<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission file number 1-12551
MAIL-WELL, INC.
(Exact name of Registrant as specified in its charter.)
COLORADO 84-1250533
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
23 Inverness Way East, Englewood, CO 80112
(Address of principal executive offices) (Zip Code)
303-790-8023
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
INDICATE BY CHECKMARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.
Yes /X/ No / /
As of May 12, 1998, the Registrant had 43,051,001 shares of Common Stock, $0.01
par value, outstanding.
================================================================================
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
----
Part I - Financial Information
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 17
Part II - Other Information
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Securities Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
2
<PAGE>
PART I. FINANCIAL INFORMATION, ITEM 1. FINANCIAL STATEMENTS
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1998 1997
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 8,185 $ 37,587
Receivables, net 59,288 38,436
Accounts receivable -- other 8,257 7,874
Income tax receivable, net -- 1,777
Securitized interest in accounts receivable 42,598 22,319
Inventories 96,732 78,143
Deferred income taxes 2,493 2,410
Other current assets 7,504 5,093
-------- --------
Total current assets 225,057 193,639
PROPERTY, PLANT AND EQUIPMENT -- NET 279,766 223,390
DEFERRED FINANCING COSTS -- NET 2,485 1,938
GOODWILL -- NET 220,988 153,524
OTHER ASSETS -- NET 15,038 13,710
-------- --------
TOTAL $743,334 $586,201
-------- --------
-------- --------
CURRENT LIABILITIES
Accounts payable $ 64,180 $ 42,572
Accrued compensation and vacation 27,102 26,533
Accrued interest 4,114 4,337
Income tax payable, net 659 --
Other current liabilities 26,313 26,913
Current portion of long-term debt and
capital leases 464 562
-------- --------
Total current liabilities 122,832 100,917
ACCRUED PENSION 1,174 1,174
CAPITAL LEASES 40 2,771
BANK BORROWINGS 95,710 60,193
SENIOR SUBORDINATED NOTES 85,000 85,000
CONVERTIBLE SUBORDINATED NOTES 152,050 152,050
DEFERRED INCOME TAXES 28,757 28,676
OTHER LONG TERM LIABILITIES 5,439 5,519
-------- --------
Total liabilities 491,002 436,300
-------- --------
COMMITMENTS AND CONTINGENCIES
MINORITY INTEREST 3,500 3,500
-------- --------
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; 25,000
shares authorized, none issued and outstanding -- --
Common stock, $0.01 par value; 100,000,000
shares authorized, 42,846,406 and 37,679,638
shares issued and outstanding, respectively
(including 3,896,544 shares held by ESOP) 428 377
Paid-in capital 192,494 99,843
Retained earnings 59,317 49,807
Unearned ESOP compensation (2,357) (2,406)
Cumulative foreign currency translation
adjustment (730) (1,032)
Pension liability adjustment (73) (73)
Unrealized loss, net of taxes, on securitized
interest in accounts receivable (247) (115)
-------- --------
Total stockholders' equity 248,832 146,401
-------- --------
TOTAL $743,334 $586,201
-------- --------
-------- --------
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
1998 1997
-------- --------
<S> <C> <C>
NET SALES $274,705 $212,032
COST OF SALES
Materials 116,205 89,958
Labor and other 80,454 59,017
Manufacturing 18,137 15,541
Depreciation 4,620 3,355
Waste recovery (3,222) (2,473)
-------- --------
Total cost of sales 216,194 165,398
GROSS PROFIT 58,511 46,634
OTHER OPERATING COSTS
Selling 19,867 15,421
Administrative 14,529 12,799
Amortization 1,733 1,117
(Gain) loss on disposal of assets ( 467) 871
-------- --------
Total other operating costs 35,662 30,208
OPERATING INCOME 22,849 16,426
OTHER EXPENSE
Interest expense - debt 5,589 4,554
Interest expense - amortization of deferred
financing costs 89 724
Discount on sale of accounts receivable 807 1,269
Other income (195) (530)
-------- --------
INCOME BEFORE INCOME TAXES 16,559 10,409
PROVISION FOR INCOME TAXES
Current 4,371 2,551
Deferred 2,678 1,877
-------- --------
NET INCOME $ 9,510 $ 5,981
-------- --------
-------- --------
EARNINGS PER BASIC SHARE $ 0.25 $ 0.17
EARNINGS PER DILUTED SHARE $ 0.22 $ 0.16
WEIGHTED AVERAGE SHARES - BASIC 38,154,942 35,553,099
WEIGHTED AVERAGE SHARES - DILUTED 48,357,308 36,413,862
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1998 1997
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 9,510 $ 5,981
Adjustments to reconcile net income to cash
provided by (used in) operations
Depreciation 4,620 3,355
Amortization 1,822 1,841
Deferred tax provision 2,678 1,877
(Gain), loss on disposal of assets (467) 871
ESOP compensation expense 719 68
Other (132) 20
Change in operating assets and liabilities
Receivables (32,982) 3,724
Current income taxes (302) 334
Inventories (4,559) (3,034)
Accounts payable 5,527 (1,193)
Accrued interest (223) (1,658)
Other working capital 11,907 (1,128)
Accrued pension, current and long term (219) (40)
Other assets and other long-term liabilities (375) 443
--------- --------
Net cash provided by (used in) operating
activities (2,476) 11,461
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs (140,927) (189)
Capital expenditures (12,871) (5,601)
Proceeds from sale of property, plant and
equipment 248 24
--------- --------
Net cash used in investing activities (153,550) (5,766)
--------- --------
