) any other right or power with
respect to any security therefor, or to take or prosecute (or in taking or
prosecuting) any action in connection with any Operative Document, or any
failure to sell or otherwise dispose of in a commercially reasonable manner
any collateral securing any or all of the Guaranteed Obligations (excepting
only, with respect to any such sale or other disposition of collateral, any
such requirement imposed at the time in question by then-applicable law and
not waiveable by Guarantors.
(ix) if for any reason any Guaranteed Party is required to refund
any payment by the Lessor to such Guaranteed Party or pay the amount
thereof to someone else;
<PAGE>
Loan Agreement
(x) the existence of any claim, set-off or other rights that any
Guarantor may at any time have against the Lessor, any Guaranteed Party or
any other Person, whether or not arising in connection with this Guaranty
or any other Loan Document;
(xi) the election by any of the Guaranteed Parties in any proceeding
under chapter 11 of the Bankruptcy Code of the application of section
1111(b)(2) of the Bankruptcy Code;
(xii) any borrowing or grant of a security interest by the Lessor, as
debtor-in-possession, under section 364 of the Bankruptcy Code (U.S.) or
section 31 of the Bankruptcy and Insolvency Act (Canada);
(xiii) the disallowance, under section 502 of the Bankruptcy Code
(U.S.) or section 135 of the Bankruptcy and Insolvency Act (Canada), of all
or any portion of the claims of any of the Guaranteed Parties for payment
of any of the Guaranteed Obligations; or
(xiv) any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a Lessor or a guarantor.
Without limiting the generality of clause (ii) above, it is expressly
-----------
acknowledged and agreed by each Guarantor that such Guarantor's guarantee of the
payment and performance of the Guaranteed Obligations hereunder is with full
recourse and personal liability, notwithstanding the fact that the liability of
Lessor for the payment of the Guaranteed Obligations is nonrecourse as and to
the extent provided for in the Operative Documents.
4. Waiver. (a) Guarantors hereby (i) waive (A) promptness, diligence,
------
presentment, protest, notice of dishonor, notice of intent to accelerate, notice
of acceleration, notice of acceptance and any and all other notices with respect
to any of the Guaranteed Obligations or this Guaranty, (B) the filing of any
claim with a court in the event of receivership or bankruptcy of the Lessor or
the Lessee, (C) protest or notice with respect to nonpayment of all or any of
the Guaranteed Obligations, (D) the benefit of any statute of limitations, (E)
any and all rights to which Guarantors may otherwise have been entitled under
any suretyship laws of the State of Texas in effect from time to time,
including, without limitation, any rights pursuant to Rule 31 of the Texas Rules
of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code
and Chapter 34 of the Texas Business and Commerce Code, (F) all demands
whatsoever (and any requirement that same be made on the Lessor or any other
Person as a condition precedent to Guarantors' obligations hereunder); and (ii)
covenant and agree that this Guaranty will not be discharged except by complete
performance of the Guaranteed Obligations and any payment obligations of
Guarantors contained herein.
(b) If, in the exercise of any of its rights and remedies, any of the
Guaranteed Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the Lessor
or the Lessee or any other Person, whether because of any applicable law
pertaining to "election of remedies" or otherwise, Guarantors hereby consent to
such
4
<PAGE>
Loan Agreement
action by such Guaranteed Party and waive any claim based upon such action. Any
election of remedies which results in the denial or impairment of the right of
such Guaranteed Party to seek a deficiency judgment against the Lessor or the
Lessee or any other Person shall not impair the obligations of Guarantors to pay
the full amount of the Guaranteed Obligations or any other obligation of
Guarantors contained herein.
(c) In the event any of the Guaranteed Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Guaranteed Obligations, such Guaranteed Party may bid all or less
than the amount of the Guaranteed Obligations and the amount of such bid need
not be paid by such Guaranteed Party but shall be credited against the
Guaranteed Obligations. The amount of the successful bid at any such sale,
whether such Guaranteed Party or any other Person is the successful bidder,
shall, to the extent permitted by applicable law, be conclusively deemed to be
the fair market value of the Collateral and the difference between such bid
amount and the remaining balance of the Guaranteed Obligations shall, to the
extent permitted by applicable law, be conclusively deemed to be the amount of
the Guaranteed Obligations guaranteed under this Guaranty, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which any of the Guaranteed
Parties might otherwise be entitled by reason of such bidding at any such sale.
(d) Guarantors agree that notwithstanding the foregoing and without
limiting the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, any of the Guaranteed Parties is prevented
by applicable law from exercising its rights to accelerate the maturity of the
Guaranteed Obligations, to collect interest on the Guaranteed Obligations or to
enforce or exercise any other right or remedy with respect to the Guaranteed
Obligations, or the Agent is prevented from taking any action to realize on the
Collateral, Guarantors agree to pay to the Agent for the account of the
Guaranteed Parties, upon demand therefor, the amount that would otherwise have
been due and payable had such rights and remedies been permitted to be exercised
by the Guaranteed Parties.
(e) Each Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Lessor and of each other guarantor of
all or any part of the Guaranteed Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations or any part
thereof, that diligent inquiry would reveal. Guarantors hereby agree that the
Guaranteed Parties shall have no duty to advise each of Guarantors of
information known to any of the Guaranteed Parties regarding such condition or
any such circumstance. In the event that any of the Guaranteed Parties in its
sole discretion undertakes at any time or from time to time to provide any such
information to Guarantors, such Guaranteed Party shall be under no obligation
(i) to undertake any investigation not a part of its regular business routine,
(ii) to disclose any information which, pursuant to accepted or reasonable
banking or commercial finance practices, such Guaranteed Party wishes to
maintain confidential or (iii) to make any other or future disclosures of such
information or any other information to the Guarantors.
5
<PAGE>
Loan Agreement
(f) Guarantors consent and agree that the Guaranteed Parties shall be
under no obligation to marshal any assets in favor of any Guarantor or otherwise
in connection with obtaining payment of any or all of the Guaranteed Obligations
from any Person or source.
5. Waiver of Subrogation. Guarantors agree that any and all rights of
---------------------
subrogation or similar rights which Guarantors may have against the Lessor are
hereby expressly waived unless and until the Guaranteed Obligations have been
fully and finally paid and performed, and Guarantors will not enforce any such
right against the Lessor unless and until the Guaranteed Obligations have been
fully and finally paid and performed. Notwithstanding any payments made or
obligations performed by Guarantors by reason of this Guaranty or any other
Operative Document to which Guarantors are parties or any enforcement of or
realization on the security provided therein (including but not limited to
application of funds on account of such payments or obligations or as a result
of such enforcement or realization), Guarantors hereby irrevocably waive and
release any and all rights they may have at any time (whether arising directly
or indirectly, by operation of law, contract or otherwise) to assert any claim
against the Lessor or against any direct or indirect security on account of such
payments made or obligations performed or such enforcement of or realization on
security, including without limitation any and all rights of subrogation,
reimbursement, exoneration, contribution or indemnity, unless and until the
Guaranteed Obligations have been fully and finally paid and performed.
Notwithstanding anything to the contrary contained in this Guaranty or any other
Operative Document or applicable law, any and all of such rights of subrogation,
reimbursement, exoneration, contribution or indemnity are and shall be subject
to and limited by the nonrecourse provisions of the Loan Agreement and the
Financing Notes; it being agreed and understood by each Guarantor that none of
such rights shall in any way relate to any indebtedness, liabilities or
obligations of the Lessor which are nonrecourse to the Lessor or for which the
Lessor has no personal liability.
6. Covenants and Representations. Guarantors hereby covenant and agree
-----------------------------
with the Agent and each Financing Lender that they shall perform all obligations
under the Participation Agreement that Guarantors have agreed to perform,
including without limitation each and every covenant applicable to the
Guarantors contained in the Participation Agreement. Guarantors represent and
warrant to the Agent and each Financing Lender that (a) all representations and
warranties contained in the Participation Agreement and applicable to Guarantors
are true and correct in all material respects; (b) Guarantors and the Lessor are
members of an affiliated and integrated group of corporations and are engaged in
related businesses and supporting lines of business; (c) Guarantors has received
and will receive a direct and indirect material benefit from the transactions
evidenced by and contemplated in the Participation Agreement and the Operative
Documents; (d) this Guaranty is given by Guarantors in furtherance of its direct
and indirect business interests and corporate purposes, and is necessary to the
conduct, promotion and attainment of its businesses; (e) the value of the
consideration received and to be received by Guarantors pursuant to the
Participation Agreement, the Operative Documents and the transactions
contemplated thereby is reasonably worth at least as much as the liability and
obligation of Guarantors hereunder; and (f) the Guaranteed Obligations
constitute "Senior Indebtedness" (as that term is defined in the Borrower
Indenture as described and defined in the Mail-Well Credit Agreement), and the
Agent and the
6
<PAGE>
Loan Agreement
Financing Lenders, as beneficiaries of this Guaranty, are entitled to all of the
rights of the holder of "Senior Indebtedness" (as that term is defined in the
Borrower Indenture) pursuant to the Borrower Indenture as if the Guarantors were
the primary obligors with respect to such obligations guaranteed by the
Guarantors.
7. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Guaranty, nor consent to any departure by Guarantors herefrom, shall in any
event be effective unless the same shall be in writing, approved by the Required
Financing Lenders and signed by the Agent, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided however, that no amendment, waiver or consent shall,
-------- --------
unless in writing and signed by all the Guaranteed Parties, limit the liability
of Guarantors or postpone any date fixed for payment hereunder.
8. Addresses for Notices. All notices and other communications provided
---------------------
for hereunder shall be in writing (including telex or telecopy communication)
and mailed, telexed, telecopied or hand delivered, if to the Guarantors,
addressed to them at 23 Inverness Way East, Englewood, Colorado 80112; if to any
Guaranteed Party, addressed to it at the address of such Guaranteed Party
specified in the Participation Agreement, or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section 8. All such
---------
notices and other communication shall, when mailed, telexed, telecopied or hand
delivered, be effective when deposited in the mails (with postage prepaid),
confirmed by telex answer back, telecopied with confirmation of receipt or hand
delivered to the addressee or its agent, respectively.
9. No Waiver; Remedies. (a) No failure on the part of any Guaranteed
-------------------
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law or any of the Operative Documents.
(b) Failure by any of the Guaranteed Parties at any time or times
hereafter to require strict performance by the Guarantors, the Lessor or any
other Person of any of the provisions, warranties, terms or conditions contained
in any of the Operative Documents now or at any time or times hereafter executed
by the Guarantors, the Lessor or such other Person and delivered to any of the
Guaranteed Parties shall not waive, affect or diminish any right of any of the
Guaranteed Parties at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of any of the Guaranteed Parties or any
agent, director, officer or employee of any of the Guaranteed Parties.
(c) No waiver by the Guaranteed Parties of any default shall operate
as a waiver of any other default or the same default on a future occasion, and
no action by any of the Guaranteed Parties permitted hereunder shall in any way
affect or impair any of the rights of the Guaranteed Parties or the obligations
of each of Guarantors under this Guaranty or under any of the other
7
<PAGE>
Loan Agreement
Operative Documents to which they are a party. Any determination by a court of
competent jurisdiction of the amount of any principal or interest or other
amount constituting any of the Guaranteed Obligations shall be conclusive and
binding on each of Guarantors irrespective of whether each of Guarantors was a
party to the suit or action in which such determination was made.
10. Right of Set-off. Upon the occurrence and during the continuance of
----------------
any Event of Default, each of the Guaranteed Parties is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Guaranteed Party to or for the credit or the account of Guarantors against any
and all of the indebtedness, liabilities and obligations of Guarantors now or
hereafter existing under this Guaranty, irrespective of whether or not such
Guaranteed Party shall have made any demand under this Guaranty and although
such indebtedness, liabilities and obligations may be contingent and unmatured.
Each of the Guaranteed Parties agrees to notify Guarantors after such setoff and
application made by such Guaranteed Party; provided, however, that the failure
-----------------
to give such notice shall not affect the validity of such set-off and
application. The rights of each Guaranteed Party under this Section 11 are in
----------
addition to all other rights and remedies (including, without limitation, other
rights of setoff) which such Guaranteed Party may have.
11. Continuing Guaranty; Transfer of Notes. This Guaranty is a continuing
--------------------------------------
guaranty and shall (i) remain in full force and effect until termination of the
obligations of the Financing Lenders to make the Loans, and payment in full
thereafter of the Guaranteed Obligations and all other amounts payable under
this Guaranty, (ii) be binding upon each Guarantors and its successors and
assigns, and (iii) inure to the benefit of and be enforceable by the Guaranteed
Parties and their respective successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), any of the Guaranteed
------------
Parties may assign or otherwise transfer any note held by it or Obligation owing
to it to any other Person, and such other Person shall thereupon become vested
with all the rights in respect thereof granted to such Guaranteed Party herein
or otherwise with respect to such of the notes and Obligations so transferred or
assigned, subject, however, to compliance with the provisions of Section 12.1 of
the Participation Agreement in respect of assignments.
12. Reinstatement. This Guaranty shall remain in full force and effect
-------------
and continue to be effective should any petition be filed by or against any Loan
Party for liquidation or reorganization, should any Loan Party become insolvent
or make an assignment for the benefit of creditors or should a receiver or
trustee be appointed for all or any significant part of any Loan Party's assets,
and shall, to the fullest extent permitted by law, continue to be effective or
be reinstated, as the case may be, if at any time payment and performance of the
Guaranteed Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by any
obligee of the Guaranteed Obligations or such part thereof, whether as a
"voidable preference," "fraudulent transfer," or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any
part thereof, is rescinded, reduced, restored or returned, the Guaranteed
Obligations shall, to the fullest extent
8
<PAGE>
Loan Agreement
permitted by law, be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
13. Interest Limitation. (a) All agreements between the Guarantors, the
-------------------
Agent or any Financing Lender, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of demand being made in respect of an
amount due under any Operative Document or otherwise, shall the amount paid, or
agreed to be paid, to the Agent, or any Financing Lender for the use,
forbearance or detention of the money to be loaned under the Participation
Agreement, or otherwise or for the payment or performance of any covenant or
obligation contained herein or in any other Operative Document exceed the
Maximum Rate. If, as a result of any circumstances whatsoever, fulfillment
of any provision hereof or of any such documents, at the time performance of
such provision shall be due, shall involve transcending the limit
of validity prescribed by applicable usury law, then, ipso facto the obligation
---- -----
to be fulfilled shall be reduced to the limit of such validity, and if, from any
such circumstance, the Agent, or any Financing Lender shall ever receive
interest or anything which might be deemed interest under applicable law which
would exceed the Maximum Rate, such amount which would be excessive interest
shall be applied to the amounts owing on other obligations of the Guarantors to
the Agent, or any Financing Lender under any Operative Document and not to the
payment of interest, or if such excessive interest exceeds the amounts owing on
other obligations of the Guarantors to the Agent, or any Financing Lender under
any Operative Document, as the case may be, such excess shall be refunded to the
Guarantors. All sums paid or agreed to be paid to the Agent, or any Financing
Lender for the use, forbearance or detention of the indebtedness of the
Guarantors to the Agent or any Financing Lender shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full of the principal (including
the period of any renewal or extension thereof) so that the interest on account
of such indebtedness shall not exceed the Maximum Rate. Notwithstanding
anything to the contrary contained in any Operative Document, it is understood
and agreed that if at any time the rate of interest which accrues on the
outstanding principal balance of any indebtedness of the Guarantors hereunder
shall exceed the Maximum Rate, the rate of interest which accrues on the
outstanding principal balance of any such indebtedness shall be limited to the
Maximum Rate, but any subsequent reductions in the rate of interest which
accrues on the outstanding principal balance of any such indebtedness shall not
reduce the rate of interest which accrues on the outstanding principal balance
of any such indebtedness below the Maximum Rate until the total amount of
interest accrued on the outstanding principal balance of any such indebtedness
equals the amount of interest which would have accrued if such interest rate had
at all times been in effect. The terms and provisions of this Section 14 shall
----------
control and supersede every other provision of this Guaranty.
(b) The parties hereto agree that if Article 1.04, Subtitle 1, Title
79 of the Revised Civil Statutes of Texas, 1925, as amended, is applicable to
the determination of the Maximum Rate, the indicated rate ceiling computed from
time to time pursuant to Section (a) of such Article shall apply, provided that,
--------
to the extent permitted by such Article, the Agent may from time to time by
notice
9
<PAGE>
Loan Agreement
to Guarantors revise the election of such interest rate ceiling as such ceiling
affects the then current or future balances of any indebtedness of Guarantors
hereunder.
14. Descriptive Headings. The section headings in this Guaranty have been
--------------------
inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this Guaranty.
15. Counterparts. This Guaranty may be executed in several counterparts,
------------
and by the parties hereto on separate counterparts, and each counterpart, when
so executed and delivered, shall constitute an original instrument, and all such
separate counterparts shall constitute but one and the same instrument.
16. Separability. Should any paragraph, sentence, paragraph, Subsection
------------
or Section of this Guaranty be judicially declared to be invalid, unenforceable
or void, such decision shall not have the effect of invalidating or voiding the
remainder of this Guaranty, and Guarantors hereby agrees that the part or parts
of this Guaranty so held to be invalid, unenforceable or void will be deemed to
have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein. Each
covenant contained in this Guaranty shall be construed (absent an express
contrary provision herein) as being independent of each other covenant contained
herein, and compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with one or more other
covenants.
17. Agent for Service of Process. Guarantors hereby irrevocably designate
----------------------------
The Prentice-Hall Corporation System, Inc. to receive for and on behalf of
Guarantors service of process in Texas. Guarantors agree that the failure of
its agent for service of process to give any notice of any such service of
process to Guarantors shall not impair or affect the validity of such service or
of any judgment based thereon. If, despite the foregoing, there is for any
reason no agent for service of process of Guarantors available to be served,
then Guarantors further irrevocably consent to the service of process by the
mailing thereof by the Agent by registered or certified mail, postage prepaid,
to the Guarantors at its address listed in Section 9 hereof. Nothing in this
---------
Section 18 shall affect the right of the Agent or the Financing Lenders to serve
- ----------
legal process in any other manner permitted by law or affect the right of the
Agent or any Financing Lender to bring any action or proceeding against the
Guarantors or its equipment in the courts of any other jurisdiction.
18. SUBMISSION TO JURISDICTION. GUARANTORS HEREBY SUBMIT TO THE
--------------------------
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN HOUSTON, TEXAS, AND TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN DALLAS,
TEXAS, FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. GUARANTORS IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
10
<PAGE>
Loan Agreement
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
19. GOVERNING LAW. THIS GUARANTY, INCLUDING THE RIGHTS, OBLIGATIONS AND
-------------
REMEDIES HEREUNDER OF GUARANTORS, AND THE GUARANTEED PARTIES HEREOF, SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED TO
CONFLICT OF LAWS PRINCIPLES) AND JUDICIAL DECISIONS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAW.
20. FINAL AGREEMENT. THIS WRITTEN GUARANTY AND THE OTHER OPERATIVE
---------------
DOCUMENTS TO WHICH THEY ARE PARTIES REPRESENT THE FINAL AGREEMENT BETWEEN OR
AMONG THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES HERETO.
21. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
--------------------
LAW, GUARANTORS HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE AGENT OR THE FINANCING
LENDERS IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
22. Guaranty Survives Foreclosure. The Agent and the Financing Lenders,
-----------------------------
at their option and in their sole discretion, may proceed against any collateral
securing the Guaranteed Obligations by way of either judicial or non-judicial
foreclosure, and the obligations of Guarantors under this Guaranty shall survive
such foreclosure. Guarantors understand a non-judicial foreclosure of any
security interest securing the Guaranteed Obligations could impair or eliminate
any subrogation or reimbursement rights of Guarantors may have against the
Lessor; nevertheless Guarantors hereby waive and relinquish any defense based
upon the loss of any such reimbursement or subrogation rights and any other
defense which may arise out of any applicable law now or hereafter in effect.
If any security agreement securing the Guaranteed Obligations is foreclosed
judicially or non-judicially before the Agent or the Financing Lenders proceed
against Guarantors under this Guaranty, each of Guarantors's liability for the
Guaranteed Obligations secured by such security agreement shall be the
deficiency resulting from the judicial or non-judicial sale; i.e., the
difference between the amount of the Guaranteed Obligations secured by the
security agreement on the day of the foreclosure sale (including without
limitation principal, accrued interest, attorneys' fees, late charges and costs
of foreclosure) and the amount of the successful bid at the foreclosure sale.
11
<PAGE>
Loan Agreement
Guarantors further waive the right to object to the amount which may be bid by
the Agent or the Lessor at any foreclosure sale.
[remainder of page left intentionally blank]
12
<PAGE>
Loan Agreement
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
GUARANTORS:
----------
MAIL-WELL I CORPORATION, a Delaware
corporation
By:_____________________________________
Name:___________________________________
Title:__________________________________
13
<PAGE>
Loan Agreement
MAIL-WELL, INC., a
Delaware corporation
By:____________________________________
Name:__________________________________
Title:_________________________________
14
<PAGE>
Loan Agreement
PAVEY ENVELOPE AND TAG CORP.,
as a Guarantor
By:______________________________________
Name:_________________________________
Title:________________________________
15
<PAGE>
Loan Agreement
MAIL-WELL WEST, INC.,
as a Guarantor
By:______________________________________
Name:_________________________________
Title:________________________________
16
<PAGE>
Loan Agreement
WISCO II, L.L.C.,
as a Guarantor
By:___________________________________
Name:______________________________
Title:_____________________________
17
<PAGE>
Loan Agreement
MAIL-WELL CANADA HOLDINGS, INC.,
as a Guarantor
By:_____________________________________
Name:________________________________
Title:_______________________________
18
<PAGE>
Loan Agreement
GRAPHIC ARTS CENTER, INC.,
as a Guarantor
By:_________________________________
Name:____________________________
Title:___________________________
19
<PAGE>
Loan Agreement
WISCO III, L.L.C.,
as a Guarantor
By:_______________________________
Name:__________________________
Title:_________________________
20
<PAGE>
Loan Agreement
WISCO ENVELOPE CORP.,
as a Guarantor
By:______________________________
Name:_________________________
Title:________________________
21
<PAGE>
EXHIBIT 10.47
================================================================================
MASTER EQUIPMENT LEASE AND SECURITY AGREEMENT
Dated as of November 15, 1996
between
MAIL-WELL I CORPORATION
as the Lessee or Debtor
and
PARIBAS PROPERTIES, INC.
as the Lessor or Secured Party.
================================================================================
This Master Equipment Lease and Security Agreement has been executed in several
counterparts. To the extent, if any, that this Master Equipment Lease and
Security Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction), no lien on
this Master Equipment Lease and Security Agreement may be created through the
transfer or possession of any counterpart other than the original counterpart
containing the receipt therefor executed by Lessor on or following the signature
page hereof.
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
DEFINITIONS................................................................ 2
1.1 Definitions; Interpretation............................................2
ARTICLE II
MASTER LEASE................................................................2
2.1 Acceptance and Lease of Equipment......................................2
2.2 Acceptance Procedure...................................................2
2.3 Lease Term.............................................................2
2.4 Disclaimer of Warranties...............................................2
2.5 Title; Ownership of Equipment; Subordination...........................3
2.6 Appointment of the Agent...............................................4
ARTICLE III
PAYMENT OF RENT.............................................................5
3.1 Rent...................................................................5
3.2 Net Rent...............................................................6
3.3 Supplemental Rent......................................................6
3.4 Method of Payment......................................................6
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT...........................................7
4.1 Quiet Enjoyment........................................................7
4.2 Right to Inspect.......................................................7
ARTICLE V
ABSOLUTE OBLIGATIONS........................................................7
5.1 Unconditional Net Lease................................................7
5.2 No Termination or Abatement............................................8
ARTICLE VI
SUBLEASES...................................................................8
6.1 Subletting.............................................................8
6.2 Assignment of Subleases and Business Interruption Insurance to Lessor..9
ii
<PAGE>
ARTICLE VII
LESSEE ACKNOWLEDGMENTS................................................... 9
7.1 Condition of the Equipment.......................................... 9
7.2 Risk of Loss........................................................10
ARTICLE VIII
POSSESSION AND USE OF THE EQUIPMENT, ETC.................................10
8.1 Use of the Equipment................................................10
8.2 Compliance with Requirements of Law, Equipment Insurance Legal
Requirements and Insurance Requirements.............................11
8.3 Assignment by Lessee................................................11
8.4 Permitted Users.....................................................11
8.5 Location of Equipment...............................................11
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN...........................................11
9.1 Maintenance and Repair; Return......................................11
9.2 Return of the Equipment.............................................12
ARTICLE X
MODIFICATIONS, ETC.......................................................13
10.1 Modifications, Substitutions and Replacements.......................13
ARTICLE XI
PROTECTION OF TITLE BY LESSEE............................................14
11.1 Prohibition on Liens................................................14
ARTICLE XII
PERMITTED CONTESTS.......................................................14
12.1 Permitted Contests in Respect of Applicable Law.
(a) ..................................................14
ARTICLE XIII
INSURANCE................................................................15
13.1 Public Liability and Workers Compensation Insurance.................15
13.2 Hazard and Other Insurance..........................................16
13.3 Insurance Coverage..................................................16
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS.........................17
iii
<PAGE>
14.1 Casualty and Condemnation..........................................17
14.2 Environmental Matters..............................................18
14.3 Notice of Environmental Matters....................................19
ARTICLE XV
TERMINATION OF LEASE.....................................................19
15.1 Partial Termination upon Certain Events............................19
15.2 Partial Termination Procedures.....................................20
ARTICLE XVI
EVENTS OF DEFAULT........................................................20
16.1 Lease Events of Default............................................20
16.2 Remedies...........................................................21
16.3 Waiver of Certain Rights...........................................25
16.4 Security Interest and Foreclosure..................................25
ARTICLE XVII
LESSOR'S RIGHT TO CURE...................................................26
17.1 The Lessor's Right to Cure the Lessee's Lease Defaults.............26
ARTICLE XVIII
PURCHASE PROVISIONS......................................................27
18.1 Option to Purchase all of the Equipment............................27
18.2 Expiration Date Purchase Obligation................................27
18.3 Acceleration of Purchase Obligation................................27
ARTICLE XIX
INDEMNITIES..............................................................28
19.1 General Indemnity..................................................28
19.2 Impositions........................................................29
ARTICLE XX
REMARKETING OPTION.......................................................30
20.1 Option to Remarket.................................................30
20.2 Certain Obligations Continue.......................................32
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING...........................33
iv
<PAGE>
21.1 Provisions Relating to the Exercise of Purchase Option or
Obligation and Conveyance Upon Remarketing and Conveyance Upon
Certain Other Events...............................................33
ARTICLE XXII
ESTOPPEL CERTIFICATES....................................................34
22.1 Estoppel Certificates..............................................34
ARTICLE XXIII
ACCEPTANCE OF SURRENDER..................................................35
23.1 Acceptance of Surrender............................................35
ARTICLE XXIV
NO MERGER OF TITLE.......................................................35
24.1 No Merger of Title.................................................35
ARTICLE XXV
INTENT OF THE PARTIES....................................................35
25.1 Ownership of the Equipment.........................................35
ARTICLE XXVI
MISCELLANEOUS............................................................36
26.1 Survival; Severability; Etc........................................36
26.2 Amendments and Modifications.......................................36
26.3 No Waiver..........................................................36
26.4 Notices............................................................36
26.5 Successors and Assigns.............................................36
26.6 Headings and Table of Contents.....................................36
26.7 Counterparts.......................................................36
26.8 GOVERNING LAW......................................................36
26.9 Limitations on Recourse............................................37
26.10 Original Lease.....................................................37
List of Exhibits:
- ----------------
EXHIBIT "A" Description of the Equipment
EXHIBIT "B" Insurance Coverage Requirements and Allocation of
Equipment Balance to Each Item of the Equipment
v
<PAGE>
MASTER EQUIPMENT LEASE AND SECURITY AGREEMENT
THIS MASTER EQUIPMENT LEASE AND SECURITY AGREEMENT (this "Master Lease"),
------------
dated as of November 15, 1996, between PARIBAS PROPERTIES, INC., a Delaware
corporation, having its principal office at 1200 Smith Street, Suite 3100,
Houston, Texas 77002, as the Lessor and as Secured Party, and MAIL-WELL I
CORPORATION, a Delaware corporation, having a principal office at 23 Inverness
Way East, Englewood, CO 80112, Attn: Mr. Paul Reilly, as Lessee and as Debtor.
W I T N E S S E T H:
-------------------
Recitals
--------
A. Pursuant to that certain Participation Agreement dated as of the date
hereof (as amended, modified, restated or supplemented from time to time, the
"Participation Agreement"), entered into by and among the Lessee, the various
- ------------------------
Subsidiaries of the Lessee as are or may from time to time become parties
thereto as Subsidiary Guarantors (the "Subsidiary Guarantors"), Lessor, the
---------------------
financial institution or institutions (the "Equity Lenders") who are parties
--------------
thereto as Equity Lenders, the financial institutions (the "Financing Lenders")
-----------------
who are parties thereto as Financing Lenders, and Banque Paribas, Houston
Agency, as agent (in such capacity, the "Agent") for the Financing Lenders and
-----
the Equity Lenders (collectively referred to as the "Lender" or "Lenders," as
------ -------
the case may be), have agreed to finance the Lessor's acquisition of the
Equipment (as hereinafter defined).
B. On the Effective Date, the Lessor will purchase certain envelope and
commercial printing equipment from the Lessee (all such items of equipment being
called the "Equipment"). Each item of the Equipment is more particularly
---------
described on the Equipment Schedule attached hereto as Exhibit "A" and made a
-----------
part hereof for all purposes (the "Equipment Schedule").
------------------
C. The Lessor desires to lease to the Lessee, and the Lessee desires to
lease from the Lessor, the Equipment.
Agreement
---------
NOW, THEREFORE, in consideration of the foregoing, and of other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
1.1 Definitions; Interpretation. Capitalized terms used but not otherwise
---------------------------
defined in this Master Lease have the respective meanings specified in Appendix
--------
A to this Master Lease; and the rules of interpretation set forth in Appendix A
- - ----------
to this Master Lease shall apply to this Master Lease.
ARTICLE II
MASTER LEASE
2.1 Acceptance and Lease of Equipment. The Lessor hereby leases to the
---------------------------------
Lessee for the Lease Term (as hereinafter defined), the Equipment, and the
Lessee hereby leases from the Lessor for the Lease Term, the Lessor's interest
in the Equipment, together with any accessories, replacements and substitutions
therefor which may be made by the Lessee pursuant to the terms of this Master
Lease. The Lessee shall have the right from time to time to release items of
the Equipment and to substitute items of other equipment strictly in accordance
with the provisions of Section 6.3 of the Participation Agreement. Each such
-----------
substitution shall be subject to the approval of the Agent, which approval may
be withheld in its sole discretion.
2.2 Acceptance Procedure. The Lessee hereby irrevocably accepts all of
--------------------
the Equipment for all purposes of this Master Lease and the other Operative
Documents on the terms set forth therein and herein, and agrees that all of the
Equipment shall be deemed to be included in the leasehold estate of this Master
Lease and shall be subject to the terms and conditions of this Master Lease as
of the Effective Date.
2.3 Lease Term. The term of this Master Lease shall commence on the date
----------
hereof and shall expire on the Expiration Date (the "Lease Term"), unless the
----------
Lease Term is earlier terminated in accordance with the provisions of this
Master Lease or the Operative Documents.
2.4 DISCLAIMER OF WARRANTIES.
------------------------
(a) THE LESSOR LEASES THE EQUIPMENT TO THE LESSEE "AS-IS", "WHERE-
IS", WITH ALL FAULTS, AND IN WHATEVER CONDITION IT MAY BE. THE LESSEE
ACKNOWLEDGES THAT THE LESSOR IS NOT A SELLER (AS SUCH TERM IS DEFINED IN
ANY APPLICABLE UNIFORM COMMERCIAL CODE), NOR A SELLER'S AGENT, AND THE
LESSOR DOES NOT MAKE AND HAS NOT MADE, AND IT SHALL NOT BE DEEMED TO MAKE
OR HAVE MADE, ANY WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS
TO (1) THE DESIGN, OPERATION OR CONDITION OF, OR THE QUALITY OF THE
MATERIAL, EQUIPMENT OR
2
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WORKMANSHIP IN, THE EQUIPMENT, (2) THE MERCHANTABILITY OR FITNESS OF THE
-------------------------------------
EQUIPMENT FOR ANY PARTICULAR PURPOSE, (3) THE TITLE TO THE EQUIPMENT OR ANY
-------------------------------------
COMPONENT THEREOF, (4) COMPLIANCE WITH SPECIFICATIONS OR APPLICABLE LAW,
(5) THE ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE),
(6) THE ABSENCE OF INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, (7)
THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR (8)
ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO
ANY OF THE EQUIPMENT, EITHER UPON DELIVERY THEREOF TO LESSEE OR OTHERWISE,
IT BEING AGREED THAT ALL RISKS, IF ANY, AS BETWEEN THE LESSOR AND THE
LESSEE, ARE TO BE BORNE BY THE LESSEE.
(b) THE LESSOR SHALL NOT HAVE ANY RESPONSIBILITY OR LIABILITY TO THE
LESSEE OR ANY OTHER PERSON WITH RESPECT TO ANY OF THE FOLLOWING (I) ANY
LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED DIRECTLY OR
INDIRECTLY BY ANY EQUIPMENT OR BY ANY INADEQUACY THEREOF OR DEFICIENCY OR
DEFECT THEREIN, OR ANY MATERIALS (INCLUDING, WITHOUT LIMITATION, ANY
SUBSTANCES DEEMED TO BE HAZARDOUS UNDER APPLICABLE LAW) AT ANY TIME
CONTAINED THEREIN OR REMOVED OR ESCAPING THEREFROM, OR BY ANY OTHER
CIRCUMSTANCES IN CONNECTION THEREWITH; (II) THE USE, OPERATION OR
PERFORMANCE OF ANY EQUIPMENT OR ANY RISKS RELATING THERETO; (III) ANY
INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED PROFITS OR
CONSEQUENTIAL DAMAGES; OR (IV) THE DELIVERY, OPERATION, SERVICING,
MAINTENANCE, REPAIR, IMPROVEMENT OR REPLACEMENT OF ANY OF THE EQUIPMENT.
THE LESSEE ACKNOWLEDGES THAT THE EQUIPMENT IS IN ALL THE FOREGOING RESPECTS
SATISFACTORY TO THE LESSEE, AND THE LESSEE WILL NOT ASSERT ANY CLAIM OF ANY
NATURE WHATSOEVER AGAINST THE LESSOR BASED ON ANY OF THE FOREGOING MATTERS
IN THIS SECTION 2.4. SUBJECT TO THE LESSOR'S RIGHT TO DO SO, THE LESSOR
-----------
HEREBY ASSIGNS WITHOUT RECOURSE TO THE LESSEE FOR THE TERM OF THIS MASTER
LEASE ANY WARRANTY WHICH HAS BEEN EXTENDED TO THE LESSOR BY THE
MANUFACTURER OR VENDOR OF THE EQUIPMENT. ANY AMOUNTS RECEIVED BY THE
LESSEE AS PAYMENT UNDER ANY SUCH WARRANTY SHALL BE APPLIED TO RESTORE THE
EQUIPMENT TO THE CONDITION REQUIRED BY THIS MASTER LEASE, WITH THE BALANCE
OF SUCH AMOUNT, IF ANY, TO BE PAID OVER TO THE AGENT AND (TO THE EXTENT THE
AGENT RECEIVES SUCH AMOUNTS IN GOOD COLLECTED FUNDS) APPLIED AS RENT. THE
LESSEE SHALL NOT TAKE ANY ACTION OR FAIL TO TAKE ANY ACTION, THE EFFECT OF
WHICH WOULD BE TO INVALIDATE ANY SUCH WARRANTY.
2.5 Title; Ownership of Equipment; Subordination.
--------------------------------------------
(a) The Equipment is leased to the Lessee without any representation or
warranty, express or implied by the Lessor, and is subject to the existing state
of title and all applicable requirements of law and Property legal requirements.
The Lessee shall in no event have any
3
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recourse against the Lessor for any defect in or exception to title to any of
the Equipment. The parties acknowledge their express intent that this Master
Lease constitutes an operating lease for financial accounting purposes only; and
for bankruptcy and federal, state and other tax purposes, the transaction
contemplated hereby is a financing arrangement and that the Lessee is treated as
the owner of the Equipment. This Master Lease is not intended to be subject to
the provisions of Article 2A of the Uniform Commercial Code. The Lessee hereby
waives any and all rights and remedies provided to a lessee in Article 2A and
any other rights or remedies now or hereafter provided to or conferred upon it
by statute or otherwise which may limit or modify any of the Lessor's rights and
remedies under this Master Lease; provided, however, that such waiver shall not
-------- -------
preclude the Lessee from asserting any claim of the Lessee against the Lessor in
a separate cause of action. Without limitation of the rights and remedies
provided by the Operative Documents and by applicable law, and in addition to
those rights and remedies, the Lessor shall have all rights and remedies of a
"secured party" under Article 9 of the Uniform Commercial Code.
(b) This Master Lease and all rights and interests of the Lessor and the
Lessee hereunder are subject and subordinate to the security interests and
provisions of the Lessor First Security Agreement and the Lessor Second Security
Agreement.
2.6 Appointment of the Agent. The Lessor hereby irrevocably designates
------------------------
and appoints the Agent as the agent for the Lessor (but for the benefit of the
Lenders) pursuant to the collateral assignment being made under the Assignment
of Lease and Rent, to take such action on its behalf under the provisions of
this Master Lease and the other Operative Documents and to exercise such powers
and perform such duties as are expressly granted to and reserved by the Lessor
thereunder, together with such other powers as are reasonably incidental
thereto. The provisions of Article X of the Loan Agreement, with respect to the
Agent for the Lenders thereunder, are hereby fully incorporated by reference and
shall be applicable to the rights, duties and responsibilities of the Agent as
the agent for the Lessor (but for the benefit of the Lenders), including without
limitation the provisions giving to the Required Participants the right to
remove the Agent and, upon any removal or resignation of the Agent, to appoint a
Successor Agent. Without limitation of the foregoing, all amounts of whatever
kind payable to the Lessor under or with respect to this Master Lease shall be
paid to, and collected by, the Agent as agent for the Lessor (but for the
benefit of the Lenders). Notwithstanding any provision to the contrary
elsewhere in this Master Lease, the Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in any other
Operative Document, or any fiduciary relationship as to the Lessor, the Lessee
or any other party to the Operative Documents, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Master Lease or any other Operative Document. Unless expressly
provided herein to the contrary, all rights, remedies, powers and privileges of
the Lessor hereunder shall be exercised by the Agent upon the written direction
of the Required Equity Lenders.
4
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ARTICLE III
PAYMENT OF RENT
3.1 Rent.
----
(a) During the Lease Term, the Lessee shall pay Basic Rent on each
Payment Date, on the date required under Section 20.1(k) hereof in
---------------
connection with the Lessee's exercise of the Remarketing Option, and on any
date on which this Master Lease shall terminate with respect to any or all
of the Equipment.
(b) Subject to the terms of the Operative Documents, Basic Rent shall
be due and payable in lawful money of the United States and shall be paid
on the due date therefor directly to the Agent for the pro rata account of
the Lenders entitled to receive such payment in immediately available funds
by wire transfer to the account of the Agent specified on Schedule IV to
-----------
the Participation Agreement under the heading "Wire Transfer Instructions
for Obligors."
(c) All Rent and other amounts payable hereunder shall be paid
without notice or demand by Lessee directly to the Agent and such amounts
shall be disbursed by the Agent in accordance with the Operative Documents.
Lessee's obligation to pay Rent shall be absolute and unconditional and not
subject to any abatement, reduction, set-off, defense, counterclaim or
recoupment (collectively "Abatements") for any reason whatsoever, including
----------
without limitation, Abatements due to any present or future claims of
Lessee against Lessor under this Master Lease or otherwise, or against any
manufacturer or vendor of any of the Equipment.
(d) Neither the Lessee's inability or failure to take or maintain
possession of all or any portion of any Equipment when delivered by the
Lessor, whether or not attributable to any act or omission of the Lessee or
any act or omission of the Lessor, or for any other reason whatsoever,
shall delay or otherwise affect the Lessee's obligation to pay Rent for
such Equipment in accordance with the terms of this Master Lease.
(e) If a court shall finally determine that Lessor has received any
payments under this Master Lease which are determined to be interest and
which result in interest charges to Lessee in excess of the highest
permitted by applicable law, such payments shall be subject to, and applied
in accordance with, the provisions of Section 13.2 of the Participation
------------
Agreement.
(f) All amounts payable by the Lessee under this Master Lease which
constitute interest under Applicable Laws shall be expressly subject to the
controlling provisions of Section 13.2 of the Participation Agreement
5
<PAGE>
3.2 Net Rent. All Rent shall be paid absolutely net to the Lessor, so
-------- ---------- ---
that this Master Lease shall yield to the Lessor the full amount thereof,
without set-off, prior notice, demand, deduction or reduction. The Lessee
accordingly covenants and agrees to pay, as they become due and payable and
before they become delinquent, all Impositions, costs, expenses, fees,
liabilities, deductions and other charges whatsoever with respect to the
Equipment and the ownership, leasing, operation, maintenance, repair, and use
thereof, including without limitation the costs, charges and
assessments hereinafter set forth in this Master Lease and any obligations which
the Lessor may now or hereafter suffer or incur with respect to the Equipment,
of whatever kind or character whatsoever.
3.3 Supplemental Rent. The Lessee shall pay to the Lessor or the Person
-----------------
entitled thereto any and all Supplemental Rent promptly as the same shall become
due and payable, and if the Lessee fails to pay any Supplemental Rent, the
Lessor shall have all rights, powers and remedies provided for herein or by law
or equity or otherwise in the case of nonpayment of Basic Rent. The Lessee
shall pay to the Lessor, as Supplemental Rent, among other things, on demand, to
the extent permitted by applicable Requirements of Law, interest at the
applicable Default Rate on any installment of Basic Rent not paid when due for
the period for which the same shall be overdue and on any payment of
Supplemental Rent not paid when due or demanded by the Lessor for the period
from the due date or the date of any such demand, as the case may be, until the
same shall be paid. The expiration or other termination of the Lessee's
obligations to pay Basic Rent hereunder shall not limit or modify the
obligations of the Lessee with respect to Supplemental Rent. Unless expressly
provided otherwise in this Master Lease, in the event of any failure on the part
of the Lessee to pay and discharge any Basic Rent or Supplemental Rent as and
when due, the Lessee shall also promptly pay and discharge any fine, penalty,
interest or cost which may be assessed or added under any agreement with a third
party for nonpayment or late payment of such Basic Rent or Supplemental Rent,
whether under the Operative Documents or otherwise, all of which shall also
constitute Supplemental Rent.
3.4 Method of Payment. Each payment of Rent shall be made by the Lessee
-----------------
to the Agent prior to 11:00 a.m., Houston, Texas time to the Lessor's account
specified on Schedule IV to the Participation Agreement under the heading "Wire
Transfer Instructions for Obligors" in funds consisting of lawful currency of
the United States of America which shall be immediately available on the
scheduled date when such payment shall be due, unless such scheduled date shall
not be a Business Day, in which case such payment shall be made on the next
succeeding Business Day. Payments received after 11:00 a.m., Houston, Texas
time on the date due shall for the purpose of Section 16.1 hereof, be deemed
------------
received on such day; provided, however, that for the purposes of the second
-------- -------
sentence of Section 3.3 hereof, such payments shall be deemed received on the
-----------
next succeeding Business Day and, unless the Agent is otherwise able to invest
or employ such funds on the date received, subject to interest at the Default
Rate as provided in such Section 3.3.
-----------
6
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7
<PAGE>
ARTICLE IV
QUIET ENJOYMENT; RIGHT TO INSPECT
4.1 Quiet Enjoyment. Subject to Sections 2.4, 2.5 and 4.2 hereof, and
--------------- ------------ --- ---
subject to the rights of the Lessor contained in Article XVI hereof and the
-----------
other terms of the Operative Documents to which the Lessee is a party, the
Lessee shall peaceably and quietly have, hold and enjoy the Equipment for the
Lease Term, free of any claim or other action by the Lessor or anyone claiming
by, through or under the Lessor (other than the Lessee) with respect to any
matters arising from and after the Effective Date. Such right of quiet
enjoyment is independent of, and shall not affect the Lessor's or Agent's rights
otherwise to initiate legal action to enforce, the obligations of the Lessee
under this Master Lease.
4.2 Right to Inspect. During the Lease Term, the Lessee shall upon
----------------
reasonable notice from the Lessor (except that no notice shall be required if a
Lease Event of Default has occurred and is continuing), permit the Lessor, the
Financing Lenders, the Equity Lenders and their respective authorized
representatives to inspect any of the Equipment subject to this Master Lease
during normal business hours, provided that such inspections shall not
unreasonably interfere with the Lessee's business operations.
ARTICLE V
ABSOLUTE OBLIGATIONS
5.1 Unconditional Net Lease. This Master Lease shall constitute an
-----------------------
absolute and unconditional net lease. Any present or future law to the contrary
notwithstanding, this Master Lease shall not terminate, nor shall the Lessee be
entitled to any abatement, suspension, deferment, reduction, set-off,
counterclaim, or defense with respect to the Rent, nor shall the obligations of
the Lessee hereunder be affected (except as expressly herein permitted and by
performance of the obligations in connection therewith) by reason of: (i) any
defect in the condition, merchantability, design, construction, quality or
fitness for use of any of the Equipment or any part thereof, or the failure of
any of the Equipment to comply with all Requirements of Law and Equipment Legal
Requirements, including any inability to occupy or use any of the Equipment by
reason of such non-compliance; (ii) any damage to, loss or destruction of,
removal, abandonment, salvage, loss, contamination of or Release from, scrapping
or destruction of or any requisition or taking of, any of the Equipment or any
part thereof; (iii) any restriction, prevention or curtailment of or
interference with any use of any of the Equipment or any part thereof including
eviction; (iv) the interference with the Lessee's use of any of the Equipment by
any private person, corporation, or governmental authority, or any defect in
title to or rights to any of the Equipment or any Lien on such title or rights
or on any of the Equipment (other than Lessor Liens); (v) any change, waiver,
extension, indulgence or other action or omission or breach in respect of any
obligation or liability of or by the Lessor or any Lender; (vi) any bankruptcy,
insolvency, reorganization, composition, adjustment, dissolution, liquidation or
other like
8
<PAGE>
proceedings relating to the Lessee, the Lessor, any Lender or any other Person,
or any action taken with respect to this Master Lease by any trustee or receiver
of the Lessee, the Lessor, any Lender or any other Person, or by any court, in
any such proceeding; (vii) any claim that the Lessee has or might have against
any Person, including without limitation the Lessor, any Lender, or any vendor,
manufacturer, contractor of or for any of the Equipment; (viii) any failure on
the part of the Lessor to perform or comply with any of the terms of this Master
Lease (other than performance by Lessor of its obligations set forth in Section
-------
2.1 hereof), of any other Operative Document or of any other agreement; (ix) any
- ---
invalidity or unenforceability or illegality or disaffirmance of this Master
Lease against or by the Lessee or any provision hereof or any of the other
Operative Documents or any provision of any thereof, or the invalidity or
unenforceability or lack of due authorization of this Master Lease, or any lack
of right, power or authority of the Lessee or any other party to enter into this
Master Lease; (x) the impossibility or illegality of performance by the Lessee,
the Lessor or both; (xi) any action by any court, administrative agency or other
Governmental Authority; (xii) any restriction, prevention or curtailment of or
interference with the construction on or any use of any of the Equipment or any
part thereof; or (xiii) any other cause or circumstances whether similar or
dissimilar to the foregoing and whether or not the Lessee shall have notice or
knowledge of any of the foregoing. The Lessee's agreement in the preceding
sentence shall not affect any claim, action or right the Lessee may have against
the Lessor or any Lender. The parties intend that the obligations of the Lessee
hereunder shall be covenants and agreements that are separate and independent
from any obligations of the Lessor hereunder or under any other Operative
Documents, and the obligations of the Lessee shall continue unaffected unless
such obligations shall have been modified or terminated in accordance with an
express provision of this Master Lease.
5.2 No Termination or Abatement. The Lessee shall remain obligated under
---------------------------
this Master Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Master Lease (except as provided herein),
notwithstanding any action for bankruptcy, insolvency, reorganization,
liquidation, dissolution, or other proceeding affecting the Lessor or any
Lender, or any action with respect to this Master Lease which may be taken by
any trustee, receiver or liquidator of the Lessor or any Lender or by any court
with respect to the Lessor or any Lender. The Lessee hereby waives all rights
(i) to terminate or surrender this Master Lease (except as provided herein) or
(ii) to avail itself of any abatement, suspension, deferment, reduction, set-
off, counterclaim or defense with respect to any Rent. The Lessee shall remain
obligated under this Master Lease in accordance with its terms and the Lessee
hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Master Lease. Notwithstanding any such statute or otherwise, the Lessee
shall be bound by all of the terms and conditions contained in this Master
Lease.
9
<PAGE>
ARTICLE VI
SUBLEASES
6.1 Subletting. The Lessee may sublease any of the Equipment or any
----------
portion thereof to one or more of its Subsidiary Guarantors; provided, however,
-------- -------
that no sublease or other relinquishment of possession of any of the Equipment
shall in any way discharge or diminish any
of the Lessee's obligations to the Lessor hereunder and the Lessee shall remain
directly and primarily liable under this Master Lease as to the Equipment, or
any portion thereof, so sublet. Each sublease or other permitted use of any of
the Equipment shall expressly be made subject and subordinate to this Master
Lease and to the rights of the Lessor and the Agent hereunder and under the
other Operative Documents, and shall expressly provide for the immediate
surrender of the related Equipment to the Lessor after notice from the Lessor to
such sublessee of the occurrence of a Lease Event of Default hereunder and a
request for such surrender. All such subleases shall expressly provide for
automatic termination at or prior to the earlier to occur of (i) the Expiration
Date or (ii) the date the Lease Term is earlier terminated in accordance with
the provisions of this Master Lease or the other Operative Documents, unless the
Lessee shall have purchased the Equipment pursuant to Article XVIII.
-------------
Notwithstanding anything contained herein to the contrary, neither the Lessee
nor any Permitted User shall have any rights whatsoever to sublease or grant any
right to use any of the Equipment to any Person except that Lessee may sublease
the Equipment to, or permit the use thereof by, a Permitted User, and neither
the Lessee nor any Permitted User shall have any right to assign any of its
rights, title and interests under this Master Lease.
6.2 Assignment of Subleases and Business Interruption Insurance to Lessor.
------------------------------------------------- -------------------
To secure the prompt and full payment by the Lessee of the Rent, the Lessee
hereby assigns to the Lessor, subject to the conditions hereinafter set forth,
all of the Lessee's right, title and interest in and to all subleases affecting
any of the Equipment and all rents, issues and profits accruing thereunder, and
all guarantees and security deposits with respect to such subleases, and the
Lessee hereby confers, and, if requested by the Lessor, will cause each
applicable Permitted User to confer, upon the Lessor, the Lenders and their
respective agents and representatives, sufficient possession of the Equipment to
permit and insure the collection by the Lessor of the rentals and other sums
payable under such subleases; provided, however, that such assignment, although
-------- -------
presently effective, is given solely as security, and the Lessor hereby
irrevocably waives the right to exercise the Lessor's rights pursuant to this
Section 6.2 until and unless a Lease Event of Default shall occur and be
- -----------
continuing. The Lessee hereby irrevocably directs and, if requested by the
Lessor, will cause each Permitted User to pay to the Lessor the rentals or other
sums payable under its sublease in accordance with the Master Lease when, as and
if directed to do so by the Lessor in a written notice to such Permitted User in
which the Lessor shall certify that a Lease Event of Default shall have occurred
and be continuing under this Master Lease. The Lessee hereby irrevocably
notifies and directs each Permitted User to pay such amounts to the Lessor in
10
<PAGE>
the event such Permitted User receives any such notice from the Lessor, and the
Lessee hereby irrevocably waives, any claims for nonpayment of such rentals or
other sums that might arise as a result of such payments to the Lessor.
ARTICLE VII
LESSEE ACKNOWLEDGMENTS
7.1 Condition of the Equipment. WITHOUT LIMITATION OF SECTION 2.4 HEREOF,
-------------------------- -----------
THE LESSEE ACKNOWLEDGES AND AGREES THAT ALTHOUGH THE LESSOR WILL OWN AND HOLD
TITLE TO THE EQUIPMENT, THE LESSEE IS SOLELY RESPONSIBLE UNDER THE TERMS OF THIS
MASTER LEASE FOR THE MERCHANTABILITY, FITNESS, OPERATION, REPAIR, PERFORMANCE,
SERVICING AND MAINTENANCE OF THE EQUIPMENT. THE LESSEE FURTHER ACKNOWLEDGES AND
AGREES THAT IT IS LEASING EACH ITEM OF EQUIPMENT "AS IS" WITHOUT REPRESENTATION,
WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR, THE FINANCING LENDERS
OR THE EQUITY LENDERS AND IN EACH CASE SUBJECT TO (A) THE EXISTING STATE OF
TITLE (EXCLUDING LESSOR LIENS), (B) THE RIGHTS OF ANY PARTIES IN POSSESSION
THEREOF, (C) ANY STATE OF FACTS WHICH AN ACCURATE PHYSICAL INSPECTION MIGHT
SHOW, AND (D) VIOLATIONS OF REQUIREMENTS OF LAW AND EQUIPMENT LEGAL REQUIREMENTS
WHICH MAY EXIST ON THE DATE HEREOF OR ON THE EFFECTIVE DATE FOR SUCH ITEM OF
EQUIPMENT. NONE OF THE LESSOR, THE FINANCING LENDERS OR THE EQUITY LENDERS HAS
MADE OR SHALL BE DEEMED TO HAVE MADE ANY REPRESENTATION, WARRANTY OR COVENANT
(EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO HAVE ANY LIABILITY WHATSOEVER AS TO
THE TITLE (OTHER THAN THE LESSOR FOR LESSOR LIENS), VALUE, HABITABILITY, USE,
CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF ANY OF THE EQUIPMENT (OR ANY
PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY OF THE EQUIPMENT (OR ANY PART THEREOF)
AND NONE OF THE LESSOR, THE FINANCING LENDERS OR THE EQUITY LENDERS SHALL BE
LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN (OTHER THAN FOR LESSOR
LIENS) OR THE FAILURE OF ANY OF THE EQUIPMENT, OR ANY PART THEREOF, TO COMPLY
WITH ANY REQUIREMENT OF LAW OR EQUIPMENT LEGAL REQUIREMENT.
7.2 Risk of Loss. During the Lease Term the risk of loss of or decrease
------------
in the enjoyment and beneficial use of the Equipment as a result of the damage
or destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by the Lessee, and the Lessor shall in no event be
answerable or accountable therefor.
11
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ARTICLE VIII
POSSESSION AND USE OF THE EQUIPMENT, ETC.
8.1 Use of the Equipment. The Equipment shall be used solely in the
--------------------
businesses operated by the Lessee and the Subsidiary Guarantors and only in the
manner for which such Equipment was designed and intended so as to subject it
only to ordinary wear and tear. The Lessee shall pay, or cause to be paid, all
charges and costs required in connection with the use of the Equipment as
contemplated by this Master Lease. The Lessee shall not commit or permit any
waste or deterioration of the Equipment or any part thereof (other than ordinary
wear and tear) and shall perform all scheduled maintenance on a basis no less
frequent than the scheduling basis employed by the Lessee for similar equipment
owned or operated by the Lessee or its Affiliates.
8.2 Compliance with Requirements of Law, Equipment Legal Requirements and
---------------------------------------------------------------------
Insurance Requirements. Subject to the terms of Article XII hereof relating to
- ---------------------- -----------
Permitted Contests, the Lessee, at its sole cost and expense, shall (a) comply
in all material respects with all Requirements of Law (including all Hazardous
Materials Laws), Equipment Legal Requirements and Insurance Requirements
relating to the Equipment, including the use, operation, maintenance, repair and
restoration thereof and the remarketing thereof pursuant to Article XX
----------
hereunder, whether or not compliance therewith shall require structural or
extraordinary changes in the Equipment or interfere with the use and enjoyment
of the Equipment, and (b) procure, maintain and comply with all licenses,
permits, orders, approvals, consents and other authorizations required for the
use, maintenance and operation of the Equipment and for the use, operation,
maintenance, repair and restoration of the Equipment.
8.3 Assignment by Lessee. The Lessee may not assign this Master Lease or
--------------------
any of its rights or obligations hereunder in whole or in part to any Person,
except that the Lessee may sublease any of the Equipment or portion thereof as
permitted under Section 6.1 of this Master Lease.
-----------
8.4 Permitted Users. So long as no Lease Event of Default shall exist and
---------------
subject to the terms and provisions of this Master Lease and the other Operative
Documents and the rights of the Lessor, the Agent, and the Lenders hereunder and
thereunder, any Permitted User may use (but not acquire any interest in) any of
the Equipment in accordance with the terms of this Master Lease; provided, that
--------
the rights of each Permitted User in the Equipment are and shall at all times be
subject and subordinate to all of the rights and remedies of the Lessor, the
Agent, and the Lenders hereunder and under the other Operative Documents. All
rights of any Permitted User in and to the Equipment shall automatically cease
and terminate on the Expiration Date or pursuant to the Lessor's exercise of any
of its rights and remedies hereunder.
12
<PAGE>
8.5 Location of Equipment. The Lessee and each Permitted User shall keep
---------------------
each item of the Equipment strictly at the location specified on Exhibit "A",
-----------
attached hereto (being its present location), and shall not move or otherwise
relocate any item of the Equipment without the express written consent of the
Agent and the Equity Lenders.
ARTICLE IX
MAINTENANCE AND REPAIR; RETURN
9.1 Maintenance and Repair; Return.
------------------------------
(a) The Lessee, at its sole cost and expense, shall maintain each
item of the Equipment in good condition (ordinary wear and tear from proper
use alone excepted) and make all necessary repairs thereto, of every kind
and nature whatsoever, whether ordinary or extraordinary, structural or
nonstructural or foreseen or unforeseen, in each case as required by all
Requirements of Law, Equipment Legal Requirements and Insurance
Requirements and on a basis consistent with the operation and maintenance
of first-class
envelope and commercial printing equipment comparable to the Equipment and
in no event less than the standards applied by the Lessee in the operation
and maintenance of other comparable equipment owned or leased by the Lessee
or its Affiliates.
(b) The Lessor shall under no circumstances be required to make any
repairs, replacements, alterations or renewals of any nature or description
to any of the Equipment, make any expenditure whatsoever in connection with
this Master Lease (other than for Advances made in accordance with and
pursuant to the terms of the Participation Agreement) or maintain any of
the Equipment in any way. The Lessee waives any right to (i) require the
Lessor to maintain, repair, rebuild or replace all or any part of any of
the Equipment or (ii) make repairs at the expense of the Lessor pursuant to
any Requirement of Law, Equipment Legal Requirement, Insurance Requirement,
contract, agreement, or covenant, condition or restriction in effect at any
time during the Lease Term.
(c) The Lessee shall, upon the Expiration Date or earlier termination
of this Master Lease (other than as a result of the Lessee's purchase of
the Equipment from the Lessor as provided herein), return and surrender the
Equipment to the Lessor in the same condition as when delivered to Lessee
hereunder, ordinary wear and tear resulting from proper use thereof alone
excepted, free of any Hazardous Materials that may have a material adverse
affect on the value of the Equipment, and free and clear of any Liens
whatsoever other than Lessor Liens, complying with the Lessee's obligations
under Sections 8.2, 9.1(a), 10.1, 11.1, 14.1(e), 14.2 and 20.1 of this
------------ ------ ---- ---- ------- ---- ----
Master Lease.
9.2 Return of the Equipment. As a condition to the consummation of the
-----------------------
sale of the Equipment pursuant to the Remarketing Option, the Lessee shall, at
its expense:
13
<PAGE>
(a) At least ninety (90) days and not more than one hundred twenty
(120) days prior to the Expiration Date or earlier termination of this
Master Lease, cause a manufacturer's representative or a qualified
equipment maintenance provider, acceptable to the Lessor, to perform (i) a
comprehensive physical inspection of all the components and capabilities of
the Equipment (including but not limited to sensors, motors, controls,
lubrication systems, and all hydraulic, electrical and mechanical controls
and switches); (ii) a testing of software and a testing and examination of
printed material coming off the press for its salability; and (iii) a
review of the maintenance records including but not limited to lubrication,
schedules, rollers resurfaced, blankets changed, etc. The inspection on
each piece of the Equipment shall verify and certify that the Equipment can
perform at its original performance specifications with regard to speed,
register control and quality of printed matter. If during such inspection,
examination and test, the authorized inspector finds any of the material or
workmanship to be defective or the Equipment not operating within
manufacturer's specifications, then the Lessee shall repair or replace such
defective material and, after corrective measures are completed, the Lessee
shall provide for a follow-up inspection by the authorized inspector for
the purposes of certifying the Equipment's performance capabilities as
outlined above;
(b) ensure that all of the Equipment and the operations thereof
conform to all applicable local, state, and federal laws, and health and
safety guidelines, including without limitation those prescribed by the
Occupational Safety and Health Act;
(c) provide for the de-installation, packing, transporting to any
location(s) within the continental United States, all of which shall
include, but not be limited to the following: the manufacturer's
representative de-installing all of the Equipment (including all wire,
cable and mounting hardware and software) in accordance with the
specifications of the manufacturer, the Equipment being removed by a
licensed and insured erector/rigger who specializes in printing equipment
removal and crating of the Equipment, and shall be performed in a
prescribed manner, including proper marking and labeling of electrical
wires connections and components; and
(d) provide insurance and safe, secure storage for the Equipment for
sixty (60) days after the Expiration Date or earlier termination of this
Master Lease at accessible location(s) satisfactory to the Lessor.
ARTICLE X
MODIFICATIONS, ETC.
10.1 Modifications, Substitutions and Replacements. The Lessee, at its
---------------------------------------------
sole cost and expense, may at any time and from time to time make alterations,
improvements and additions to
14
<PAGE>
any item of the Equipment or any part thereof and substitutions and replacements
therefor (collectively, "Modifications"); provided, however, that:
------------- -------- -------
(a) except for any Modification required to be made pursuant to a
Requirement of Law or Equipment Legal Requirement (a "Required
--------
Modification"), no Modification shall materially adversely affect the
------------
present or residual fair market value or useful life of the Equipment or
any part thereof from that which existed immediately prior to such
Modification;
(b) the Modification shall be done in a good and workmanlike manner;
(c) the Lessee shall comply in all material respects with all
Requirements of Law (including all Hazardous Materials Laws), Equipment
Legal Requirements and Insurance Requirements applicable to the
Modification;
(d) subject to the terms of Article XII relating to Permitted
-----------
Contests, the Lessee shall pay all costs and expenses and shall discharge
(or cause to be insured or bonded over) within ten (10) days after the same
shall be filed (or otherwise become effective) any Liens arising with
respect to the Modification;
(e) such Modifications shall comply with Sections 8.2 and 9.1(a); and
------------ ------
(f) written notice of each such Modification of any material nature
shall be given, prior to the making of such Modification, to the Agent and
the Equity Lenders, setting forth in reasonable detail the nature and cost
thereof.
All Modifications shall remain part of the Equipment and shall be subject to
this Master Lease and title thereto shall immediately vest in the Lessor.
ARTICLE XI
PROTECTION OF TITLE BY LESSEE
11.1 Prohibition on Liens.
--------------------
(a) The Lessee agrees that except as otherwise provided herein and
subject to the terms of Article XII relating to Permitted Contests, the
-----------
Lessee shall not directly or indirectly create or allow to remain, and
shall promptly discharge at its sole cost and expense, any Lien (other than
any Lessor Lien and Permitted Property Liens), upon any of the Equipment or
any Modifications or any Lien with respect to the Rent or with respect to
any amounts held by the Lessor or the Lenders pursuant to the Loan
Agreement or the other Operative Documents.
15
<PAGE>
(b) Nothing contained in this Master Lease shall be construed as
constituting the consent or request of the Lessor, expressed or implied, to
or for the performance by any contractor, mechanic, laborer, materialman,
supplier or vendor of any labor or services or for the furnishing of any
materials for any construction, alteration, addition, repair or demolition
of or to any of the Equipment or any part thereof. NOTICE IS HEREBY GIVEN
THAT NONE OF THE LESSOR OR THE LENDERS IS OR SHALL BE LIABLE FOR ANY LABOR,
SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO THE LESSEE, OR TO
ANYONE HOLDING THE EQUIPMENT OR ANY PART THEREOF THROUGH OR UNDER THE
LESSEE, AND THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES
OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF THE LESSOR OR ANY
LENDER IN AND TO ANY OF THE EQUIPMENT.
ARTICLE XII
PERMITTED CONTESTS
12.1 Permitted Contests in Respect of Applicable Law.
-----------------------------------------------
(a) If, to the extent and for so long as (i) a test, challenge,
appeal or proceeding for review of any Applicable Law relating to any of
the Equipment shall be prosecuted diligently and in good faith in
appropriate proceedings by the Lessee or (ii) compliance with such
Applicable Law shall have been excused or exempted by a valid waiver,
extension or forbearance, the Lessee shall not be required to comply with
such Applicable Law but only if and so long as any such test, challenge,
appeal, proceeding, waiver, extension, forbearance or noncompliance shall
not, in the reasonable opinion of the Lessor, the Financing Lenders and the
Equity Lenders, involve (A) any risk of criminal liability being imposed on
the Lessor, any Financing Lender, any Equity Lender or any item of the
Equipment or (B) any risk of (1) foreclosure, forfeiture or loss of such
item of the Equipment, or any material part thereof, or (2) the nonpayment
of Rent or (C) any risk of (1) the sale of, or the creation of any Lien on,
any part of such item of the Equipment, (2) civil liability being imposed
on the Lessor, any Financing Lender, any Equity Lender or such item of the
Equipment, or (3) enjoinment of, or interference with, the use, possession
or disposition of such item of the Equipment in any material respect.
Notwithstanding the foregoing, the Lessee shall have no right of contest
under the provisions of this Section 12.1 upon any return or Remarketing of
------------
the Equipment pursuant to this Master Lease.
(b) The Lessor will not be required to join in any proceedings
pursuant to this Section 12.1 unless a provision of any Applicable Law
------------
requires that such proceedings be brought by or in the name of the Lessor;
and in that event, the Lessor will join in the proceedings or permit such
proceedings or any part thereof to be brought in its name if
16
<PAGE>
and so long as (i) the Lessee has not elected the Remarketing Option and
(ii) the Lessee pays all related expenses and indemnifies the Lessor and
the Lenders to the satisfaction of the respective Indemnitees.
ARTICLE XIII
INSURANCE
13.1 Public Liability and Workers Compensation Insurance.
---------------------------------------------------
(a) During the Lease Term, the Lessee shall procure and carry, at the
Lessee's sole cost and expense, commercial general liability insurance for
claims for injuries or death sustained by persons or damage to property
arising or resulting from the use, ownership or operation of any of the
Equipment and such other public liability coverages as are ordinarily
procured by the Lessee or its Affiliates who own or operate similar
equipment, but in any case shall provide liability coverage of at least
$5,000,000 per person and $2,000,000 for property damage per occurrence,
subject to a $10,000,000 annual aggregate. Such insurance shall be on
terms, in amounts and with insurers that are no less favorable than
insurance maintained by the Lessee or such Affiliates with respect to
similar equipment that they own and that are in accordance with normal
industry practice. The policy shall be endorsed to name the Lessor, the
Agent and each Lender as additional insureds. The policy shall also
specifically provide that the policy shall be considered primary insurance
which shall apply to any loss or claim before any contribution by any
insurance which the Lessor, or any Lender may have in force.
(b) The Lessee shall, in the operation of the Equipment, comply with
the applicable workers' compensation laws.
13.2 Hazard and Other Insurance. During the Lease Term, the Lessee shall
--------------------------
keep, or cause to be kept, each item of the Equipment insured against loss or
damage by fire, earthquake, flood and other risks on terms and in amounts that
are no less favorable than insurance covering other similar equipment owned by
the Lessee or its Affiliates and, in any event, in an amount not less than full
replacement value and that are in accordance with the insurance coverage set
forth on Exhibit "B", attached hereto; provided, that such insurance shall
----------
separately cover each item of the Equipment, shall be "all risk" property
insurance, and shall be in an amount not less than the Purchase Price paid by
Lessor to Lessee for each such item of the Equipment. All insurance proceeds in
respect of any loss or occurrence for which the proceeds related thereto are (i)
less than or equal to $100,000, in the absence of the occurrence and continuance
of an Event of Default, shall be paid to the Lessee for application in
accordance with Article XIV and (ii) greater than $100,000, shall be adjusted
-----------
jointly by the Lessee and the Lessor (unless an Event of Default has occurred
and is continuing, in which case such proceeds shall be adjusted solely by the
Lessor) and held by the Lessor for application in accordance with Article XIV.
-----------
17
<PAGE>
13.3 Insurance Coverage.
------------------
(a) The Lessee shall furnish the Lessor and each Lender with
certificates showing the insurance required under Sections 13.1 and 13.2
------------- ----
hereof to be in effect and naming the Lessor, the Agent and each Lender as
additional insureds with respect to liability coverage (excluding worker's
compensation insurance), naming the Agent, the Lessor and the Lessee as
their interests may appear with respect to casualty coverage and naming the
Agent as loss payee with respect to casualty coverage and showing the loss
payee endorsement required by Section 13.3(b) of this Master Lease with
---------------
respect to such coverage. All such insurance shall be at the cost and
expense of the Lessee. Such certificates shall include a provision for no
less than thirty (30) days, advance written notice by the insurer to the
Lessor and each additional insured and loss payee in the event of
cancellation or reduction of such insurance. In addition, the Lessee shall
cause the Lessor, the Agent and each Lender to be named as additional
insureds under each liability policy maintained hereunder.
(b) The Lessee agrees that the insurance policy or policies required
by Section 13.2 above shall include an appropriate clause pursuant to which
------------
such policy shall provide that it will not be invalidated should the Lessee
waive, in writing, prior to a loss, any or all rights of recovery against
any party for losses covered by such policy, and that the insurance in
favor of the Lessor, the Agent, the Financing Lenders and the Equity
Lenders, and their respective rights under and interests in said policies,
shall not be invalidated or reduced by any act or omission or negligence of
the Lessee or any other Person having any interest in any of the Equipment.
The Lessee hereby waives any and all such rights against the Lessor, the
Financing Lenders and the Equity Lenders to the extent of payments made
under such policies.
(c) The Lessee may self insure (including by way of deductibles) with
respect to damage, casualty coverage and liability coverage to the extent
provided under, and in a manner consistent with, the Lessee's comprehensive
all-risk policy and risk management program in effect from time to time.
(d) The Lessee shall pay as they become due all premiums for the
insurance required by Sections 13.1 and 13.2 above, and shall renew or
------------- ----
replace each policy prior to the expiration date thereof. Throughout the
Lease Term, at the time each of the Lessee's insurance policies is renewed
(but in no event less frequently than once each year), the Lessee shall
deliver to the Lessor and each Lender certificates of insurance evidencing
that all insurance required by this Article XIII is being maintained by the
------------
Lessee and is in effect.
18
<PAGE>
ARTICLE XIV
CASUALTY AND CONDEMNATION; ENVIRONMENTAL MATTERS
14.1 Casualty and Condemnation.
-------------------------
(a) Subject to the provisions of this Article XIV, (i) if all or a
-----------
portion of any of the Equipment is damaged or destroyed in whole or in part
by a Casualty (other than a Significant Casualty), any insurance proceeds
payable with respect to such Casualty shall be paid directly to the Lessee,
or if received by the Lessor or the Agent, shall be paid over to the Lessee
for the reconstruction, refurbishment and repair of such item of the
Equipment and (ii) if the use of, access to, or possession of, or title to,
all or a portion of any of the Equipment is the subject of a Condemnation
(other than a Significant Condemnation), then any award or compensation
relating thereto shall be paid to the Lessee; provided, however, that, in
-------- -------
each case, if a Lease Event of Default shall have occurred and be
continuing, such award, compensation or insurance proceeds shall be paid
directly to the Agent or, if received by the Lessee, shall be held in trust
for the Agent, and shall be paid over by the Lessee to the Agent to be
distributed by the Agent in accordance with the Loan Agreement. All
amounts held by or payable to the Agent when a Lease Event of Default
exists hereunder on account of any compensation or insurance proceeds shall
at the option of the Agent either be (i) paid to the Lessee for the repair
of damage caused by such Casualty or Condemnation in accordance with
clause (d) of this Section 14.1, or (ii) applied to the Lease Balance.
---------- ------------
(b) The Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof. At the Agent's request, and at the Lessee's sole cost
and expense, the Agent may participate in any such proceeding, action,
negotiation, prosecution or adjustment. The Lessor and the Lessee agree
that this Master Lease shall control the rights of the Lessor and the
Lessee in and to any such award, compensation or insurance payment.
(c) If the Lessor or the Lessee shall receive notice, or if a
Responsible Officer of Lessee has actual knowledge, of a Casualty or of an
actual, pending or threatened Condemnation affecting any of the Equipment
or any interest therein, the Lessor or the Lessee, as the case may be,
shall give notice thereof to the other and to the Agent promptly after the
receipt of such notice.
(d) If pursuant to this Section 14.1 and Section 15.1 this Master
------------ ------------
Lease shall continue in full force and effect following a Casualty or
Condemnation with respect to any of the Equipment, the Lessee shall, at its
sole cost and expense (and, without limitation,
19
<PAGE>
if any award, compensation or insurance payment is not sufficient to
restore such item of the Equipment in accordance with this clause (d), the
----------
Lessee shall pay the shortfall), promptly (and in any event prior to any
Termination Date or Expiration Date) and diligently repair any damage to
such Equipment caused by such Casualty or Condemnation in conformity with
the requirements of Sections 9.1 and 10.1 so as to restore such item of the
------------ ----
Equipment to at least the same condition, operation, function and value as
existed immediately prior to such Casualty or Condemnation with such
Modification as the Lessee may elect in accordance with Section 10.1. In
------------
such event, title to such Equipment shall remain with the Lessor subject to
the terms of this Master Lease. Upon completion of such restoration, the
Lessee shall furnish the Lessor a Responsible Officer's Certificate
confirming that such restoration has been completed pursuant to this Master
Lease.
(e) In no event shall a Casualty or Condemnation affect the Lessee's
obligations to pay Rent pursuant to Section 3.1 or to perform its
-----------
obligations and pay any amounts due on the Expiration Date or otherwise
pursuant to this Master Lease. Notwithstanding anything contained herein
to the contrary, in the event that a Casualty or Condemnation shall exist
on the Expiration Date, all amounts payable with respect thereto shall be
paid to the Agent to be disbursed by the Agent to the Lenders in accordance
with the terms of the Loan Agreement.
(f) Subject to the provisions hereof, any Excess
Casualty/Condemnation Proceeds received by the Agent in respect of a
Casualty shall be turned over to the Lessee.
14.2 Environmental Matters. Promptly upon the Lessee's knowledge of the
---------------------
existence of an Environmental Violation that could have a material and adverse
effect with respect to any of the Equipment, the Lessee shall notify the Agent
in writing of such Environmental Violation. If the Lessor elects not to
terminate this Master Lease with respect to such Equipment pursuant to Section
-------
15.1, at the Lessee's sole cost and expense, the Lessee shall promptly and
- ----
diligently comply with all Applicable Law and commence any response, clean up,
remedial or other action necessary to remove, clean up or remediate the
Environmental Violation in accordance with Section 8.2 and the requirements of
-----------
all applicable Hazardous Materials Laws. The Lessee shall, upon completion of
remedial action by the Lessee, cause to be prepared by an environmental
consultant reasonably acceptable to the Lessor a report describing the
Environmental Violation and the actions taken by the Lessee (or its agents) in
response to such Environmental Violation, and a statement by the consultant that
the Environmental Violation has been remedied in compliance in all material
respects with applicable Hazardous Materials Laws referred to in Section 8.2
-----------
hereof. Each such Environmental Violation shall be remedied prior to the
Expiration Date unless each item of the Equipment with respect to which an
Environmental Violation has occurred but has not been remedied has been
purchased by the Lessee in accordance with Sections 18.1 or 18.2. Nothing in
------------- ----
this Article XIV shall reduce or limit the Lessee's obligations under Sections
----------- --------
12.1, 12.2 or 12.3 of the Participation Agreement.
- ---- ---- ----
20
<PAGE>
14.3 Notice of Environmental Matters. Promptly, but in any event within
-------------------------------
sixty (60) Business Days from the date the Lessee has actual knowledge thereof,
the Lessee shall provide to the Lessor written notice of any pending or
threatened Claim, action or proceeding involving any Hazardous Materials Laws or
any Release on or in connection with any of the Equipment that could have a
material and adverse effect in connection with any of the Equipment or creates
any risk of liability upon the Agent or any Lender or any Lien upon any of the
Equipment. All such notices shall describe in reasonable detail the nature of
the claim, action or proceeding and the Lessee's proposed response thereto. In
addition, the Lessee shall provide to the Lessor, within sixty (60) Business
Days of receipt, copies of all written communications with any Governmental
Authority relating to any Environmental Violation which could have a material
and adverse effect in connection with any of the Equipment. The Lessee shall
also promptly provide such detailed reports of any such material environmental
Claims as may reasonably be requested by the Lessor, any Financing Lender or any
Equity Lender. In the event that the Lessor receives written notice of any
pending or threatened Claim, action or proceeding involving any Hazardous
Materials Laws or any Release on or in connection with any of the Equipment, the
Lessor shall promptly give notice thereof to the Lessee.
ARTICLE XV
TERMINATION OF LEASE
15.1 Partial Termination upon Certain Events. If any Significant Casualty
---------------------------------------
or Condemnation, or material and adverse Environmental Violation as specified in
Section 14.2, occurs with respect to any of the Equipment, and the Lessor shall
- ------------
have given written notice (a "Termination Notice") to the Lessee that, as a
------------------
consequence of such event, this Master Lease is to be terminated with respect to
such Equipment, then the Lessee shall be obligated to purchase the Lessor's
interest in such affected Equipment on or prior to the next occurring Payment
Date by paying the Lessor an amount equal to the Equipment Balance for such
affected Equipment. The portion of the Equipment Balance allocated to each item
of the Equipment shall be as set forth on Exhibit "B", attached hereto.
----------
15.2 Partial Termination Procedures. On the date of the payment by the
------------------------------
Lessee of the Equipment Balance with respect to any of the Equipment in
accordance with Section 15.1 (such date, the "Partial Termination Date"), this
------------ ------------------------
Master Lease shall terminate with respect to such Equipment and, concurrent with
the Lessor's receipt of such payment,
(a) the Lessor shall execute and deliver to the Lessee (or to the
Lessee's designee) at the Lessee's cost and expense a bill of sale with
respect to such Equipment, without recourse, representation or warranty of
any kind whatsoever, and with the disclaimers set forth in Section 2.4
-----------
hereof, in each case in conformity with local custom and free and clear of
the Lien of the Lessor First Security Agreement and the Lessor Second
Security Agreement, and any Lessor Liens attributable to the Lessor;
21
<PAGE>
(b) such item of the Equipment shall be conveyed to the Lessee (or to
the Lessee's designee) "AS IS" and in its then present physical condition
subject to each of the disclaimers set forth in Section 2.4 hereof; and
-----------
(c) any Net Proceeds with respect to the Casualty or Condemnation
giving rise to the termination of this Master Lease with respect to such
item of the Equipment theretofore received by the Agent shall be applied
against sums due hereunder and any remaining balance shall be paid to the
Lessee provided that no Lease Event of Default is then existing.
ARTICLE XVI
EVENTS OF DEFAULT
16.1 Lease Events of Default. The occurrence of any one or more of the
-----------------------
following events (whether such event shall be voluntary or involuntary or come
about or be effected by operation of law or pursuant to or in compliance with
any judgment, decree or order of any court or any order, rule or regulation of
any administrative or governmental body) shall constitute a "Lease Event of
--------------
Default":
- -------
(a) the Lessee shall fail to make payment of (i) any Basic Rent
within five (5) days after the same has become due and payable or (ii) any
Equipment Balance, Purchase Option Price, Loan Balance or Lease Balance,
including, without limitation, amounts due pursuant to Sections 15.1, 18.1,
------------- ----
18.2, 18.3 or 20.1, on the date due therefor; or
---- ---- ----
(b) the Lessee shall fail to make payment of any Supplemental Rent
(other than Supplemental Rent referred to in clause (a) of this Section)
----------
payable within five (5) days after receipt of notice thereof; or
(c) the Lessee shall fail to maintain insurance as required by
Article XIII of this Master Lease; or
------------
(d) the Lessee shall fail to observe or perform any term, covenant or
condition of the Lessee under this Master Lease, the Participation
Agreement or any other Operative Document to which it is a party other than
those described in clauses (a), (b) or (c) of this Section 16.1, or in
----------- --- --- ------------
Articles XX and XXI hereof, or any Subsidiary Guarantor shall fail to
----------- ---
observe or perform any term, covenant or condition applicable to it under
the Participation Agreement (exclusive of defaults under the Guaranty) and,
in each such case, such failure shall have continued for thirty (30) days
after the earlier of (i) delivery to the Lessee or such Subsidiary
Guarantor, as applicable, of written notice thereof from the Lessor or (ii)
a Responsible Officer of the Lessee or such Subsidiary Guarantor, as
applicable, shall have knowledge of such failure; or
22
<PAGE>
(e) any representation or warranty made by the Lessee, Holdings, or
any Subsidiary Guarantor in any of the Operative Documents to which it is a
party shall have been inaccurate in any material respect at the time made;
or
(f) a default by the Lessee or any other Guarantor beyond any
applicable grace period shall have occurred and be continuing under the
Guaranty; or
(g) any Operative Document to which the Lessee or any other Guarantor
is a party or any Lien granted under any such Operative Document shall, in
whole or in part, terminate, cease to be effective against, or cease to be
the legally valid, binding and enforceable obligation of, the Lessee or any
such other Guarantor, as the case may be; or
(h) the Lessee or any other Guarantor shall directly or indirectly
contest in any manner the effectiveness, validity, binding nature or
enforceability of any Operative Document or any Lien granted under any
Operative Document, or the Lessee or any other Guaranty shall repudiate, or
purport to discontinue or terminate, the Guaranty; or
(i) an Event of Default (as defined in the Credit Agreements) shall
have occurred and be continuing under any Credit Agreement.