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock issuance 92,018 44
Cash overdrafts - 361
Proceeds from long-term debt 93,098 7,000
Repayments of long-term debt (59,107) (11,333)
Repayments of capital lease obligations (87) (258)
--------- --------
Net cash provided by (used in) financing
activities 125,922 (4,186)
--------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 702 (314)
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS (29,402) 1,195
BALANCE AT BEGINNING OF PERIOD 37,587 9,656
--------- --------
BALANCE AT END OF PERIOD $ 8,185 $ 10,851
--------- --------
--------- --------
SUPPLEMENTAL DISCLOSURES
Cash paid for interest $ 5,812 $ 6,211
Cash paid for taxes 2,178 2,803
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE>
MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
NATURE OF OPERATIONS -- Mail-Well, Inc. and subsidiaries (the "Company") is
one of the largest printers in North America, specializing in custom envelopes,
high quality printed materials, labels, business communications documents and
filing products. Within envelope printing and filing products, the Company
competes primarily in the consumer direct segment in which envelopes are
designed and manufactured to customer specifications. In addition, the Company
manufactures stock envelopes sold in the office products and merchant/printer
markets. 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. With acquisitions in early 1998, the Company is now a major
printer of custom business communications documents for the distributor market
and a major printer of glue-applied paper labels for the beverage, food and
household products industries. The Company commenced operations on February 24,
1994 with the acquisition of the envelope businesses of Georgia-Pacific
Corporation ("GP Envelope") and Pavey Envelope and Tag Corp. ("Pavey").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION -- The Company, headquartered in Englewood,
Colorado, is organized under Colorado law and its common stock is traded on the
New York Stock Exchange. These financial statements include the accounts of the
Company and all significant intercompany accounts and transactions have been
eliminated.
INTERIM FINANCIAL INFORMATION -- The interim financial information contained
herein is unaudited and includes all normal and recurring adjustments which, in
the opinion of management, are necessary to present fairly the information set
forth. The consolidated financial statements should be read in conjunction with
the Notes to the Consolidated Financial Statements which are included in the
Company's Form 10-K. The results for interim periods are not necessarily
indicative of results to be expected for the Company's fiscal year ending
December 31, 1998. The Company believes that the report filed on Form 10-Q is
representative of its financial position, its results of operations and its cash
flows for the three months ended March 31, 1998 and 1997.
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")-- Unearned ESOP compensation balance
is presented in the accompanying financial statements as a reduction of equity.
As the ESOP shares are allocated to participants, the unearned ESOP compensation
balance will decrease and compensation expense will be recorded.
AUTHORIZED CAPITAL STOCK -- At the Company's annual meeting on April 29,
1998, the shareholders approved an amendment to the Articles of Incorporation
to increase the number of shares of common stock authorized for issuance to a
total of 100,000,000 shares.
RECLASSIFICATION -- Certain amounts in the 1997 financial statements have
been reclassified to conform to the 1998 presentation.
OTHER COMPREHENSIVE INCOME-- Effective January 1, 1998, the Company adopted
Statement of Financial Accounting Standards No. 130, Reporting Comprehensive
Income. Accordingly, components of other comprehensive income (loss) are as
follows,
<TABLE>
<CAPTION>
Balance Current Balance
January 1 Period Change March 31,
-------------- ------------- ----------------
(in thousands) 1998 1997 1998 1997 1998 1997
------- ----- ----- ----- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Cumulative foreign currency
translation adjustment $(1,032) $(115) $ 302 $(140) $ (730) $(255)
Pension liability adjustment (73) (110) 0 0 (73) (110)
Unrealized loss, net of taxes,
on securitized interest in
accounts receivable (115) (49) (132) 0 (247) (49)
------- ----- ----- ----- ------- -----
Accumulated other comprehensive
income (loss) $(1,220) $(274) $ 170 $(140) $(1,050) $(414)
------- ----- ----- ----- ------- -----
------- ----- ----- ----- ------- -----
</TABLE>
6
<PAGE>
EARNINGS PER SHARE -- In June 1997, the Company's common stock split 3:2 and
in May 1998 the Company declared a 2:1 stock split effective June 1, 1998; all
share and per share information have been retroactively restated to reflect
these splits. In 1997, the Financial Accounting Standards Board issued
"Statement of Financial Accounting Standards No. 128, Earnings Per Share" ("SFAS
128"). The Company has adopted SFAS 128 resulting in the restatement of earnings
per share for all prior periods. Basic earnings per share excludes dilution and
is computed by dividing earnings available to common stockholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution of securities that could
share in the earnings. Common shares outstanding excludes unallocated shares
issued under the ESOP.