16.2 Remedies. Upon the occurrence of any Lease Event of Default and at
--------
any time thereafter, the Agent, as agent for the Lenders, may, with the consent
of the Required Equity Lenders and shall, at the direction of the Required
Equity Lenders, so long as such Lease Event of Default is continuing, do one or
more of the following as the Agent in its sole discretion shall determine (in
accordance with such consent or direction), without limiting any other right or
remedy the Lessor may have on account of such Lease Event of Default (including,
without limitation, the obligation of the Lessee to purchase the Equipment as
set forth in Section 18.3):
------------
(a) The Agent may, by notice to the Lessee, rescind or terminate this
Master Lease as to any item of the Equipment or all of the Equipment as of
the date specified in such notice; however, (i) no reletting or taking of
possession of any of the Equipment (or any portion thereof) by the Agent
will be construed as an election on the Agent's part to terminate this
Master Lease unless a written notice of such intention is given to the
Lessee, (ii) notwithstanding any reletting or taking of possession, the
Agent may at any time thereafter elect to terminate this Master Lease for a
continuing Lease Event of Default and (iii) no act or thing done by the
Agent or any of its agents, representatives or employees and no agreement
accepting a surrender of the Equipment shall be valid unless the same be
made in writing and executed by the Agent;
(b) The Agent may (i) demand that the Lessee, and the Lessee shall
upon the written demand of the Agent, return any of the Equipment promptly
to the Agent in the
23
<PAGE>
manner and condition required by, and otherwise in accordance with all of
the provisions of Articles VII and IX and Section 8.2 hereof as if such
------------ -- -----------
item of the Equipment were being returned at the end of the Lease Term, and
the Agent shall not be liable for the reimbursement of the Lessee for any
costs and expenses incurred by the Lessee in connection therewith and (ii)
without prejudice to any other remedy which the Agent may have for
possession of any of the Equipment, and to the extent and in the manner
permitted by Applicable Law, take immediate possession of (to the exclusion
of the Lessee) such Equipment and remove such Equipment from the premises
where it is located, by summary proceedings or otherwise, all without
liability to the Lessee for or by reason of such entry or taking of
possession, whether for the restoration of damage to the Equipment caused
by such taking or otherwise and, in addition to the Agent's other damages,
the Lessee shall be responsible for all costs and expenses incurred by the
Agent, the Financing Lenders and/or the Equity Lenders in connection with
any reletting or disposition, including without limitation, reasonable
brokers' fees and all costs of any alterations or repairs made by the
Agent;
(c) The Agent may (i) declare an amount equal to the sum of Loan
Balance as of the date of such declaration, together with all other accrued
Obligations of the Lessor and the Lessee to the Lenders under the Operative
Documents, to be immediately due and payable; and/or (ii) sell all or any
part of any one or more items of the Equipment at public or private sale,
as the Agent may determine, free and clear of any rights of the Lessee
(except that Excess Sales Proceeds are payable to and shall be paid to the
Lessee) with respect thereto (except to the extent required by clause (iii)
------------
below if the Agent shall elect to exercise its rights thereunder) in which
event the Lessee's obligation to pay Basic Rent hereunder for periods
commencing after the date of such sale shall be terminated or
proportionately reduced, as the case may be; and/or (iii) if the Agent
shall so elect, demand that the Lessee pay to the Agent, and the Lessee
shall pay to the Agent, on the date of such sale, in lieu of Basic Rent
accruing and due for periods commencing on or after the Payment Date
coinciding with such date of sale (or, if the sale date is not a Payment
Date, the Payment Date next preceding the date of such sale), an amount
equal to (A) the excess, if any, of (1) the Lease Balance calculated as of
such Payment Date (including all Rent due and unpaid to and including such
Payment Date), over (2) the net proceeds of such sale (that is, after
deducting all costs and expenses incurred by the Agent or any Lender(s)
incident to such conveyance, including, without limitation, repossession
costs, brokerage commissions, prorations, transfer taxes, fees and expenses
for counsel, title insurance fees, survey costs, recording fees, and any
repair costs), to the extent received by the Agent in good, collected and
indefeasible funds; plus (B) interest at the Default Rate on the foregoing
amount from such Payment Date until the date of payment;
(d) The Agent may, at its option, elect not to terminate this Master
Lease with respect to the Equipment and continue to collect all Basic Rent,
Supplemental Rent, and
24
<PAGE>
all other amounts due the Agent on behalf of the Lessor pursuant to the
Assignment of Lease and Rent (together with all costs of collection) and
enforce the Lessee's obligations under this Master Lease as and when the
same become due, or are to be performed. In addition, at the option of the
Agent, upon any abandonment of any of the Equipment by the Lessee or
repossession of same by the Agent, the Agent may, in its sole and absolute
discretion, elect not to terminate this Master Lease and may make the
necessary repairs in order to relet such Equipment, and relet the Equipment
or any part thereof for such term or terms (which may be for a long term
extending beyond the Lease Term of this Master Lease) and at such rental or
rentals and upon such other terms and conditions as the Agent in its
reasonable discretion may deem advisable. Upon each such reletting all net
rentals actually received by the Agent from such reletting in good,
collected and indefeasible funds shall be applied to the Lessee's
obligations hereunder and the other Operative Documents in such order,
proportion and priority as the Agent may elect in the Agent's sole and
absolute discretion. If such net rentals received from such reletting
during any period in good, collected and indefeasible funds are less than
the Rent with respect to such item of the Equipment to be paid during that
period by the Lessee hereunder, the Lessee shall pay any deficiency, as
calculated by the Agent, to the Agent on the next Payment Date;
(e) Unless all of the Equipment has been sold in its entirety, the
Agent may, whether or not the Agent shall have exercised or shall
thereafter at any time exercise any of its rights under clauses (b), (c) or
----------- ---
(d) of this Section 16.2 with respect to any of the Equipment or any
--- ------------
portions thereof, demand, by written notice to the Lessee specifying a date
(a "Termination Date") not earlier than twenty (20) days after the date of
----------------
such notice, that the Lessee purchase, on such Termination Date, all unsold
Equipment and all unsold portions of the Equipment for an amount equal to
the Lease Balance in accordance with the provisions of Section 18.2;
------------
(f) The Agent may exercise any other right or remedy that may be
available to it under Applicable Law (including, without limitation, under
Article 9 of the Uniform Commercial Code), or proceed by appropriate court
action (legal or equitable) to enforce the terms hereof or to recover
damages for the breach hereof. Separate suits may be brought to collect any
such damages for any period(s), and such suits shall not in any manner
prejudice the Agent's right to collect any such damages for any subsequent
period(s), or the Agent may defer any such suit until after the expiration
of the Lease Term, in which event such suit shall be deemed not to have
accrued until the expiration of the Lease Term;
(g) The Agent may retain and apply against the Lease Balance all sums
which the Agent would, absent such Lease Event of Default, be required to
pay to, or turn over
25
<PAGE>
to, the Lessee pursuant to the terms of this Master Lease or any of the
other Operative Documents;
(h) The Agent, as a matter of right and without notice to the Lessee,
shall have the right to apply to any court having jurisdiction to appoint a
receiver or receivers of any of the Equipment, and the Lessee hereby
irrevocably consents to any such appointment. Any such receiver(s) shall
have all of the usual powers and duties of receivers in like or similar
cases and all of the powers and duties of the Agent in case of entry, and
shall continue as such and exercise such powers until the date of
confirmation of the sale of such item of the Equipment unless such
receivership is sooner terminated; or
(i) The Agent shall be entitled to enforce payment of the
indebtedness and performance of the obligations secured hereby and to
exercise all rights and powers under this instrument or under any of the
other Operative Documents or other agreement or any laws now or hereafter
in force, notwithstanding some or all of the obligations secured hereby may
now or hereafter be otherwise secured, whether by security agreement,
pledge, lien, assignment or otherwise.
Neither the acceptance of this instrument nor its enforcement, shall prejudice
or in any manner affect the Agent's right to realize upon or enforce any other
security now or hereafter held by the Agent, it being agreed that the Agent
shall be entitled to enforce this instrument and any other security now or
hereafter held by the Agent in such order and manner as the Agent may determine
in its absolute discretion. No remedy herein conferred upon or reserved to the
Agent is intended to be exclusive of any other remedy herein or by law provided
or permitted, but each shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in equity or
by statute. Every power or remedy given by any of the Operative Documents to
the Agent or to which it may otherwise be entitled, may be exercised,
concurrently or independently, from time to time and as often as may be deemed
expedient by the Agent. In no event shall the Agent, in the exercise of the
remedies provided in this instrument (including, without limitation, in
connection with the assignment of rents to Agent, or the appointment of a
receiver and the repossession by such receiver of all or any part of the
Equipment), be deemed a "mortgagee in possession," and the Agent
shall not in any way be made liable for any act, either of commission or
omission, in connection with the exercise of such remedies.
(k) Without limitation of the foregoing, at the direction of either
the Required Equity Lenders or the Required Financing Lenders, the Agent
may, on behalf of the Lessor, demand the purchase of the Equipment by the
Lessee pursuant to Section 18.3 of this Master Lease.
------------
If, pursuant to the exercise by the Agent of its remedies pursuant to this
Section 16.2, the Lease Balance and all other amounts due and owing from the
- ------------
Lessee under this Master Lease and the
26
<PAGE>
other Operative Documents have been paid in full, then the Lessor shall remit to
the Lessee any excess amounts received by the Lessor.
16.3 Waiver of Certain Rights. If this Master Lease shall be terminated
------------------------
pursuant to Section 16.2, the Lessee waives, to the fullest extent permitted by
------------
law, (a) any notice of repossession or the institution of legal proceedings to
obtain repossession; (b) any right of redemption, re-entry or repossession; (c)
the benefit of any laws now or hereafter in force exempting the Lessee from
liability for rent or for debt or limiting the Lessor with respect to the
election of remedies; (d) any other rights which might otherwise limit or modify
any of the Lessor's rights or remedies under this Article XVI; and (e) to the
-----------
maximum extent permitted by law, the Lessee hereby further waives the benefit of
any appraisement, valuation, stay, extension, reinstatement and redemption laws
now or hereafter in force and all rights of marshaling in the event of any sale
of any Equipment or any interest therein.
16.4 Security Interest and Foreclosure.
---------------------------------
(a) The Lessee hereby grants to the Lessor a security interest in and
to all of the Equipment, together with (i) all other items of equipment
hereafter made part of the Collateral hereunder, wherever located, whether
now owned or existing or hereafter owned, existing, acquired or arising,
and whether in the Lessee's, the Agent's, any Lender's or any other
person's or entity's possession or control, including, without limitation,
all Substituted Equipment under Section 6.3 of the Participation Agreement,
-----------
(ii) all apparatus, warranties, guaranties, contract rights, claims,
intangible rights relating thereto, (iii) all Modifications, accessories,
replacements, and substitutions therefor, (iv) all general intangibles
arising therefrom or in connection therewith, (v) all proceeds therefrom,
and (vi) all other property which the Lessee may hereafter become entitled
to receive on account of the Equipment (collectively, the "Collateral"), to
----------
secure the payment of the Equipment Balance and all other amounts payable
hereunder and under the Operative Documents in connection therewith. Upon
the occurrence of any Lease Event of Default, the Lessor shall have the
power and authority, to the extent provided by law, after proper notice and
lapse of such time as may be required by law, to sell such Collateral at
the time and place of sale fixed by the Lessor in such notice of sale,
either as a whole, or in separate lots or parcels or items and in such
order as the Lessor may elect, at auction to the highest bidder for cash in
lawful money of the United States payable at the time of sale. Without
limitation of the foregoing, the Lessor shall have all of the rights,
remedies and recourses with respect to the Equipment afforded a secured
party by the Uniform Commercial Code of the State of Texas and of each
state in which the Equipment is situated; and such rights, remedies and
recourses shall be in addition to, and not in limitation of, all other
rights, remedies and recourses afforded by this Master Lease and the
Operative Documents and at law and in equity. Additionally, upon the
occurrence of a Lease Event of Default, the Lessor, in lieu of or in
addition to exercising any power of sale hereinabove given, may proceed by
a suit
27
<PAGE>
or suits in equity or at law, whether for a foreclosure hereunder, or for
the sale of the Collateral, or against the Lessee on a recourse basis for
the Lease Balance, or for the specific performance of any covenant or
agreement herein contained or in aid of the execution of any power herein
granted, or for the appointment of a receiver pending any foreclosure
hereunder or the sale of the Equipment, or for the enforcement of any other
appropriate legal or equitable remedy.
(b) The Lessee shall execute and deliver to the Lessor, in form and
substance satisfactory to the Lessor, such financing statements and further
assurances as the Lessor may, from time to time, consider reasonably
necessary to create, perfect and preserve the Lessor's security interest in
the Collateral hereunder, and the Lessor may cause such statements and
assurances to be recorded and filed at such times and places as may be
required or permitted by law to so create, perfect and preserve such
security interest. Pursuant to the Uniform Commercial Code of the State of
Texas and of each state in which the Equipment is situated, this Master
Lease shall be effective as a Financing Statement. The address of the
Lessor, as Secured Party, and the Lessee, as Debtor, are as set forth
herein. The security interest herein granted shall not obligate the Agent,
any Lender or the Lessor in any manner whatsoever with respect to the
Equipment or other Collateral, or require the Agent, any Lender or the
Lessor to take any other action, incur any expenses or perform or discharge
any obligation, duty or liability whatsoever. Upon any Lease Event of
Default, at the request of the Lessor, the Lessee shall gather all of the
Equipment at a location designated by the Lessor for sale pursuant to the
terms hereof. Within ten (10) days following the Lessee's receipt of
written request from the Lessor, the Lessee shall prepare and deliver to
the Lessor a written inventory specifically listing all of the Collateral,
which inventory shall be certified by a Responsible Officer of the Lessee
as being true, correct and complete.
ARTICLE XVII
LESSOR'S RIGHT TO CURE
17.1 The Lessor's Right to Cure the Lessee's Lease Defaults. The Lessor
------------------------------------------------------
and/or the Agent, without waiving or releasing any obligation or Lease Event of
Default, may (but shall be under no obligation to) remedy any Lease Event of
Default for the account and at the sole cost and expense of the Lessee,
including the failure by the Lessee to maintain the insurance required by
Article XIII, and may, to the fullest extent permitted by law, and
- ------------
notwithstanding any right of quiet enjoyment in favor of the Lessee, repossess
any of the Equipment for such purpose and take all such action thereon as may be
necessary or appropriate therefor. No such repossession shall be deemed a
termination of this Master Lease. All reasonable out-of-pocket costs and
expenses so incurred (including fees and expenses of counsel), together with
interest thereon at the Default Rate from the date on which such sums or
expenses are paid by the Lessor, shall be paid by the Lessee to the Lessor or
the Agent, as the case may be, as Supplemental Rent.
28
<PAGE>
ARTICLE XVIII
PURCHASE PROVISIONS
18.1 Option to Purchase all of the Equipment. Subject to the conditions
---------------------------------------
contained herein, and without limitation of the Lessee's purchase obligation
pursuant to Sections 18.2 or 18.3, the Lessee shall have the option on any
------------- ----
Business Day to purchase all, but not less than all, of the Equipment subject to
this Master Lease at a price equal to the Lease Balance on the date of such
purchase. The Lessee's exercise of its option pursuant to this Section 18.1
------------
shall be subject to the following conditions:
(i) the Lessee shall have delivered a Purchase Notice to the Lessor not
less than ten (10) days prior to such purchase, specifying the date of such
purchase; and
(ii) no Lease Event of Default shall have occurred and be continuing.
If the Lessee exercises its option pursuant to this Section 18.1 then, upon the
------------
Lessor's receipt of all amounts due in connection therewith, the Lessor shall
transfer to the Lessee or its designee all of the Lessor's right, title and
interest in and to all of the Equipment in accordance with the procedures set
forth in Section 21.1(a) hereof, such transfer to be effective as of the date
---------------
specified in the Purchase Notice.
18.2 Expiration Date Purchase Obligation. Unless (a) the Lessee shall have
-----------------------------------
properly exercised its option pursuant to Section 18.1 and purchased all of the
------------
Equipment pursuant thereto, or (b) the Lessee shall have properly exercised the
Remarketing Option and shall have fulfilled all of the conditions of clauses (a)
-----------
through (l) of Section 20.1 hereof and the Lessor shall have sold its interest
--- ------------
in all of the Equipment pursuant thereto, then, subject to the terms, conditions
and provisions set forth in this Article XVIII, and in accordance with the terms
-------------
of Section 21.1(a) hereof, the Lessee shall purchase from the Lessor, and the
---------------
Lessor shall convey to the Lessee, on the Expiration of the Lease Term all of
the Lessor's interest in all of the Equipment for an amount equal to the Lease
Balance. The Lessee may designate, in a notice given to the Lessor not less
than ten (10) days prior to the closing of such purchase (time being of the
essence), the transferee or transferees to whom the conveyance shall be made (if
other than to the Lessee), in which case such conveyance shall (subject to the
terms and conditions set forth herein) be made to such designee; provided,
--------
however, that such designation of a transferee or transferees shall not cause
- -------
the Lessee to be released, fully or partially, from any of its obligations under
this Master Lease; including, without limitation, the obligation to
pay the Lessor the Lease Balance on such Expiration Date, nor shall such
designation convey or be deemed to convey to such designee any rights, title,
interest or Claim against or with respect to any of the Equipment.
18.3 Acceleration of Purchase Obligation.
-----------------------------------
29
<PAGE>
(a) The Lessee shall be obligated to purchase for an amount equal to
the Lease Balance, the Lessor's interest in all of the Equipment
(notwithstanding any prior election to exercise its Purchase Option
pursuant to Section 18.1) (i) automatically and without notice upon the
-------------
occurrence of any Lease Event of Default specified in clauses (h) or (i) of
----------- ---
Section 11.1 of the Mail-Well Credit Agreement and (ii) as provided for at
------------
Section 16.2(e) immediately upon written demand of the Lessor upon the
---------------
occurrence of any other Lease Event of Default.
(b) The Lessee shall be obligated to purchase for an amount equal to
the Lease Balance (including without limitation all other amounts owing in
respect of Rent, including Supplemental Rent, theretofore accruing),
immediately upon written demand of the Lessor, the Lessor's interest in all
of the Equipment at any time during the Lease Term when (i) the Lessor
ceases to have title as contemplated by Section 11.1 or (ii) any related
------------
Operative Document to which the Lessee is a party shall cease to be in full
force and effect, or shall cease to give the Lenders the Liens, rights,
powers and privileges purported to be created thereby.
(c) Any purchase under this Section 18.3 shall be in accordance with
------------
Article XXI.
-----------
ARTICLE XIX
INDEMNITIES
19.1 GENERAL INDEMNITY. THE LESSEE HEREBY ASSUMES AND AGREES TO INDEMNIFY,
-----------------
PROTECT, SAVE, AND KEEP HARMLESS THE LESSOR, THE LENDERS AND THEIR RESPECTIVE
AGENTS AND EMPLOYEES, FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES, INJURIES,
CLAIMS, ALLEGATIONS, DEMANDS, EXPENSES, INCLUDING LEGAL EXPENSES, OR
LIABILITIES, INCLUDING NEGLIGENCE, TORT AND STRICT LIABILITY, OF WHATSOEVER KIND
AND NATURE, IN ANY WAY RELATING TO, OR ARISING OR ALLEGED TO ARISE ON ACCOUNT
OF: (I) THE PURCHASE, POSSESSION, MAINTENANCE, STORAGE, USE, CONDITION
(INCLUDING WITHOUT LIMITATION, LATENT AND OTHER DEFECTS AND WHETHER OR NOT
DISCOVERABLE BY THE LESSOR, THE LESSEE OR ANY LENDER, AND ANY CLAIM FOR PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT) OR OPERATION OF ANY ITEM OF THE EQUIPMENT,
WHETHER ARISING PRIOR TO, DURING OR AFTER THE LEASE TERM WITH RESPECT TO ALL OR
ANY PART OF THE EQUIPMENT; (II) ANY CLAIMS BASED ON LIABILITY IN TORT,
NEGLIGENCE, NUISANCE, TRESPASS, WASTE, STRICT LIABILITY, OR BREACH OF
WARRANTIES; (III) ANY INJURY TO OR DEATH OF ANY PERSON OR ANY DAMAGE TO OR LOSS
OF PROPERTY ON OR NEAR THE EQUIPMENT; (IV) ANY VIOLATION BY LESSEE OF ANY
PROVISION OF THIS MASTER LEASE, ANY DOCUMENT MATERIAL THERETO (THE "RELATED
-------
DOCUMENTS") OR OF ANY AGREEMENT, APPLICABLE LAW, RULE, REGULATION, ORDINANCE OR
- ---------
RESTRICTION AFFECTING OR APPLICABLE TO THE LESSEE, THE LESSOR (WITH RESPECT TO
THE EQUIPMENT), ANY OF THE EQUIPMENT OR THE LEASING, OWNERSHIP, USE,
REPLACEMENT, ADAPTATION OR MAINTENANCE THEREOF; (V) EACH AND EVERY CLAIM AND
LOSS ARISING OUT OF OR CONNECTED WITH ANY ENVIRONMENTAL VIOLATION OR THE RELEASE
OF ANY HAZARDOUS
30
<PAGE>
MATERIAL; AND/OR (VI) THE LOSS, DAMAGE, DESTRUCTION, REMOVAL, RETURN, SURRENDER,
SALE OR OTHER DISPOSITION OF THE EQUIPMENT, OR ANY ITEM THEREOF, EXCEPT, IN EACH
SUCH CASE, WHERE SUCH LOSS, DAMAGE, INJURY, CLAIM, ALLEGATION, DEMAND, EXPENSE
(INCLUDING LEGAL EXPENSES OR LIABILITIES) IS DUE TO THE GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT OF THE LESSOR. THE FOREGOING INDEMNITIES SHALL REMAIN IN FULL
FORCE AND EFFECT DESPITE THE EXPIRATION, CANCELLATION OR EARLIER TERMINATION OF
THIS MASTER LEASE. THE INDEMNIFICATION SET FORTH IN THIS SECTION 19.1 SHALL
------------
EXPRESSLY INDEMNIFY THE LESSOR, THE LENDERS AND THEIR RESPECTIVE AGENTS AND
EMPLOYEES AGAINST THEIR ORDINARY NEGLIGENCE.
19.2 Impositions.
-----------
(a) The Lessee shall pay, and indemnify and hold the Lessor harmless
from and against, all Impositions, which may now or hereafter be imposed
upon or with respect to any of: (i) the ownership, leasing, sale,
possession, use, purchase, operation, transfer of title, return or other
disposition of the Equipment; (ii) the rental, receipts or earnings arising
therefrom; (iii) this Master Lease or any of the Operative Documents, or
(iv) any payment made pursuant to any of the foregoing or otherwise with
respect to any of the transactions contemplated thereunder or upon any
filing and/or recordation of the foregoing, which are payable for any
period of time during which this Master Lease is in effect, whether payable
by the Lessor or the Lessee under Applicable Law, including but not limited
to (x) Impositions imposed on the purchase of the Equipment by the Lessor
and the rental payments under this Master Lease, (y) personal property
Impositions on the Equipment, and (z) Taxes imposed on any sale of the
Equipment pursuant to this Master Lease. The Lessee shall furnish to the
Lessor evidence of the payment of such Impositions at the time paid by the
Lessee, and shall provide the Lessor immediately upon receipt with a copy
of all bills for such Impositions. If the Lessee fails to pay any said
Impositions, the Lessor shall have the right, but shall not be obligated,
to pay the same, in which event the cost thereof shall be repayable to the
Lessor on demand. The Lessee's obligations hereunder shall survive and
continue after the expiration, cancellation or termination of the Lease
Term as to those Impositions and any related expenses incurred or accrued
(or attributable to events occurring) during such Lease Term, or until the
Equipment is returned to the Lessor in accordance with this Master Lease
(if later). If any taxing authority makes a claim against the Lessor
which, if successful, would require the Lessee to indemnify the Lessor
under this Section 19.2, the Lessee shall have the right in good faith to
------------
contest such claim provided that the Lessor is protected from the
consequences of any such contest in a manner satisfactory to the Lessor.
The foregoing contest right shall not relieve the Lessee of any of its
obligations under this Master Lease.
(b) The Impositions and the indemnification obligations of the Lessee
hereunder shall expressly include and cover, without limitation, all Taxes
arising as a result of this Master Lease and/or the ownership by Lessor of
the Equipment which are based on net or gross income or net
31
<PAGE>
or gross receipts of any person, corporation, or other entity, including,
without limitation, any United States federal or state income tax, any
capital gains Taxes, any excess profits or conduct or business Taxes, or
any withholdings or withholding Taxes.
(c) The Lessee will, where permitted to do so under applicable rules
and regulations, make and timely file such reports and returns, including
exemption certificates or affidavits with respect to any sales, use or
other Imposition, in such manner as to show the Lessee and not the Lessor
as the owner of the Equipment, and as shall be satisfactory to the Lessor
or, where not so permitted, will notify the Lessor of such requirement and
will prepare and deliver such reports or returns to the Lessor for filing
within a reasonable time prior to the time such reports are to be filed.
All costs and expenses (including reasonable legal and accountants, fees
and disbursements) of preparing any such report or returns shall be borne
by the Lessee.
ARTICLE XX
REMARKETING OPTION
20.1 Option to Remarket. Subject to the fulfillment of each of the
------------------
conditions set forth in this Section 20.1, the Lessee shall have the option (the
------------
"Remarketing Option") to market and complete the sale of all of the Equipment
------------------
for the Lessor. The Lessee's effective exercise and consummation of the
Remarketing Option shall be subject to the due and timely fulfillment of each of
the following provisions as to each item of the Equipment as of the dates set
forth below.
(a) Not later than twelve (12) months prior to the Expiration Date,
the Lessee shall give to the Lessor written notice of the Lessee's exercise
of the Remarketing Option, which exercise shall be irrevocable.
(b) Not later than three (3) months prior to the Expiration Date, the
Lessee shall deliver to the Lessor an Environmental Audit for each item of
the Equipment. Such Environmental Audit shall be prepared by an
environmental consultant selected by the Lessor in the Lessor's reasonable
discretion and shall contain conclusions reasonably satisfactory to the
Lessor as to the environmental status of the Equipment. If any such
Environmental Audit indicates any exceptions, the Lessee shall have also
delivered prior to the Expiration Date a written statement by such
environmental consultant concluding, to the satisfaction of the Agent, that
all such exceptions have been remedied in compliance with Applicable Law.
(c) On the date of the Lessee's notice to the Lessor of the Lessee's
exercise of the Remarketing Option, no Lease Event of Default or Lease
Default shall exist, and thereafter, no Lease Event of Default or Lease
Default shall exist.
32
<PAGE>
(d) Subject to the provisions of this paragraph, the Lessee shall
have completed all Modifications, restoration and rebuilding of the
affected Equipment pursuant to Sections 10.1 and 14.1 (as the case may be),
------------- ----
without relying on any Permitted Contest to modify its obligations under
this Paragraph 20.1(d), and shall have fulfilled all of the conditions and
requirements in connection therewith pursuant to said Sections, in each
case prior to the date on which the Lessor receives the Lessee's notice of
the Lessee's intention to exercise the Remarketing Option (time being of
the essence), regardless of whether the same shall be within the Lessee's
control. In the event, however, that the Lessee has commenced any
Modification, restoration or rebuilding of any affected Equipment but that
such Modification, restoration or rebuilding has not been completed, the
Lessee shall nevertheless have the right to exercise the Remarketing Option
and shall, thereafter, complete such Modification, restoration or
rebuilding promptly and without delay in accordance with the provisions of
this Master Lease, and in any event not later than the date upon which the
Lessee or the Lessor procures bids from one or more prospective purchasers.
The Lessee shall have also paid the cost of all Modifications, restorations
and rebuilding, commenced prior to the Expiration Date. The Lessee shall
not have been excused pursuant to Section 12.1 from complying with the
------------
requirements of this Section 20.1(d).
(e) During the Marketing Period, the Lessee shall, as nonexclusive
agent for the Lessor, use its best efforts to sell the Lessor's interest in
the Equipment and will attempt to obtain the highest purchase price
therefor and for not less than the Fair Market Sales Value.
(f) The Lessee shall procure bids from one or more bona fide
prospective purchasers and shall deliver to the Lessor and the Lenders not
less than sixty (60) days prior to the Expiration Date a binding written
unconditional (except as set forth below), irrevocable offer by such
purchaser or purchasers offering the highest cash bid to purchase the
Equipment (each, a "Conforming Bid"). No such purchaser shall be the
--------------
Lessee or any Subsidiary or Affiliate of the Lessee. The written offer
must specify the Expiration Date as the closing date unless the Lessor and
the Lenders shall otherwise agree in their sole discretion.
(g) The Lessee shall submit all Conforming Bids to the Lessor and the
Lenders, and the Lessor will have the right to submit any one or more bids.
Any sale by the Lessee shall be for the highest cash Conforming Bid
submitted to the Lessor. The determination of the highest bid shall be
made by the Lessor prior to the end of the Marketing Period. All
Conforming Bids shall be on an all-cash basis unless the Lessor and the
Lenders shall otherwise agree in their sole discretion.
33
<PAGE>
(h) In connection with any such sale of any of the Equipment, the
Lessee will provide to the purchaser all customary seller's indemnities,
representations and warranties regarding title, absence of Liens (except
Lessor Liens) and the condition of such item of the Equipment; including,
without limitation, an environmental indemnity to the extent the same
are required by the purchaser. The Lessee shall have obtained, at its cost
and expense, all required governmental and regulatory consents and
approvals and shall have made all filings as required by Applicable Law in
order to carry out and complete the transfer of each of the Equipment. As
to the Lessor, any such sale shall be made on an "as is, with all faults"
basis without representation or warranty by the Lessor other than the
absence of Lessor Liens. Any agreement as to such sale shall be made
subject to the Lessor's rights hereunder.
(i) The Lessee shall pay directly, and not from the sale proceeds,
all costs and expenses of the sale of the Equipment, whether incurred by
the Lessor, the Agent or the Lessee, including without limitation, the cost
of all environmental reports, appraisals, transfer taxes, the Lessor's
reasonable attorneys' fees, the Lessee's attorneys' fees, commissions,
escrow fees, recording fees, and all applicable documentary and other
transfer taxes and other Impositions.
(j) The Lessee shall pay to the Agent on or prior to the Expiration
Date (or in the case of Supplemental Rent, to the Agent for distribution in
accordance with Operative Documents) an amount equal to the Loan Balance
with respect to the Financing Loans plus all accrued and unpaid Rent
----
(including Supplemental Rent, if any) and all other amounts hereunder which
have accrued or will accrue prior to or as of the Expiration Date, in the
type of funds specified in Section 3.4 hereof.
-----------
(k) The Lessee shall pay to the Lessor on or prior to the Expiration
Date the amounts, if any, required to be paid pursuant to Section 12.2 of
------------
the Participation Agreement.
(l) The purchase of all of the Equipment shall be consummated on the
Expiration Date and the gross proceeds (the "Gross Remarketing Proceeds")
--------------------------
realized from the sale of the Equipment (i.e., without deduction for any
marketing, closing or other costs, prorations or commissions) shall be paid
directly to the Agent; provided, however, that if the Gross Remarketing
-------- -------
Proceeds actually received by the Agent in good, collected and indefeasible
funds from such sale exceed the Lease Balance as of such date, then the
excess shall be paid to the Lessee on the Expiration Date.
If one or more of the foregoing provisions shall not be fulfilled as of the
date set forth above with respect to any of the Equipment, or if any of the
Equipment is not purchased as aforesaid, or if the conditions set forth in
Paragraph 9.1(c) or in Section 9.2 hereof have not been
- ---------------- -----------
34
<PAGE>
satisfied in accordance with their terms, then the Agent shall declare by
written notice to the Lessee the Remarketing Option to be null and void (whether
or not it has been theretofore exercised by the Lessee) as to all of the
Equipment, in which event all of the Lessee's rights under this Section 20.1
------------
shall immediately terminate as if never exercised and the Lessee shall be
obligated to purchase all of the Equipment pursuant to Section 18.2 on the
------------
Expiration Date.
Except as expressly set forth herein, the Lessee shall have no right, power
or authority to bind the Lessor in connection with any proposed sale of any of
the Equipment.
20.2 Certain Obligations Continue. During the Marketing Period, the
----------------------------
obligation of the Lessee to pay Rent (including the installment of Rent due on
the Expiration Date) shall continue undiminished until payment in full of the
Loan Balance and all other amounts due to the Lessor with respect to the
Equipment under the Operative Documents to which the Lessee is a party. The
Lessor or any Equity Lender shall have the right, but shall be under no duty, to
solicit bids, to inquire into the efforts of the Lessee to obtain bids or
otherwise to take action in connection with any such sale, in addition to the
other rights as expressly provided in this Article XX.
----------
ARTICLE XXI
PROCEDURES RELATING TO PURCHASE OR REMARKETING
21.1 Provisions Relating to the Exercise of Purchase Option or Obligation
--------------------------------------------------------------------
and Conveyance Upon Remarketing and Conveyance Upon Certain Other Events.
- ------------------------------------------------------------------------
(a) In connection with any termination of this Master Lease with
respect to any of the Equipment pursuant to the terms of Article XV, in
----------
connection with any purchase or in connection with the Lessee's purchase of
any of the Equipment in accordance with Sections 18.1, 18.2, 18.3 or
------------- ---- ----
obligations under Section 16.2(e), then, upon the date on which this Master
---------------
Lease is to terminate with respect to the applicable Equipment and upon
tender by the Lessee of the amounts set forth in Article XV, Sections
---------- --------
16.2(e), 18.1, 18.2 or 18.3, as applicable in good, collected and
------- ---- ---- ----
indefeasible funds:
(i) the Lessor shall execute and deliver to the Lessee (or to
the Lessee's designee) at the Lessee's cost and expense: a bill of
sale with respect to the Lessor's rights, title and interests in such
item of the Equipment in each case in conformity with local custom and
free and clear of the security interest of the Lessor Security
Agreement and any Lessor Liens attributable to the Lessor;
(ii) such item of the Equipment shall be conveyed to the Lessee
"AS IS" and in its then present physical condition, without
representation, warranty or
35
<PAGE>
recourse of any kind or character whatsoever, and with the disclaimer
set forth in Section 2.4 hereof; and
-----------
(iii) the Lessor shall execute and deliver to the Lessee a
statement of termination of this Master Lease, in each case to the
extent such Operative Documents relate to such item of the Equipment,
and shall use its best efforts to cause the Agent for the Financing
Lenders to execute and deliver a release of the Assignment of Lease
and Rent to the extent relating to such item of the Equipment.
(b) If the Lessee properly exercises the Remarketing Option, then the
Lessee shall, on the Expiration Date, and at its own cost, transfer
possession of all of the Equipment to the independent purchasers thereof
or, if no sale has been consummated on or prior to the Expiration Date, to
the Lessor, in each case by surrendering the same into the possession of
the Lessor or such purchasers, as the case may be, free and clear of all
Liens other than Lessor Liens and the lien of the Lessor First Security
Agreement and the Lessor Second Security Agreement, in good condition (as
modified by Modifications permitted by this Master Lease), ordinary wear
and tear excepted, and in compliance with Applicable Law and the terms of
this Master Lease (including without limitation Articles IX and XX). The
----------- --
Lessee shall, on and within a reasonable time before and up to one year
after the Expiration Date, cooperate reasonably with the Agent, the Lessor,
the Lenders and the independent purchasers of the Equipment in order to
facilitate the purchase by such purchasers of the Equipment, which
cooperation shall include the following, all of which the Lessee shall do
on or before the Expiration Date or as soon thereafter as is reasonably
practicable, (i) providing copies of all books and records regarding the
maintenance and ownership of the Equipment and all know-how, data and
technical information relating thereto, (ii) granting or assigning all
licenses and permits necessary for the operation and maintenance of each
item of the Equipment and cooperating reasonably in seeking and obtaining
all necessary Governmental Action, and (iii) providing the originals of all
warranties and guaranties relating to the Equipment and full assistance to
the purchasers in connection with the enforcement of such warranties and
guaranties. The obligations of the Lessee under this paragraph shall
survive the expiration or termination of this Master Lease.
ARTICLE XXII
ESTOPPEL CERTIFICATES
22.1 Estoppel Certificates. At any time and from time to time upon not
---------------------
less than ten (10) Business Days prior written request by the Lessor or the
Lessee (the "Requesting Party"), the other party (whichever party shall have
----------------
received such request, the "Certifying Party") shall furnish to the Requesting
----------------
Party a certificate signed by an individual having the office of vice
36
<PAGE>
president or higher in the Certifying Party certifying that this Master Lease is
in full force and effect (or that this Master Lease is in full force and effect
as modified and setting forth the modifications); the dates to which the Basic
Rent and Supplemental Rent have been paid; to the best knowledge of the signer
of such certificate, whether or not the Requesting Party is in default under any
of its obligations hereunder (and, if so, the nature of such alleged default);
and such other matters under this Master Lease as the Requesting Party may
reasonably request. Any such certificate furnished pursuant to this Article
-------
XXII may be relied upon by the Requesting Party and any existing or prospective
- ----
mortgagee, purchaser or lender, and any accountant or auditor, of, from or to
the Requesting Party (or any Affiliate thereof).
ARTICLE XXIII
ACCEPTANCE OF SURRENDER
23.1 Acceptance of Surrender. No surrender to the Lessor of this Master
-----------------------
Lease or of all or any of the Equipment or of any part of any thereof or of any
interest therein shall be valid or effective unless agreed to and accepted in
writing by the Lessor and, prior to the payment or performance of all
Obligations, the Lenders, and no act by the Lessor or the Lenders or any
representative or agent of the Lessor or the Lenders, other than a written
acceptance, shall constitute an acceptance of any such surrender.
ARTICLE XXIV
NO MERGER OF TITLE
24.1 No Merger of Title. There shall be no merger of this Master Lease or
------------------
of the leasehold estate created hereby by reason of the fact that the same
Person may acquire, own or hold, directly or indirectly, in whole or in part,
(a) this Master Lease or the leasehold estate created hereby or any interest in
this Master Lease or such leasehold estate, or (b) a beneficial interest in the
Lessor.
ARTICLE XXV
INTENT OF THE PARTIES
25.1 Ownership of the Equipment.
--------------------------
(a) As provided in Section 2.5(a) hereof, it is the intent of the
--------------
parties hereto that (i) for financial accounting purposes with respect to
the Lessee, the Lessor will be treated as the owner and lessor of the
Equipment, and (ii) for purposes of federal, state and local income taxes
and bankruptcy, the transaction contemplated hereby is a financing
arrangement and preserves ownership of the Equipment in the Lessee.
37
<PAGE>
(b) It is further the intent of the parties hereto that (i) the
obligations of the Lessee under this Master Lease to pay Basic Rent and
Supplemental Rent or the Lease Balance in connection with any purchase of
the Equipment pursuant to this Master Lease shall be treated as payments of
interest on and principal of, respectively, loans from the Lessor, the
Equity Lenders and the Financing Lenders to the Lessee, and (ii) this
Master Lease grants a security interest in and to the Equipment and other
Collateral to the Lessor to secure Lessee's performance and payment of all
amounts under this Master Lease and the other Operative Documents.
ARTICLE XXVI
MISCELLANEOUS
26.1 Survival; Severability; Etc. Anything contained in this Master Lease
---------------------------
to the contrary notwithstanding, all claims against and liabilities of the
Lessee or the Lessor arising from events commencing prior to the expiration or
earlier termination of this Master Lease shall survive such expiration or
earlier termination for a period of one year except as to indemnification, which
shall continue to survive. If any term or provision of this Master Lease or any
application thereof shall be declared invalid or unenforceable, the remainder of
this Master Lease and any other application of such term or provision shall not
be affected thereby.
26.2 Amendments and Modifications. Subject to the requirements,
----------------------------
restrictions and conditions set forth in the Participation Agreement, neither
this Master Lease nor any provision hereof may be amended, waived, discharged or
terminated except by an instrument in writing in recordable form signed by the
Lessor and the Lessee.
26.3 No Waiver. No failure by the Lessor or the Lessee to insist upon the
---------
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Master Lease, and this Master
Lease shall continue in full force and effect with respect to any other then
existing or subsequent default.