<TABLE>
<CAPTION>
INCOME SHARES PER-SHARE
(in thousands, except share and per share amounts) (NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ---------
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED MARCH 31, 1998,
EARNINGS PER BASIC SHARE
Income available to common stockholders $ 9,510 38,154,942 $0.25
EFFECT OF DILUTIVE SECURITIES
Stock options 1,954,260
Convertible subordinated notes 1,083 8,002,634
Other 245,472
EARNINGS PER DILUTED SHARE
Income available to common stockholders
including assumed conversions $10,593 48,357,308 $0.22
FOR THE THREE MONTHS ENDED MARCH 31, 1997,
EARNINGS PER BASIC SHARE
Income available to common stockholders $ 5,981 35,553,099 $0.17
EFFECT OF DILUTIVE SECURITIES
Stock options 812,613
Other 48,150
EARNINGS PER DILUTED SHARE
Income available to common stockholders
including assumed conversions $ 5,981 36,413,862 $0.16
</TABLE>
3. DETAIL OF CERTAIN BALANCE SHEET ACCOUNTS (IN THOUSANDS)
INVENTORIES:
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
-------------- -----------------
<S> <C> <C>
Raw materials $ 39,095 $ 30,308
Work in process 11,818 9,458
Finished goods 49,147 41,270
Reserve for obsolescence and loss (3,328) (2,893)
-------- --------
Total $ 96,732 $ 78,143
-------- --------
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land and land improvements $ 14,918 $ 12,459
Buildings 63,542 52,817
Leasehold improvements 6,564 4,914
Machinery and equipment 196,840 162,112
Furniture and fixtures 4,108 3,730
Automobiles and trucks 761 771
Computers and software 13,803 11,745
Construction in progress 18,873 10,435
-------- --------
319,409 258,983
Less accumulated depreciation (39,643) (35,593)
-------- --------
Total $279,766 $223,390
-------- --------
-------- --------
</TABLE>
7
<PAGE>
4. LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
INTEREST RATE AT
MARCH 31, 1998 MARCH 31, 1998 DECEMBER 31, 1997
---------------- -------------- -----------------
<S> <C> <C> <C>
Bank borrowings:
Unsecured line of credit, due
March 31, 2003
Mail-Well I Corporation $ - $ -
Supremex 5.375% 90,238 -
Demand note
Supremex - 55,393
Senior Subordinated Notes, due 2004 10.5% 85,000 85,000
Convertible Subordinated Notes, due 2002 5.0% 152,050 152,050
Other 5,777 5,105
-------- --------
333,065 297,548
Less current maturities (305) (305)
-------- --------
Long-term debt $332,760 $297,243
-------- --------
-------- --------
</TABLE>
On March 18,1998, the Company closed a new bank facility totaling $300
million with Bank of America, the lead agent for its syndicate of banks. The
new bank facility consists of a five-year unsecured line of credit. Proceeds
from the unsecured line of credit were used to repay the Demand Note
outstanding at December 31, 1997.
The indenture to the Senior Subordinated Notes contains 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 the Company, pay dividends or repurchase shares of common stock.
In addition the Company is required to satisfy financial covenants.
The Convertible Subordinated Notes constitute unsecured subordinated
obligations of the Company. They are convertible at the option of the holder
into shares of the Company's common stock at a conversion price of $38.00 per
share, or $19.00 per share after the 2:1 stock split effective June 1, 1998. In
addition, the Company may be required to repurchase the Notes at a price of 101%
of the principal amount, plus interest, upon occurrence of certain events
constituting a change of control of the Company.
5. COMMON STOCK ISSUANCE
On February 11, 1998, the Company completed the sale of 6,000,000 shares of
its Common Stock, adjusted for the 2:1 stock split, at a price of $19.625 per
share through a group of underwriters led by Prudential Securities
Incorporated. Of these shares, 4,864,600 were sold by the Company and
1,135,400 were sold by a group of shareholders. Proceeds from the sale of
common stock by the Company of $91.2 million, net of underwriting discounts
and commissions, were used for general corporate purposes. An additional $0.8
million in proceeds was received on the exercise of options in the first
quarter of 1998.
6. STOCK OPTIONS
On February 4, 1998, the Company's Board of Directors adopted a non-qualified
stock option plan (the "1998 Plan") for key employees and directors authorizing
future grants of stock options to purchase up to 1,000,000 shares of the
Company's common stock, adjusted for the 2:1 stock split. The 1998 Plan will be
administered by the Compensation Committee of the Board, and key employees and
directors of the Company and its affiliates may receive options as determined by
the Committee in its discretion. The exercise price of options granted under the
1998 Plan shall not be less than 100% of the fair market value of the Company's
common stock on the date of the grant.
8
<PAGE>
7. ACQUISITIONS
The statements of operations include the operations of acquisitions, all of
which have been accounted for under the purchase method of accounting, from
their acquisition date.