26.4 Notices. All notices, demands, requests, consents, approvals and
-------
other communications hereunder shall be in writing and directed to the address
described in, and deemed received in accordance with the provisions of Section
-------
13.3 of the Participation Agreement.
- ----
26.5 Successors and Assigns. All the terms and provisions of this Master
----------------------
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
38
<PAGE>
26.6 Headings and Table of Contents. The headings and table of contents in
------------------------------
this Master Lease are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.
26.7 Counterparts. This Master Lease may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.
26.8 GOVERNING LAW. THIS MASTER LEASE SHALL BE GOVERNED BY, AND CONSTRUED
-------------
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT
REGARD TO CONFLICTS OF LAW PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE
CREATION OF THE LEASEHOLD ESTATES HEREUNDER AND THE EXERCISE OF RIGHTS AND
REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATES IN WHICH SUCH ESTATES ARE LOCATED. WITHOUT
LIMITING THE FOREGOING, IN THE EVENT THAT THIS MASTER LEASE IS DEEMED TO
CONSTITUTE A FINANCING, WHICH IS THE INTENTION OF THE PARTIES, THE LAWS OF THE
STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, SHALL GOVERN THE
CREATION, TERMS AND PROVISIONS OF THE INDEBTEDNESS EVIDENCED HEREBY, BUT THE
SECURITY INTEREST CREATED HEREBY AND THE CREATION AND THE ENFORCEMENT OF SAID
SECURITY INTEREST SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATES IN WHICH SUCH ESTATES ARE LOCATED.
26.9 Limitations on Recourse. The parties hereto agree that except as
-----------------------
specifically set forth in this Master Lease or in any other Operative Document,
Lessor shall have no personal liability whatsoever to the Lessee or its
respective successors and assigns for any claim based on or in respect of this
Master Lease or any of the other Operative Documents or arising in any way from
the transactions contemplated hereby or thereby and the recourse shall be solely
had against the Lessor's interest in the Equipment; provided, however, that
-------- -------
Lessor shall be liable (a) for its own willful misconduct or gross negligence,
or (b) for any Tax based on or measured by any fees, commission or compensation
received by it for acting as the Lessor as contemplated by the Operative
Documents. It is understood and agreed that, except as provided in the
preceding sentence: (i) the Lessor shall have no personal liability under any of
the Operative Documents as a result of acting pursuant to and consistent with
any of the Operative Documents; (ii) all obligations of the Lessor to the
Lessee, under this Master Lease or any other obligation or liability of the
Lessee under the Operative Documents, are solely nonrecourse obligations and
shall be enforceable solely against the interest of the Lessor of the Equipment;
and (iii) all such personal liability of the Lessor is expressly waived and
released as a condition of, and as consideration for, the execution and delivery
of the Operative Documents by Lessor.
39
<PAGE>
26.10 Original Lease. The single executed original of this Master Lease
--------------
marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART" on the signature
page thereof and containing the receipt thereof of the Agent on or following the
signature page thereof shall be the Original Executed Counterpart of this Master
Lease (the "Original Executed Counterpart"). To the extent that this Master
-----------------------------
Lease constitutes chattel paper, as such term is defined in the Uniform
Commercial Code as in effect in any applicable jurisdiction, no security
interest in this Master Lease may be created through the transfer or possession
of any counterpart other than the Original Executed Counterpart.
[remainder of page left intentionally blank]
40
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Master Lease be duly
executed and delivered as of the date first above written.
LESSEE:
MAIL-WELL I CORPORATION, a Delaware
corporation
By: __________________________________
Name: ________________________________
Title: _______________________________
41
<PAGE>
LESSOR:
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By: ____________________________________
Edward V. Canale, President
By: ____________________________________
Matthew J. Cooleen, Vice President
42
<PAGE>
THIS COUNTERPART IS THE ORIGINAL EXECUTED COUNTERPART.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged as of the date hereof.
PARIBAS PROPERTIES, INC.,
as Lessor
By: ____________________________________
Edward V. Canale, President
By: ____________________________________
Matthew J. Cooleen, Vice President
43
<PAGE>
EXHIBIT "A"
TO MASTER LEASE
EQUIPMENT SCHEDULE
Description of each item Purchase Price
of Equipment Serial No. Allocation
- ------------------------ ---------- --------------
44
<PAGE>
EXHIBIT "B"
TO MASTER LEASE
INSURANCE COVERAGE REQUIREMENTS
AND ALLOCATION OF EQUIPMENT BALANCE
TO EACH ITEM OF THE EQUIPMENT
-----------------------------
45
<PAGE>
EXHIBIT 10.48
================================================================================
SECURITY AGREEMENT
(Second and Subordinated Security Interest)
made and entered into by
PARIBAS PROPERTIES, INC.
and
MAIL-WELL I CORPORATION
as Debtors
and
BANQUE PARIBAS
as Agent for Secured Party
Dated: November 15, 1996
================================================================================
<PAGE>
Security Agreement (Second)
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
ARTICLE I - SECURITY INTEREST........................................... 2
Section 1.01. Creation of Security Interest........................ 2
-----------------------------
Section 1.02. Subordination........................................ 2
-------------
Section 1.03. Collateral........................................... 2
----------
Section 1.04. Debtors Remain Liable................................ 3
---------------------
Section 1.05. Payment Obligations of Debtors....................... 3
------------------------------
ARTICLE II - REPRESENTATIONS AND WARRANTIES.............................. 3
Section 2.01. Representations and Warranties....................... 3
------------------------------
(a) Valid Pledge......................................... 3
------------
(b) Ownership of Collateral.............................. 3
-----------------------
(c) No Violation of Law.................................. 4
-------------------
(d) Valid Obligation of Debtors.......................... 4
---------------------------
(e) Consents and Approvals............................... 4
----------------------
ARTICLE III - COVENANTS.................................................. 4
Section 3.01. General Covenants of Debtors......................... 4
----------------------------
Section 3.02. Rights of Secured Party.............................. 6
-----------------------
ARTICLE IV - EVENTS OF DEFAULT AND REMEDIES.............................. 6
Section 4.01. Events of Default.................................... 6
-----------------
Section 4.02. Acceleration of Secured Obligations.................. 6
-----------------------------------
Section 4.03. Sale of Collateral................................... 6
------------------
Section 4.04. Rights of a Secured Party............................ 7
-------------------------
Section 4.05. Application of Collateral to Secured Obligations..... 8
------------------------------------------------
Section 4.06. Cumulative Remedies.................................. 8
-------------------
Section 4.07. Resort to Other Security............................. 9
------------------------
Section 4.08. Nominee Owner........................................ 9
-------------
Section 4.09. Waiver of Appraisement, Valuation, Etc............... 9
---------------------------------------
Section 4.10. Power of Attorney.................................... 9
-----------------
ARTICLE V - ADDITIONAL AGREEMENTS........................................10
Section 5.01. Payment of Secured Obligations.......................10
------------------------------
Section 5.02. No Waiver............................................11
---------
Section 5.03. No Impairment of Rights..............................11
-----------------------
Section 5.04. No Release or Impairment.............................11
------------------------
Section 5.05. Security Agreement as Financing Statement............11
-----------------------------------------
Section 5.06. Financing Statements.................................11
--------------------
</TABLE>
i
<PAGE>
Security Agreement (Second)
<TABLE>
<S> <C> <C>
Section 5.07. Dealing with Successors.............................12
-----------------------
Section 5.08. Subrogation.........................................12
-----------
Section 5.09. Application of Security.............................12
-----------------------
Section 5.10. Assignment by Secured Party.........................12
---------------------------
Section 5.11. Performance by Secured Party........................12
----------------------------
ARTICLE VI - MISCELLANEOUS..............................................13
Section 6.01. No Waiver; Cumulative Remedies......................13
------------------------------
Section 6.02. Successors and Assigns..............................13
----------------------
Section 6.03. AMENDMENT; ENTIRE AGREEMENT.........................13
---------------------------
Section 6.04. Notices.............................................13
-------
Section 6.05. GOVERNING LAW; VENUE; SERVICE OF PROCESS............13
----------------------------------------
Section 6.06. Headings............................................14
--------
Section 6.07. Survival of Representations and Warranties..........14
------------------------------------------
Section 6.08. Counterparts........................................14
------------
Section 6.09. Waiver of Bond......................................14
--------------
Section 6.10. Severability........................................14
------------
Section 6.11. Construction........................................14
------------
Section 6.12. WAIVER OF JURY TRIAL................................15
--------------------
Section 6.13. No Liability of Secured Party.......................15
-----------------------------
Section 6.14. Secured Obligations Absolute........................15
----------------------------
Section 6.15. Limitation on Liability.............................16
-----------------------
Section 6.16. Subordination.......................................16
-------------
</TABLE>
ii
<PAGE>
Security Agreement (Second)
SECURITY AGREEMENT
(Second and Subordinated Security Interest)
THIS SECURITY AGREEMENT (this "Agreement"), made and entered into on this
---------
the 15th day of November, 1996, by PARIBAS PROPERTIES, INC., a Delaware
corporation (the "Lessor"), whose address is 787 Seventh Avenue, 30th Floor, New
------
York, New York 10019, MAIL-WELL I CORPORATION, a Delaware corporation (the
"Lessee"), whose address is 23 Inverness Way East, Englewood, Colorado 80112
- -------
(the Lessor and the Lessee being collectively called ("Debtors"), and BANQUE
-------
PARIBAS, a bank organized under the laws of France, as Agent, for the benefit of
the "Financing Lenders" (as that term is defined below) ("Secured Party"), whose
-------------
address is 1200 Smith Street, Suite 3100, Houston, Texas 77002.
W I T N E S S E T H :
- - - - - - - - - -
Recitals:
--------
A. Pursuant to the provisions of a certain Participation Agreement, dated
of even date herewith (the "Participation Agreement"), among the Lessee, the
-----------------------
subsidiaries of the Lessee that are parties thereto, the Lessor, Secured Party
and the various financial institutions that are parties thereto as Equity
Lenders (the "Equity Lenders"), and as Financing Lenders (the "Financing
-------------- ---------
Lenders") have agreed to make loans to the Lessor in the aggregate principal sum
- -------
of $24,500,000 and the Equity Lenders have agreed to make loans to the Lessor in
the aggregate principal sum of $5,500,000, which are to be used by the Lessor to
purchase the Equipment (as defined below) from the Lessee.
B. Concurrently herewith, Debtors have executed and delivered a certain
Security Agreement (the "First Security Agreement") for the benefit of the
------------------------
Equity Lenders, as secured parties, covering the Collateral hereinafter
described as security for the obligations of Debtors to the Equity Lenders as
therein described.
C. Pursuant to the Participation Agreement, the Equipment (hereinafter
defined) has, concurrently herewith, been acquired by the Lessor and leased by
the Lessor to the Lessee pursuant to a certain Master Lease (herein so called).
The Master Lease, and the rights of Lessor and the Lessee thereunder, are
subject and subordinate to the provisions of the First Security Agreement
(hereinafter defined) and this Agreement.
D. Debtors desire to hereby grant to Secured Party, solely in its
capacity as Agent for the benefit of Equity Lenders, the second and subordinate
security interest provided for in the Participation Agreement. Unless otherwise
defined herein, the capitalized terms used in this Agreement have the defined
meanings given to them in Appendix A attached to the Participation Agreement.
Agreements:
----------
<PAGE>
Security Agreement (Second)
NOW, THEREFORE, the parties hereto jointly and severally agree as follows:
ARTICLE I
SECURITY INTEREST
Section 1.01. Creation of Security Interest. Debtors hereby grant a
-----------------------------
security interest to Secured Party in the Collateral described in Section 1.03
of this Agreement to secure and enforce the performance and payment of all
debts, obligations and liabilities of every kind and character of Debtors, now
or hereafter existing in favor of Secured Party, and all substitutions,
renewals, extensions, rearrangements and modifications thereof. All such
indebtedness and obligations are hereinafter sometimes called the "Secured
-------
Obligations").
- -----------
Section 1.02. Subordination. The security interest herein granted shall
-------------
be subordinate and inferior to the security interest granted by Debtors in favor
of the Equity Lenders pursuant to the provisions of the First Security
Agreement. Unless and until all indebtedness and obligations (collectively, the
"First Secured Obligations") secured by the First Security Agreement have been
-------------------------
paid and discharged in full, all payments or distributions with respect to the
Collateral which are received by Secured Party shall be received in trust for
the benefit of the Equity Lenders under the First Security Agreement and shall
be segregated from other funds and property held by Secured Party, and shall be
forthwith paid over to the Equity Lenders in the same form as so received.
Secured Party shall take no action to enforce its rights and remedies with
respect to the Collateral hereunder unless and until the First Secured
Obligations shall have been paid in full. The foregoing shall not preclude
Secured Party, however, from filing any necessary claims in bankruptcy or any
other proceeding or taking action to preserve and protect (i) the validity,
enforceability and collectability of this Agreement and the Secured Obligations,
and (ii) the validity, enforceability and priority of the Loan Agreement and all
documents executed in connection therewith (collectively, the "Loan Documents").
--------------
Notwithstanding the foregoing, Secured Party shall have the right to enforce all
rights and remedies which it may have under the Operative Documents following
any default by Debtors thereunder and shall have the right to take any other
action of any kind or character whatsoever with respect to the Secured
Obligations as Secured Party shall at any time and in sole and absolute
discretion deem necessary, advisable or appropriate. Secured Party shall, at
the time any default notice is given to Debtors with respect to the Secured
Obligations and/or the Collateral, send a true and correct copy thereof to the
Equity Lenders.
Section 1.03. Collateral. The collateral (the "Collateral") consists of
---------- ----------
all of the Equipment, which is more particularly described on Schedule I,
----------
attached hereto (the "Equipment"), together with (i) all other items of
---------
equipment hereafter made part of the Collateral hereunder, wherever located,
whether now owned or existing or hereafter owned, existing, acquired or arising,
and whether in Debtors', Secured Party's or any other person's or entity's
possession or control, (ii) all apparatus, accessories, replacements and
substitutions (including without limitation all Modifications and Substituted
Equipment), warranties, guaranties, contract rights, claims, intangible rights
relating thereto, (iii) all substitutions therefor, (iv) all general intangibles
arising therefrom or in connection therewith, (v) all proceeds therefrom, and
(vi) all other property which Debtors may hereafter
2
<PAGE>
Security Agreement (Second)
become entitled to receive on account of the Equipment (and in all of Debtors'
respective rights, title and interests in and with respect to the foregoing),
and in the event Debtors receive any such property, Debtors will, upon request
by Secured Party, take such steps as are necessary to perfect Secured Party's
security interest hereunder.
Section 1.04. Debtors Remain Liable. Notwithstanding anything to the
---------------------
contrary contained herein, but subject to the limitation on liability provisions
of Section 6.15 hereof, (a) Debtors shall remain liable under the contracts,
------------
agreements, documents and instruments included in the Collateral to the extent
set forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed, (b) the exercise by
Secured Party of any of its rights or remedies hereunder shall not release
Debtors from any of their duties or obligations under the contracts, agreements,
documents and instruments included in the Collateral, (c) Secured Party shall
not become liable for any indebtedness, liability or obligation under any of the
contracts, agreements, documents and instruments included in the Collateral by
reason of this Agreement, and (d) Secured Party shall not be obligated to
perform any of the obligations or duties of Debtors thereunder or to take any
action to collect or enforce any claim for payment assigned hereunder.
Section 1.05. Payment Obligations of Debtors. Debtors shall pay to
------------------------------
Secured Party on demand all reasonable expenses and expenditures, including
attorneys' fees and other legal expenses, incurred or paid by Secured Party in
exercising or protecting its interests, rights and remedies under this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. Representations and Warranties. Debtors severally and not
------------------------------
jointly represent and warrant that:
(a) Valid Pledge. The Collateral is genuine, free from any
------------
restriction on transfer, and Secured Party has duly granted a security interest
in the Collateral in accordance with law.
(b) Ownership of Collateral. Debtors have the right to pledge the same
-----------------------
and to transfer any interest therein; all consents required for the pledge of
the Collateral herein provided have been obtained; the Collateral is free and
clear from all security interests and encumbrances except the security interest
evidenced hereby and the first and prior security interest created by the First
Security Agreement; with the exception of the financing statements filed
pursuant to this Agreement and the First Security Agreement and the Master
Lease, to Debtors' knowledge there is no financing statement (or similar
statement or instrument of registration under the law of any jurisdiction)
covering or purporting to cover any interest of any kind in the Collateral or
its proceeds on file or registered in any public office (except for releases or
terminations of financing statements filed concurrently herewith); and Debtors
will warrant and forever defend the title to the Collateral
3
<PAGE>
Security Agreement (Second)
and its proceeds against the claims and demands of all persons whomsoever
claiming or to claim the same or any part thereof.
(c) No Violation of Law. The execution, delivery and performance by
-------------------
Debtors of this Agreement do not and will not contravene or violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect and applicable to Debtors or
the of Debtors, or result in a breach of or constitute a default (with or
without the giving of notice or the lapse of time or both) under any indenture
or loan, credit or other agreement to which Debtors are a party or by which
Debtors or any of Debtors' property may be bound or affected.
(d) Valid Obligation of Debtors. This Agreement constitutes the
---------------------------
legal, valid and binding obligation of Debtors enforceable against Debtors in
accordance with its terms.
(e) Consents and Approvals. No authorization, consent, approval,
----------------------
license, order or exemption of, or filing or registration with, any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary to the valid execution, delivery or
performance by Debtors of this Agreement or to the enforcement hereof by Secured
Party.
ARTICLE III
COVENANTS
Section 3.01. General Covenants of Debtors. Debtors covenant and agree
----------------------------
with Secured Party as follows:
(a) Debtors shall furnish to Secured Party such instruments as may be
required by Secured Party to assure the transferability of, and Secured Party's
perfected first interest in, the Collateral when and as often as may be
requested by Secured Party.
(b) Debtors will cause the Lessee to pay prior to delinquency all
Taxes in accordance with the Operative Documents.
(c) If the validity or priority of this Agreement or of any rights,
titles, security interests or other interests created or evidenced hereby shall
be challenged or endangered, or if any legal proceedings are instituted with
respect thereto, Debtors will give prompt written notice thereof to Secured
Party and, at Debtors' own cost and expense, will diligently endeavor to cure,
and shall cure, without prejudice to Secured Party's rights, title or interest,
any defect that may be developed or claimed, and will take all necessary and
proper steps for the defense of such legal proceedings, and Secured Party
(whether or not named as a party) is hereby authorized and empowered to take
such additional steps as in its judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection of the
validity or priority of this Agreement and the
4
<PAGE>
Security Agreement (Second)
rights, titles, security interests and other interests created or evidenced
hereby, and all expenses so incurred of every kind and character shall be a
demand obligation owing by Debtors.
(d) Debtors will, on request of Secured Party, (1) promptly correct
any defect, error or omission which may be discovered in the contents of this
Agreement or in any other instrument executed in connection herewith or in the
execution or acknowledgment thereof; (2) execute, acknowledge, deliver and
record or file such further instruments (including without limitation further
security agreements, financing statements and continuation statements) and do
such further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Agreement and such other instruments and to
subject to the security interests hereof and thereof any property intended by
the terms hereof and thereof to be covered hereby and thereby, including
specifically, but without limitation, any renewals, additions, substitutions,
replacements or appurtenances to the then Collateral, and (3) execute,
acknowledge, deliver, procure and record or file any document or instrument
(including specifically any financing statement) reasonably deemed advisable by
Secured Party to protect the security interest hereunder against the rights or
interests of third persons, and Debtors will pay all costs connected with any of
the foregoing.
(e) Notwithstanding the security interest in proceeds granted herein,
Debtors will not, except in accordance with the terms of the Master Lease, sell,
exchange, lend, assign, transfer or otherwise dispose of all or any part of the
Collateral or any interest therein, or permit any of the foregoing, without the
prior written consent of Secured Party.
(f) Debtors will pay all appraisal fees, filing fees, taxes, brokerage
fees and commissions, Uniform Commercial Code search fees, escrow fees,
attorneys' fees, and all other costs and expenses of every character incurred by
Debtors or Secured Party in connection with this Agreement or the Collateral and
will reimburse Secured Party for all such expenses incurred by it. Debtors
shall pay all expenses and reimburse Secured Party for any expenditures,
including attorneys' fees and legal expenses, incurred or expended in connection
with Secured Party's exercise of any of its rights and remedies hereunder or
Secured Party's protection of the Collateral and its security interest therein.
Any amount to be paid hereunder by Debtors to Secured Party shall be a demand
obligation owing by Debtors to Secured Party and shall bear interest from date
of expenditure until paid at the Default Rate.
(g) Debtors will not change their addresses, names, identities or
structures without notifying Secured Party of such change in writing at least
thirty (30) days prior to the effective date of such change, and unless Debtors
shall have taken such action, satisfactory to Secured Party, to have caused the
security interest of Secured Party in the Collateral to be at all times fully
perfected and at all times in full force and effect.
(h) Debtors shall account fully and faithfully for and, if Secured
Party so elects, shall promptly pay or turn over to Secured Party the proceeds
in whatever form received from disposition in any manner of any of the
Collateral, whether the Secured Obligations are mature or
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Security Agreement (Second)
not, the order and method of application to be in the sole discretion of Secured
Party, except as otherwise specifically authorized herein or in the other
Operative Documents.
(i) Debtors shall furnish Secured Party all such information as
Secured Party may reasonably request with respect to the Collateral.
(j) Debtors shall keep each item of Equipment at the location
specified on Schedule I hereto for such item and to maintain the Equipment in
----------
the manner required by the Master Lease.
Section 3.02. Rights of Secured Party. The rights, remedies, powers and
-----------------------
privileges of Secured Party hereunder shall be exercised by Secured Party upon
the written direction of the Required Financing Lenders. Debtors agree that, if
Debtors fail to perform any act or to take any action which hereunder Debtors
are required to perform or take, or to pay any money which hereunder Debtors are
required to pay, Secured Party, in Debtors' names or in its own name, may but
shall not be obligated to perform or cause to be performed such act or take such
action or pay such money, and any expenses so incurred by Secured Party, and any
money so paid by Secured Party, shall be a demand obligation owing by Debtors to
Secured Party and Secured Party, upon making such payment, shall be subrogated
to all of the rights of the person, corporation or body politic receiving such
payment. Any amounts due and owing by Debtors to Secured Party pursuant to this
Agreement shall bear interest from the date such amount is expended by Secured
Party until paid at the Default Rate and shall be a part of the Secured
Obligations and shall be secured by this Agreement and by any other instrument
securing the Secured Obligations.
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
Section 4.01. Events of Default. Debtors shall be in default under this
-----------------
Agreement upon the happening of an Event of Default under the Operative
Documents, including, without limitation, Debtors breach of any of the
covenants, representations or warranties contained herein..
Section 4.02. Acceleration of Secured Obligations. Upon the occurrence of
-----------------------------------
an Event of Default, and at any time thereafter, Secured Party shall have the
option of declaring, without notice to any Person, all Secured Obligations,
including without limitation principal and accrued interest, to be immediately
due and payable.
Section 4.03. Sale of Collateral. Upon the occurrence of an Event of
------------------
Default, and at any time thereafter, Secured Party may, without notice except as
hereinafter provided, convert the Collateral to cash or sell the Collateral or
any part thereof at public or private sale for cash, upon credit, or for future
delivery, and at such price or prices as Secured Party may deem best, and
Secured Party may be the purchaser of any and all of the Collateral so sold and
may apply upon the purchase price therefor any Secured Obligations or any part
thereof and thereafter hold the same absolutely free from any right or claim of
whatsoever kind. Upon any such sale Secured Party shall
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Security Agreement (Second)
have the right to deliver, assign and transfer to the purchaser thereof the
Collateral so sold. Each purchaser at any such sale shall hold the Collateral
sold absolutely free from any claim or right of whatsoever kind, including any
equity or right of redemption, stay or appraisal which Debtors have or may have
under any rule of law or statute now existing or hereafter adopted. Secured
Party shall give Debtors ten (10) days written notice mailed to Debtors at the
addresses set forth herein (which shall satisfy any requirement of notice or
reasonable notice in any applicable statute) of Secured Party's intention to
make any such public or private sale. Such notice, in case of public sale, shall
state the time and place fixed for such sale. Any such public sale shall be
held at such time or times, within the ordinary business hours and at such place
or places, as Secured Party may fix in the notice of such sale. At any sale the
Collateral may be sold in one lot as an entirety or as separate items as Secured
Party may determine. Secured Party shall not be obligated to make any sale
pursuant to any such notice. Secured Party may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time
to time by announcement at any time and place fixed for the sale, and such sale
may be made at any time or place to which the same may be so adjourned. In case
of any sale of all or any part of the Collateral on credit or for future
delivery, the Collateral so sold may be retained by Secured Party until the
selling price is paid by the purchaser thereof, but Secured Party shall incur no
liability in case of the failure of such purchaser to take up and pay for the
Collateral so sold, and in case of any such failure, such Collateral may again
be sold upon like notice. Each and every method of disposition described in
this Section shall constitute disposition in an commercially reasonable manner.
Debtors shall remain liable for any deficiency.
Section 4.04. Rights of a Secured Party. Upon the occurrence and during
-------------------------
the continuance of an Event of Default, Secured Party shall have all the rights
of a secured party after default under the Uniform Commercial Code of Texas, and
in conjunction with, in addition to or in substitution for those rights and
remedies and the rights and remedies provided for herein and in the other
Operative Documents:
(a) written notice mailed to Debtors as provided herein ten (10) days
prior to the date of public sale of the Collateral or prior to the date after
which private sale of the Collateral will be made shall constitute reasonable
notice;
(b) it shall not be necessary that the Collateral or any part thereof
be present at the location of such sale;
(c) prior to the application of the proceeds of any disposition of the
Collateral to the Secured Obligations, such proceeds shall be applied to the
expenses of retaking, holding, selling, and the like and the attorneys fees and
legal expenses incurred by Secured Party, Debtors, to remain liable for any
deficiency;
(d) the sale by Secured Party of less than the whole of the Collateral
shall not exhaust the rights of Secured Party hereunder, and Secured Party is
specifically empowered to make successive sale or sales hereunder until the
whole of the Collateral shall be sold; and, if the proceeds of such sale of less
than the whole of the Collateral shall be less than the aggregate of the Secured
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Security Agreement (Second)
Obligations, this Agreement and the security interest created hereby shall
remain in full force and effect as to the unsold portion of the Collateral just
as though no sale had been made;
(e) in the event any sale hereunder is not completed or is defective
in the opinion of Secured Party, such sale shall not exhaust the rights of
Secured Party hereunder and Secured Party shall have the right to cause a
subsequent sale or sales to be made hereunder;
(f) all statements of fact or other recitals made in any bill of sale
or assignment or other instrument evidencing any foreclosure sale hereunder as
to nonpayment of the indebtedness or as to the occurrence of any default, or as
to Secured Party having declared all of such indebtedness to be due and payable,
or as to notice of time, place and terms of sale and the properties to be sold
having been duly given, as to any other act or thing having been duly done by
Secured Party, shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(g) Secured Party may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale held by
Secured Party, including the sending of notices and the conduct of sale, but in
the name and on behalf of Secured Party.
Section 4.05. Application of Collateral to Secured Obligations. Upon the
------------------------------------------------
occurrence and during the continuance of an Event of Default, and at any time
thereafter, Secured Party shall have the right, with or without notice or
demand, to apply all or any part of the Collateral to the payment of any or all
of the Secured Obligations in such manner and order as Secured Party may in its
sole discretion elect. To facilitate the rights of Secured Party hereunder,
Debtors hereby authorize Secured Party, its officers, agents or assigns, after
the occurrence and during the continuance of an Event of Default:
(a) to collect all or any part of the Collateral without further
notice to or to further consent by Debtors, and Debtors hereby constitute and
appoint Secured Party the true and lawful attorney of Debtors with power of
substitution in the names of Debtors to take any of the actions described in the
following clauses (b), (c), and (d);
(b) to ask, demand, collect, receive, receipt for, sue for, compound
and give acquittance for any and all amounts which may be or become due or
payable under said Collateral;
(c) to execute any and all withdrawal receipts or other orders for the
payment of money drawn on said Collateral and to endorse the names of Debtors on
all commercial paper, drafts, checks and other instruments given in payment or
in part payment thereof;
(d) in its discretion to file any claim or take any other action or
proceeding, either in its own name or in the names of Debtors or otherwise,
which Secured Party may deem necessary or appropriate to protect and preserve
the right, title and interest of Secured Party hereunder.
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Security Agreement (Second)
Section 4.06. Cumulative Remedies. All remedies herein expressly provided
-------------------
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other
instrument securing the payment of the Secured Obligations, or any part thereof,
or otherwise benefiting Secured Party or the Financing Lenders, and the resort
to any remedy provided for hereunder or under any such other instrument or
provided for by law shall not prevent the concurrent or subsequent employment of
any other appropriate remedy or remedies; but in no event shall Secured Party or
the Financing Lenders be obligated to exercise any remedy, which obligation
Debtors hereby unconditionally waive.
Section 4.07. Resort to Other Security. Upon the occurrence and during
------------------------
the continuance of an Event of Default, Secured Party may, but in no event shall
be obligated (which obligation, if any, Debtors hereby unconditionally waive)
to, resort to any security given by this Agreement or to any other security now
existing or hereafter given to secure the payment of the Secured Obligations, in
whole or in part, and in such portions and in such order as may seem best to
Secured Party in its sole and uncontrolled discretion, and any such action
shall not in anywise be considered as a waiver of any of the rights, benefits or
security interests evidenced by this Agreement.
Section 4.08. Nominee Owner. Upon the occurrence and during the
-------------
continuance of an Event of Default, Secured Party may at any time cause any or
all of the Collateral to be transferred into its name or into the name or names
of any nominee or nominees of Secured Party.
Section 4.09. Waiver of Appraisement, Valuation, Etc. To the full extent
---------------------------------------
Debtors may do so, Debtors agree that Debtors will not at any time insist upon,
plead, claim or take the benefit or advantage of any law now or hereafter in
force providing for any marshaling, appraisement, valuation, stay, extension or
redemption, and Debtors, for Debtors, Debtors' receivers, trustees, successors
and assigns, and for any and all persons ever claiming any interest in the
Collateral, to the extent permitted by law, hereby waives and releases all
rights of redemption, valuation, appraisement, stay of execution, notice of
intention to mature or declare due the whole of the Secured Obligations, and all
rights to a marshaling of the assets of Debtors, including the Collateral, or to
a sale in inverse order of alienation in the event of foreclosure of the
security interest hereby created.
Section 4.10. Power of Attorney. Debtors hereby irrevocably constitute
-----------------
and appoint Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the names of Debtors or in its own name, to take after
the occurrence and during the continuance of an Event of Default and from time
to time thereafter, any and all action and to execute any and all documents and
instruments which Secured Party at any time and from time to time deems
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, Debtors hereby give Secured Party the
power and right on behalf of Debtors and in its own name to do any of the
following after the occurrence and during the continuance of an Event of Default
and from time to time thereafter, without notice to or the consent of Debtors:
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Security Agreement (Second)
(i) to demand, sue for, collect or receive, in the names of
Debtors or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money
orders, documents of title or any other instruments for the payment of
money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) (A) to direct account debtors and any other parties liable
for any payment with respect to the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (B) to receive payment of and receipt for any
and all monies, claims and other amounts due and to become due at any time
in respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against Debtors, assignments, verifications and notices in
connection with accounts and other documents relating to the Collateral;
(D) to commence and prosecute any suit, action or proceeding at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
Debtors with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as Secured Party may deem
appropriate; (G) to endorse Debtors' name on all applications, documents,
papers and instruments necessary or desirable in order for Secured Party to
use any of the Collateral; (H) to make, settle, compromise or adjust any
claims under or pertaining to any of the Collateral (including claims under
any policy of insurance); and (I) to sell, transfer, pledge, convey, make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Secured Party were the absolute owner
thereof for all purposes, and to do, at Secured Party's option and Debtors'
expense, at any time, or from time to time, all acts and things which
Secured Party deems necessary to protect, preserve, maintain, or realize
upon the Collateral and Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Neither Secured Party nor
any Person designated by Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law. This power of
attorney is conferred on Secured Party solely to protect, preserve, maintain and
realize upon its security interest in the Collateral. Secured Party shall not
be responsible for any decline in the value of the Collateral and shall not be
required to take any steps to preserve rights against prior parties or to
protect, preserve or maintain any Lien given to secure the Collateral.
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Security Agreement (Second)
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. Payment of Secured Obligations. If all of the Secured
------------------------------
Obligations shall be paid as they become due and payable in good collected
funds, and if all of the covenants, warranties, undertakings and agreements made
in this Agreement and the other Operative Documents of Debtors and the Lessee
are kept and performed, in each such case, indefeasibly, then and in that event
only, all rights under this Agreement shall terminate and the Collateral shall
become free and clear of the security interest evidenced hereby, and such
security interest shall be released by Secured Party in due form at Debtors'
cost.
Section 5.02. No Waiver. Secured Party may waive any default without
---------
waiving any other prior or subsequent default. Secured Party may remedy any
default without waiving the default remedied. The failure by Secured Party to
exercise any right, power or remedy upon any default shall not be construed as a
waiver of such default or as a waiver of the right to exercise any such right,
power or remedy at a later date. No single or partial exercise by Secured Party
of any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification
or waiver of any provision hereof nor consent to any departure by Debtors
herefrom shall in any event be effective unless the same shall be in writing and
signed by Secured Party and then such waiver or consent shall be effective only
in the specific instances, for the purpose for which given and to the extent
therein specified. No notice to nor demand on Debtors in any case shall of
itself entitle Debtors to any other or further notice of demand in similar or
other circumstances. Acceptance by Secured Party of any payment in an amount
less than the amount then due on any Secured Obligations shall be deemed an
acceptance on account only and shall not in any way affect the existence of a
default hereunder.
Section 5.03. No Impairment of Rights. Secured Party may at any time and
-----------------------
from time to time in writing (a) waive compliance by Debtors with any covenant
herein made by Debtors to the extent and in the manner specified in such
writing; (b) consent to Debtors' doing any act which hereunder Debtors are
prohibited from doing, or consent to Debtors' failing to do any act which
hereunder Debtors are required to do, to the extent and in the manner specified
in such writing; (c) release any part of the Collateral, or any interest
therein, from the security interest of this Agreement; or (d) release any party
liable, either directly or indirectly, for the Secured Obligations or for any
covenant herein or in any other instrument now or hereafter securing the payment
of the Secured Obligations without impairing or releasing the liability of any
other party. No such act shall in any way impair the rights of Secured Party
hereunder or impair or release the liability of any party except to the extent
specifically agreed by Secured Party in such writing.
Section 5.04. No Release or Impairment. The security interest and other
------------------------
rights of Secured Party hereunder shall not be impaired by any indulgence,
moratorium or release granted by Secured Party, including but not limited to (a)
any renewal, extension or modification which Secured Party may grant with
respect to any Secured Obligations; (b) any surrender, compromise, release,
renewal,
11
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Security Agreement (Second)
extension, exchange or substitution which Secured Party may grant in
respect of any item of the Collateral, or any part thereof or any interest
therein, or (c) any release or indulgence granted to any indorser, guarantor or
surety of any Secured Obligations.
Section 5.05. Security Agreement as Financing Statement. A carbon,
-----------------------------------------
photographic or other reproduction of this Agreement or of any financing
statement relating to this Agreement shall be sufficient as a financing
statement.
Section 5.06. Financing Statements. Debtors will cause all financing
--------------------
statements and continuation statements relating hereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Secured Party may
request, and will pay all such recording, filing, re-recording and refiling
taxes, fees and other charges.
Section 5.07. Dealing with Successors. Without limiting the prohibition
-----------------------
set forth in Section 3.01(e) hereof, in the event the ownership of the
Collateral or any part thereof becomes vested in a person other than Debtors,
Secured Party may, without notice to Debtors, deal with such successor or
successors in interest with reference to this Agreement and to the Secured
Obligations in the same manner as with Debtors, without in any way affecting or
discharging Debtors' liability hereunder or for the payment of the Secured
Obligations. No sale of the Collateral, no forbearance on the part of Secured
Party and no extension of the time for the payment of the Secured Obligations
given by Secured Party shall operate to release, discharge, modify, change or
affect, in whole or in part, the liability of Debtors, Borrower or any other
person for the payment of the Secured Obligations, except as agreed in writing
by Secured Party.
Section 5.08. Subrogation. To the extent that proceeds of the Secured
-----------
Obligations are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Collateral, such
proceeds have been advanced by Secured Party at Debtors' request and Secured
Party shall be subrogated to any and all rights, security interests and liens
owned by any owner or holder of such outstanding liens, security interests,
charges or encumbrances, irrespective of whether said liens, security interests,
charges or encumbrances are released.
Section 5.09. Application of Security. If any part of the Secured
-----------------------
Obligations cannot be lawfully secured by this Agreement, or if any part of the
Collateral cannot lawfully be subject to the security interest hereof to the
full extent of such indebtedness, then all payments made shall be applied on
said indebtedness first in discharge of that portion thereof which is not
secured by this Agreement.
Section 5.10. Assignment by Secured Party. Each Financing Lender may at
---------------------------
any time assign or otherwise transfer all or any portion of their rights and
obligations under this Agreement and the other Operative Documents (including,
without limitation, the Obligations) to any other Person, to the extent
permitted by, and upon the conditions contained in, Article XIII of the
Participation Agreement, and such Person shall thereupon become vested with all
the benefits thereof granted to Secured Party on behalf of the Financing
Lenders, herein or otherwise.
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Security Agreement (Second)
Section 5.11. Performance by Secured Party. If Debtors shall fail to
----------------------------
perform any covenant or agreement contained in this Agreement, Secured Party may
perform or attempt to perform such covenant or agreement on behalf of Debtors.
In such event, Debtors shall, at the request of Secured Party, promptly pay any
amount expended by Secured Party in connection with such performance or
attempted performance to Secured Party, together with interest thereon at the
Default Rate from and including the date of such expenditure to but excluding
the date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that neither Secured Party nor the Financing Lenders shall have
any liability or responsibility for the performance of any obligation of Debtors
under this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.01. No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 6.02. Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Debtors and Secured Party and their respective
heirs, successors and assigns, except that neither party hereto shall assign any
of its rights or obligations under this Agreement except as permitted by the
Participation Agreement.
SECTION 6.03. AMENDMENT; ENTIRE AGREEMENT. EXCEPT AS PROVIDED IN THE
---------------------------
OTHER OPERATIVE DOCUMENTS, THIS AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO. The provisions of this Agreement may be amended or waived only by an
instrument in writing signed by the parties hereto.
Section 6.04. Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section 6.04. Except as otherwise provided in this Agreement, all
------------
such communications shall be deemed to have been duly given when transmitted by
telecopy or when personally delivered or, in the case of a
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Security Agreement (Second)
mailed notice, three Business Days after deposit in the mails, in each case
given or addressed as aforesaid; provided, however, that notices to Secured
-------- -------
Party shall be deemed given when received by Secured Party.
SECTION 6.05. GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
----------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT
HAS BEEN ENTERED INTO IN HARRIS COUNTY, TEXAS, AND SHALL BE PERFORMABLE FOR ALL
PURPOSES IN HARRIS COUNTY, TEXAS. ANY ACTION OR PROCEEDING AGAINST DEBTORS
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS. DEBTORS HEREBY
IRREVOCABLY (A) SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B)
WAIVE ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN INCONVENIENT
FORUM. DEBTORS AGREE THAT SERVICE OF PROCESS UPON IT MAY BE MADE BY CERTIFIED OR
REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT ITS ADDRESS SPECIFIED OR
DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.04 OF THIS AGREEMENT.
------------
NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL AFFECT THE RIGHT OF
SECURED PARTY TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL
LIMIT THE RIGHT OF SECURED PARTY TO BRING ANY ACTION OR PROCEEDING AGAINST
DEBTORS OR WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTIONS.
ANY ACTION OR PROCEEDING BY DEBTORS AGAINST SECURED PARTY SHALL BE BROUGHT ONLY
IN A COURT LOCATED IN HARRIS COUNTY, TEXAS.
Section 6.06. Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 6.07. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties or the right of Secured Party to rely upon them.
Section 6.08. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.09. Waiver of Bond. In the event Secured Party seeks to take
--------------
possession of any or all of the Collateral by judicial process, Debtors hereby
irrevocably waive any bonds and any surety or security relating thereto that may
be required by applicable law as an incident to such
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Security Agreement (Second)
possession, and waives any demand for possession prior to the commencement of
any such suit or action.
Section 6.10. Severability. Any provision of this Agreement which is
------------
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 6.11. Construction. Debtors and Secured Party acknowledge that
------------
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Debtors and Secured
Party.
SECTION 6.12. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, DEBTORS HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PRO CEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 6.13. No Liability of Secured Party. Secured Party's duty with
-----------------------------
reference to the Collateral shall be solely to use reasonable care in the
custody and preservation of the Collateral in Secured Party's possession.