On January 6, 1998, the Company acquired the stock of Poser Business
Forms, Inc., ("Poser"). Poser is the second largest U.S. printer of custom
business communications documents for the distributor market and has annual
sales of $90 million. Poser, headquartered in Fairhope, Alabama, has a nation-
wide network of 14 plants producing four-color process printing, labels,
envelopes, loose-leaf products, laser cut-sheets and business forms. Poser also
has two high-growth trademarked products, VersaSeal, a self-mailing system, and
Security Guard, a line of documents with special security protection. This
acquisition launches the Company in a new highly fragmented, growing operating
segment
On March 3, 1998, the Company acquired substantially all the assets of Rono
Graphic Communications Co. and Hicks-Chatten Engraving Company ("Rono"). Rono is
a printer specializing in high-quality posters, annual reports, advertising and
point-of-purchase displays with $12 million in annual sales located in Portland,
Oregon.
On March 10, 1998, the Company acquired substantially all the assets of the
Lawson Mardon Packaging USA, Inc. label division subsequently renamed Mail-Well
Label ("MW Label"). MW Label is the second largest supplier of glue-applied
labels in North America, providing premium and conventional labels, in-mold
labels, postcards and graphic services to the food, beverage and consumer
household products markets. Headquartered in Toronto, Ontario, with plants in
Montreal, Quebec; Leamington, Ontario; Baltimore, Maryland; and Sparks, Nevada,
MW Label has annual sales of $81 million. This acquisition also launches the
Company in a new highly fragmented segment of the printing industry.
On March 27, 1998, the Company acquired the stock of Denver Forms Company
("Denver Forms"). Denver Forms is a business communications documents and
specialty printing manufacturer based in Denver, Colorado with annual sales of
$12 million.
On March 27, 1998, the Company acquired the stock of the National Graphics
Company ("Natl Graphics"). Natl Graphics is a forms distributor based in Denver,
Colorado with annual sales of $8 million.
On March 27, 1998, the Company acquired substantially all the assets of EPX
DENVER ("EPX"). EPX is a business communications documents and specialty
printing manufacturer based in Denver, Colorado with annual sales of $4 million.
On April 8, 1998, the Company acquired substantially all the assets of Blue
Line Envelope ("Blue Line"). Blue Line, located in Montreal, Quebec, is an
envelope manufacturer for office products outlets and stationers in Canada with
annual sales of $6 million.
On April 21, 1998, the Company acquired the stock of South Press, Inc.
("South Press"). South Press is a high quality printer located in Dallas, Texas
with annual sales of $12 million.
On May 5, 1998, the Company acquired the stock of Century Index Corporation
("Century"). Century is a manufacturer of filing products located in Anaheim,
California, with annual sales of $8 million.
On May 11, 1998, the Company acquired substantially all the assets of the
International Paper label division ("IP Label"). IP Label located in Bowling
Green, Kentucky, prints labels for consumer products and has annual sales of $30
million.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the consolidated
historical financial statements and related notes of Mail-Well, Inc. and its
subsidiaries (the "Company") included elsewhere in this report. In addition
to the historical information contained herein, this report contains
forward-looking statements. The reader of this information should understand
that all such forward-looking statements are subject to various uncertainties
and risks that could affect their outcome. The Company's actual results
could differ materially from those suggested by such forward-looking
statements. Factors which could cause or contribute to such differences
include, but are not limited to, product demand and sales, growth rate,
ability to obtain assumed productivity savings, quality controls,
availability of acquisition opportunities and their related costs, cost
savings due to integration and synergies associated with acquisitions,
ability to obtain additional financings and bank debt restructuring, interest
rates, foreign currency exchange rates, paper and raw material costs, waste
paper prices, ability to pass through paper costs to customers, postage
rates, changes in the direct mail industry, competition, ability to develop
new products, labor costs, labor relations and advertising costs. 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
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1998 1997
----------- ----------
<S> <C> <C>
Net sales
U.S. Envelope $ 172,202 $ 139,700
Canadian Envelope 28,197 31,616
High Impact Color Printing 48,684 40,716
Business Communications Documents 21,597 0
Consumer Products Labels 4,025 0
----------- ----------
Total net sales 274,705 212,032
----------- ----------
Cost of sales
U.S. Envelope 135,619 108,323
Canadian Envelope 20,146 22,777
High Impact Color Printing 39,315 33,702
Business Communications Documents 17,627 0
Consumer Products Labels 3,153 0
Corporate 334 596
----------- ----------
Total cost of sales 216,194 165,398
----------- ----------
Gross profit 58,511 46,634
----------- ----------
Operating expenses
U.S. Envelope 19,222 16,733
Canadian Envelope 3,556 4,570
High Impact Color Printing 6,821 5,165
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Business Communications Documents 2,364 0
Consumer Products Labels 609 0
Corporate 3,090 3,740
----------- ----------
Total operating expenses 35,662 30,208
----------- ----------
Operating income 22,849 16,426
Interest expense - debt 5,589 4,554
Interest expense - amortization of
deferred financing costs 89 724
Discount on sale of accounts receivable 807 1,269
Other income (195) (530)
Income tax expense 7,049 4,428
----------- ----------
Net income $ 9,510 $ 5,981
----------- ----------
----------- ----------
</TABLE>
OVERALL OPERATING RESULTS
Sales for the quarter ended March 31, 1998 rose $62.7 million, or 30%, from
the quarter ended March 31, 1997. Net income for the quarter ended March 31,
1998 increased by $3.5 million ($0.05 per diluted share), or 59%, compared
with the prior year period. During the most recent quarter the Company
continued to focus its efforts on the operations of recently acquired
businesses. These efforts included establishing the strategic direction in
the two new operating segments, Business Communications Documents and
Consumer Products Labels, entered via acquisitions in 1998. In addition, the
Company reviewed acquired operations in existing operating segments to
determine changes in cost structures and marketing strategy.
ACQUISITIONS
The presentation below summarizes the Company's acquisitions,
<TABLE>
<CAPTION>
ESTIMATED
MONTH OPERATING ANNUAL
LOCATION AQUIRED SEGMENT SALES
------------------------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
1995 ACQUISITIONS (MILLIONS)
Supremex, Inc. ("Supremex") Canada July Envelope $ 93
Graphic Arts Center, Inc. ("GAC") Portland, Oregon August High Impact 150
Aggregate purchase price was $148.1
million, with $71.2 million --------
goodwill recorded 243
1996 ACQUISITIONS
Quality Park Products, Inc. ("Quality") St. Paul, Minnesota April Envelope 80
Pac National Group Products, Inc. ("PNG") Canada August Envelope 30
Shepard Poorman Communications Corp ("SP") Indianapolis, Indiana December High Impact 50
Aggregate purchase price was $68.2
million, with $17.7 million --------
goodwill recorded 160
1997 ACQUISITIONS
Griffin Envelope, Inc. ("Griffin") Seattle, Washington June Envelope 12
The Allied Printers ("Allied") Seattle, Washington July High Impact 17
Murray Envelope Corporation ("Murray") Hattiesburg, Mississippi July Envelope 48
National Color Graphics, Inc. ("NCG") Atlanta, Georgia September High Impact 23
Intertec Mailing Services ("MW Services") Nashville, Tennessee October Envelope 7
Cambridge, Maryland plant of Western Cambridge, Maryland December Envelope 33
Graphics Communications ("MW Graphics")
Aggregate purchase price was $87.0
million, with $32.7 million --------
goodwill recorded 140
FIRST QUARTER 1998 ACQUISITIONS
Poser Business Forms, Inc. ("Poser") Fairhope, Alabama January Documents 90
Rono Graphic Communications Co. ("Rono") Portland, Oregon March High Impact 12
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Lawson Mardon Label Division ("MW Label") Toronto, Ontario March Labels 81
Denver Forms Company ("Denver Forms") Denver, Colorado March Documents 12
National Graphics Company ("Natl Graphics") Denver, Colorado March Envelope 8
EPX Denver ("EPX") Denver, Colorado March Documents 4
Aggregate purchase price was $140.9
million, with $68.8 million --------
goodwill recorded 207
</TABLE>
All of the acquisitions have been accounted for under the purchase method of
accounting. Accordingly the historical results of operations of the Company
include results of operations of each of the acquisitions from their date of
purchase. The table below presents the historical sales and cost of sales of
the Company adjusted to show the effects of the acquisitions as if the
acquisitions had occurred on January 1 of the year prior to their actual
purchase date.
<TABLE>
<CAPTION>
Three Months Ended March 31,
-----------------------------
1998 1997
-------------- -----------
<S> <C> <C>
Net sales as reported $ 274,705 $ 212,032
1997 acquisitions in the aggregate 0 37,037
1998 acquisitions in the aggregate 21,967 51,258
-------------- -----------
Net sales, pro forma 296,672 300,327
-------------- -----------
Cost of sales, as reported 216,194 165,398
1997 acquisitions in the aggregate 0 29,875
1998 acquisitions in the aggregate 17,768 40,923
-------------- -----------
Cost of sales, pro forma 233,962 236,196
-------------- -----------
Gross profit, as reported $ 58,511 $ 46,634
-------------- -----------
-------------- -----------
21.3% 22.0%
Gross profit, pro forma $ 62,710 $ 64,131
-------------- -----------
-------------- -----------
21.1% 21.4%
</TABLE>
12
<PAGE>
RESULTS OF OPERATIONS
U.S. ENVELOPE
The following table presents historical financial data for the U.S.
Envelope operations of the Company, including acquisitions from their
purchase dates.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
-------------------------
1998 1997
-----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) $ % $ %
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $172,202 100.0 $139,700 100.0
Cost of sales 135,619 78.7 108,323 77.5
Operating expenses 19,222 11.2 16,733 12.0
--------- ----- --------- ------
Operating income $ 17,361 10.1 $ 14,644 10.5
--------- ----- --------- ------
--------- ----- --------- ------
</TABLE>
QUARTER ENDED MARCH 31, 1998 COMPARED TO QUARTER ENDED MARCH 31, 1997
NET SALES -- Net sales increased by $32.5 million (23.3%) for the quarter
ended March 31, 1998 compared to the quarter ended March 31, 1997, due
primarily to acquisitions. Excluding acquisitions, the average selling price
per thousand units decreased 3.4% to $18.80 for the quarter ended March 31,
1998, from the same period in the prior year. However, because of its ability
to pass through paper cost fluctuations to customers, the Company uses
volumes of units sold and material gross margin (that is, net sales less net
cost of materials) per thousand units as revenue trend indicators in its
envelope operations. Again excluding acquisitions, unit volume increased
6.9% to 7.7 billion units in the first quarter of 1998 from 7.2 billion units
in the same quarter in 1997. Material gross margin per thousand units,
excluding acquisitions, decreased 4.3% to $10.79 in the first quarter of 1998
from $11.27 in the year-ago period. Overall material gross margin dollars
increased 24.8% in the first quarter of 1998 compared to the same period in
1997, with 22.7% of this increase coming from acquisitions.