Secured Party shall not be responsible in any way for any depreciation in the
value of the Collateral, nor shall any duty or responsibility whatsoever rest
upon Secured Party to take necessary steps to preserve rights against prior
parties or to enforce collection of the Collateral by legal proceedings or
otherwise, the sole duty of Secured Party being to receive collections,
remittances and payments on such Collateral as and when made. In the event
Debtors instruct Secured Party, in writing or orally, to deliver any or all of
the Collateral to a broker or other third person, and Secured Party agrees to do
so, the following conditions shall be conclusively deemed to be a part of
Secured Party's agreement, whether or not they are specifically mentioned to
Debtors at the time of such agreement. Secured Party shall assume no
responsibility for checking the genuineness or authenticity of any person
purporting to be a messenger, employee or representative of the broker or other
third person to whom Debtors have directed Secured Party to deliver the
Collateral, or the genuineness or authenticity of any document of instructions
delivered by any such person. Debtors will be considered by requesting any such
delivery to have assumed all risk of loss as to the Collateral. Secured Party's
sole responsibility will be to deliver the Collateral to the person purporting
to be the broker or other third person described by Debtors, or a messenger,
employee or representative thereof. Secured Party and Debtors hereby expressly
agree that the foregoing actions by Secured Party shall constitute reasonable
care.
15
<PAGE>
Security Agreement (Second)
Section 6.14. Secured Obligations Absolute. Debtors agree that the Secured
----------------------------
Obligations will be paid strictly and in accordance with the terms of the
Operative Documents regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any such terms or the rights of Secured
Party with respect thereto. The grant of a first and prior security interest in
the Collateral to Secured Party hereunder, and the obligations of Debtors and
the rights and remedies of Secured Party under this Agreement, shall be absolute
and unconditional, irrespective of (i) any lack of validity or enforceability of
any provision of this or any other Operative Document or any other agreement,
document or instrument relating to any Operative Document, or avoidance or
subordination of any of the Secured Obligations; (ii) any limitation of
liability or recourse in any Operative Document; (iii) any other matter or
occurrence set forth in Section 3 of the Guaranty (all of which are incorporated
herein by reference); or (iv) any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.
Without limitation of the foregoing, Debtors hereby waive any and all rights to
which Debtors may otherwise have or be entitled to under any suretyship laws of
the State of Texas in effect from time to time, including, without limitation,
any rights pursuant to Rule 31 of the Texas Rules of Civil Procedure, Section
17.001 of the Texas Civil Practice and Remedies Code, and Chapter 34 of the
Texas Business and Commerce Code.
Section 6.15. Limitation on Liability. Notwithstanding anything to the
-----------------------
contrary contained herein or in any other Operative Document, Secured Party
covenants and agrees for itself, the Equity Lenders and their respective
successors and assigns, that it shall enforce payment of any obligation
contained in this Agreement solely from the Lessee and the Collateral and from
other security held for the payment of the Secured Obligations. It is
expressly understood and agreed that the provisions of this section are not
intended as a release or discharge of the Secured Obligations, or any portion
thereof, but only as a covenant that no deficiency, after applying the net
proceeds at foreclosure or other sale of any of the Collateral, shall ever be
asserted against the Lessor, its successors or assigns, for the payment of the
Secured Obligations, all of which shall remain in full force and effect;
provided, however, that Secured Party expressly reserves all other legal rights
and remedies against the Lessee, the Collateral and other security held and
parties liable for the repayment of the Secured Obligations, including the
right, if an Event of Default occurs, to foreclose the security interest
contained therein and to exercise all other rights and remedies available to
Secured Party hereunder and under the Uniform Commercial Code. The Lessee
confirms and agrees that the Lessor shall have no personal liability in the
performance of any obligations or the payment of any amounts to the Lessee
hereunder or under any of the other Operative Documents, and any such personal
liability is expressly waived.
Section 6.16. Subordination. This Agreement, and the security interest
-------------
granted by Debtors to Secured Party hereunder, are subject and subordinate in
all respects to the terms, provisions and security interests of the First
Security Agreement.
[remainder of page intentionally left blank]
16
<PAGE>
Security Agreement (Second)
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTORS:
-------
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By:
------------------------------------
Edward V. Canale, President
By:
------------------------------------
Matthew J. Cooleen, Vice President
17
<PAGE>
Security Agreement (Second)
MAIL-WELL I CORPORATION
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
18
<PAGE>
Security Agreement (Second)
SECURED PARTY:
-------------
BANQUE PARIBAS, as Agent for the Financing Lenders
By:
----------------------------------------
Pierre-Jean de Filippis, General Manager
By:
----------------------------------------
Christopher S. Goodwin, Vice President
<PAGE>
Security Agreement (Second)
SCHEDULE I
----------
Description and Locations of Equipment
--------------------------------------
<PAGE>
EXHIBIT 10.51
================================================================================
ASSIGNMENT OF LEASE AND RENT
dated as of November 15, 1996
from
PARIBAS PROPERTIES, INC.,
as ASSIGNOR
to
BANQUE PARIBAS,
as Agent for the Lenders,
as ASSIGNEE
================================================================================
<PAGE>
ASSIGNMENT OF LEASE AND RENT
THIS ASSIGNMENT OF LEASE AND RENT, dated as of November 15, 1996 (this
"Assignment"), made by PARIBAS PROPERTIES, INC., a Delaware corporation (the
- -----------
"Lessor"), to BANQUE PARIBAS, as Agent (the "Agent") for the Lenders under the
- ------- -----
Loan Agreement referred to below (together with their respective successors and
assigns, the "Lenders").
-------
W I T N E S S E T H:
-------------------
Recitals:
--------
A. Pursuant to that certain Loan Agreement dated as of the date hereof
(as amended, restated, supplemented or otherwise modified from time to time, the
"Loan Agreement"), entered into by and among the Lessor, the Lenders and the
--------------
Agent, the Lenders have severally agreed to make Loans to the Lessor in an
aggregate amount not to exceed the aggregate Commitments of the Lenders, as set
forth on Schedule I to the Participation Agreement (as defined in Appendix A to
---------- ----------
the Loan Agreement), upon the terms and subject to the conditions set forth in
the Loan Agreement and the Participation Agreement, to be evidenced by the notes
(such notes, as the same may hereafter be amended, modified, renewed, extended
or otherwise changed from time to time, together with any note or notes or other
obligations executed and delivered in renewal, extension or replacement thereof
or in substitution or exchange therefor, are hereinafter collectively referred
to as the "Notes") issued by the Lessor under the Loan Agreement.
-----
B. It is a condition, among others, to the obligation of the Lenders to
make their respective Loans to the Lessor under the Loan Agreement that the
Lessor shall have executed and delivered, and the Lessee shall have consented
to, this Assignment to the Agent for the benefit of the Lenders.
C. In order further to secure payment of all the amounts owing to the
Lenders under the Loan Agreement, the Notes and the other Operative Documents,
the Lessor has agreed to enter into, execute, and deliver this Assignment.
Agreement:
---------
NOW, THEREFORE, in consideration of the foregoing, the parties hereto agree
as follows:
1. Defined Terms. Capitalized terms used but not otherwise defined in
-------------
this Assignment shall have the respective meanings specified in Appendix A to
----------
the Loan Agreement; and the rules of interpretation set forth in such Appendix A
----------
shall apply to this Assignment.
<PAGE>
Assignment of Lease and Rent
2. Assignment. To secure its obligations under the Loan Agreement,
----------
the Notes and the other Operative Documents, the Lessor hereby assigns,
transfers, sets over and conveys to the Agent for the ratable benefit of the
Lenders, all the following described properties, rights and interests relating
to or arising in connection with the Equipment, whether now owned or held or
hereafter acquired:
(a) Except as hereinafter provided, all of the estate, right,
title, interest, benefits, powers and privileges of the Lessor, as Lessor,
under the Master Lease including:
(i) the immediate and continuing right, on a nonexclusive
basis, to make claim for, receive, collect and receipt for all
rents, income, revenues, issues, profits, insurance proceeds,
condemnation proceeds, sales proceeds and other sums payable to
or receivable by the Lessor under the Master Lease, or pursuant
to any provisions thereof, whether as rent or as the purchase
price or termination payment for any interest in any of the
Equipment or otherwise including, without limitation, after
payment of the Equity Balance, the Lease Balance and any sales
proceeds payable to the Lessor pursuant to the Master Lease
(collectively, the "Master Lease Rents"), including all cash,
------------------
securities or letters of credit delivered or deposited pursuant
thereto to secure performance by the Lessee of its obligations
thereunder,
(ii) the right (subject to the consent of Required
Lenders) to make all waivers and agreements on behalf of the
Lessor under the Master Lease provided for or permitted under
the Master Lease (provided, however, that none of the foregoing
-------- -------
will be made or given with respect to Article VIII, IX, X, XIII,
XIV, XVIII, XX or XXI of the Master Lease without the written
consent of all of the Equity Lenders),
(iii) the right to give all notices, consents, releases
and other instruments provided under the Master Lease (provided,
--------
however, that none of the foregoing will be made or given with
-------
respect to Article VIII, IX, X, XIII, XIV, XVIII, XX or XXI of
the Master Lease without the written consent of all of the
Equity Lenders),
(iv) the right (subject to the consent of the Required
Lenders), on a non-exclusive basis, to give all notices of
default and to take all action upon the happening of an Event of
Default under the Master Lease, including the commencement,
conduct and consummation of proceedings as shall be permitted
under any provision of the Master Lease, or by law or in equity,
2
<PAGE>
Assignment of Lease and Rent
(v) the right, on a non-exclusive basis, to receive all
notices sent to the Lessor under the Master Lease,
(vi) subject to the interest of the Equity Lenders therein,
the Lessor's interest under the Master Lease in the Lessee's tangible
and intangible property used or arising in connection with any
Equipment, including, but not limited to, permits, licenses, contract
rights and prepaid expenses, and
(vii) the right (subject to the consent of the Required
Lenders), on a non-exclusive basis, to do any and all other things
whatsoever which the Lessor is or may be entitled to do under the
Master Lease;
provided, however, there are expressly excluded from the terms of this
-------- -------
Assignment, and the Lease Rents shall in no event include, the Excepted
Payments;
(b) subject to the interest of the Equity Lenders therein, all of the
estate, right, title, interest, benefits, powers and privileges of the
Lessor in, to and under all other leases, subleases or licenses relating to
the Equipment, all licenses, concessions, management, or other agreements
of a similar kind that relate to the use of any of the Equipment or any
part thereof for any purposes or that result in any payment (collectively,
the "Subleases" and, together with the Master Lease, the "Assigned
--------- --------
Leases"), together with, subject to the interest of the Equity Lenders
------
therein, all estate, right, title, interest, benefits powers and privileges
of the Lessor under the Subleases including, without limitation, the
immediate and continuing right, on a non-exclusive basis, to make claim
for, receive, collect and receipt for all charges, fees, income, issues,
profits, receipts, rents, revenues or royalties payable under any of the
Subleases (collectively, the "Sublease Rents" and, together with the Master
--------------
Lease Rents, the "Lease Rents") and all right, title and interest of the
-----------
Lessor thereunder, including all cash, securities or letters of credit
deposited thereunder to secure performance by the obligors of their
obligations thereunder; provided, however, there are expressly excluded
-------- -------
from the terms of this Assignment the Excepted Payments;
(c) subject to the interest of the Equity Lenders therein, all of the
estate, right, title, interest benefits, powers and privileges of the
Lessor, to and under all agreements or contracts for the sale or other
disposition of all or any part of any of the Equipment, now or hereafter
entered into by the Lessor (collectively, the "Contracts"), together with,
---------
subject to the interest of the Equity Lenders therein, all estate, right,
title, interest, benefits, powers and privileges of the Lessor under the
Contracts including, without limitation, the immediate and continuing
right, on a non-exclusive basis, to make claim for, receive, collect and
receipt for all charges, fees, income, issues, profits, receipts,
3
<PAGE>
Assignment of Lease and Rent
rents, revenues or royalties payable under any of the Contracts
(collectively, the "Contract Rents" and, together with the Lease Rents and
--------------
the Sublease Rents, the "Rents") and all right, title and interest of the
-----
Lessor thereunder, including all cash, securities or letters of credit
deposited thereunder to secure performance by the obligors of their
obligations thereunder; provided, however, that the Lessor shall
-------- -------
exclusively retain, and the Contract Rents shall in no event include, the
Excepted Payments; and
(d) on a non-exclusive basis, all of the right, title and interest
of the Lessor in and to all claims and rights to the payment of money at
any time arising in connection with any repudiation, rejection or breach of
the Master Lease by the Lessee or a trustee or receiver of the Lessee under
any insolvency statute, law or regulation, including, without limitation,
all rights to recover damages arising out of such breach or rejection, all
rights to charges payable by the Lessee or such trustee or receiver in
respect of any of the Equipment or any portions thereof following
rejection, repudiation or disaffirmance of the Master Lease or following
the entry of an order for relief under any insolvency statute, law or
regulation in respect of the Lessee and all rentals and other charges
outstanding under the Master Lease as of the date of entry of such order
for relief.
Notwithstanding the foregoing provisions of this Section 2, the assignment
---------
contained herein shall in no event include any amounts payable to or received by
the Lessor, the Agent or otherwise payable or paid with respect to the Equity
Balance, and without limiting the provisions of Article V of the Loan Agreement
neither the Agent (solely in the capacity as Agent for the Financing Lenders)
nor the Financing Lenders shall be entitled to exercise any remedies under the
Master Lease or take any action with respect to the Lease Rents or the Contract
Rents unless and until the Equity Balance and all other amounts payable to the
Equity Lenders under the Participation Agreement and the other Operative
Documents shall have been paid in full to the Equity Lenders. Any attempt by the
Agent or any Lender to exercise remedies or take any other action in
contravention of the previous sentence or Article V of the Loan Agreement shall
---------
be null and void.
3. Receipt of Rents. The Lenders hereby acknowledge and agree that the
----------------
Agent will collect and hold the Rents for the benefit of each of the Lenders and
will distribute the Rents to the Lenders in accordance with and in the priority
set forth in Article IV of the Loan Agreement. Without limiting the provisions
----------
of Article V of the Loan Agreement, the Agent (solely in the capacity as Agent
---------
for the Financing Lenders) and the Financing Lenders further acknowledge and
agree that they shall not individually or collectively be entitled to take any
action with respect to Lease Rents or Contract Rent unless and until the Equity
Balance shall have been paid in full to the Equity Lenders. To the extent not
inconsistent with Article V of the Loan Agreement, the foregoing shall not
---------
affect the right of the Required Financing Lenders to cause the Agent to
exercise other rights and remedies available to the Financing Lenders under the
Operative Documents, and upon the occurrence of a Lease Event of Default, the
Required Financing
4
<PAGE>
Assigment of Lease and Rent
Lenders shall have the right to cause the Agent to exercise the remedies
pursuant to Section 18.3 of the Master Lease. Any attempt by the Agent or any
------------
Financing Lender to exercise remedies or take any other action in contravention
of this section shall be null and void.
4. Irrevocability; Supplemental Instruments. The Lessor agrees that this
----------------------------------------
Assignment and the designation and direction to the Lessee set forth in Sections
--------
2 and 3 of this Assignment are irrevocable and that it will not take any action
- - -
as Lessor under the Master Lease or otherwise which is inconsistent with this
Assignment and that any action, assignment, designation or direction
inconsistent herewith shall be void. The Lessor will from time to time execute
and deliver all instruments of further assurance and do such further acts as may
be necessary or proper to carry out more effectively the purpose of this
Assignment.
5. Validity. The Lessor represents and warrants (on a continuing basis)
--------
and covenants to the Lenders that (a) the Lessor has not assigned or executed
any assignment of, and will not assign or execute any assignment of, the
Lessor's interest in any of the Assigned Leases, in any Contract, in any Rents
or in any other subject matter of this Assignment to anyone other than the
Lenders and any assignment, designation or direction by the Lessor inconsistent
herewith shall be void, and (b) the Lessor has not done any act or executed any
document that impairs the rights of the Lenders to the Master Lease or the Rents
under this Assignment.
6. The Lessor Remains Liable. While the assignment made hereby is
-------------------------
present, direct and continuing, it has been made for the purpose of providing
the Lenders with security for the performance of the Lessor's obligations under
the Loan Agreement, the Notes and the other Operative Documents, and the
execution and delivery hereof shall not impair or diminish in any way the
obligations of the Lessor under the Assigned Leases, or impose any of such
obligations on the Lenders. This Assignment shall not operate to cause the
Lenders (or their designee) to be regarded as a mortgagee in possession.
Neither the Lenders nor their designee shall be responsible or liable for
performing any of the obligations of the Lessor under any of the Assigned Leases
or any Contract, for any waste by the Lessee or others, for any dangerous or
defective conditions of any of the Equipment, for negligence in the management,
upkeep, repair or control of any of the Equipment or any other act or omission
by any other Person. Nothing contained herein shall operate or be construed to
(a) obligate the Lenders (or their designee) to assume the obligations of the
Lessor under any of the Assigned Leases or any Contract, to perform any of the
terms and conditions contained in any of the Assigned Leases or any Contract or
otherwise to impose any obligation upon the Lenders with respect to any of the
Assigned Leases or any Contract or (b) place upon the Lenders (or their
designee) any responsibility for the operation, control, care, management or
repair of any of the Equipment or any part thereof. Subject at all times to the
terms and conditions of this Assignment, the Lessor will at all times promptly
and faithfully perform in all respects, or cause to be performed in all
respects, all of its covenants,
5
<PAGE>
Assignment of Lease and Rent
conditions and agreements contained in the Assigned Leases or any Contract now
or hereafter existing on the part of the Lessor to be kept and performed.
7. Amendments; Lessee's Consent. The Lessor will not enter into any
----------------------------
agreement subordinating, amending, extending or terminating any of the Assigned
Leases except as provided in Section 13.5 of the Participation Agreement, and
------------
any such attempted subordination, amendment, modification, extension or
termination without compliance with such Section 13.5 of the Participation
------------
Agreement shall be void. If any of the Assigned Leases or any Contract shall be
amended, it shall continue to be subject to the provisions hereof without the
necessity of any further act by any of the parties hereto. The Lessor and the
Lenders hereby consent to the provisions of Lessee's Consent attached to this
Assignment and agree to be bound thereby. Nothing in this Section 7 shall be
---------
construed as limiting or otherwise affecting in any way the Lessor's right to
receive directly the Excepted Payments.
8. Termination of this Assignment. This Assignment shall continue in
------------------------------
full force and effect until all obligations, liabilities and indebtedness of any
kind now or hereafter due to the Lenders from the Lessor or the Lessee under or
with respect to the Loan Agreement or any of the other Operative Documents, or
which are otherwise secured hereby, whether now existing or hereafter arising or
incurred, have been fully paid, performed and satisfied, at which time this
Assignment will terminate.
9. Ongoing Right to Collect Rents; Receivers. If notwithstanding the
-----------------------------------------
terms of this Assignment, a petition or order for sequestration of rents, or the
appointment of a receiver or some similar judicial action or order is deemed
required under applicable state law to allow the Lenders to continue to collect
the monies described in Sections 2(a), (b) and (c) of this Assignment, then it
------------- --- ---
is agreed by the Lessor that any proof of claim or similar document filed by the
Lenders in connection with the breach or rejection of the Master Lease by the
lessee thereunder or the trustee of any lessee under any federal or state
insolvency statute shall for the purpose of perfecting the Lenders, rights
conferred in said paragraphs be deemed to constitute action required under such
state law. Upon the occurrence and during the continuance of a Loan Agreement
Event of Default (not existing solely by virtue of a Lease Event of Default),
the Lessor hereby consents to the appointment of a receiver for any or all of
the Equipment as a matter of right and without any requirement for notice to the
Lessor and without regard to the solvency of the Lessor or to the collateral
that may be available for the satisfaction of the Notes and all other
Obligations under the Loan Agreement and the other Operative Documents.
10. Amendment. Subject to Article V of the Loan Agreement, this
--------- ---------
Assignment may not be amended or otherwise modified except by a writing signed
by the Lessor, the Agent (in its capacity as agent for all Lenders) and, if
required by Section 13.5 of the Participation Agreement, the Lessee, in
------------
accordance with the terms of the Participation Agreement.
6
<PAGE>
Assignment of Lease and Rent
11. Notices. All notices, demands, requests, consents, approvals and
-------
other instruments under this Assignment shall be made in accordance with the
notice provisions of the Participation Agreement.
12. Successors and Assigns. All covenants, agreements, representations
----------------------
and warranties in this Assignment by the Lessor and the Agent on behalf of the
Lenders shall bind, and shall inure to the benefit of and be enforceable by,
their respective successors and assigns, whether or not so expressed.
13. Severability. If any provision or provisions, or if any portion of
------------
any provision or provisions, in this Assignment is found by a court of law of
competent jurisdiction to be in violation of any local, state or Federal
ordinance, statute, law, administrative or judicial decision, or public policy,
and if such court should declare such portion, provision or provisions to be
illegal, invalid, unlawful, void or unenforceable as written, then it is the
intent of the parties hereto that such portion, provision or provisions shall be
given force to the fullest possible extent that they are legal, valid and
enforceable, that the remainder of this Assignment shall be construed as if such
illegal, invalid, unlawful, void or unenforceable portion, provision or
provisions were not contained therein, and that the rights, obligations and
interests of the Lessor, the Lenders and the Lessee under the remainder of this
Assignment shall continue in full force and effect.
14. Governing Law. THIS ASSIGNMENT AND THE RIGHTS AND OBLIGATIONS OF THE
-------------
LESSOR UNDER THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES, EXCEPT AS TO MATTERS RELATING TO THE CREATION OF LIENS AND
THE EXERCISE OF REMEDIES WITH RESPECT THERETO, WHICH SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF EACH STATE IN WHICH THE APPLICABLE
EQUIPMENT IS LOCATED.
15. Counterparts. This Assignment may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
16. Conflicts. In the event of any conflicts between the terms and
---------
provisions hereof and the terms and provisions of the other Operative Documents,
the terms and provisions of the other Operative Documents shall be controlling.
17. Limitation on Liability. Without impairing the rights, powers,
-----------------------
privileges, lands, and security interest hereunder or under any other Operative
Document, the Agent, on behalf of
7
<PAGE>
Assignment of Lease and Rent
itself, the Lenders and their respective successors and assigns, hereby agree
that the obligations secured hereby shall be enforced solely from the
Collateral, and no deficiency, after applying the net proceeds at foreclosure or
other judicial sale of the Collateral, shall ever be asserted against the
Lessor, its successors and assigns, for the payment of any obligation or
indebtedness secured hereby. The foregoing limitation on liability shall have no
effect upon the liability of the Lessee under the Master Lease and other
Operative Documents, which liability shall be and remain full recourse.
[remainder of page intentionally left blank]
8
<PAGE>
Assignment of Lease and Rent
IN WITNESS WHEREOF, the Lessor has caused this Assignment to be duly
executed as of the day and year first above written.
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By:____________________________________
Edward V. Canale, President
By:____________________________________
Matthew J. Cooleen, Vice President
9
<PAGE>
Consent of Lessee to Assignment of Lease and Rent
CONSENT AND ACKNOWLEDGMENT BY MAIL-WELL I CORPORATION
-----------------------------------------------------
The undersigned hereby acknowledges receipt of a counterpart original of,
and consents to, the foregoing Assignment of Lease and Rent.
The foregoing is furnished for good and valuable consideration the receipt
and sufficiency of which are hereby acknowledged by the undersigned, and the
undersigned understands and intends that the Lenders will rely on the foregoing
and that the undersigned will be legally bound by the foregoing. This Consent
and Acknowledgment shall inure to the benefit of the Lenders and their
respective successors and assigns.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Consent
and Acknowledgment as of November 15, 1996, pursuant to proper authority duly
granted.
MAIL-WELL I CORPORATION,
a Delaware corporation
By:____________________________
Name:__________________________
Title:_________________________
<PAGE>
EXHIBIT 10.52
================================================================================
SECURITY AGREEMENT
(First and Prior Security Interest)
made and entered into by
PARIBAS PROPERTIES, INC.
and
MAIL-WELL I CORPORATION
as Debtors
and
BANQUE PARIBAS
as Agent for Secured Party
Dated: November 15, 1996
================================================================================
<PAGE>
Security Agreement (First)
TABLE OF CONTENTS
Page
----
<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE I - SECURITY INTEREST........................................... 2
Section 1.01. Creation of Security Interest....................... 2
-------------------------------------
Section 1.02. Collateral.......................................... 2
----------
Section 1.03. Debtors Remain Liable............................... 2
---------------------
Section 1.04. Payment Obligations of Debtors...................... 2
------------------------------
ARTICLE II - REPRESENTATIONS AND WARRANTIES............................. 3
Section 2.01. Representations and Warranties...................... 3
------------------------------
(a) Valid Pledge........................................ 3
------------
(b) Ownership of Collateral............................. 3
-----------------------
(c) No Violation of Law................................. 3
-------------------
(d) Valid Obligation of Debtors......................... 3
---------------------------
(e) Consents and Approvals.............................. 3
----------------------
ARTICLE III - COVENANTS................................................. 4
Section 3.01. General Covenants of Debtors........................ 4
----------------------------
Section 3.02. Rights of Secured Party............................. 5
-----------------------
ARTICLE IV - EVENTS OF DEFAULT AND REMEDIES............................. 6
Section 4.01. Events of Default................................... 6
-----------------
Section 4.02. Acceleration of Secured Obligations................. 6
-----------------------------------
Section 4.03. Sale of Collateral.................................. 6
------------------
Section 4.04. Rights of a Secured Party........................... 6
-------------------------
Section 4.05. Application of Collateral to Secured Obligations.... 7
------------------------------------------------
Section 4.06. Cumulative Remedies................................. 8
-------------------
Section 4.07. Resort to Other Security............................ 8
------------------------
Section 4.08. Nominee Owner....................................... 8
-------------
Section 4.09. Waiver of Appraisement, Valuation, Etc.............. 8
---------------------------------------
Section 4.10. Power of Attorney................................... 9
-----------------
ARTICLE V - ADDITIONAL AGREEMENTS.......................................10
Section 5.01. Payment of Secured Obligations......................10
------------------------------
Section 5.02. No Waiver...........................................10
---------
Section 5.03. No Impairment of Rights.............................10
-----------------------
Section 5.04. No Release or Impairment............................11
------------------------
Section 5.05. Security Agreement as Financing Statement...........11
-----------------------------------------
Section 5.06. Financing Statements................................11
--------------------
</TABLE>
i
<PAGE>
Security Agreement (First)
<TABLE>
<S> <C> <C>
Section 5.07. Dealing with Successors.............................11
-----------------------
Section 5.08. Subrogation.........................................11
-----------
Section 5.09. Application of Security.............................12
-----------------------
Section 5.10. Assignment by Secured Party.........................12
---------------------------
Section 5.11. Performance by Secured Party........................12
----------------------------
ARTICLE VI - MISCELLANEOUS..............................................12
Section 6.01. No Waiver; Cumulative Remedies......................12
------------------------------
Section 6.02. Successors and Assigns..............................12
----------------------
Section 6.03. AMENDMENT; ENTIRE AGREEMENT.........................12
---------------------------
Section 6.04. Notices.............................................13
-------
Section 6.05. GOVERNING LAW; VENUE; SERVICE OF PROCESS............13
----------------------------------------
Section 6.06. Headings............................................13
--------
Section 6.07. Survival of Representations and Warranties..........13
------------------------------------------
Section 6.08. Counterparts........................................14
------------
Section 6.09. Waiver of Bond......................................14
--------------
Section 6.10. Severability........................................14
------------
Section 6.11. Construction........................................14
------------
Section 6.12. WAIVER OF JURY TRIAL................................14
--------------------
Section 6.13. No Liability of Secured Party.......................14
-----------------------------
Section 6.14. Secured Obligations Absolute........................15
----------------------------
Section 6.15. Limitation on Liability.............................15
-----------------------
</TABLE>
ii
<PAGE>
Security Agreement (First)
SECURITY AGREEMENT
(First and Prior Security Interest)
THIS SECURITY AGREEMENT (this "Agreement"), made and entered into on this
---------
the 15th day of November, 1996, by PARIBAS PROPERTIES, INC., a Delaware
corporation (the "Lessor"), whose address is 787 Seventh Avenue, 30th Floor, New
------
York, New York 10019, MAIL-WELL I CORPORATION, a Delaware corporation (the
"Lessee"), whose address is 23 Inverness Way East, Englewood, Colorado 80112
- -------
(the Lessor and the Lessee being collectively called "Debtors"), and BANQUE
-------
PARIBAS, a bank organized under the laws of France, as Agent for the benefit of
"Equity Lenders" (as that term is defined below) ("Secured Party"), whose
-------------
address is 1200 Smith Street, Suite 3100, Houston, Texas 77002.
W I T N E S S E T H :
- - - - - - - - - -
Recitals:
--------
A. Pursuant to the provisions of a certain Participation Agreement, dated
of even date herewith (the "Participation Agreement"), among the Lessee, the
-----------------------
subsidiaries of the Lessee that are parties thereto, the Lessor, Secured Party
and the various financial institutions that are parties thereto as Equity
Lenders (the "Equity Lenders") and as the Financing Lenders (the "Financing
-------------- ---------
Lenders"), the Financing Lenders have agreed to make loans to the Lessor in the
- -------
aggregate principal sum of $24,500,000 and the Equity Lenders have agreed to
make loans to the Lessor in the aggregate principal sum of $5,500,000, which
sums are to be used by the Lessor to purchase the Equipment (as defined below)
from the Lessee.
B. The Participation Agreement provides, among other things, that Debtors
will grant (i) to Secured Party, solely in its capacity as Agent for the benefit
of Equity Lenders, a first and prior security interest in and to the Equipment
as security for all of the debts, duties, liabilities and obligations of
Debtors, both jointly and severally, to the Equity Lenders under the Operative
Documents (the "Secured Obligations"), and (ii) to the Agent, solely in its
-------------------
capacity as Agent for the Financing Lenders, a second security interest in and
to the Equipment as security for all debts, duties, liabilities and obligations
of Debtors to the Financing Lenders under the Operative Documents pursuant to a
certain Security Agreement (Second and Subordinated Security Interest) the
"Second Security Agreement").
- --------------------------
C. Pursuant to the Participation Agreement, the Equipment has,
concurrently herewith, been acquired by the Lessor and leased by the Lessor to
the Lessee pursuant to a certain Master Lease (herein so called). The Master
Lease, and the rights of Lessor and the Lessee thereunder, are subject and
subordinate to the provisions of the Second Security Agreement and this
Agreement.
D. Debtors desire to hereby grant to Secured Party the first and prior
security interest provided for in the Participation Agreement. Unless otherwise
defined herein, the capitalized terms
<PAGE>
Security Agreement (First)
used in this Agreement have the defined meanings given to them in Appendix A
attached to the Participation Agreement.
Agreements:
----------
NOW, THEREFORE, the parties hereto agree jointly and severally, as follows:
ARTICLE I
SECURITY INTEREST
Section 1.01. Creation of Security Interest. Debtors hereby grant a
-----------------------------
security interest to Secured Party in the Collateral described in Section 1.02
of this Agreement to secure and enforce the performance and payment of all
Secured Obligations, now or hereafter existing in favor of Secured Party, and
all substitutions, renewals, extensions, rearrangements and modifications
thereof.
Section 1.02. Collateral. The collateral (the "Collateral") consists of
---------- ----------
all of the Equipment, which is more particularly described on Schedule I,
----------
attached hereto, together with (i) all other items of equipment hereafter made
part of the Collateral hereunder, wherever located, whether now owned or
existing or hereafter owned, existing, acquired or arising, and whether in
Debtors', Secured Party's or any other person's or entity's possession or
control, (ii) all apparatus, accessories, replacements and substitutions
(including without limitation all Modifications and Substituted Equipment),
warranties, guaranties, contract rights, claims, intangible rights relating
thereto, (iii) all substitutions therefor, (iv) all general intangibles arising
therefrom or in connection therewith, (v) all proceeds therefrom, and (vi) all
other property which Debtors may hereafter become entitled to receive on account
of the Equipment (and in all of Debtors' respective rights, title and interests
in and with respect to the foregoing), and in the event Debtors receive any such
property, Debtors will, upon request by Secured Party, take such steps as are
necessary to perfect Secured Party's security interest hereunder.
Section 1.03. Debtors Remain Liable. Notwithstanding anything to the
---------------------
contrary contained herein, but subject to the limitation on liability provisions
of Section 6.15 hereof, (a) Debtors shall remain liable under the contracts,
------------
agreements, documents and instruments included in the Collateral to the same
extent as if this Agreement had not been executed, (b) the exercise by Secured
Party of any of its rights or remedies hereunder shall not release Debtors from
any of its duties or obligations under the contracts, agreements, documents and
instruments included in the Collateral, (c) Secured Party shall not become
liable for any indebtedness, liability or obligation under any of the contracts,
agreements, documents and instruments included in the Collateral by reason of
this Agreement, and (d) Secured Party shall not be obligated to perform any of
the obligations or duties of Debtors thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
Section 1.04. Payment Obligations of Debtors. Debtors shall pay to
------------------------------
Secured Party on demand all reasonable expenses and expenditures, including
attorneys' fees and other legal expenses
2
<PAGE>
Security Agreement (First)
incurred or paid by Secured Party in exercising or protecting its interests,
rights and remedies under this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.01. Representations and Warranties. Debtors severally and not
------------------------------
jointly represent and warrant that:
(a) Valid Pledge. The Collateral is genuine, free from any
------------
restriction on transfer, and Debtors have duly granted to Secured Party, and
Secured Party shall continue to have, a valid, first priority security interest
in the Collateral in accordance with law.
(b) Ownership of Collateral. Debtors have the right to pledge the
-----------------------
same and to transfer any interest therein; all consents required for the pledge
of the Collateral herein provided have been obtained; the Collateral is free and
clear from all security interests and encumbrances except the security interest
evidenced hereby and the security interest created by the Second Security
Agreement and the Master Lease (which other security interests are subject and
subordinate to the security interest granted by Debtors to Secured Party
hereunder and the first priority thereof); with the exception of the financing
statements filed pursuant to this Agreement and the Second Security Agreement,
to Debtors' knowledge there is no financing statement (or similar statement or
instrument of registration under the law of any jurisdiction) covering or
purporting to cover any interest of any kind in the Collateral or its proceeds
on file or registered in any public office (except for releases or terminations
of financing statements filed concurrently herewith); and Debtors will warrant
and forever defend the title to the Collateral and its proceeds against the
claims and demands of all persons whomsoever claiming or to claim the same or
any part thereof.
(c) No Violation of Law. The execution, delivery and performance by
-------------------
Debtors of this Agreement do not and will not contravene or violate any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award presently in effect and applicable to Debtors or
the of Debtors, or result in a breach of or constitute a default (with or
without the giving of notice or the lapse of time or both) under any indenture
or loan, credit or other agreement to which Debtors is a party or by which
Debtors or any of Debtors' property may be bound or affected.
(d) Valid Obligation of Debtors. This Agreement constitutes the
---------------------------
legal, valid and binding obligation of Debtors enforceable against Debtors in
accordance with its terms.
(e) Consents and Approvals. No authorization, consent, approval,
----------------------
license, order or exemption of, or filing or registration with, any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, is or will be necessary to the valid execution, delivery or
performance by Debtors of this Agreement or to the enforcement hereof by Secured
Party.
3
<PAGE>
Secuirty Agreement (First)
ARTICLE III
COVENANTS
Section 3.01. General Covenants of Debtors. Debtors covenant and agree
----------------------------
with Secured Party as follows:
(a) Debtors shall furnish to Secured Party such instruments as may be
required by Secured Party to assure the transferability of, and Secured Party's
perfected first priority interest in, the Collateral when and as often as may be
requested by Secured Party.
(b) Debtors will cause the Lessee to pay prior to delinquency all
Taxes in accordance with the Operative Documents.
(c) If the validity or priority of this Agreement or of any rights,
titles, security interests or other interests created or evidenced hereby shall
be challenged or endangered, or if any legal proceedings are instituted with
respect thereto, Debtors will give prompt written notice thereof to Secured
Party and, at Debtors' own cost and expense, will diligently endeavor to cure,
and shall cure, without prejudice to Secured Party's rights, title or interest,
any defect that may be developed or claimed, and will take all necessary and
proper steps for the defense of such legal proceedings, and Secured Party
(whether or not named as a party) is hereby authorized and empowered to take
such additional steps as in its judgment and discretion may be necessary or
proper for the defense of any such legal proceedings or the protection of the
validity or priority of this Agreement and the rights, titles, security
interests and other interests created or evidenced hereby, and all expenses so
incurred of every kind and character shall be a demand obligation owing by
Debtors.
(d) Debtors will, on request of Secured Party, (1) promptly correct
any defect, error or omission which may be discovered in the contents of this
Agreement or in any other instrument executed in connection herewith or in the
execution or acknowledgment thereof; (2) execute, acknowledge, deliver and
record or file such further instruments (including without limitation further
security agreements, financing statements and continuation statements) and do
such further acts as may be necessary, desirable or proper to carry out more
effectively the purposes of this Agreement and such other instruments and to
subject to the security interests hereof and thereof any property intended by
the terms hereof and thereof to be covered hereby and thereby, including
specifically, but without limitation, any renewals, additions, substitutions,
replacements or appurtenances to the then Collateral, and (3) execute,
acknowledge, deliver, procure and record or file any document or instrument
(including specifically any financing statement) reasonably deemed advisable by
Secured Party to protect the security interest hereunder against the rights or
interests of third persons, and Debtors will pay all costs connected with any of
the foregoing.
(e) Notwithstanding the security interest in proceeds granted herein,
Debtors will not, except in accordance with the terms of the Master Lease, sell,
exchange, lend, assign, transfer or otherwise dispose of all or any part of the
Collateral or any interest therein, or permit any of the foregoing, without the
prior written consent of Secured Party.
4
<PAGE>
Security Agreement (First)
(f) Debtors will pay all appraisal fees, filing fees, taxes, brokerage
fees and commissions, Uniform Commercial Code search fees, escrow fees,
attorneys' fees, and all other costs and expenses of every character incurred by
Debtors or Secured Party in connection with this Agreement or the Collateral and
will reimburse Secured Party for all such expenses incurred by it. Debtors shall
pay all expenses and reimburse Secured Party for any expenditures, including
attorneys' fees and legal expenses, incurred or expended in connection with
Secured Party's exercise of any of its rights and remedies hereunder or Secured
Party's protection of the Collateral and its security interest therein. Any
amount to be paid hereunder by Debtors to Secured Party shall be a demand
obligation owing by Debtors to Secured Party and shall bear interest from date
of expenditure until paid at the Default Rate.
(g) Debtors will not change their addresses, names, identities or
structures without notifying Secured Party of such change in writing at least
thirty (30) days prior to the effective date of such change, and unless Debtors
shall have taken such action, satisfactory to Secured Party, to have caused the
security interest of Secured Party in the Collateral to be at all times fully
perfected and at all times in full force and effect.
(h) Debtors shall account fully and faithfully for and, if Secured
Party so elects, shall promptly pay or turn over to Secured Party the proceeds
in whatever form received from disposition in any manner of any of the
Collateral, whether the Secured Obligations are mature or not, the order and
method of application to be in the sole discretion of Secured Party, except as
otherwise specifically authorized herein or in the other Operative Documents.
(i) Debtors shall furnish Secured Party all such information as
Secured Party may reasonably request with respect to the Collateral.
(j) Debtors shall keep each item of the Equipment at the location
specified on Schedule I hereto for such item and shall maintain the Equipment in
----------
the manner required by the Master Lease.
Section 3.02. Rights of Secured Party. The rights, remedies, powers and
-----------------------
privileges of Secured Party hereunder shall be exercised by Secured Party upon
the written direction of the Required Equity Lenders. Debtors agree that, if
Debtors fail to perform any act or to take any action which hereunder Debtors
are required to perform or take, or to pay any money which hereunder Debtors are
required to pay, Secured Party, in Debtors' name or in its own name, may but
shall not be obligated to perform or cause to be performed such act or take such
action or pay such money, and any expenses so incurred by Secured Party, and any
money so paid by Secured Party, shall be a demand obligation owing by Debtors to
Secured Party and Secured Party, upon making such payment, shall be subrogated
to all of the rights of the Person, corporation or body politic receiving such
payment. Any amounts due and owing by Debtors to Secured Party pursuant to this
Agreement shall bear interest from the date such amount is expended by Secured
Party until paid at the Default Rate and shall be a part of the Secured
Obligations and shall be secured by this Agreement and by any other instrument
securing the Secured Obligations.
5
<PAGE>
Security Agreement (First)
ARTICLE IV
EVENTS OF DEFAULT AND REMEDIES
Section 4.01. Events of Default. Debtors shall be in default under this
-----------------
Agreement upon the happening of an Event of Default under the Operative
Documents, including, without limitation, Debtors breach of any of the
covenants, representations or warranties contained herein.
Section 4.02. Acceleration of Secured Obligations. Upon the occurrence of
-----------------------------------
an Event of Default, and at any time thereafter, Secured Party shall have the
option of declaring, without notice to any Person, all Secured Obligations,
including without limitation principal and accrued interest, to be immediately
due and payable.
Section 4.03. Sale of Collateral. Upon the occurrence of an Event of
------------------
Default, and at any time thereafter, Secured Party may, without notice except as
hereinafter provided, convert the Collateral to cash or sell the Collateral or
any part thereof at public or private sale for cash, upon credit, or for future
delivery, and at such price or prices as Secured Party may deem best, and
Secured Party may be the purchaser of any and all of the Collateral so sold and
may apply upon the purchase price therefor any Secured Obligations or any part
thereof and thereafter hold the same absolutely free from any right or claim of
whatsoever kind. Upon any such sale Secured Party shall have the right to
deliver, assign and transfer to the purchaser thereof the Collateral so sold.
Each purchaser at any such sale shall hold the Collateral sold absolutely free
from any claim or right of whatsoever kind, including any equity or right of
redemption, stay or appraisal which Debtors have or may have under any rule of
law or statute now existing or hereafter adopted. Secured Party shall give
Debtors ten (10) days written notice mailed to Debtors at the address set forth
herein (which shall satisfy any requirement of notice or reasonable notice in
any applicable statute) of Secured Party's intention to make any such public or
private sale. Such notice, in case of public sale, shall state the time and
place fixed for such sale. Any such public sale shall be held at such time or
times, within the ordinary business hours and at such place or places, as
Secured Party may fix in the notice of such sale. At any sale the Collateral
may be sold in one lot as an entirety or as separate items as Secured Party may
determine. Secured Party shall not be obligated to make any sale pursuant to
any such notice. Secured Party may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at any time and place fixed for the sale, and such sale may be made
at any time or place to which the same may be so adjourned. In case of any sale
of all or any part of the Collateral on credit or for future delivery, the
Collateral so sold may be retained by Secured Party until the selling price is
paid by the purchaser thereof, but Secured Party shall incur no liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold, and in case of any such failure, such Collateral may again be sold upon
like notice. Each and every method of disposition described in this Section
shall constitute disposition in an commercially reasonable manner. Debtors
shall remain liable for any deficiency.
Section 4.04. Rights of a Secured Party. Upon the occurrence and during
-------------------------
the continuance of an Event of Default, Secured Party shall have all the rights
of a secured party after default under the Uniform Commercial Code of Texas, and
in conjunction with, in addition to or in substitution
6
<PAGE>
Security Agreement (First)
for those rights and remedies and the rights and remedies provided for herein
and in the other Operative Documents:
(a) written notice mailed to Debtors as provided herein ten (10) days
prior to the date of public sale of the Collateral or prior to the date after
which private sale of the Collateral will be made shall constitute reasonable
notice;
(b) it shall not be necessary that the Collateral or any part thereof
be present at the location of such sale;
(c) prior to the application of the proceeds of any disposition of the
Collateral to the Secured Obligations, such proceeds shall be applied to the
expenses of retaking, holding, selling, and the like and the attorneys fees and
legal expenses incurred by Secured Party, Debtors to remain liable for any
deficiency;
(d) the sale by Secured Party of less than the whole of the Collateral
shall not exhaust the rights of Secured Party hereunder, and Secured Party is
specifically empowered to make successive sale or sales hereunder until the
whole of the Collateral shall be sold; and, if the proceeds of such sale of less
than the whole of the Collateral shall be less than the aggregate of the Secured
Obligations, this Agreement and the security interest created hereby shall
remain in full force and effect as to the unsold portion of the Collateral just
as though no sale had been made;
(e) in the event any sale hereunder is not completed or is defective
in the opinion of Secured Party, such sale shall not exhaust the rights of
Secured Party hereunder and Secured Party shall have the right to cause a
subsequent sale or sales to be made hereunder;
(f) all statements of fact or other recitals made in any bill of sale
or assignment or other instrument evidencing any foreclosure sale hereunder as
to nonpayment of the indebtedness or as to the occurrence of any default, or as
to Secured Party having declared all of such indebtedness to be due and payable,
or as to notice of time, place and terms of sale and the properties to be sold
having been duly given, as to any other act or thing having been duly done by
Secured Party, shall be taken as prima facie evidence of the truth of the facts
so stated and recited; and
(g) Secured Party may appoint or delegate any one or more Persons as
agent to perform any act or acts necessary or incident to any sale held by
Secured Party, including the sending of notices and the conduct of sale, but in
the name and on behalf of Secured Party.
Section 4.05. Application of Collateral to Secured Obligations. Upon the
------------------------------------------------
occurrence and during the continuance of an Event of Default, and at any time
thereafter, Secured Party shall have the right, with or without notice or
demand, to apply all or any part of the Collateral to the payment of any or all
of the Secured Obligations in such manner and order as Secured Party may in its
sole discretion elect. To facilitate the rights of Secured Party hereunder,
Debtors hereby authorize
7
<PAGE>
Security Agreement (First)
Secured Party, its officers, agents or assigns, after the occurrence and during
the continuance of an Event of Default:
(a) to collect all or any part of the Collateral without further
notice to or to further consent by Debtors, and Debtors hereby constitute and
appoint Secured Party the true and lawful attorney of Debtors with power of
substitution in the name of Debtors to take any of the actions described in the
following clauses (b), (c), and (d);
(b) to ask, demand, collect, receive, receipt for, sue for, compound
and give acquittance for any and all amounts which may be or become due or
payable under said Collateral;
(c) to execute any and all withdrawal receipts or other orders for the
payment of money drawn on said Collateral and to endorse the names of Debtors on
all commercial paper, drafts, checks and other instruments given in payment or
in part payment thereof;
(d) in its discretion to file any claim or take any other action or
proceeding, either in its own name or in the names of Debtors or otherwise,
which Secured Party may deem necessary or appropriate to protect and preserve
the right, title and interest of Secured Party hereunder.
Section 4.06. Cumulative Remedies. All remedies herein expressly provided
-------------------
for are cumulative of any and all other remedies existing at law or in equity
and are cumulative of any and all other remedies provided for in any other
instrument securing the payment of the Secured Obligations, or any part thereof,
or otherwise benefiting Secured Party or the Equity Lenders, and the resort to
any remedy provided for hereunder or under any such other instrument or provided
for by law shall not prevent the concurrent or subsequent employment of any
other appropriate remedy or remedies; but in no event shall Secured Party or the
Equity Lenders be obligated to exercise any remedy, which obligation Debtors
hereby unconditionally waive.
Section 4.07. Resort to Other Security. Upon the occurrence and during
------------------------
the continuance of an Event of Default, Secured Party may, but in no event shall
be obligated (which obligation, if any, Debtors hereby unconditionally waive)
resort to any security given by this Agreement or to any other security now
existing or hereafter given to secure the payment of the Secured Obligations, in
whole or in part, and in such portions and in such order as may seem best to
Secured Party in its sole and uncontrolled discretion, and any such action
shall not in anywise be considered as a waiver of any of the rights, benefits or
security interests evidenced by this Agreement.
Section 4.08. Nominee Owner. Upon the occurrence and during the
-------------
continuance of an Event of Default, Secured Party may at any time cause any or
all of the Collateral to be transferred into its name or into the name or names
of any nominee or nominees of Secured Party.
Section 4.09. Waiver of Appraisement, Valuation, Etc. To the full extent
---------------------------------------
Debtors may do so, Debtors agree that Debtors will not at any time insist upon,
plead, claim or take the benefit or advantage of any law now or hereafter in
force providing for any marshaling, appraisement,
8
<PAGE>
Security Agreement (First)
valuation, stay, extension or redemption, and Debtors, for Debtors, Debtors'
receivers, trustees, successors and assigns, and for any and all Persons ever
claiming any interest in the Collateral, to the extent permitted by law, hereby
waive and release all rights of redemption, valuation, appraisement, stay of
execution, notice of intention to mature or declare due the whole of the Secured
Obligations, and all rights to a marshaling of the assets of Debtors, including
the Collateral, or to a sale in inverse order of alienation in the event of
foreclosure of the security interest hereby created.
Section 4.10. Power of Attorney. Debtors hereby irrevocably constitute
-----------------
and appoint Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the names of Debtors or in its own name, to take after
the occurrence and during the continuance of an Event of Default and from time
to time thereafter, any and all action and to execute any and all documents and
instruments which Secured Party at any time and from time to time deems
necessary or desirable to accomplish the purposes of this Agreement and, without
limiting the generality of the foregoing, Debtors hereby give Secured Party the
power and right on behalf of Debtors and in its own name to do any of the
following after the occurrence and during the continuance of an Event of Default
and from time to time thereafter, without notice to or the consent of Debtors:
(i) to demand, sue for, collect or receive, in the names of
Debtors or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances, money
orders, documents of title or any other instruments for the payment of
money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, Liens or other encumbrances
levied or placed on or threatened against the Collateral;
(iii) (A) to direct account debtors and any other parties liable
for any payment with respect to the Collateral to make payment of any and
all monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (B) to receive payment of and receipt for any
and all monies, claims and other amounts due and to become due at any time
in respect of or arising out of any Collateral; (C) to sign and endorse any
invoices, freight or express bills, bills of lading, storage or warehouse
receipts, drafts against Debtors, assignments, verifications and notices in
connection with accounts and other documents relating to the Collateral;
(D) to commence and prosecute any suit, action or proceeding at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
Debtors with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described above and, in connection
therewith, to give such discharges or releases as Secured Party may deem
appropriate; (G) to endorse Debtors' names on all applications, documents,
papers and instruments necessary or desirable in order for Secured Party to
9
<PAGE>
Security Agreement (First)
use any of the Collateral; (H) to make, settle, compromise or adjust any
claims under or pertaining to any of the Collateral (including claims under
any policy of insurance); and (I) to sell, transfer, pledge, convey, make
any agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Secured Party were the absolute owner
thereof for all purposes, and to do, at Secured Party's option and Debtors'
expense, at any time, or from time to time, all acts and things which
Secured Party deems necessary to protect, preserve, maintain, or realize
upon the Collateral and Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Neither Secured Party nor
any Person designated by Secured Party shall be liable for any act or omission
or for any error of judgment or any mistake of fact or law. This power of
attorney is conferred on Secured Party solely to protect, preserve, maintain and
realize upon its security interest in the Collateral. Secured Party shall not
be responsible for any decline in the value of the Collateral and shall not be
required to take any steps to preserve rights against prior parties or to
protect, preserve or maintain any Lien given to secure the Collateral.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01. Payment of Secured Obligations. If all of the Secured
------------------------------
Obligations shall be paid as they become due and payable in good collected
funds, and if all of the covenants, warranties, undertakings and agreements made
in this Agreement and the other Operative Documents of Debtors and the Lessee
are kept and performed, in each such case, indefeasibly, then and in that event
only, all rights under this Agreement shall terminate and the Collateral shall
become free and clear of the security interest evidenced hereby, and such
security interest shall be released by Secured Party in due form at Debtors'
cost.
Section 5.02. No Waiver. Secured Party may waive any default without
---------
waiving any other prior or subsequent default. Secured Party may remedy any
default without waiving the default remedied. The failure by Secured Party to
exercise any right, power or remedy upon any default shall not be construed as a
waiver of such default or as a waiver of the right to exercise any such right,
power or remedy at a later date. No single or partial exercise by Secured Party
of any right, power or remedy hereunder shall exhaust the same or shall preclude
any other or further exercise thereof, and every such right, power or remedy
hereunder may be exercised at any time and from time to time. No modification
or waiver of any provision hereof nor consent to any departure by Debtors
herefrom shall in any event be effective unless the same shall be in writing and
signed by Secured Party and then such waiver or consent shall be effective only
in the specific instances, for the purpose for which given and to the extent
therein specified. No notice to nor demand on Debtors in any case shall of
itself entitle Debtors to any other or further notice of demand in similar or
other
10
<PAGE>
Security Agreement (First)
circumstances. Acceptance by Secured Party of any payment in an amount
less than the amount then due on any Secured Obligations shall be deemed an
acceptance on account only and shall not in any way affect the existence of a
default hereunder.
Section 5.03. No Impairment of Rights. Secured Party may at any time and
-----------------------
from time to time in writing (a) waive compliance by Debtors with any covenant
herein made by Debtors to the extent and in the manner specified in such
writing; (b) consent to Debtors' doing any act which hereunder Debtors are
prohibited from doing, or consent to Debtors' failing to do any act which
hereunder Debtors are required to do, to the extent and in the manner specified
in such writing; (c) release any part of the Collateral, or any interest
therein, from the security interest of this Agreement; or (d) release any party
liable, either directly or indirectly, for the Secured Obligations or for any
covenant herein or in any other instrument now or hereafter securing the payment
of the Secured Obligations without impairing or releasing the liability of any
other party. No such act shall in any way impair the rights of Secured Party
hereunder or impair or release the liability of any party except to the extent
specifically agreed by Secured Party in such writing.
Section 5.04. No Release or Impairment. The security interest and other
------------------------
rights of Secured Party hereunder shall not be impaired by any indulgence,
moratorium or release granted by Secured Party, including but not limited to (a)
any renewal, extension or modification which Secured Party may grant with
respect to any Secured Obligations; (b) any surrender, compromise, release,
renewal, extension, exchange or substitution which Secured Party may grant in
respect of any item of the Collateral, or any part thereof or any interest
therein, or (c) any release or indulgence granted to any indorser, guarantor or
surety of any Secured Obligations.
Section 5.05. Security Agreement as Financing Statement. A carbon,
-----------------------------------------
photographic or other reproduction of this Agreement or of any financing
statement relating to this Agreement shall be sufficient as a financing
statement.
Section 5.06. Financing Statements. Debtors will cause all financing
--------------------
statements and continuation statements relating hereto to be recorded, filed,
re-recorded and refiled in such manner and in such places as Secured Party may
request, and will pay all such recording, filing, re-recording and refiling
taxes, fees and other charges.
Section 5.07. Dealing with Successors. Without limiting the prohibition
-----------------------
set forth in Section 3.01(e) hereof, in the event the ownership of the
Collateral or any part thereof becomes vested in a Person other than Debtors,
Secured Party may, without notice to Debtors, deal with such successor or
successors in interest with reference to this Agreement and to the Secured
Obligations in the same manner as with Debtors, without in any way affecting or
discharging Debtors' liability hereunder or for the payment of the Secured
Obligations. No sale of the Collateral, no forbearance on the part of Secured
Party and no extension of the time for the payment of the Secured Obligations
given by Secured Party shall operate to release, discharge, modify, change or
affect, in whole or in part, the liability of Debtors, Borrower or any other
Person for the payment of the Secured Obligations, except as agreed in writing
by Secured Party.
11
<PAGE>
Security Agreement (First)
Section 5.08. Subrogation. To the extent that proceeds of the Secured
-----------
Obligations are used to pay indebtedness secured by any outstanding lien,
security interest, charge or prior encumbrance against the Collateral, such
proceeds have been advanced by Secured Party at Debtors' request and Secured
Party shall be subrogated to any and all rights, security interests and liens
owned by any owner or holder of such outstanding liens, security interests,
charges or encumbrances, irrespective of whether said liens, security interests,
charges or encumbrances are released.
Section 5.09. Application of Security. If any part of the Secured
-----------------------
Obligations cannot be lawfully secured by this Agreement, or if any part of the
Collateral cannot lawfully be subject to the security interest hereof to the
full extent of such indebtedness, then all payments made shall be applied on
said indebtedness first in discharge of that portion thereof which is not
secured by this Agreement.
Section 5.10. Assignment by Secured Party. Each Equity Lender may at any
---------------------------
time assign or otherwise transfer all or any portion of their rights and
obligations under this Agreement and the other Operative Documents (including,
without limitation, the Obligations) to any other Person, to the extent
permitted by, and upon the conditions contained in, Article XIII of the
Participation Agreement, and such Person shall thereupon become vested with all
the benefits thereof granted to Secured Party on behalf of the Equity Lenders,
herein or otherwise.
Section 5.11. Performance by Secured Party. If Debtors shall fail to
----------------------------
perform any covenant or agreement contained in this Agreement, Secured Party or
the Equity Lenders may perform or attempt to perform such covenant or agreement
on behalf of Debtors. In such event, Debtors shall, at the request of Secured
Party, promptly pay any amount expended by Secured Party in connection with such
performance or attempted performance to Secured Party, together with interest
thereon at the Default Rate from and including the date of such expenditure to
but excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that neither Secured Party or the Equity
Lenders shall not have any liability or responsibility for the performance of
any obligation of Debtors under this Agreement.
ARTICLE VI
MISCELLANEOUS
Section 6.01. No Waiver; Cumulative Remedies. No failure on the part of
------------------------------
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 6.02. Successors and Assigns. This Agreement shall be binding
----------------------
upon and inure to the benefit of Debtors and Secured Party and their respective
heirs, successors and assigns, except
12
<PAGE>
Security Agreement (First)
that neither party hereto shall assign any of its rights or obligations under
this Agreement except as permitted by the Participation Agreement.
SECTION 6.03. AMENDMENT; ENTIRE AGREEMENT. EXCEPT AS PROVIDED IN THE
---------------------------
OTHER OPERATIVE DOCUMENTS, THIS AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT
AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO. The provisions of this Agreement may be amended or waived only by an
instrument in writing signed by the parties hereto.
Section 6.04. Notices. All notices and other communications provided for
-------
in this Agreement shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section 6.04. Except as otherwise provided in this Agreement, all
------------
such communications shall be deemed to have been duly given when transmitted by
telecopy or when personally delivered or, in the case of a mailed notice, three
Business Days after deposit in the mails, in each case given or addressed as
aforesaid; provided, however, that notices to Secured Party shall be deemed
-------- -------
given when received by Secured Party.
SECTION 6.05. GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
----------------------------------------
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT
HAS BEEN ENTERED INTO IN HARRIS COUNTY, TEXAS, AND SHALL BE PERFORMABLE FOR ALL
PURPOSES IN HARRIS COUNTY, TEXAS. ANY ACTION OR PROCEEDING AGAINST DEBTORS
UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT IN HARRIS COUNTY, TEXAS. DEBTORS HEREBY
IRREVOCABLY (A) SUBMIT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B)
WAIVE ANY OBJECTION DEBTORS MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. DEBTORS AGREE THAT SERVICE OF PROCESS UPON THEM MAY BE MADE
BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, AT THEIR ADDRESSES
SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 6.04 OF
------------
THIS AGREEMENT. NOTHING IN THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL
AFFECT THE RIGHT OF SECURED PARTY TO SERVE PROCESS IN ANY
13
<PAGE>
Security Agreement (First)
OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF SECURED PARTY TO BRING
ANY ACTION OR PROCEEDING AGAINST DEBTORS OR WITH RESPECT TO ANY OF THEIR
PROPERTY IN COURTS IN OTHER JURISDICTIONS. ANY ACTION OR PROCEEDING BY DEBTORS
AGAINST SECURED PARTY SHALL BE BROUGHT ONLY IN A COURT LOCATED IN HARRIS COUNTY,
TEXAS.
Section 6.06. Headings. The headings, captions, and arrangements used in
--------
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 6.07. Survival of Representations and Warranties. All
------------------------------------------
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties or the right of Secured Party to rely upon them.
Section 6.08. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.09. Waiver of Bond. In the event Secured Party seeks to take
--------------
possession of any or all of the Collateral by judicial process, Debtors hereby
irrevocably waive any bonds and any surety or security relating thereto that may
be required by applicable law as an incident to such possession, and waives any
demand for possession prior to the commencement of any such suit or action.
Section 6.10. Severability. Any provision of this Agreement which is
------------
determined by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 6.11. Construction. Debtors and Secured Party acknowledge that
------------
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Debtors and Secured
Party.
SECTION 6.12. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, DEBTORS HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SECURED PARTY IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
14
<PAGE>
Security Agreement (First)
Section 6.13. No Liability of Secured Party. Secured Party's duty with
-----------------------------
reference to the Collateral shall be solely to use reasonable care in the
custody and preservation of the Collateral in Secured Party's possession.
Secured Party shall not be responsible in any way for any depreciation in the
value of the Collateral, nor shall any duty or responsibility whatsoever rest
upon Secured Party to take necessary steps to preserve rights against prior
parties or to enforce collection of the Collateral by legal proceedings or
otherwise, the sole duty of Secured Party being to receive collections,
remittances and payments on such Collateral as and when made. In the event
Debtors instruct Secured Party, in writing or orally, to deliver any or all of
the Collateral to a broker or other third person, and Secured Party agrees to do
so, the following conditions shall be conclusively deemed to be a part of
Secured Party's agreement, whether or not they are specifically mentioned to
Debtors at the time of such agreement. Secured Party shall assume no
responsibility for checking the genuineness or authenticity of any Person
purporting to be a messenger, employee or representative of the broker or other
third person to whom Debtors have directed Secured Party to deliver the
Collateral, or the genuineness or authenticity of any document of instructions
delivered by any such Person. Debtors will be considered by requesting any such
delivery to have assumed all risk of loss as to the Collateral. Secured Party's
sole responsibility will be to deliver the Collateral to the Person purporting
to be the broker or other third person described by Debtors, or a messenger,
employee or representative thereof. Secured Party and Debtors hereby expressly
agree that the foregoing actions by Secured Party shall constitute reasonable
care.
Section 6.14. Secured Obligations Absolute. Debtors agree that the Secured
----------------------------
Obligations will be paid strictly and in accordance with the terms of the
Operative Documents regardless of any law, regulation or order now or hereafter
in effect in any jurisdiction affecting any such terms or the rights of Secured
Party with respect thereto. The grant of a first and prior security interest in
the Collateral to Secured Party hereunder, and the obligations of Debtors and
the rights and remedies of Secured Party under this Agreement, shall be absolute
and unconditional, irrespective of (i) any lack of validity or enforceability of
any provision of this or any other Operative Document or any other agreement,
document or instrument relating to any Operative Document, or avoidance or
subordination of any of the Secured Obligations; (ii) any limitation of
liability or recourse in any Operative Document; (iii) any other matter or
occurrence set forth in Section 3 of the Guaranty (all of which are incorporated
herein by reference); or (iv) any other circumstances which might otherwise
constitute a legal or equitable discharge or defense of a guarantor or surety.
Without limitation of the foregoing, Debtors hereby waive any and all rights to
which Debtors may otherwise have or be entitled to under any suretyship laws of
the State of Texas in effect from time to time, including, without limitation,
any rights pursuant to Rule 31 of the Texas Rules of Civil Procedure, Section
17.001 of the Texas Civil Practice and Remedies Code, and Chapter 34 of the
Texas Business and Commerce Code.
Section 6.15. Limitation on Liability. Notwithstanding anything to the
-----------------------
contrary contained herein or in any other Operative Document, Secured Party
covenants and agrees for itself, the Equity Lenders and their respective
successors and assigns, that it shall enforce payment of the Secured Obligations
solely from amounts payable to the Lessor by the Lessee under the Master Lease,
from the Collateral, and from other security held for the payment of the Secured
Obligations. It is
15
<PAGE>
Security Agreement (First)
expressly understood and agreed that the provisions of this section are not
intended as a release or discharge of the Secured Obligations, or any portion
thereof, but only as a covenant that no deficiency, after applying the net
proceeds at foreclosure or other sale of any of the Collateral, shall ever be
asserted against the Lessor, its successors or assigns, for the payment of the
Secured Obligations, all of which shall remain in full force and effect;
provided, however, that Secured Party expressly reserves all other legal rights
and remedies against the Lessee, the Collateral and other security held and
parties liable for the repayment of the Secured Obligations, including the
right, if an Event of Default occurs, to foreclose the security interest
contained therein and to exercise all other rights and remedies available to
Secured Party hereunder and under the Uniform Commercial Code. The Lessee
confirms and agrees that the Lessor shall have no personal liability in the
performance of any obligations or the payment of any amounts to the Lessee
hereunder or under any of the other Operative Documents, and any such personal
liability is expressly waived.
[remainder of page intentionally left blank]
16
<PAGE>
Security Agreement (First)
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTORS:
-------
PARIBAS PROPERTIES, INC.,
a Delaware corporation
By:
----------------------------------
Edward V. Canale, President
By:
----------------------------------
Matthew J. Cooleen, Vice President
17
<PAGE>
Security Agreement (First)
MAIL-WELL I CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
18
<PAGE>
Security Agreement (First)
SECURED PARTY:
-------------
BANQUE PARIBAS, as Agent for the Equity Lenders
By:
----------------------------------------
Pierre-Jean de Filippis, General Manager
By:
----------------------------------------
Christopher S. Goodwin, Vice President
19
<PAGE>
Security Agreement (First)
SCHEDULE I
----------
Description and Locations of Equipment
--------------------------------------
<PAGE>
EXHIBIT 10.53
BILL OF SALE AND ASSIGNMENT OF EQUIPMENT
THIS BILL OF SALE AND ASSIGNMENT OF EQUIPMENT (this "Bill of Sale"), made
and entered into on this the 15th day of November, 1996, by MAIL-WELL I
CORPORATION, a Delaware corporation ("Assignor"), whose address is 23 Inverness
Way East, Englewood, Colorado 80112, to and for the benefit of PARIBAS
PROPERTIES, INC., a Delaware corporation ("Assignee"), whose address is 1200
Smith Street, Suite 3100, Houston, Texas 77002;
W I T N E S S E T H:
- - - - - - - - - -
Recitals
--------
A. Assignor, Assignee and various financial institutions identified
therein as "Lenders" (and herein so called), and Banque Paribas, as Agent for
such Lenders, have entered into a certain Participation Agreement (the
"Participation Agreement") dated as of November 15, 1996, which provides, among
- ------------------------
other things, for the lease financing of certain envelope and commercial
printing equipment owned by Assignor (the "Equipment"). The Equipment is more
---------
particularly described on Annex I attached hereto and made a part hereof for all
-------
purposes.
B. In accordance with the provisions of the Participation Agreement, the
Financing Lenders have, concurrently herewith, advanced to Assignee the sum of
$24,500,000.00 and the Equity Lenders have, concurrently herewith, advanced to
Assignee the sum of $5,500,000.00, aggregating $30,000,000.00 (the "Purchase
--------
Price"), to be used by Assignee for the purchase of the Equipment from Assignor.
- -----
Also, concurrently herewith, the Purchase Price has been paid by Assignee to
Assignor and the Equipment is being leased by Lessor to Lessee pursuant to a
certain Master Equipment Lease and Security Agreement, dated of even date
herewith (the "Master Lease").
------------
C. Pursuant to the Participation Agreement, Assignor desires to hereby
sell, assign, transfer and convey to Assignee all of the Equipment together with
all right, title and interest of Assignor in and to all fittings, accessories,
warranties, service contracts, guarantees and other items of tangible and
intangible personal property owned by Assignor and affixed or attached to, or
(with respect to intangible personal property) acquired or used in connection
with the operation of, the Equipment (the Equipment, together with all of
Assignor's right, title and interest in and to such other properties and assets,
being collectively called the "Assigned Properties").
-------------------
NOW, THEREFORE, for and in consideration of the premises and the sum of
Thirty Million Dollars ($30,000,000.00) and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed by Assignor, Assignor does hereby SELL, ASSIGN, TRANSFER, SET OVER and
DELIVER unto Assignee, its successors and assigns, all of the Assigned
Properties, free and clear of any and all liens or other encumbrances whatsoever
except as expressly provided in the Master Lease.
1
<PAGE>
Bill of Sale
TO HAVE AND TO HOLD the Assigned Properties unto Assignee, its successors
and assigns, forever; and Assignor does hereby bind itself and its successors
and assigns to WARRANT and FOREVER DEFEND, all and singular, title to the
Assigned Properties unto Assignee, its successors and assigns, against every
person whomsoever lawfully claiming or to claim the same or any part thereof.
1. Representations and Warranties. Assignor hereby represents and
------------------------------
warrants to Assignee as follows:
a. Affirmation of Representations and Warranties in Participation
--------------------------------------------------------------
Agreement. Each of the representations and warranties of Assignor set
---------
forth in the Participation Agreement is true and correct in all material
respects as of the date hereof.
b. Authorization. This Bill of Sale has been duly authorized,
-------------
executed and delivered on behalf of Assignor, and Assignor has full power
and authority to enter into and perform its respective obligations
hereunder.
c. No Breach. Neither the execution and delivery of this Bill of
---------
Sale nor the consummation of the transactions contemplated hereby will (i)
violate, conflict with or result in the breach or termination of, or
otherwise give any other contracting party the right to terminate, or
constitute a default (by way of substitution, novation or otherwise) under
the terms of, any mortgage, lease, bond, indenture, agreement, franchise or
other instrument or obligation to which any Assignor is a party or by which
any of the Assigned Properties may be bound or affected, (ii) result in the
creation of any lien, charge or encumbrance upon the Assigned Properties
pursuant to the terms of any such mortgage, bond, indenture, agreement,
franchise or other instrument or obligation or otherwise other than liens
in favor of Assignee, (iii) violate any judgment, order, injunction, decree
or award of any court, administrative agency or governmental body against,
or binding upon, Assignor or the Assigned Properties, or (iv) constitute a
violation by Assignor of any law or regulation applicable to Assignor or
the Assigned Properties.
d. Ownership of the Equipment and Other Assigned Properties.
--------------------------------------------------------
Assignor has good and marketable title to the Equipment and other Assigned
Properties, free and clear of any liens or other encumbrances whatsoever
other than liens in favor of Assignee.
e. Compliance with Laws. Assignor is not in violation of (i) any
--------------------
applicable judgment, order, injunction, writ or decree, or (ii) any
federal, state or local law, ordinance or regulation or any other
requirement of any governmental body, court or arbitrator, in each such
case, which is applicable to the Equipment or other Assigned Properties,
including, without limitation, the Occupational Safety and Health Act, the
Americans with Disabilities Act, and all applicable laws, rules and
regulations relating to
2
<PAGE>
Bill of Sale
the protection of human health or the environment. No permits, licenses,
orders and approvals of any federal, state, local or foreign government or
regulatory body (other than those which have been obtained) are necessary
or required for the acquisition, ownership, operation or leasing by
Assignee of the Equipment and other Assigned Properties.
f. Outstanding Commitments. There are no outstanding contracts or
-----------------------
commitments applicable to the Equipment or any part thereof which would
bind Assignee or the Equipment or other Assigned Properties to any
obligation or liability whatsoever. Attached hereto as Annex II and made a
--------
part hereof is a true, correct and complete list of all warranties, service
contracts, and guaranties relating to the Assigned Properties for the
benefit of the owner thereof, all of which are assignable to Assignee and
have been duly assigned and transferred to Assignee pursuant to the terms
hereof.
g. Actions and Proceedings. There are no charges, actions, suits,
-----------------------
claims or legal, administrative or arbitration proceedings or
investigations (whether or not the defense thereof or liabilities in
respect thereof are covered by policies of insurance), potential, pending
or, to the knowledge of any Assignor, threatened, against or involving the
Equipment or other Assigned Properties, and there are no outstanding
orders, writs, injunctions or decrees of any court, governmental agency or
arbitration tribunal against or involving the Equipment or other Assigned
Properties. To the best knowledge of Assignor, there are no bases or
grounds for any suit, action, claim, investigation or proceeding that would
adversely affect the Equipment or other Assigned Properties.
h. Full Disclosure. All documents and schedules delivered or to be
---------------
delivered by or on behalf of Assignor to Assignee in connection with this
Bill of Sale and the transac tions contemplated hereby, taken as a whole,
are and will be true, correct and complete in all material respects.
i. Due Organization. Assignor is a corporation duly organized,
----------------
validly existing, and in good standing under the laws of the State of its
incorporation, with full power and authority to enter into and perform this
Bill of Sale.
j. Adequacy of Assets. The Equipment and other Assigned Properties
------------------
constitute all items of personal property, both tangible and intangible, as
of the date hereof, that historically have been used in the operation of
the Equipment. Each item of the Equipment is suitable and adequate for the
business purpose for which it is now being used.
k. Taxes. Assignor has filed all requisite federal, state and local
-----
tax returns due for all fiscal periods ending on or before September 31,
1996, and have paid all taxes required thereby. None of the Equipment or
other Assigned Properties is subject or will be subject to a lien for
unpaid taxes.
3
<PAGE>
Bill of Sale
l. Compliance with Laws. Assignor has owned and operated, and will
--------------------
continue to operate, the Equipment and other Assigned Properties in compliance
with all applicable federal and state laws, rules and regulations (including
without limitation environmental laws) and in accordance with the terms of the
Master Lease.
2. No Agents. No agent or finder has acted on behalf of any Assignor in
---------
connection with the transactions contemplated hereby. In the event that any
claim is at any time made by any agent or finder for any fee or other commission
in connection with the transactions contemplated herein, such claim shall be
handled and satisfied solely by the Assignor whose commitments or alleged
commitments gave rise thereto.
3. Indemnification. Assignor agrees to indemnify, defend and hold
---------------
harmless Assignee from and against any and all costs, expenses and losses,
including, without limitation, interest, penalties and reasonable attorneys'
fees and disbursements, arising out of or otherwise in respect of any inaccuracy
in or breach of any representation, warranty, covenant or agreement of Assignor
contained in this Bill of Sale.
4. Further Assurances. Assignor agrees to perform such other acts and to
------------------
execute, acknowledge and/or deliver subsequent to the date hereof such other
instruments, documents and other materials, as Assignee may reasonably request
from time to time in order to effectuate the conveyance and assignment of the
Equipment and the other Assigned Properties to Assignee and to vest good and
marketable title thereto in Assignee.
5. Access to Records. Assignor agrees to preserve all books, records and
-----------------
documents in its possession relating to any of the Equipment or other Assigned
Properties. In the event that Assignee shall any time require access to such
books, records and documents for any purpose whatsoever, including, without
limitation, verifying the accuracy of the representations and warranties
contained herein, preparing tax returns or complying with any audit request,
Assignor shall allow representatives of Assignee access to such books, records
and documents during regular business hours for the purpose of obtaining such
information and will permit Assignee and its representatives to make extracts
and copies thereof as may be deemed necessary or appropriate by Assignee.
6. Governing Law. This Bill of Sale shall be governed by and construed
-------------
in accordance with the laws of the State of Texas.
7. Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Bill of Sale.
4
<PAGE>
Bill of Sale
8. Execution in Counterparts. This Bill of Sale may be executed in one
-------------------------
or more counterparts, all of which shall be considered one and the same
agreement, and shall become a binding agreement when one or more counterparts
have been signed by each of the parties and delivered to the other parties.
9. No Assumption by Assignee. Assignee does not hereby assume or agree
-------------------------
to perform any debt, duty or obligation of Assignor or any other party with
respect to the Assigned Properties, and any such assumption or agreement is
hereby expressly disclaimed.
10. Binding Effect. All of the covenants, terms and conditions set forth
--------------
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective heirs, successors and assigns.
[remainder of page intentionally left blank]
5
<PAGE>
Bill of Sale
EXECUTED as of the day and year first above written.
ASSIGNOR:
MAIL-WELL I CORPORATION
By:_______________________________
Name:_____________________________
Title:____________________________
6
<PAGE>
Bill of Sale
ASSIGNEE:
PARIBAS PROPERTIES, INC.
By:___________________________________
Edward V. Canale, President
By:___________________________________
Matthew J. Cooleen, Vice President
7
<PAGE>
EXHIBIT 10.49
APPENDIX A
to
Participation Agreement,
Master Lease, and Loan Agreement
DEFINITIONS AND INTERPRETATION
A. Interpretation. In each Operative Document, unless a clear contrary
--------------
intention appears:
(i) the singular number includes the plural number and vice versa;
-----------
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are permitted by
the Operative Documents, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement (including any Operative Document),
document or instrument means such agreement, document or instrument as amended
or modified and in effect from time to time in accordance with the terms thereof
and, if applicable, the terms of the other Operative Documents and reference to
any promissory note includes any promissory note which is an extension or
renewal thereof or a substitute or replacement therefor;
(v) reference to any Applicable Law means such Applicable Law as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated thereunder
and reference to any section or other provision of any Applicable Law means that
provision of such Applicable Law from time to time in effect and constituting
the substantive amendment, modification, codification, replacement or
reenactment of such section or other provision;
(vi) reference in any Operative Document to any Article, Section,
Appendix, Schedule or Exhibit means such Article or Section thereof or Appendix,
Schedule or Exhibit thereto;
(vii) "hereunder, "hereof", "hereto" and words of similar import shall be
deemed references to an Operative Document as a whole and not to any particular
Article, Section or other provision thereof;
(viii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term; and
(ix) relative to the determination of any period of time, "from" means
"from and including" and "to" means "to but excluding".
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Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
B. Accounting Terms. In each Operative Document, unless expressly
----------------
otherwise provided, accounting terms shall be construed and interpreted, and
accounting determinations and computations shall be made, in accordance with
GAAP.
C. Conflict in Operative Documents. If there is any conflict between any
-------------------------------
Operative Documents, such Operative Document shall be interpreted and construed,
so as to avoid or minimize such conflict but, to the extent (and only to the
extent) of such conflict, the Participation Agreement shall prevail and control.
D. Legal Representation of the Parties. The Operative Documents were
-----------------------------------
negotiated by the parties with the benefit of legal representation and any rule
of construction or interpretation otherwise requiring the Operative Document to
be construed or interpreted against any party shall not apply to any
construction or interpretation hereof or thereof.
E. Material Adverse Effect. The term "Material Adverse Effect," as such
----------------------- ------------------------
term is defined in the Mail-Well Credit Agreement, shall, for purposes of all of
the Operative Documents (including, without limitation, for purposes of Section
-------
16.1(i) of the Master Lease), be deemed to mean as such term is defined in this
- -------
Appendix A below.
F. Defined Terms. Unless a clear contrary intention appears, terms
-------------
defined herein have the respective indicated meanings when used in each
Operative Document.
"Acceleration" is defined in Section 6.2(a) of the Loan Agreement.
------------ --------------
"Additional Costs" are defined in Section 11.1 of the Participation
---------------- ------------
Agreement.
"Advance" means an advance of funds to the Lessor pursuant to Article III
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of the Participation Agreement.
"Adjusted Eurodollar Rate" is defined in Section 1.1 of the Mail-Well
------------------------ -----------
Credit Agreement.
"Affiliate" means, as to any Person, any other Person (i) that directly or
---------
indirectly, through one or more intermediaries, controls or is controlled by, or
is under common control with, such Person; (ii) that directly or indirectly
beneficially owns or holds ten percent (10%) or more of any class of voting
stock of such Person; or (iii) ten percent (10%) or more of the voting stock of
which is directly or indirectly beneficially owned or held by the Person in
question. The term "control" means the possession, directly or indirectly, of
the power to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise; provided, however, in no event shall the Agent or any Lender be
-------- -------
deemed an Affiliate of the Borrower or any of its Subsidiaries.
"After Tax Basis" means, with respect to any payment to be received, the
---------------
amount of such payment increased so that, after deduction of the amount of all
taxes required to be paid by the
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<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
recipient (less any tax savings realized and the present value of any tax
savings projected to be realized by the recipient as a result of the payment of
the indemnified amount) with respect to the receipt by the recipient of such
amounts, such increased payment (as so reduced) is equal to the payment
otherwise required to be made.
"Agent" means Banque Paribas in its capacity as Agent for the Lenders, or
-----
such successor agent as may be appointed by the Lenders pursuant to Section 10.9
------------
of the Loan Agreement, or in its capacity as Agent for Lessor or any successor
agent as may be appointed by the Lessor pursuant to Section 2.6 of the Master
Lease.
"Applicable Bankruptcy Law" means, with respect to any Guarantor, Title 11
-------------------------
of the United States Code, as amended from time to time, and any other laws
governing bankruptcy, suspension of payments, reorganization, arrangement,
adjustment of debts, relief of debtors, dissolution, insolvency or other similar
laws applicable to such Guarantor.
"Applicable Law" means all existing and future applicable laws, rules,
--------------
regulations (including Hazardous Materials Laws) statutes, treaties, codes,
ordinances, permits, certificates, orders and licenses of and interpretations
by, any Governmental Authority, and applicable judgments, decrees, injunctions,
writs, orders or like action of any court, arbitrator or other administrative,
judicial or quasi-judicial tribunal or agency of competent jurisdiction
(including those pertaining to health, safety or the environment (including,
without limitation, wetlands) and those pertaining to the use of any Equipment)
and any restrictive covenant or deed restriction or easement of record, in each
case affecting the Lessee, any Subsidiary Guarantor, any Equipment or any
material interests in any other kind of Equipment or asset, whether real,
personal or mixed, or tangible or intangible, of the Lessee or any Subsidiary
Guarantor.
"Applicable Lending Office" means for each Lender and each Type of Loan,
-------------------------
the Lending Office of such Lender (or of an Affiliate of such Lender) designated
for such Type of Loan below its name on the signature pages hereof (or, with
respect to a Lender that becomes a party to the Participation Agreement pursuant
to an assignment made in accordance with Section 13.8 of the Participation
------------
Agreement) or such other office of such Lender (or of an Affiliate of such
Lender) as such Lender may from time to time specify to the Borrower and the
Agent as the office by which its Loans of such Type are to be made and
maintained.