COST OF SALES -- Total cost of sales, as a percentage of sales, increased
from 77.5% in the first quarter of 1997 to 78.7% in the first quarter of
1998, primarily as a result of the decrease in average selling price. Cost of
sales includes materials, net of waste recovery revenue, labor, depreciation
and other manufacturing costs. Net material cost, as a percent of sales,
decreased from 42.1% for the first quarter of 1997 to 41.3% for the first
quarter of 1998. All other manufacturing costs, as a percent of sales,
increased to 37.4% in the first quarter of 1998 from 35.5% in the first
quarter of 1997. The majority of this shift is due to sales mix changes
resulting from acquisitions. Excluding acquisitions, net material cost, as a
percent of sales, increased 0.5% to 42.6% in the first quarter of 1998 from
the year earlier period due to increased paper costs. Again excluding
acquisitions, all other manufacturing costs decreased 0.3% to 29.6% in the
first quarter of 1998 from the year earlier period due to efficiency
improvements attributable to ongoing consolidation activities and new
equipment installations.
OPERATING EXPENSES -- For the first quarter ended March 31, 1998,
operating expenses decreased to 11.2% of sales from 12.0% of sales in the
same period in 1997. This decline is due to the continuing consolidation and
reorganization of our envelope operations including acquisitions.
13
<PAGE>
CANADIAN ENVELOPE
The following table presents financial information with respect to the
Canadian Envelope operations (Supremex), including acquisitions from their
purchase dates. All amounts are in U.S. dollars.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
-------------------------
1998 1997
-----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) $ % $ %
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $28,197 100.0 $31,616 100.0
Cost of sales 20,146 71.5 22,777 72.0
Operating expenses 3,556 12.6 4,570 14.5
--------- ----- --------- ------
Operating income $ 4,495 15.9 $ 4,269 13.5
--------- ----- --------- ------
--------- ----- --------- ------
</TABLE>
QUARTER ENDED MARCH 31, 1998 COMPARED TO THE QUARTER ENDED MARCH 31, 1997
NET SALES -- Net sales for the first quarter of 1998 were down 10.8%
compared to the first quarter of 1997. The average selling price was down
8.3% primarily due to a 5.0% reduction in the average exchange rate in the
first quarter of 1998 compared to the same period in 1997. Again, due to the
ability to pass through material cost changes to customers, the Company
primarily uses unit sales and material gross margin (that is, net sales less
net cost of materials) per thousand units as revenue trend indicators in its
envelope operations. Unit sales declined 2.0% to 1.5 billion in the first
quarter of 1998 from the first quarter of 1997, which is attributable to
exiting certain low margin markets served by PNG prior to acquisition.
Material gross margin per thousand units decreased 5.7% in the first quarter
of 1998 compared to the first quarter of 1998 due primarily to the 5.0%
reduction in the average exchange rate.
COST OF SALES -- Total cost of sales, as a percentage of sales, decreased
from 72.0% in the first quarter of 1997 to 71.5% in the first quarter of
1998. Cost of sales includes materials, net of waste recovery revenue, labor,
depreciation and other manufacturing costs. Net material costs, as a percent
of sales, increased to 45.0% in the first quarter of 1998 compared to 44.1%
in the first quarter of 1997 due to increased paper costs. All other
manufacturing costs however decreased, as a percent of sales, 1.4% in the
first quarter of 1998 compared to the same period in 1997, primarily due to
the successful integration of PNG operations with Supremex.
OPERATING EXPENSES - As a percentage of net sales, operating expenses
decreased to 12.6% for the quarter ended March 31, 1998, from 14.5% in the
same quarter of 1997. Operating expenses decreased 22.2% in the first quarter
of 1998 compared to the prior year period due to the complete assimilation of
the PNG operations.
HIGH IMPACT COLOR PRINTING
The following table presents financial information with respect to the High
Impact Color Printing (GAC) operations including acquisitions from their
purchase dates.
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
-------------------------
1998 1997
-----------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS) $ % $ %
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $48,684 100.0 $40,716 100.0
Cost of sales 39,315 80.8 33,702 82.8
Operating expenses 6,821 14.0 5,165 12.7
--------- ----- --------- ------
Operating income $ 2,548 5.2 $ 1,849 4.5
--------- ----- --------- ------
--------- ----- --------- ------
</TABLE>
14
<PAGE>
QUARTER ENDED MARCH 31, 1998 COMPARED TO THE QUARTER ENDED MARCH 31, 1997
NET SALES -- Net sales increased by $8.0 million (19.6%) for the first
quarter of 1998 compared to the first quarter of 1997. This increase in net
sales includes $9.9 million of net sales related to acquisitions which is
offset by a $1.9 million decrease in net sales at other print facilities,
primarily Indianapolis and San Francisco. Continuing declines in the computer
book segment, due to higher utilization of electronic medium, is the major
factor in San Francisco, while a temporary decrease in volumes with a single
customer is the reason for reduced sales in Indianapolis.