"Applicable Margin" means (i) with respect to the Financing Loans, from the
-----------------
Effective Date until the first Calculation Date following the Effective Date,
one-half percent (0.5%) for Prime Rate Loans and two percent (2%) for Eurodollar
Loans, and (ii) with respect to the Equity Loans at all times, one and one-
half percent (1.5%) for Prime Rate Loans and three percent (3%) for Eurodollar
Loans. For periods from each Calculation Date following the Effective Date to
the next Calculation Date, the Applicable Margin for Financing Loans shall mean
the rate per annum set forth in the table below that corresponds to the ratio
of: (i) Total Debt as of the date of the relevant financial statement referred
to below to (ii) EBITDA for the four (4) fiscal quarters of the Lessee then most
recently entered as of the date of such financial statement:
3
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Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
<TABLE>
<CAPTION>
Ratio of Total Debt Applicable Margin Applicable Margin
to EBITDA for Eurodollar Loans for Prime Rate Loans
------------------- -------------------- ---------------------
<S> <C> <C>
Greater than or equal to 3.25 to 1.00 2.5% 1.0%
Greater than or equal to 2.75 to 1.00
and less than 3.25 to 1.00 2.0% 0.5%
Less than 2.75 to 1.00 1.75% 0.25%
</TABLE>
The Applicable Margin for Financing Loans shall change on each Calculation Date
and be calculated on the basis of the financial statement delivered by the
Lessee pursuant to Section 8.1(a) of the Mail-Well Credit Agreement and the
--------------
certificate to be delivered by Borrower by the Lessee pursuant to Section 8.1(e)
--------------
of the Mail-Well Credit Agreement; provided, that if the Lessee fails to deliver
to the Agent such financial statements or certificate on or before the relevant
Calculation Date, the Applicable Margin for Financing Loans shall be as set
forth above for a period from such Calculation Date until the date such
statements and certificate are received by the Agent, after which the Applicable
Margin for Financing Loans shall be determined as otherwise provided herein.
"Appraisal" means, with respect to each item of Equipment, an appraisal,
---------
prepared by the Appraiser, of such Equipment, which Appraisal complies in all
material respects with the applicable Requirements of Law, and will appraise the
Fair Market Sales Value of such Equipment.
"Appraiser" means Valuation Research Corporation or, if such appraiser is
---------
not available, another reputable appraiser selected by the Lessor, with the
consent of the Lessee (which consent shall not be unreasonably withheld).
"Appurtenant Rights" means, with respect to each item of Equipment, all
------------------
warranties, agreements, and other rights and benefits at any time belonging or
pertaining to such Equipment, including, without limitation, all permits and
licenses and all software and intellectual property rights.
"Assignment and Acceptance" means an assignment and acceptance entered into
-------------------------
by a Lender and its Assignee and accepted by the Agent pursuant to Section
-------
13.8(e) of the Participation Agreement.
- -------
"Assignment of Lease and Rent" means the Assignment of Lease and Rent dated
----------------------------
as of the Effective Date, from the Lessor, as assignor, to the Agent, as
assignee.
"Bankruptcy Code" means the United States Code entitled "Bankruptcy," as
---------------
now or hereafter in effect, or any successor thereto.
"Basic Rent" means the sum of the Financing Lender Basic Rent and the
----------
Equity Lender Basic Rent, calculated as of the applicable date on which Basic
Rent is due.
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<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Basle Accord" means the proposals for risk-based capital framework
------------
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.
"Bill of Sale" means each bill of sale and assignment executed by the
------------
Lessee or a Subsidiary Guarantor selling, assigning and transferring to the
Lessor all or any portion of the Equipment.
"Break Costs" means an amount equal to the amount, if any, required to
-----------
compensate the Lessor or any Participant for any loss, cost or expense incurred
by it (including, without limitation, any loss, cost or expense incurred by
reason of the liquidation or reemployment of deposits or funds acquired by the
Lessor or such Participant to fund its obligations under the Operative
Documents) as a result of (x) the Lessee's payment of Rent other than on a
Payment Date, or (y) any Advance not being made on the date specified therefor
in the applicable Funding Request (other than as a result of a breach by the
Lessor or such Participant, as the case may be, of its obligation under Sections
--------
3.1, 3.2 or 3.3, as the case may be, of the Participation Agreement to make
- --- --- ---
Advances to the Lessee or make Equity Loans or Loans available to the Lessor).
A statement as to the amount of such loss, cost or expense, prepared in good
faith and in reasonable detail and submitted by the Lessor or such Participant,
as the case may be, to the Lessee, shall be presumed correct.
"Business Day" means (i) each Monday, Tuesday, Wednesday, Thursday and
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Friday which is not a day on which banks in New York, New York or Houston, Texas
are generally authorized or obligated, by law or executive order, to close and
(ii) relative to the payment of Rent determined by reference to the Eurodollar
Rate, any day which is a Business Day under clause (i) and is also a day on
----------
which dealings in Dollars are carried on in the London interbank Eurodollar
market.
"Calculation Date" means the date occurring in each calendar quarter during
----------------
the term of this Agreement which is fifteen (15) days after the date on which
quarterly financial statements of the Lessee are required by Section 8.1 of the
-----------
Mail-Well Credit Agreement to be delivered to the Agent; provided, however, that
-------- -------
the first Calculation Date shall be the Effective Date.
"Casualty" means any contamination, damage or destruction of all or any
--------
material portion of any item of the Equipment as a result of a fire or other
casualty, or prohibition of use for more than 45 days (but in no event beyond
the Expiration Date).
"CERCLA" means the Comprehensive Environmental Response, Compensation, and
------
Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et. seq., as amended by the
-- ----
Superfund Amendments and Reauthorization Act of 1986.
"Certifying Party" is defined in Section 22.1 of the Master Lease.
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Appendix A Participation Agreement,
Master Lease, and Loan Agreement
"Change in Control" or "Change of Control" has the meaning given to "Change
----------------- ----------------- ------
of Control" in Section 1.1 of the Mail-Well Credit Agreement.
- ---------- -----------
"Claims" means any and all allegations, notices, orders, threatened claims,
------
damages, obligations, liabilities, losses, actions, suits, judgments, penalties,
fines, claims, demands, settlements, costs and expenses (including, without
limitation, reasonable legal and consulting fees and expenses) of any nature
whatsoever.
"Code" means the Internal Revenue Code of 1986, as amended from time to
----
time, or any successor statute thereto.
"Collateral" means all property and interests in property, presently owned
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or hereafter acquired or presently existing or hereafter created by the
Guarantors, including any and all proceeds thereof, in which a security interest
has been granted in favor of the Credit Facility Agent and the Agent for the
ratable benefit of the Credit Facility Banks and the Financing Lenders, whether
under the Security Documents or any other Operative Document.
"Commitment" means (i) as to any Lender, the obligation of such Lender to
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make Loans to the Lessor at the request of the Lessee in an aggregate principal
amount not to exceed the amount set forth opposite such Lender's name on
Schedule I to the Participation Agreement, as such Schedule may be amended from
- ----------
time to time and (ii) with respect to the Lessor, the obligation of the Lessor
to pay the Purchase Price (to the extent the Lessor receives Equity Loans and
Loans).
"Commitment Amount" means an amount equal to $24,500,000 with respect to
-----------------
the Financing Loans and $5,500,000 with respect to the Equity Loans.
"Commitment Percentage" means, as to any Lender, the percentage of the
---------------------
Equity Loans, the Financing Loans or all Loans, as may be applicable based upon
the context in which such term is used, set forth opposite such Lender's name
under the heading "Commitment Percentage" on Schedule I to the Participation
----------
Agreement, as such Schedule may be amended from time to time.
"Commonly Controlled Entity" means a Person that is under common control
--------------------------
with the Lessee within the meaning of subsection 414(b), (c), (m), (n) or (o) of
the Code.
"Condemnation" means with respect to any item of Equipment, any
------------
condemnation, reacquisition, confiscation, seizure or other taking or sale of
the use, access, possession, rights or title to such Equipment, or any part
thereof, wholly or partially (temporarily or permanently) by or on account of
any actual or threatened eminent domain proceeding or other taking of action by
any Person having the power of eminent domain, including an action by a
Governmental Authority, with respect to any real property of which such
Equipment may be deemed to be a fixture or is otherwise adversely affected by
any such taking. A Condemnation shall be deemed to have occurred on the
earliest of the dates that the use or title vests in the condemning authority or
a claim to condemnation proceeds arises with respect to the Equipment.
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<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Credit Agreements" means, collectively, the Supremex Credit Agreement and
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the Mail-Well Credit Agreement.
"Credit Documents" means each Credit Agreement, the notes executed and
----------------
delivered pursuant thereto, the Security Documents and all other documents,
instruments and agreements now or hereafter executed or delivered pursuant
thereto or in connection therewith.
"Credit Facility Agent" means Banque Paribas, as agent for the Credit
---------------------
Facility Banks, or such successor administrative agent as may be appointed by
the Credit Facility Banks pursuant to the Credit Agreements.
"Credit Facility Banks" means, collectively, each lender party to the
---------------------
Supremex Credit Agreement or the Mail-Well Credit Agreement.
"Credit Facility Financing Statement" means any Uniform Commercial Code
-----------------------------------
financing statement, on Form UCC-1 or otherwise, executed pursuant to the
provisions of the Credit Agreements or any other Credit Document.
"Credit Facility Loans" means "Loans" under, and as defined in, the Credit
---------------------
Agreements.
"Default" means any Event of Default or any condition, occurrence or event
-------
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Default Rate" means, with respect to any Loan, the Prime Rate or
------------
Eurodollar Rate for such Loan, as the case may be, plus the Applicable Margin
----
plus two percent (2%) per annum.
- ----
"Dollars" and "$", mean dollars in lawful currency of the United States of
------- -
America.
"EBITDA" has the meaning given to such term in Section 1.1 of the Mail-Well
------ -----------
Credit Agreement.
"Effective Date" means November ____, 1996.
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"Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
-----------------
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) acceptable to the Agent and
approved by the Lessee, which approval by the Lessee and Agent shall not be
unreasonably withheld, conditioned or delayed.
"End of the Term Report" is defined in Section 12.2(a) of the Participation
---------------------- ---------------
Agreement.
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<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Environmental Audit" means, with respect to each item of Equipment, an
-------------------
environmental assessment (the scope and performance of which meets or exceeds
the then most current ASTM Standard Practice E1527 for Environmental
Assessments).
"Environmental Certificate" means the Environmental Certificate required by
-------------------------
the Agent in accordance with the provisions of Section 14.2 of the Master Lease.
-------------
"Environmental Violation" means any activity, omission, occurrence or
-----------------------
condition that violates or results in non-compliance with any Hazardous
Materials Law.
"Equipment" means equipment, apparatus, Modifications, Substituted
---------
Equipment, furnishings, fittings and personal property of every kind and nature
whatsoever purchased by the Lessor using the proceeds of the Loans, including
but without limiting the generality of the foregoing, all the envelope and
commercial printing equipment and other equipment specifically described in the
Master Lease, together with all Appurtenant Rights relating thereto.
"Equipment Balance" means, with respect to any Equipment, an amount equal
-----------------
to the outstanding principal amount of the Loans related to such Equipment, and
all accrued and unpaid interest and Equity Yield thereon, and any Supplemental
Rent related thereto.
"Equipment Legal Requirements" means all Applicable Laws affecting any
----------------------------
Equipment or the use or alteration thereof, whether now or hereafter enacted and
in force, including any that require repairs, modifications or alterations in or
to any Equipment or in any way limit the use and enjoyment thereof (including
all building, zoning and fire codes and the Americans with Disabilities Act of
1990, 42 U.S.C. (S) 1201 et seq. and any other similar Federal, state or local
-- ---
laws or ordinances and the regulations promulgated thereunder) and any that may
relate to environmental requirements (including all Hazardous Materials Laws),
and all permits, licenses, authorizations and regulations relating thereto, and
all covenants, agreements, restrictions and encumbrances contained in any
instruments which are either of record or known to the Lessee affecting any
Equipment, the Appurtenant Rights and any licenses or other agreements entered
into pursuant to Section 8.2 of the Master Lease.
-----------
"Equity Balance" means, as of any date of determination, an amount equal to
--------------
the sum of the outstanding Equity Loans together with all accrued and unpaid
Equity Yield thereon.
"Equity Lender Basic Rent" means the amount of accrued Equity Yield due on
------------------------
the Equity Loans as of any Payment Date and excluding any interest at the
applicable Default Rate on any installment of Equity Lender Basic Rent not paid
when due.
"Equity Lender Commitment" means the Commitment of each Equity Lender in
------------------------
the amount set forth on Schedule I of the Participation Agreement, as such
----------
Schedule may be amended from time to time.
8
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Equity Lenders" means those Lenders designated as Equity Lenders under the
--------------
terms of the Loan Agreement.
"Equity Loan" is defined at Section 3.2 of the Participation Agreement.
----------- -----------
"Equity Loans" means the Loans in the aggregate principal amount of
------------
$5,500,000 to be made by the Equity Lenders to the Lessor under the Loan
Agreement
"Equity Notes" as defined in Section 2.2 of the Loan Agreement.
------------ -----------
"Equity Obligations" means all Obligations owed to the Equity Lenders.
------------------
"Equity Yield" means the interest accruing and payable with respect to each
------------
Equity Loan, whether a Prime Rate Loan or a Eurodollar Loan, plus the Applicable
Margin, in accordance with the provisions of Section 2.4 of the Loan Agreement.
-----------
"Equity Yield Rate" means, with respect to each Equity Loan, the sum of the
-----------------
Eurodollar Rate or the Prime Rate, as the case may be, plus the Applicable
Margin.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time or any successor Federal statute.
"Eurodollar Rate" is defined in Section 1.1 of the Mail-Well Credit
--------------- -----------
Agreement.
"Eurodollar Loans" means Loans that bear interest at a rate based upon the
----------------
Eurodollar Rate or the Adjusted Eurodollar Rate.
"Event of Default" means a Lease Event of Default, a Loan Agreement Event
----------------
of Default, or an "Event of Default" as defined in any Credit Agreement, or an
event of default under any other Operative Document.
"Excepted Payments" means:
-----------------
(a) all indemnity payments (including indemnity payments made pursuant
to Article XII of the Participation Agreement) to which the Lessor, any
-----------
Lender, or any of their respective Affiliates, agents, officers, directors
or employees is entitled;
(b) any amounts (other than Basic Rent or amounts payable by Lessee
pursuant to Section 15.2 or Articles XVI, XVIII or XX of the Master Lease)
------------ ------------ ----- --
payable under any Operative Document to reimburse the Lessor, any Lender,
or any of their respective Affiliates (including the reasonable expenses of
the Lessor, any Lender or such Affiliates incurred in connection with any
such payment) for performing or complying with any of the obligations of
the Lessee under and as permitted by any Operative Document;
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Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
(c) any amount payable to any Lender by any transferee permitted under
the Operative Documents of the interest of such Lender as the purchase
price of such Lender's interest (or a portion thereof);
(d) any insurance proceeds (or payments with respect to risks self-
insured or policy deductibles) under liability policies other than such
proceeds or payments payable to any Lender;
(e) any insurance proceeds under policies maintained by the Lessor or
Equity Lender;
(f) Transaction Expenses or other amounts or expenses paid or payable
to or for the benefit of the Lessor or Lender;
(g) any payments received by any Lender or the Lessor from the
transfer of all or any part of such Lender's interest in the Loans or the
Lessor's interest in any of the Equipment or any other property, other than
payments received by the Lessor under the Master Lease; and
(h) any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (g) above.
"Excess Casualty/Condemnation Proceeds" means the excess, if any, of (x)
-------------------------------------
the aggregate of all awards, compensation or insurance proceeds payable in
connection with a Casualty or Condemnation minus (y) the Equipment Balance paid
-----
by the Lessee pursuant to Article XV of the Master Lease with respect to such
----------
Casualty or Condemnation.
"Excess Sales Proceeds" means the excess, if any, of (x) the aggregate of
---------------------
all proceeds received by the Lessor in connection with any sale of Equipment
pursuant to the Lessor's exercise of remedies under Section 16.2 of the Master
------------
Lease or the Lessee's exercise of the Remarketing Option under Article XX of the
----------
Master Lease minus (y) the Lease Balance for such Equipment.
"Expiration Date" means March 31, 2003.
---------------
"Expiration of the Term" means the last day of the Lease Term.
----------------------
"Expiration Date Purchase Obligation" means the Lessee's obligation,
-----------------------------------
pursuant to Section 18.2 of the Master Lease, to purchase all (but not less than
------------
all) of the Equipment on the Expiration Date.
"Fair Market Sales Value" means, with respect to any Equipment, the amount,
-----------------------
which in any event shall not be less than zero, that would be paid in cash in an
arm's length transaction between an informed and willing purchaser and an
informed and willing seller, neither of whom is under any
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Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
compulsion to purchase or sell, respectively, for the ownership of such
Equipment. The Fair Market Sales Value of any Equipment shall be determined
based on the assumption that, except for purposes of Article XVI of the Master
Lease and Section 12.2 of the Participation Agreement, such Equipment is
------------
installed and in place, and is in the condition and state of repair required
under Section 9.1 of the Master Lease and the Lessee is in compliance with the
-----------
other requirements of the Operative Documents relating to the condition of the
Equipment.
"Fee Letters" means, collectively, each fee letter (if any) entered into by
-----------
the Lessee with the Agent, the Lessor or any Lender with respect to the fees to
be paid to such Person by the Lessee., including without limitation, the Agent's
Letter (as defined in Section 1.1 of the Mail-Well Credit Agreement).
-----------
"Financing Balance" means, as of any date of determination, an amount equal
-----------------
to the sum of the outstanding Financing Loans together with all accrued and
unpaid interest thereon.
"Financing Lender Basic Rent" means the amount of accrued interest on the
---------------------------
Financing Loans, determined in accordance with Section 2.4 of the Loan Agreement
-----------
and excluding any interest at the applicable Default Rate on any installment of
Basic Rent as of any Payment Date not paid when due.
"Financing Lenders" means those Lenders designated as Financing Lenders
-----------------
under the terms of the Loan Agreement.
"Financing Loans" means the Loans in the aggregate principal amount of
---------------
$24,500,000 to be made by the Financing Lenders to the Lessor under the Loan
Agreement.
"Financing Notes" as defined in Section 2.2 of the Loan Agreement.
--------------- -----------
"Financing Obligations" means all Obligations owed to the Financing
---------------------
Lenders.
"Financing Statements" means UCC-1 financing statements appropriately
--------------------
completed and executed by the Lessor or the Lessee, as the case may be, for
filing in the applicable jurisdiction in order to protect the Lessor's interest
under the Master Lease to the extent the Master Lease is a security agreement
and to protect the security interest of the Agent under the Operative
Documents..
"Fiscal Quarter" means any quarter of a Fiscal Year.
--------------
"Fiscal Year" means any period of twelve consecutive calendar months ending
-----------
on or about December 31; references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "1996 Fiscal Year") refer to the Fiscal Year
---
ending on or about December 31st of such calendar year.
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Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
------------
or any successor thereto.
"GAAP" means United States generally accepted accounting principles
----
(including principles of consolidation), in effect from time to time.
"Government Obligations" means direct obligations of the United States of
----------------------
America or obligations for the full and prompt payment of any obligation of
which the full faith and credit of the United States of America is pledged.
"Governmental Action" means all permits, authorizations, registrations,
-------------------
consents, approvals, waivers, exceptions, variances, orders, judgments, written
interpretations, decrees, licenses, exemptions, publications, filings, notices
to and declarations of or with, or required by, any Governmental Authority, or
required by any Applicable Law, and shall include, without limitation, all
environmental and operating permits and licenses that are required for the full
use and operation of any Equipment.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government.
"Gross Remarketing Proceeds" is defined in Section 20.1(l) of the Master
-------------------------- ---------------
Lease.
"Guaranteed Obligations" has the meaning given to it in the Guaranty.
----------------------
"Guarantor" or "Guarantors" means the Lessee, Holdings and each Subsidiary
--------- ----------
Guarantor, as guarantors under the Guaranty.
"Guaranty" means the Lease Facility Guaranty Agreement (whether one or
--------
more) dated as of the Effective Date, made jointly and severally by each of the
Guarantors in favor of the Lenders.
"Hazardous Activity" means any activity, process, procedure or undertaking
------------------
that directly or indirectly (i) produces, generates or creates any Hazardous
Material; (ii) causes or results in (or threatens to cause or result in) the
Release of any Hazardous Material into the environment (including air, water
vapor, surface water, groundwater, drinking water, land (including surface or
subsurface), plant, aquatic and animal life); (iii) involves the containment or
storage of any Hazardous Material; or (iv) would be regulated as hazardous waste
treatment, storage or disposal within the meaning of any Hazardous Materials
Law.
"Hazardous Materials" means any hazardous, toxic or dangerous materials,
-------------------
substances, chemicals, wastes or pollutants that from time to time are defined
by or pursuant to or are regulated under any Hazardous Materials Laws, including
asbestos, polychlorinated biphenyls, petroleum, petroleum derivatives or by-
products, other hydrocarbons, urea formaldehyde and any material,
12
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
substance, pollutant or waste that is defined as a hazardous waste under RCRA or
defined as a hazardous substance under CERCLA.
"Hazardous Materials Laws" means all federal, state, regional, county or
------------------------
local laws, statutes, rules, regulations, ordinances or common laws, now or
hereafter in effect, relating to the generation, recycling, use, reuse, sale,
storage, handling, transport, treatment or disposal of Hazardous Materials,
including CERCLA, RCRA, the Clean Air Act, 42 U.S.C. (S) 7401, et seq. ("CAA"),
-- ---- ---
the Toxic Substances Control Act, 15 U.S.C. 2601 et seq. ("TSCA") and any rules,
-- ---- ----
regulations and guidance documents promulgated or published thereunder, and any
state, regional, county or local statute, law, rule, regulation, ordinance or
common law now or hereafter in effect that relates to public health, safety or
the discharge, emission or disposal of Hazardous Materials in or to air, water,
land or groundwater, to the withdrawal or use of groundwater, to the use,
handling or disposal of asbestos, polychlorinated biphenyls, petroleum,
petroleum derivatives or by-products, other hydrocarbons or urea formaldehyde,
to the treatment, storage, disposal or management of Hazardous Materials, to
exposure to Hazardous Materials or to the transportation, storage, disposal,
management or release of gaseous or liquid substances, and any regulation,
order, injunction, judgment, declaration, notice or demand issued thereunder.
"Holdings" means Mail-Well, Inc., a Delaware corporation.
--------
"Impositions" means any and all liabilities, losses, expenses and costs of
-----------
any kind whatsoever for fees, taxes, levies, imposts, duties, charges,
assessments or withholdings of any nature whatsoever ("Taxes") (including,
-----
without limitation, (i) personal property taxes, including personal property
taxes on any property covered by any Lease that is classified by Governmental
Authorities as personal property; (ii) sales taxes, use taxes and other similar
taxes (including rent taxes and intangibles taxes); (iii) any excise taxes; (iv)
conveyance taxes, intangible taxes, stamp taxes and documentary recording taxes
and fees; (v) taxes that are or are in the nature of franchise, income, value
added, gross receipts, privilege and doing business taxes, license and
registration fees; and (vi) assessments on any Equipment, including all
assessments for public improvements or benefits, whether or not such
improvements are commenced or completed within the Lease Term, and in each case
all interest, additions to tax and penalties thereon, which at any time may be
levied, assessed or imposed by any Federal, state or local authority upon or
with respect to (a) any Tax Indemnitee, any Equipment or any part thereof or
interest therein, or the Lessee or any sublessee or user of any Equipment; (b)
the financing, refinancing, substitution, subleasing, assignment, control,
condition, occupancy, servicing, maintenance, repair, ownership, possession,
purchase, rental, lease, delivery, insuring, use, operation, improvement,
transfer, return or other disposition of such Equipment or any part thereof or
interest therein; (c) the Notes or other Indebtedness with respect to any
Equipment or any part thereof or interest therein or transfer thereof; (d) the
rentals, receipts or earnings arising from any Equipment or any part thereof or
interest therein; (e) the Operative Documents or any payment made or accrued
pursuant thereto; (f) the income or other proceeds received with respect to any
Equipment or any part thereof or interest therein upon the sale or disposition
thereof; (g) any contract relating to the acquisition or delivery of the
Equipment or any part thereof or interest
13
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
therein; (h) the issuance of the Notes; or (i) otherwise in connection with the
transactions contemplated by the Operative Documents.
"Indebtedness" means, as to any Person, all items that in accordance with
------------
GAAP would be shown on the balance sheet of such Person as a liability and in
any event shall include (without duplication): (a) indebtedness for borrowed
money or for notes, debentures or other debt securities, (b) notes payable and
drafts accepted representing extensions of credit whether or not representing
obligations for borrowed money, (c) liabilities for all or any part of the
deferred purchase price of property or services, (d) liabilities secured by any
lien on any property or asset owned or held by such Person Regardless of whether
the indebtedness secured thereby shall have been assumed by or is a primary
liability of such Person, (e) capitalized lease obligations and (f) Contingent
Obligations.
"Indemnitee" means the Lessor, the Agent and each Lender, together with the
----------
respective Affiliates, successors, assigns, directors, shareholders, partners,
officers, employees and agents of the foregoing.
"Insurance Requirements" means all terms and conditions of any insurance
----------------------
policy either required by the Master Lease to be maintained by the Lessee, and
all requirements of the issuer of any such policy.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of the
-----------------------
Effective Date, among the Financing Lenders, the Agent, the Credit Facility
Banks and the Credit Facility Agent.
"Interest Period" means, with respect to any Eurodollar Loan, each period
---------------
commencing on the date such Loan is made or converted from a Prime Rate Loan or
(if continued) the last day of the next preceding Interest Period with respect
to such Loan, and ending on the numerically corresponding day in the first (1st)
, second (2nd), third (3rd) or sixth (6th) calendar month thereafter, as the
Lessor may select as provided under the terms of the Loan Agreement, except that
each such Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the foregoing: (a) each
Interest Period which would otherwise end on a day which is not a Business Day
shall end on the next succeeding Business Day (or, if such succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day); (b) any Interest Period which would otherwise extend beyond an applicable
Maturity Date shall end on such Maturity Date; (c) no more than seven (7)
Interest Periods for Eurodollar Loans shall be in effect at the same time; (d)
no Interest Period shall have a duration of less than one month and, if the
Interest Period for any Eurodollar Loans would otherwise be a shorter period,
such Loans shall not be available hereunder; and (e) no Interest Period for a
Loan may commence before and end after any principal repayment date unless,
after giving effect thereto, the aggregate principal amount of the Eurodollar
Loans having Interest Periods that end after such principal payment date and
Prime Rate Loans shall be equal to or less than the amount of the applicable
Loans scheduled to be outstanding hereunder after such principal payment date.
14
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Lease Balance" means, as of any date of determination, an amount equal to
-------------
the sum of the Loan Balance and all other Obligations of the Lessor and the
Lessee under the Operative Documents.
"Lease Default" means any event or condition which, with the lapse of time
-------------
or the giving of notice, or both, would constitute a Lease Event of Default.
"Lease Event of Default" means a "Lease Event of Default" as defined in
----------------------
Section 16.1 of the Master Lease.
- ------------
"Lease Term" means the period commencing on the Effective Date and ending
----------
on the Expiration Date.
"Lenders" has the meaning set forth in the Loan Agreement.
-------
"Lessee" means Mail-Well I Corporation, and its successors and assigns
------
expressly permitted under the Operative Documents.
"Lessor" means Paribas Properties, Inc., a Delaware corporation.
------
"Lessor First Security Agreement" means the Security Agreement, dated as of
-------------------------------
the Effective Date, executed by the Lessor and the Lessee to the Agent for the
benefit of the Equity Lenders granting a first and prior security interest in
and to all of the right, title and interest of the Lessor in and to the
Equipment and other Collateral relating thereto.
"Lessor Lien" means any Lien, true lease or sublease or disposition of
-----------
title arising as a result of (a) any claim against the Lessor or any Participant
not resulting from the transactions contemplated by the Operative Documents, (b)
any act or omission of the Lessor or any Participant which is not required or
permitted by the Operative Documents or is in violation of any of the terms of
the Operative Documents, (c) any claim against the Lessor or any Participant
with respect to Taxes or Transaction Expenses against which Lessee is not
required to indemnify Lessor or any Participant, in its individual capacity,
pursuant to Article XII of the Participation Agreement or (d) any claim against
-----------
the Lessor arising out of any transfer by the Lessor of all or any portion of
the interest of the Lessor in the Properties, the Equipment or the Operative
Documents other than the transfer of title to or possession of the Properties by
the Lessor pursuant to and in accordance with the Master Lease, the Loan
Agreement or the Participation Agreement or pursuant to the exercise of the
remedies set forth in Section 16.2 of the Master Lease.
------------
"Lessor Second Security Agreement" means the Security Agreement, dated the
--------------------------------
Effective Date, executed by the Lessor and the Lessee to the Agent for the
benefit of the Financing Lenders granting a second security interest
(subordinate only to the first security interest created by the Lessor First
Security Agreement) in and to all of the right, title and interest of the Lessor
in and to the Equipment and other Collateral relating thereto.
15
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Lease Assets" means all of the right, title and interest of the Lessor in
------------
and to the Equipment, the Operative Documents, all rent, all insurance proceeds
and condemnation awards, and any and all other proceeds arising from the
foregoing.
"Lien" has the meaning given to it in Section 1.1 of the Mail-Well Credit
---- -----------
Agreement.
"Loan Agreement" means the Loan Agreement, dated as of the Effective Date,
--------------
among the Lessor, as borrower thereunder, the Agent and the Lenders.
"Loan Agreement Default" means any event, act or condition which with
----------------------
notice or lapse of time, or both, would constitute a Loan Agreement Event of
Default.
"Loan Agreement Event of Default" is defined in Section 6.1 of the Loan
------------------------------- -----------
Agreement.
"Loan Balance" means, as of any date of determination, an amount equal to
------------
the sum of the outstanding Loans together with all accrued and unpaid interest
or Equity Yield thereon, being the same as the sum of the Financing Balance and
the Equity Balance.
"Loan Commitment" means the Commitment of each Lender in the amount set
---------------
forth on Schedule I to the Participation Agreement.
----------
"Loan Party" means each of the Lessor and the Guarantors.
----------
"Loans" means the Financing Loans and the Equity Loans made by the Lenders
-----
pursuant to the terms of the Loan Agreement.
"Mail-Well Credit Agreement" means the Third Amended and Restated Credit
--------------------------
Agreement dated as of the Effective Date among Mail-Well I, as the Borrower, all
of the present and future subsidiaries of Mail-Well I that become parties
thereto, as guarantors, the lenders which are or may from time to time become
parties thereto, and the Credit Facility Agent, providing for a $70,000,000 term
loan facility, a $30,000,000 revolving credit facility, and a $30,000,000
acquisition line/term facility.
"Marketing Period" means the period commencing on the date twelve (12)
----------------
months prior to the Expiration Date and ending on the Expiration Date.
"Master Lease" means the Master Lease and Security Agreement dated as of
------------
the Effective Date, between the Lessor and the Lessee, as may be supplemented.
"Material" and "Materially" mean material to (i) the consolidated financial
-------- ----------
position, business, assets or consolidated results of operations of the
Guarantors and their respective Subsidiaries, (ii) the ability of each of the
Guarantors to perform its obligations under the Operative Documents to which it
is a party, or (iii) the value or condition of any Equipment.
16
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Material Adverse Effect" means any decrease (as compared to any prior
-----------------------
relevant date or time, as applicable), and/or the occurrence of any event(s)
and/or the existence of any conditions(s) that could reasonably be expected to
cause any decrease (as compared to any prior relevant date or time, as
applicable), in the net worth of the Lessee and its Subsidiaries, determined on
a consolidated basis in accordance with GAAP, by an aggregate amount equal to or
greater than 25% (as compared to any prior relevant date of time, as
applicable).
"Maturity Date" means March 31, 2003.
-------------
"Maximum Commitment Amount" means an amount equal to $30,000,000.
-------------------------
"Modifications" is defined in Section 10.1 of the Master Lease.
------------- ------------
"Net Proceeds" means all amounts received by the Lessor in connection with
------------
any Casualty or Condemnation or any sale of the Equipment pursuant to the
Lessor's exercise of remedies under Section 16.2 of the Master Lease or the
------------
Lessee's exercise of the Remarketing Option under Article XX of the Master
----------
Lease, and all interest earned thereon, less the expense of claiming and
collecting such amounts, including all costs and expenses in connection
therewith for which the Lessor or any Participant is entitled to be reimbursed
pursuant to the Lease.
"Notes" is defined in Section 2.2 of the Loan Agreement.
----- -----------
"Obligations" means all indebtedness, liabilities and obligations (monetary
-----------
or otherwise), including without limitation the Loans and the Lease Balance, of
the Lessor and/or the Lessee arising under or in connection with any of the
Operative Documents.
"Obligors" means, collectively, the Guarantors.
--------
"Operating Lease" means, as to any Person, any lease of property (whether
---------------
real, personal or mixed) by such Person as lessee that is not a capitalized
lease.
"Operative Documents" means the following:
-------------------
(a) the Participation Agreement;
(b) the Master Lease;
(c) the Loan Agreement;
(d) the Notes;
(e) the Guaranty;
(f) each Bill of Sale;
(g) the Lessor First Security Agreement;
(h) the Lessor Second Security Agreement;
(i) the Lessor Financing Statements;
(j) the Assignment of Lease and Rent;
17
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
(k) each Security Document; and
(l) the Fee Letters.
"Organic Document" means, relative to any Person, its certificate of
----------------
incorporation, its by-laws and all shareholder agreements, voting trusts and
similar arrangements applicable to any of its authorized shares of capital
stock.
"Participant" means the Agent and each Lender.
-----------
"Participation Agreement" means the Participation Agreement dated as of the
-----------------------
Effective Date, among Lessee, the Subsidiary Guarantors, the Lessor, the Agent
and the Lenders.
"Participant Balance" means, with respect to each Lender, such Lender's
-------------------
respective share of the Loan Balance.
"Payment Date" means (a) any Scheduled Payment Date and (b) any date on
------------
which interest is payable pursuant to Section 2.4 of the Loan Agreement in
-----------
connection with any prepayment of the Loans.
"Permitted Property Liens" means, with respect to any Equipment, any of the
------------------------
following:
(i) the respective rights and interests of the parties to the
Operative Documents as provided in the Operative Documents;
(ii) the rights of any sublessee under a sublease permitted by the
terms of the Master Lease;
(iii) Liens for Taxes that either are not yet due or are being
contested in accordance with the provisions of Section 12.1 of the Master
------------
Lease.
(iv) Liens arising out of judgments or awards with respect to which
appeals or other proceedings for review are being prosecuted in good faith
and for the payment of which adequate reserves have been provided as
required by GAAP or other appropriate provisions have been made, so long as
such proceedings have the effect of staying the execution of such judgments
or awards and satisfy the conditions for the continuation of proceedings to
contest set forth in Section 12.1 of the Master Lease;
------------
(v) Lessor Liens; and
(vi) Liens created by the Lessee with the consent of the Agent and
the Required Lenders.
"Permitted User" means any Subsidiary Guarantor.
--------------
18
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Person" means any individual, corporation, partnership, joint venture,
------
association, joint-stock company, trust, unincorporated organization,
Governmental Authority or any other entity.
"Prime Rate" means the rate of interest as defined in Section 1.1 of the
---------- -----------
Mail-Well Credit Agreement.
"Prime Rate Loans" means Loans that bear interest at rates based upon the
----------------
Prime Rate.
"Principal Obligor" means, with respect to a certain indebtedness,
-----------------
liability or obligation, the Person creating, incurring, assuming or suffering
to exist such indebtedness, liability or obligation without becoming liable for
same as a surety or guarantor.
"Purchase Notice" means an irrevocable written notice by the Lessee
---------------
delivered to the Lessor pursuant to Section 18.1 of the Master Lease, notifying
------------
the Lessor of the Lessee's intention to exercise its option pursuant to such
Section, and identifying the proposed purchase date for the Properties to be
purchased pursuant thereto.
"Purchase Option" means the Lessee's option to purchase all, but not less
---------------
than all, of the Properties in accordance with the provisions of Section 18.1 of
------------
the Master Lease.
"Purchase Price" means the amount paid for the Equipment by the Lessor to
--------------
the Lessee.
"RCRA" means the Resource Conservation and Recovery Act of 1976, as amended
----
by the Solid and Hazardous Waste Amendments of 1984, 42 U.S.C. (S)6901 et seq.
------
"Reference Lender" means Banque Paribas.
----------------
"Register" means as specified in Section 13.8(d) of the Participation
-------- ---------------
Agreement.
"Registered Note" means each Note which is a Registered Note under the
---------------
provisions of, and as defined in, Section 2.2(b) of the Loan Agreement.
--------------
"Registered Note Register" means as specified in Section 13.8(h) of the
------------------------ ---------------
Participation Agreement.
"Regulatory Change" means, with respect to any Lender, any change after the
-----------------
Effective Date in any U.S. federal or state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders including
such Lender of or under any U.S. federal or state or foreign laws or regulations
(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
19
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Release" means any release, threatened release, pumping, pouring,
-------
emptying, injecting, escaping, leaching, dumping, seepage, spill, leak, flow,
discharge, disposal, migration or emission of a Hazardous Material.
"Released Equipment" is defined in Section 6.3 of the Participation
------------------
Agreement.
"Remarketing Option" is defined in Section 20.1 of the Master Lease.
------------------ ------------
"Rent" means, collectively, the Basic Rent and the Supplemental Rent, in
----
each case payable under the Master Lease.
"Rent Expense" means, as to any Person for any period, the aggregate rent
------------
and lease expenses recorded by such Person and its Subsidiaries on a
consolidated basis in conformity with GAAP pursuant to any Operating Lease.
"Required Equity Lenders" means, at any time, Equity Lenders holding at
-----------------------
least sixty-six and two-thirds percent (66-2/3%) of the aggregate outstanding
principal amount of the Equity Loans.
"Required Financing Lenders" means, at any time, Financing Lenders holding
--------------------------
at least sixty-six and two-thirds percent (66-2/3%) of the aggregate outstanding
principal amount of the Financing Loans.
"Required Lenders" means, at any time, each of the Equity Lenders and the
----------------
Financing Lenders holding at least sixty-six and two-thirds percent (66-2/3%) of
the aggregate outstanding principal amount of each of the Equity Loans and the
Financing Loans, respectively.
"Required Modification" is defined in clause (a) of Section 10.1 of the
--------------------- ---------- ------------
Master Lease.
"Required Participants" means, at any time, Lenders holding at least sixty-
---------------------
six and two-thirds percent (66-2/3%) of the aggregate outstanding principal
amount of the Loans.
"Requirement of Law" means, as to any Person, (a) the partnership
------------------
agreement, certificate of incorporation, bylaws or other organizational or
governing documents of such Person, (b) any Applicable Law, and (c) any order,
decree or determination of a court, arbitrator or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or
to which such Person or any of its property is subject.
"Reserve Requirement" means, for any Eurodollar Loan of any Lender for any
-------------------
Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves
20
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
required to be maintained by such Lender by reason of any Regulatory Change
against (a) any category of liabilities which includes deposits by reference to
which the Eurodollar Rate or the Adjusted Eurodollar Rate is to be determined or
(b) any category of extensions of credit or other assets which include
Eurodollar Loans.
"Responsible Officer's Certificate" is defined in Section 1.1 of the Mail-
--------------------------------- -----------
Well Credit Agreement.
"Responsible Officer" means, as to any Person, either (a) its president,
-------------------
chief executive officer or senior vice president, or (b) with respect to
financial matters, its president or chief executive officer or any vice
president designated in writing by the chief executive officer to the Agent;
provided, however, that with respect to the Obligors, "Responsible Officers"
- -------- -------
shall mean only such of the foregoing officers whose signature and incumbency
shall have been certified to the Agent and the Participants.
"Scheduled Payment Date" means:
----------------------
(a) as to any Eurodollar Loan accruing interest or Equity Yield, as
the case may be, by reference to the Eurodollar Rate, on the last day of
the Interest Period with respect thereto and, in the case of an Interest
Period greater than three (3) months, at three-month intervals after the
first day of such Interest Period; and
(b) as to any Prime Rate Loan, the earlier of (x) the date occurring
three months after the date such Loan or Equity Loan was Advanced by
Lenders, on any subsequent Scheduled Payment Date, the date occurring three
months after the immediately preceding Scheduled Payment Date and (y) the
date such Loan is converted into a Loan accruing interest or Equity Yield,
as the case may be, by reference to the Eurodollar Rate (provided, that if
--------
any such day is not a Business Day, the "Scheduled Payment Date" pursuant
to this clause (b) shall be the next succeeding Business Day), and the
----------
Maturity Date.
"SEC" means the Securities and Exchange Commission or any successor entity
---
thereto.
"Securities Act" means the Securities Act of 1933, as amended, together
--------------
with the rules and regulations promulgated thereunder.
"Security Documents" means the Security Documents as defined in the Credit
------------------
Agreements, the Assignment of Lease and Rent, the Lessor First Security
Agreement, the Lessor Second Security Agreement, the Financing Statements and
the Credit Facility Financing Statement (as defined in the Credit Agreements).
"Shortfall Amount" means, as of the Maturity Date, the difference between
----------------
the Lease Balance minus the sum of (i) the Loan Balance with respect to the
-----
Financing Loans received by the Agent pursuant to Section 20.1(j) of the Master
---------------
Lease and (ii) the Gross Remarketing Proceeds.
21
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
"Significant Casualty" means (a) any Casualty that in the reasonable, good
--------------------
faith judgment of the Agent either (i) renders an item of the Equipment
unsuitable for continued use as property of the type of such Equipment
immediately prior to such Casualty or (ii) is so substantial in nature that
restoration of an item of the Equipment to substantially its condition as
existed immediately prior to such Casualty would be impracticable or impossible,
and (b) any theft, disappearance or other loss of an item of the Equipment.
"Significant Condemnation" means (a) any Condemnation that in the
------------------------
reasonable, good faith judgment of the Agent, either (i) renders an item of the
Equipment unsuitable for continued use as property of the type of such Equipment
immediately prior to such condemnation, or (ii) is such that restoration of an
item of the Equipment is substantially conditioned as existing immediately prior
to such Condemnation would be impracticable or impossible, and (b) any theft,
disappearance or other loss of the Equipment.
"Solvent" has the meaning given to such term pursuant to Section 1.1 of the
------- -----------
Mail-Well Credit Agreement.
"Subsidiary" means, with respect to any Person, (i) any corporation of
----------
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person, or (ii) any partnership, joint venture,
limited liability company or other entity as to which such Person, directly or
indirectly, owns more than a 50% ownership, equity or similar interest of has
the power to direct or cause the direction of management and policies, or the
power to elect the managing general partner or the equivalent), of such
partnership, joint venture, limited liability company or other entity, as the
case may be.
"Subsidiary Guarantor" means each Subsidiary of the Lessee which is or
--------------------
becomes a party to the Guaranty.
"Subsidiary Parties" means all subsidiaries of Lessee and its subsidiary,
------------------
Supremex Inc., who are parties to the Credit Agreements.
"Substituted Equipment" is defined in Section 6.3 of the Participation
---------------------
Agreement.
"Subtenant" is defined in Section 6.2 of the Master Lease.
--------- -----------
"Supplemental Rent" means all amounts, liabilities and obligations (other
-----------------
than Basic Rent or Excepted Payments) which Lessee assumes or agrees to pay to
Lessor or any other Person, or which the Lessor is obligated to pay (whether or
not such amounts, liabilities and obligations are nonrecourse) under the Master
Lease or under any of the other Operative Documents, including,
22
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
without limitation, Commitment Fees, Break Costs, the Loan Balance, the
Shortfall Amount, amounts due pursuant to Article XI of the Participation
----------
Agreement and payments pursuant to Sections 15.2 of the Master Lease and
-------------
Articles XVIII and XX of the Master Lease.
- -------------- --
"Supremex Credit Agreement" means the First Amended and Restated Credit
-------------------------
Agreement dated as of the Effective Date among Supremex Inc. as the Borrower,
and all of the present and future Subsidiaries of Supremex Inc., that become
parties thereto, as guarantors, the lenders as are or may from time to time
become parties thereto, and the Credit Facility Agent, providing for a
$45,000,000 term loan facility, a $20,000,000 term loan facility and a cdn.
$10,000,000 revolving credit facility.
"Tax Indemnitee" means the Lessor, the Agent and each Lender.
--------------
"Taxes" is defined in the definition of Impositions.
-----
"Termination Date" is defined in Section 16.2(e) of the Master Lease.
---------------- ---------------
"Termination Notice" is defined in Section 15.1 of the Master Lease.
------------------ ------------
"Transaction Expenses" means all costs and expenses incurred in connection
--------------------
with the preparation, execution and delivery of the Operative Documents and the
transactions contemplated by the Operative Documents including without
limitation:
(a) the reasonable fees, out-of-pocket expenses and disbursements of
one special counsel for the Lessor and the Agent in negotiating the terms
of the Operative Documents and the other transaction documents, preparing
for the closing under, and rendering opinions in connection with, such
transactions and in rendering other services customary for counsel
representing parties to transactions of the types involved in the
transactions contemplated by the Operative Documents, and in connection
with any amendment, supplement, waiver or consent with respect to the
Operative Documents;
(b) the reasonable fees, out-of-pocket expenses and disbursements of
any law firm or other external counsel, and (without duplication) the
reasonable allocated cost of internal legal services and all disbursements
of internal counsel of each of the Lessor and each Lender in connection
with any enforcement of any rights or remedies against the Lessee in
respect of the Operative Documents;
(c) all reasonable out-of-pocket costs and expenses of the Agent and
the Lenders in connection with (i) any Casualty or Condemnation, (ii) any
sale or other disposition of the Equipment pursuant to the Master Lease,
and (iii) any Default, the exercise of any right or remedy and the
enforcement thereof as provided for under the Operative Documents, or any
other term or provision hereof or thereof, including, without limitation,
the reasonable fees and expenses of legal counsel for the Agent and the
Lenders;
23
<PAGE>
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement
(d) any and all Taxes and fees incurred in recording, registering or
filing any Operative Document or any other transaction document, any deed,
declaration, mortgage, security agreement, notice or financing statement
with any public office, registry or
governmental agency in connection with the transactions contemplated by the
Operative Documents;
(e) all expenses relating to all Environmental Audits required by the
Operative Documents; and
(f) fees and other expenses relating to Appraisals.
"Total Debt" has the meaning given to such term pursuant to Section 1.1 of
---------- -----------
the Mail-Well Credit Agreement.
"Type" means any type of Loan (i.e., a Prime Rate Loan or Eurodollar
----
Loan).
"Uniform Commercial Code" and "UCC" means the Uniform Commercial Code as in
----------------------- ---
effect in any applicable jurisdiction.
24
<PAGE>
EXHIBIT 10.50
================================================================================
LEASE FACILITY GUARANTY
dated as of November 15, 1996
made by
MAIL-WELL I CORPORATION, MAIL-WELL, INC., and
CERTAIN OF THEIR SUBSIDIARIES,
as Guarantors
in favor of
VARIOUS FINANCIAL INSTITUTIONS,
as the Lenders
and
BANQUE PARIBAS,
as Agent for the Lenders
================================================================================
<PAGE>
Lease Facility Guaranty
LEASE FACILITY GUARANTY
-----------------------
(Mail-Well I Corporation)
THIS LEASE FACILITY GUARANTY (this "Guaranty"), dated the 15th day of
--------
November, 1996, is made by MAIL-WELL I CORPORATION, a Delaware corporation
("Lessee"), MAIL-WELL, INC., a Delaware corporation ("Holdings"), and each of
- -------- --------
their subsidiaries which is a party to this Guaranty (collectively, the
"Guarantors"), in favor of the various financial institutions who are Financing
- -----------
Lenders under the Loan Agreement (together with their respective successors and
assigns, the "Financing Lenders"), and BANQUE PARIBAS, as Agent (in such
-----------------
capacity, the "Agent") for the equal and ratable benefit of itself and the
-----
Financing Lenders.
W I T N E S S E T H:
-------------------
Recitals
--------
A. The Financing Lenders, the financial institutions designated as the
"Equity Lenders," the Agent and Paribas Properties, Inc., a Delaware corporation
(the "Lessor"), have entered into that certain Loan Agreement (the "Loan
------ ----
Agreement"), dated of even date herewith, providing, among other things, for
- ---------
loans to be made by the Financing Lenders and the Equity Lenders in a maximum
aggregate principal amount not to exceed $30,000,000.00 (collectively, the
"Loans") to be used by the Lessor to purchase certain Equipment (as therein
-----
defined) from Lessee and certain of the Lessee's Subsidiaries.
B. Upon the consummation of the purchase of the Equipment by the Lessor,
the Lessor has agreed, as Lessor, to lease the Equipment to the Lessee pursuant
to the Master Lease. The Loan Agreement and the Master Lease have been entered
into pursuant to the terms and provisions of that certain Participation
Agreement dated of even date herewith, entered into by Guarantors, the Lessor,
the Equity Lenders, the Financing Lenders and the Agent.
C. As a condition to the consummation of the transactions provided in the
Participation Agreement, the Financing Lenders have required the execution and
delivery by Guarantors of this Guaranty.
D. Guarantors have duly authorized the execution, delivery and performance
of this Guaranty, and the boards of directors of Guarantors have determined that
it is in their best interest to execute and deliver this Guaranty in order to
obtain the substantial benefits provided by the Participation Agreement and
other Operative Documents.
1
<PAGE>
Lease Facility Guaranty
Agreement
---------
NOW THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, and in order to induce the Financing Lenders to
enter into the Loan Agreement, each of the Guarantors agree for the benefit of
Financing Lenders as follows:
1. Certain Defined Terms and Related Matters.
-----------------------------------------
(a) The terms used herein that are defined in the Participation
Agreement and are not otherwise defined herein shall have the meanings therefor
specified in Appendix A to the Participation Agreement and the rules of
----------
interpretation set forth in Appendix A shall apply to this Guaranty.
(b) The Financing Lenders and the Agent are referred to herein
collectively as the "Guaranteed Parties", and individually as a "Guaranteed
------------------ ----------
Party".
- -----
2. Guaranty. Guarantors hereby jointly and severally,
--------
unconditionally and irrevocably, (i) guarantee the punctual payment and
performance of all Obligations of the Lessor and the Lessee, whether several or
joint, to the Guaranteed Parties, solely in their capacity as Financing Lenders
and as Agent for the Financing Lenders, as the case may be, arising under or in
connection with the Loan Agreement, the Financing Notes, and the other Operative
Documents executed in connection therewith (collectively the "Guaranteed
----------
Obligations"), including without limitation the payment of all principal and
- -----------
accrued interest under the Financing Notes, and (ii) agree to indemnify and hold
harmless each Guaranteed Party from and against any and all costs and expenses
(including without limitation reasonable attorneys' fees) incurred by each
Guaranteed Party in enforcing any rights under this Guaranty. Guarantors shall
have no obligation to any Equity Lender or the Agent in its capacity as Agent
for the Equity Lenders under this Guaranty. This Guaranty is an absolute
guaranty of payment and performance and not a guaranty of collection.
3. Guaranty Absolute. Guarantors guarantee that the Guaranteed
-----------------
Obligations will be paid strictly in accordance with the terms of the Operative
Documents regardless of any law, regulation or order now or hereafter in effect
in any jurisdiction affecting any of such terms or the rights of the Guaranteed
Parties with respect thereto. The liability of Guarantors under this Guaranty
shall be personal, absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any provision of
any other Operative Document or any other agreement, document or instrument
relating to any Operative Document, or avoidance or subordination of any of
the Guaranteed Obligations;
(ii) any limitation of liability or recourse in any Operative
Document;
(iii) the insolvency, bankruptcy, dissolution, liquidation,
receivership, reorganization, merger, change of form, structure or
ownership, sale of all assets, or lack of
2
<PAGE>
Lease Facility Guaranty
corporate or other power of the Lessor or any other Person at any time
liable for the payment or performance of any or all of the Guaranteed
Obligations;
(iv) either with or without notice to or consent of each of
Guarantors, any one or more renewals, extensions, modifications or
rearrangements of the terms of any or all of the Guaranteed Obligations or
any of the Operative Documents, including, without limitation, material
alterations of the terms of payment (including, without limitation, changes
in maturity date(s) and interest rate(s)) or performance or any other terms
thereof, or any waiver, termination, or release of, or consent to departure
from, any of the Operative Documents, or any adjustment, indulgence,
forbearance, extension or compromise that may be granted from time to time
to the Guarantors, the Lessor, or any other Person at any time liable for
the payment or performance of any or all of the Guaranteed Obligations;
(v) the taking or accepting of any other security or guaranty
for, or right of recourse with respect to, any or all of the Guaranteed
Obligations;
(vi) any release, surrender, abandonment, exchange, alteration,
sale or other disposition, subordination, deterioration, waste, failure to
protect or preserve, impairment, or loss of, or any failure to create or
perfect any Lien or exercise any right with respect to, or any other
dealings with, any collateral or security at any time existing or
purported, believed or expected to exist in connection with any or all of
the Guaranteed Obligations;
(vii) any partial release of the liability of any Guarantor
hereunder, or any complete or partial release of any other guarantor of,
any amendment or waiver of any term of any other guaranty of, or any
consent to departure from any requirement of any other guaranty of, all or
any of the Guaranteed Obligations;
(viii) any neglect, lack of diligence, delay, omission, failure or
refusal to take or prosecute (or in taking or prosecuting) any action for
the collection or enforcement of any of the Guaranteed Obligations, or to
foreclose or take or prosecute any action to foreclose (or in foreclosing
or taking or prosecuting any action to foreclose) upon any security
therefor, or to exercise (or in exercising) any other right or power with
respect to any security therefor, or to take or prosecute (or in taking or
prosecuting) any action in connection with any Operative Document, or any
failure to sell or otherwise dispose of in a commercially reasonable manner
any collateral securing any or all of the Guaranteed Obligations (excepting
only, with respect to any such sale or other disposition of collateral, any
such requirement imposed at the time in question by then-applicable law and
not waiveable by Guarantors.
(ix) if for any reason any Guaranteed Party is required to
refund any payment by the Lessor to such Guaranteed Party or pay the amount
thereof to someone else;
3
<PAGE>
Lease Facility Guaranty
(x) the existence of any claim, set-off or other rights that
any Guarantor may at any time have against the Lessor, any Guaranteed Party
or any other Person, whether or not arising in connection with this
Guaranty or any other Loan Document;
(xi) the election by any of the Guaranteed Parties in any
proceeding under chapter 11 of the Bankruptcy Code of the application of
section 1111(b)(2) of the Bankruptcy Code;
(xii) any borrowing or grant of a security interest by the
Lessor, as debtor-in-possession, under section 364 of the Bankruptcy Code
(U.S.) or section 31 of the Bankruptcy and Insolvency Act (Canada);
(xiii) the disallowance, under section 502 of the Bankruptcy Code
(U.S.) or section 135 of the Bankruptcy and Insolvency Act (Canada), of all
or any portion of the claims of any of the Guaranteed Parties for payment
of any of the Guaranteed Obligations; or
(xiv) any other circumstances which might otherwise constitute a
legal or equitable discharge or defense of a Lessor or a guarantor.
Without limiting the generality of clause (ii) above, it is expressly
-----------
acknowledged and agreed by each Guarantor that such Guarantor's guarantee of the
payment and performance of the Guaranteed Obligations hereunder is with full
recourse and personal liability, notwithstanding the fact that the liability of
Lessor for the payment of the Guaranteed Obligations is nonrecourse as and to
the extent provided for in the Operative Documents.
4. Waiver. Guarantors hereby (i) waive (A) promptness, diligence,
------
presentment, protest, notice of dishonor, notice of intent to accelerate, notice
of acceleration, notice of acceptance and any and all other notices with respect
to any of the Guaranteed Obligations or this Guaranty, (B) the filing of any
claim with a court in the event of receivership or bankruptcy of the Lessor or
the Lessee, (C) protest or notice with respect to nonpayment of all or any of
the Guaranteed Obligations, (D) the benefit of any statute of limitations, (E)
any and all rights to which Guarantors may otherwise have been entitled under
any suretyship laws of the State of Texas in effect from time to time,
including, without limitation, any rights pursuant to Rule 31 of the Texas Rules
of Civil Procedure, Section 17.001 of the Texas Civil Practice and Remedies Code
and Chapter 34 of the Texas Business and Commerce Code, (F) all demands
whatsoever (and any requirement that same be made on the Lessor or any other
Person as a condition precedent to Guarantors' obligations hereunder); and (ii)
covenant and agree that this Guaranty will not be discharged except by complete
performance of the Guaranteed Obligations and any payment obligations of
Guarantors contained herein.
(b) If, in the exercise of any of its rights and remedies, any of the
Guaranteed Parties shall forfeit any of its rights or remedies, including,
without limitation, its right to enter a deficiency judgment against the Lessor
or the Lessee or any other Person, whether because of any applicable law
pertaining to "election of remedies" or otherwise, Guarantors hereby consent to
such
4
<PAGE>
Lease Facility Guaranty
action by such Guaranteed Party and waive any claim based upon such action.
Any election of remedies which results in the denial or impairment of the right
of such Guaranteed Party to seek a deficiency judgment against the Lessor or the
Lessee or any other Person shall not impair the obligations of Guarantors to pay
the full amount of the Guaranteed Obligations or any other obligation of
Guarantors contained herein.
(c) In the event any of the Guaranteed Parties shall bid at any
foreclosure or trustee's sale or at any private sale permitted by law or under
any of the Guaranteed Obligations, such Guaranteed Party may bid all or less
than the amount of the Guaranteed Obligations and the amount of such bid need
not be paid by such Guaranteed Party but shall be credited against the
Guaranteed Obligations. The amount of the successful bid at any such sale,
whether such Guaranteed Party or any other Person is the successful bidder,
shall, to the extent permitted by applicable law, be conclusively deemed to be
the fair market value of the Collateral and the difference between such bid
amount and the remaining balance of the Guaranteed Obligations shall, to the
extent permitted by applicable law, be conclusively deemed to be the amount of
the Guaranteed Obligations guaranteed under this Guaranty, notwithstanding that
any present or future law or court decision or ruling may have the effect of
reducing the amount of any deficiency claim to which any of the Guaranteed
Parties might otherwise be entitled by reason of such bidding at any such sale.
(d) Guarantors agree that notwithstanding the foregoing and without
limiting the generality of the foregoing if, after the occurrence and during the
continuance of an Event of Default, any of the Guaranteed Parties is prevented
by applicable law from exercising its rights to accelerate the maturity of the
Guaranteed Obligations, to collect interest on the Guaranteed Obligations or to
enforce or exercise any other right or remedy with respect to the Guaranteed
Obligations, or the Agent is prevented from taking any action to realize on the
Collateral, Guarantors agree to pay to the Agent for the account of the
Guaranteed Parties, upon demand therefor, the amount that would otherwise have
been due and payable had such rights and remedies been permitted to be exercised
by the Guaranteed Parties.
(e) Each Guarantor hereby assumes responsibility for keeping itself
informed of the financial condition of the Lessor and of each other guarantor of
all or any part of the Guaranteed Obligations, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations or any part
thereof, that diligent inquiry would reveal. Guarantors hereby agree that the
Guaranteed Parties shall have no duty to advise each of Guarantors of
information known to any of the Guaranteed Parties regarding such condition or
any such circumstance. In the event that any of the Guaranteed Parties in its
sole discretion undertakes at any time or from time to time to provide any such
information to Guarantors, such Guaranteed Party shall be under no obligation
(i) to undertake any investigation not a part of its regular business routine,
(ii) to disclose any information which, pursuant to accepted or reasonable
banking or commercial finance practices, such Guaranteed Party wishes to
maintain confidential or (iii) to make any other or future disclosures of such
information or any other information to the Guarantors.
5
<PAGE>
Lease Facility Guaranty
(f) Guarantors consent and agree that the Guaranteed Parties shall be
under no obligation to marshal any assets in favor of any Guarantor or otherwise
in connection with obtaining payment of any or all of the Guaranteed Obligations
from any Person or source.
5. Waiver of Subrogation. Guarantors agree that any and all rights
---------------------
of subrogation or similar rights which Guarantors may have against the Lessor
are hereby expressly waived unless and until the Guaranteed Obligations have
been fully and finally paid and performed, and Guarantors will not enforce any
such right against the Lessor unless and until the Guaranteed Obligations have
been fully and finally paid and performed. Notwithstanding any payments made or
obligations performed by Guarantors by reason of this Guaranty or any other
Operative Document to which Guarantors are parties or any enforcement of or
realization on the security provided therein (including but not limited to
application of funds on account of such payments or obligations or as a result
of such enforcement or realization), Guarantors hereby irrevocably waive and
release any and all rights they may have at any time (whether arising directly
or indirectly, by operation of law, contract or otherwise) to assert any claim
against the Lessor or against any direct or indirect security on account of such
payments made or obligations performed or such enforcement of or realization on
security, including without limitation any and all rights of subrogation,
reimbursement, exoneration, contribution or indemnity, unless and until the
Guaranteed Obligations have been fully and finally paid and performed.
Notwithstanding anything to the contrary contained in this Guaranty or any other
Operative Document or applicable law, any and all of such rights of subrogation,
reimbursement, exoneration, contribution or indemnity are and shall be subject
to and limited by the nonrecourse provisions of the Loan Agreement and the
Financing Notes; it being agreed and understood by each Guarantor that none of
such rights shall in any way relate to any indebtedness, liabilities or
obligations of the Lessor which are nonrecourse to the Lessor or for which the
Lessor has no personal liability.
6. Covenants and Representations. Guarantors hereby covenant and
-----------------------------
agree with the Agent and each Financing Lender that they shall perform all
obligations under the Participation Agreement that Guarantors have agreed to
perform, including without limitation each and every covenant applicable to the
Guarantors contained in the Participation Agreement. Guarantors represent and
warrant to the Agent and each Financing Lender that (a) all representations and
warranties contained in the Participation Agreement and applicable to Guarantors
are true and correct in all material respects; (b) Guarantors and the Lessor are
members of an affiliated and integrated group of corporations and are engaged in
related businesses and supporting lines of business; (c) Guarantors has received
and will receive a direct and indirect material benefit from the transactions
evidenced by and contemplated in the Participation Agreement and the Operative
Documents; (d) this Guaranty is given by Guarantors in furtherance of its direct
and indirect business interests and corporate purposes, and is necessary to the
conduct, promotion and attainment of its businesses; (e) the value of the
consideration received and to be received by Guarantors pursuant to the
Participation Agreement, the Operative Documents and the transactions
contemplated thereby is reasonably worth at least as much as the liability and
obligation of Guarantors hereunder; and (f) the Guaranteed Obligations
constitute "Senior Indebtedness" (as that term is defined in the Borrower
Indenture as described and defined in the Mail-Well Credit Agreement), and the
Agent and the
6
<PAGE>
Lease Facility Guaranty
Financing Lenders, as beneficiaries of this Guaranty, are entitled
to all of the rights of the holder of "Senior Indebtedness" (as that term is
defined in the Borrower Indenture) pursuant to the Borrower Indenture as if the
Guarantors were the primary obligors with respect to such obligations guaranteed
by the Guarantors.
7. Amendments, Etc. No amendment or waiver of any provision of this
---------------
Guaranty, nor consent to any departure by Guarantors herefrom, shall in any
event be effective unless the same shall be in writing, approved by the Required
Financing Lenders and signed by the Agent, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given; provided however, that no amendment, waiver or consent shall,
-------- --------
unless in writing and signed by all the Guaranteed Parties, limit the liability
of Guarantors or postpone any date fixed for payment hereunder.
8. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including telex or telecopy
communication) and mailed, telexed, telecopied or hand delivered, if to the
Guarantors, addressed to them at 23 Inverness Way East, Englewood, Colorado
80112; if to any Guaranteed Party, addressed to it at the address of such
Guaranteed Party specified in the Participation Agreement, or, as to each party,
at such other address as shall be designated by such party in a written notice
to each other party complying as to delivery with the terms of this Section 8.
---------
All such notices and other communication shall, when mailed, telexed, telecopied
or hand delivered, be effective when deposited in the mails (with postage
prepaid), confirmed by telex answer back, telecopied with confirmation of
receipt or hand delivered to the addressee or its agent, respectively.
9. No Waiver; Remedies. No failure on the part of any Guaranteed
-------------------
Party to exercise, and no delay in exercising, any right hereunder shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law or any of the Operative Documents.
(b) Failure by any of the Guaranteed Parties at any time or times
hereafter to require strict performance by the Guarantors, the Lessor or any
other Person of any of the provisions, warranties, terms or conditions contained
in any of the Operative Documents now or at any time or times hereafter executed
by the Guarantors, the Lessor or such other Person and delivered to any of the
Guaranteed Parties shall not waive, affect or diminish any right of any of the
Guaranteed Parties at any time or times hereafter to demand strict performance
thereof, and such right shall not be deemed to have been modified or waived by
any course of conduct or knowledge of any of the Guaranteed Parties or any
agent, director, officer or employee of any of the Guaranteed Parties.
(c) No waiver by the Guaranteed Parties of any default shall
operate as a waiver of any other default or the same default on a future
occasion, and no action by any of the Guaranteed Parties permitted hereunder
shall in any way affect or impair any of the rights of the Guaranteed Parties or
the obligations of each of Guarantors under this Guaranty or under any of the
other
7
<PAGE>
Lease Facility Guaranty
Operative Documents to which they are a party. Any determination by a court of
competent jurisdiction of the amount of any principal or interest or other
amount constituting any of the Guaranteed Obligations shall be conclusive and
binding on each of Guarantors irrespective of whether each of Guarantors was a
party to the suit or action in which such determination was made.
10. Right of Set-off. Upon the occurrence and during the continuance
----------------
of any Event of Default, each of the Guaranteed Parties is hereby authorized at
any time and from time to time, to the fullest extent permitted by law, to set
off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by such Guaranteed Party to or for the credit or the account of Guarantors
against any and all of the indebtedness, liabilities and obligations of
Guarantors now or hereafter existing under this Guaranty, irrespective of
whether or not such Guaranteed Party shall have made any demand under this
Guaranty and although such indebtedness, liabilities and obligations may be
contingent and unmatured. Each of the Guaranteed Parties agrees to notify
Guarantors after such setoff and application made by such Guaranteed Party;
provided, however, that the failure to give such notice shall not affect the
- -------- -------
validity of such set-off and application. The rights of each Guaranteed Party
under this Section 11 are in addition to all other rights and remedies
----------
(including, without limitation, other rights of setoff) which such Guaranteed
Party may have.
11. Continuing Guaranty; Transfer of Notes. This Guaranty is a
--------------------------------------
continuing guaranty and shall (i) remain in full force and effect until
termination of the obligations of the Financing Lenders to make the Loans, and
payment in full thereafter of the Guaranteed Obligations and all other amounts
payable under this Guaranty, (ii) be binding upon each Guarantors and its
successors and assigns, and (iii) inure to the benefit of and be enforceable by
the Guaranteed Parties and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (iii), any of the
------------
Guaranteed Parties may assign or otherwise transfer any note held by it or
Obligation owing to it to any other Person, and such other Person shall
thereupon become vested with all the rights in respect thereof granted to such
Guaranteed Party herein or otherwise with respect to such of the notes and
Obligations so transferred or assigned, subject, however, to compliance with the
provisions of Section 12.1 of the Participation Agreement in respect of
assignments.
12. Reinstatement. This Guaranty shall remain in full force and
-------------
effect and continue to be effective should any petition be filed by or against
any Loan Party for liquidation or reorganization, should any Loan Party become
insolvent or make an assignment for the benefit of creditors or should a
receiver or trustee be appointed for all or any significant part of any Loan
Party's assets, and shall, to the fullest extent permitted by law, continue to
be effective or be reinstated, as the case may be, if at any time payment and
performance of the Guaranteed Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Guaranteed Obligations or such part thereof,
whether as a "voidable preference," "fraudulent transfer," or otherwise, all as
though such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned, the
Guaranteed Obligations shall, to the fullest extent
8
<PAGE>
Lease Facility Guaranty
permitted by law, be reinstated and deemed reduced only by such amount paid and
not so rescinded, reduced, restored or returned.
13. Interest Limitation. All agreements between the Guarantors, the
-------------------
Agent or any Financing Lender, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of demand being made in respect of an
amount due under any Operative Document or otherwise, shall the amount paid, or
agreed to be paid, to the Agent, or any Financing Lender for the use,
forbearance or detention of the money to be loaned under the Participation
Agreement, or otherwise or for the payment or performance of any covenant or
obligation contained herein or in any other Operative Document exceed the
Maximum Rate. If, as a result of any circumstances whatsoever, fulfillment of
any provision hereof or of any such documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable usury law, then, ipso facto the obligation to be
---- -----
fulfilled shall be reduced to the limit of such validity, and if, from any
such circumstance, the Agent, or any Financing Lender shall ever receive
interest or anything which might be deemed interest under applicable law which
would exceed the Maximum Rate, such amount which would be excessive interest
shall be applied to the amounts owing on other obligations of the Guarantors to
the Agent, or any Financing Lender under any Operative Document and not to the
payment of interest, or if such excessive interest exceeds the amounts owing on
other obligations of the Guarantors to the Agent, or any Financing Lender under
any Operative Document, as the case may be, such excess shall be refunded to the
Guarantors. All sums paid or agreed to be paid to the Agent, or any Financing
Lender for the use, forbearance or detention of the indebtedness of the
Guarantors to the Agent or any Financing Lender shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of such indebtedness until payment in full of the principal (including
the period of any renewal or extension thereof) so that the interest on account
of such indebtedness shall not exceed the Maximum Rate. Notwithstanding
anything to the contrary contained in any Operative Document, it is understood
and agreed that if at any time the rate of interest which accrues on the
outstanding principal balance of any indebtedness of the Guarantors hereunder
shall exceed the Maximum Rate, the rate of interest which accrues on the
outstanding principal balance of any such indebtedness shall be limited to the
Maximum Rate, but any subsequent reductions in the rate of interest which
accrues on the outstanding principal balance of any such indebtedness shall not
reduce the rate of interest which accrues on the outstanding principal balance
of any such indebtedness below the Maximum Rate until the total amount of
interest accrued on the outstanding principal balance of any such indebtedness
equals the amount of interest which would have accrued if such interest rate had
at all times been in effect. The terms and provisions of this Section 14 shall
----------
control and supersede every other provision of this Guaranty.
(b) The parties hereto agree that if Article 1.04, Subtitle 1, Title
79 of the Revised Civil Statutes of Texas, 1925, as amended, is applicable to
the determination of the Maximum Rate, the indicated rate ceiling computed from
time to time pursuant to Section (a) of such Article shall apply, provided that,
--------
to the extent permitted by such Article, the Agent may from time to time by
notice
9
<PAGE>
Lease Facility Guaranty
to Guarantors revise the election of such interest rate ceiling as such ceiling
affects the then current or future balances of any indebtedness of Guarantors
hereunder.
14. Descriptive Headings. The section headings in this Guaranty have
--------------------
been inserted for convenience only and shall be given no substantive meaning or
significance whatsoever in construing the terms and provisions of this Guaranty.
15. Counterparts. This Guaranty may be executed in several
------------
counterparts, and by the parties hereto on separate counterparts, and each
counterpart, when so executed and delivered, shall constitute an original
instrument, and all such separate counterparts shall constitute but one and the
same instrument.
16. Separability. Should any paragraph, sentence, paragraph,
------------
Subsection or Section of this Guaranty be judicially declared to be invalid,
unenforceable or void, such decision shall not have the effect of invalidating
or voiding the remainder of this Guaranty, and Guarantors hereby agrees that the
part or parts of this Guaranty so held to be invalid, unenforceable or void will
be deemed to have been stricken herefrom and the remainder will have the same
force and effectiveness as if such part or parts had never been included herein.
Each covenant contained in this Guaranty shall be construed (absent an express
contrary provision herein) as being independent of each other covenant contained
herein, and compliance with any one covenant shall not (absent such an express
contrary provision) be deemed to excuse compliance with one or more other
covenants.
17. Agent for Service of Process. Guarantors hereby irrevocably
designate The Prentice-Hall Corporation System, Inc. to receive for and on
behalf of Guarantors service of process in Texas. Guarantors agree that the
failure of its agent for service of process to give any notice of any such
service of process to Guarantors shall not impair or affect the validity of such
service or of any judgment based thereon. If, despite the foregoing, there is
for any reason no agent for service of process of Guarantors available to be
served, then Guarantors further irrevocably consent to the service of process by
the mailing thereof by the Agent by registered or certified mail, postage
prepaid, to the Guarantors at its address listed in Section 9 hereof. Nothing in
---------
this Section 18 shall affect the right of the Agent or the Financing Lenders to
----------
serve legal process in any other manner permitted by law or affect the right of
the Agent or any Financing Lender to bring any action or proceeding against the
Guarantors or its equipment in the courts of any other jurisdiction.
18. SUBMISSION TO JURISDICTION. GUARANTORS HEREBY SUBMIT TO THE
--------------------------
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN HOUSTON, TEXAS, AND TO
THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS AND OF ANY TEXAS STATE COURT SITTING IN DALLAS,
TEXAS, FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. GUARANTORS IRREVOCABLY WAIVE,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
10
<PAGE>
Lease Facility Guaranty
OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
19. GOVERNING LAW. THIS GUARANTY, INCLUDING THE RIGHTS, OBLIGATIONS
-------------
AND REMEDIES HEREUNDER OF GUARANTORS, AND THE GUARANTEED PARTIES HEREOF, SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AS OPPOSED
TO CONFLICT OF LAWS PRINCIPLES) AND JUDICIAL DECISIONS OF THE STATE OF TEXAS AND
APPLICABLE FEDERAL LAW.
20. FINAL AGREEMENT. THIS WRITTEN GUARANTY AND THE OTHER OPERATIVE
---------------
DOCUMENTS TO WHICH THEY ARE PARTIES REPRESENT THE FINAL AGREEMENT BETWEEN OR
AMONG THE PARTIES HERETO RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES HERETO.
21. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
--------------------
APPLICABLE LAW, GUARANTORS HEREBY IRREVOCABLY AND EXPRESSLY WAIVE ALL RIGHT TO A
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF THE AGENT OR THE FINANCING
LENDERS IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
22. Guaranty Survives Foreclosure. The Agent and the Financing
-----------------------------
Lenders, at their option and in their sole discretion, may proceed against any
collateral securing the Guaranteed Obligations by way of either judicial or non-
judicial foreclosure, and the obligations of Guarantors under this Guaranty
shall survive such foreclosure. Guarantors understand a non-judicial foreclosure
of any security interest securing the Guaranteed Obligations could impair or
eliminate any subrogation or reimbursement rights of Guarantors may have against
the Lessor; nevertheless Guarantors hereby waive and relinquish any defense
based upon the loss of any such reimbursement or subrogation rights and any
other defense which may arise out of any applicable law now or hereafter in
effect. If any security agreement securing the Guaranteed Obligations is
foreclosed judicially or non-judicially before the Agent or the Financing
Lenders proceed against Guarantors under this Guaranty, each of Guarantors's
liability for the Guaranteed Obligations secured by such security agreement
shall be the deficiency resulting from the judicial or non-judicial sale; i.e.,
the difference between the amount of the Guaranteed Obligations secured by the
security agreement on the day of the foreclosure sale (including without
limitation principal, accrued interest, attorneys' fees, late charges and costs
of foreclosure) and the amount of the successful bid at the foreclosure sale.
11
<PAGE>
Lease Facility Guaranty
Guarantors further waive the right to object to the amount which may be bid by
the Agent or the Lessor at any foreclosure sale.
[remainder of page left intentionally blank]
12
<PAGE>
Lease Facility Guaranty
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to be duly
executed and delivered by its duly authorized officer on the date first above
written.
GUARANTORS:
----------
MAIL-WELL I CORPORATION, a Delaware
corporation
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
13
<PAGE>
Lease Facility Guaranty
MAIL-WELL, INC., a
Delaware corporation
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
14
<PAGE>
Lease Facility Guaranty
PAVEY ENVELOPE AND TAG CORP.,
as a Guarantor
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
15
<PAGE>
Lease Facility Guaranty
MAIL-WELL WEST, INC.,
as a Guarantor
By:
--------------------------
Name:
------------------------
Title:
-----------------------
16
<PAGE>
Lease Facility Guaranty
WISCO II, L.L.C.,
as a Guarantor
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
17
<PAGE>
MAIL-WELL CANADA HOLDINGS, INC.,
as a Guarantor
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
18
<PAGE>
Lease Facility Guaranty
GRAPHIC ARTS CENTER, INC.,
as a Guarantor
By:
-----------------------
Name:
---------------------
Title:
--------------------
19
<PAGE>
Lease Facility Guaranty
WISCO III, L.L.C.,
as a Guarantor
By:
-------------------------
Name:
-----------------------
Title:
----------------------
20
<PAGE>
Lease Facility Guaranty
WISCO ENVELOPE CORP.,
as a Guarantor
By:
----------------------
Name:
--------------------
Title:
-------------------
<PAGE>
EXHIBIT 21
Mail-Well, Inc. and its subsidiaries
1. Mail-Well I Corporation and its subsidiaries
a. Pavey Envelope & Tag Corporation
b. Wisco Envelope Corporation and its subsidiaries
1) Wisco II, L.L.C.
2) Wisco III, L.L.C.
c. Mail-Well Canada Holdings, Inc. and its subsidiary
1) Supremex, Inc. and its subsidiaries
a) PNG, Inc.
b) Innova Envelope, Inc.
c) Classic Envelope, Ltd. (75% owned)
d. Mail-Well West, Inc.
e. Graphic Arts Center, Inc. and its subsidiary
1) Shepard Poorman Communications Corporation
f. Mail-Well Trade Receivables Corp.
<PAGE>
Exhibit 23.1
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of Mail-Well, Inc.:
We have audited the consolidated financial statements of Mail-Well, Inc. and
Subsidiaries (the "Company") as of December 31, 1996 and 1995, and for the years
ended December 31, 1996 and 1995 and for the period from February 24, 1994
through December 31, 1994, and have issued our report thereon dated February 10,
1997; such report is included elsewhere in this Form 10-K. Our audits also
included the financial statement schedules of Mail-Well, Inc. and Subsidiaries,
listed in Item 14. These financial statement schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion based on
our audits. In our opinion, such financial statement schedules, when considered
in relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Denver, Colorado
February 10, 1997
<PAGE>
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
33-95818 of Mail-Well, Inc. on Form S-8 of our reports dated February 10, 1997
related to the consolidated financial statements and supplemental schedules of
Mail-Well, Inc. and Subsidiaries, appearing in this Annual Report on Form
10-K of Mail-Well, Inc. for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Denver, Colorado
March 25, 1997
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or director
of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby constitutes
and appoints Jana L. Brown and Roger Wertheimer, and each of them (with full
power to each of them to act alone), the undersigned's true and lawful attorney-
in-fact and agent, for the undersigned and on the undersigned's behalf and in
the undersigned's name, place and stead, in any and all capacities, to sign,
execute and file with the Securities and Exchange Commission the Company's
Annual Report on Form 10-K for the year ended December 31, 1996 together with
all amendments thereto, with all exhibits and any and all documents required to
be filed with respect thereto with any regulatory authority, granting unto said
attorneys, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the premises
in order to effectuate the same as fully to all intents and purposes as the
undersigned might or could do if personally present, hereby ratifying and
confirming all of the said attorneys-in-fact and agents, or either of them, may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ Frank P. Diassi
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ J. Bruce Duty
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ Frank J. Hevrdejs
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ Gerald F. Mahoney
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ Jerome W. Pickholz
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ Susan Opel Rheney
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ W. Thomas Stephens
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ Robert J. Terry
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer or
director of Mail-Well, Inc., a Delaware corporation (the "Company"), hereby
constitutes and appoints Jana L. Brown and Roger Wertheimer, and each of them
(with full power to each of them to act alone), the undersigned's true and
lawful attorney-in-fact and agent, for the undersigned and on the undersigned's
behalf and in the undersigned's name, place and stead, in any and all
capacities, to sign, execute and file with the Securities and Exchange
Commission the Company's Annual Report on Form 10-K for the year ended December
31, 1996 together with all amendments thereto, with all exhibits and any and all
documents required to be filed with respect thereto with any regulatory
authority, granting unto said attorneys, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises in order to effectuate the same as fully to
all intents and purposes as the undersigned might or could do if personally
present, hereby ratifying and confirming all of the said attorneys-in-fact and
agents, or either of them, may lawfully do or cause to be done by virtue
thereof.
IN WITNESS WHEREOF, the undersigned has hereto signed this power of
attorney this 25th day of March, 1997.
/s/ J. Virgil Waggoner
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,656
<SECURITIES> 0
<RECEIVABLES> 40,612
<ALLOWANCES> 0
<INVENTORY> 68,275
<CURRENT-ASSETS> 135,612
<PP&E> 205,708
<DEPRECIATION> (22,406)
<TOTAL-ASSETS> 470,946
<CURRENT-LIABILITIES> 113,487
<BONDS> 0
0
0
<COMMON> 130
<OTHER-SE> 121,077
<TOTAL-LIABILITY-AND-EQUITY> 470,946
<SALES> 778,524
<TOTAL-REVENUES> 778,524
<CGS> 611,591
<TOTAL-COSTS> 611,591
<OTHER-EXPENSES> 107,251
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,492
<INCOME-PRETAX> 29,190
<INCOME-TAX> 12,263
<INCOME-CONTINUING> 16,927
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,927
<EPS-PRIMARY> 1.42
<EPS-DILUTED> 1.42
</TABLE>