COST OF SALES -- Cost of sales expressed as a percent of sales decreased to
80.8% in the first quarter of 1998 from 82.8% in the year-ago quarter.
Increased list paper prices, due to product mix variations, had a negligible
effect resulting in a 0.3% decrease in overall material costs, expressed as a
percent of sales, in the first quarter of 1998 compared to the year-ago
quarter. Other manufacturing costs decreased 1.7% to 44.6% of sales in the
first quarter of 1998 compared to the prior year first quarter. This
reduction is the result of continuing manufacturing improvements and the
assimilation of acquisitions into GAC's management systems.
OPERATING EXPENSES -- As a percent of sales, operating expense increased
from 12.7% in the first quarter of 1997 to 14.0% in the first quarter of
1998. Selling expenses, as a percent of sales, increased 1.8% to 10.6% in the
first quarter of 1998 compared to the year ago period due to the addition of
sales staff in our effort to increase market share. Administrative expenses
as a percent of sales decreased 0.8% as a result of assimilating acquisitions
and continuing efficiency improvements.
CORPORATE EXPENSES
COST OF SALES -- OPERATING LEASE EXPENSES - To maintain consistency within
and between the operating segments the Company treats major equipment
additions as purchases at the operating segment level. Adjustments are made
at the corporate level for equipment financed under operating lease
commitments to comply with appropriate accounting treatment. The decline in
the net cost differential recorded at the corporate level for operating lease
reclassifications in the first quarter of 1998 compared to 1997 is the result
of transferring a large share of the operating leases to a new lessor under
more favorable lease rates.
OPERATING EXPENSES -- Total operating expenses decreased by $0.6 million to
$3.1 million in the first quarter of 1998 compared to $3.7 million in the
first quarter of 1997. Included in corporate operating expense is
amortization expense relating to goodwill, which increased $0.6 million in
the first quarter of 1998 compared to the year ago period as the result of
ongoing acquisition activity. Also included in operating expenses is the
(gain) loss on disposal of assets amounting to ($0.5) and $0.9 million,
respectively for the first quarter of 1998 and 1997. The gain on disposal of
assets in the first quarter of 1998 relates to the disposal of an excess
warehouse facility in Portland, offset by minor losses arising from other
equipment disposals. The majority of the first quarter 1997 loss on disposal
of assets relates to building and equipment losses arising from the closing
of the Pittsburgh warehouse and reorganizations of the plants in Salt Lake
City and Chicago. Other corporate operating expenses increased only $0.1
million in the first quarter of 1998 compared to the same period in 1997.
INTEREST EXPENSE-DEBT -- Interest expense increased $1.0 million in the
first quarter of 1998 compared to the first quarter of 1997 primarily as a
result of the issuance in November 1997 of the Convertible Subordinated Notes
in the amount of $152.1 million. The first quarter 1998 interest expense of
$1.9 million on the Convertible Subordinated Notes is offset by lower
interest expense on bank borrowings attributable to lower average bank debt
balances for the first quarter of 1998 compared to the year-ago period and
lower average interest rates. The average outstanding bank debt was $77.8
million in the first quarter of 1998 compared to $132.4 million in the first
quarter of 1997. The related average interest rate was 5.64% for the first
quarter of 1998 compared to 7.65% for the first quarter of 1997.
INTEREST EXPENSE-AMORTIZATION OF DEFERRED FINANCING COSTS -- The Company
wrote off deferred financing costs of $6.1 million relating to bank debt
which was repaid in November 1997, which accounts for the decrease in the
amortization of deferred financing costs in the first quarter of 1998
compared to the first quarter of 1997.
15
<PAGE>
DISCOUNT ON SALE OF ACCOUNTS RECEIVABLE -- This amount represents expenses
related to the accounts receivable securitization program, including interest
and associated utilization fees. The average receivables sold under this
agreement in the first quarter of 1998 were $44.3 million compared to $71.0
million in the first quarter of 1997 accounting for the decrease in expense
in the first quarter of 1998.
OTHER (INCOME) EXPENSE -- This line item includes interest income earned
from the investment of funds in cash equivalents of $0.2 million in both the
first quarter of 1998 and 1997. Also in the first quarter of 1997 a $0.3
million foreign exchange gain was included in this line.
INCOME TAXES -- The effective tax rate for the first quarter of 1998 and
1997 was 42.6% and 42.5%, respectively. 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 are not tax deductible.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL CASH FLOW -- Net cash used in operating activities was $2.5
million for the first quarter of 1998 as compared to $11.5 million provided
by operating activities in the first quarter of 1997. This reduction in cash
flow is attributable to a $14.0 million decrease in accounts receivables sold
under the securitization program as bank debt was restructured and we had
less need to sell accounts receivable. Capital expenditures totaled $12.9
million for the first quarter of 1998 as compared to $5.6 million for the
first quarter of 1997. Acquisition costs totaled $140.9 million in the first
quarter of 1998 compared to $0.2 million in the first quarter of 1997.
COMMON STOCK ISSUANCE -- In February 1998 the Company sold 4,864,600 shares
of its Common Stock at a price of $19.625 per share, adjusted for the 2:1
split, through a group of underwriters led by Prudential Securities
Incorporated. Proceeds from the sale of stock of $91.2 million were used for
general corporate purposes. An additional $0.8 million in proceeds was
received on the exercise of options in the first quarter of 1998.
DEBT OBLIGATIONS -- In March 1998 the Company closed a new five-year
unsecured line of credit for up to $300.0 million with the Bank of America,
the lead agent for a syndicate of banks, at an interest rate of LIBOR plus a
margin based on our leverage ratio. The effective interest rate at March 31,
1998, was 5.375% and the available credit under this facility was $209.8
million. Bank borrowings at March 31, 1998, were $90.2 million compared to
$131.9 million at March 31, 1997. The Senior Subordinated Notes outstanding
of $85.0 million, at an interest rate of 10.5%, remained unchanged from March
31, 1997, to March 31, 1998. In November 1997 the Company issued Convertible
Subordinated Notes in the amount of $152.1 million, with an interest rate of
5.0%. The Convertible Subordinated Notes constitute unsecured subordinated
obligations of the Company and they are convertible at the option of the
holder into common stock of the Company at a conversion price of $38.00 per
share, or $19.00 per share after the 2:1 stock split effective June 1, 1998.
Proceeds from the Convertible Subordinated Notes were used to pay off
existing bank debt with a higher interest rate.
CAPITAL REQUIREMENTS -- The Company estimates that, based on current
utilization of its existing equipment and expected demand, it will spend
approximately $30.0 to $35.0 million per year on capital expenditures
exclusive of acquisitions. In addition the Company expects to spend and
capitalize approximately $7.0 million in 1998 and 1999 to upgrade its
existing computer systems. The Company completed an assessment of all
computer systems in 1997 addressing "Year 2000" among other issues.
Management presently believes that with the planned modifications to existing
software in process and conversions to new software, as discussed above, the
"Year 2000" issues will be mitigated. The estimated expense to modify
existing software for "Year 2000" is not considered material. The Company
expects to use net cash from operations and/or bank and leasing company
borrowings to fund these expenditures.
16
<PAGE>
RECENT DEVELOPMENTS
POSTAL RATE INCREASE -- The U.S. Postal Service announced proposed rate
increases of approximately 4% for direct mail and 3% for first class mail.
In addition, a 6% rate decrease was proposed for prepaid, courtesy reply
envelopes. The proposed postal rate increases are significantly less than the
cumulative rate of inflation since the last postal rate increases.
Management does not anticipate that these postal rate increases will go into
effect until late 1998 or early 1999 and, if implemented, does not anticipate
they will negatively impact mail volume.
AUTHORIZED CAPITAL STOCK -- At the April 29, 1998, annual stockholders
meeting the shareholders approved an amendment to the Articles of
Incorporation increasing the number of shares of common stock authorized for
issuance from 30,000,000 to 100,000,000 shares.
ACQUISITIONS -- Acquisitions pending or closed subsequent to March 31, 1998,
are as follows,
On March 23, 1998, the Company announced that it had signed a letter of
intent to acquire International Paper's Label Division located in Bowling Green,
KY. The Division had 1997 sales of approximately $30 million and the acquisition
was completed on May 11, 1998.
On April 8, 1998, the Company announced that it had acquired Blue Line
Envelope, based in Montreal, Canada. Blue Line, an envelope manufacturer for
office products outlets and stationers in Canada, had 1997 sales of
approximately $6 million.
On April 21, 1998, the Company acquired South Press, Inc., a high quality
printer based in Dallas, TX. South Press had 1997 sales of approximately $12
million.
On April 28, 1998, the Company announced the signing of a definitive
agreement to acquire Anderson Lithographic, a leading high impact commercial
printer specializing in annual reports, automobile brochures and promotional
materials. Anderson Lithographic is based in Los Angeles, CA, and had 1997 sales
approximating $135 million. The acquisition is still pending final agreement.
On May 5, 1998, the Company acquired the Century Index Corporation, a
manufacturer of filing products located in Anaheim , CA. Century had 1997 sales
of approximately $8 million.
ITEM 3.--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK --None
PART II -- OTHER INFORMATION
ITEM 1.--LEGAL PROCEEDINGS -- None
ITEM 2.--CHANGES IN SECURITIES -- None
ITEM 3.--DEFAULTS UPON SENIOR SECURITIES -- None
ITEM 4.--SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS-- None
ITEM 5.--OTHER INFORMATION - NONE
17
<PAGE>
ITEM 6.--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
2 Articles of Merger to effect reincorporation of the Company in
Colorado effective May 30, 1997
3 (i) Articles of Incorporation of the Company
3 (ii) Bylaws of the Company
4.1* Form of Certificate representing the Common Stock, par value $0.01 per
share, of the Company.
4.3 Indenture dated as of February 24, 1994 by and between M-W Corp. and
Shawmut Bank, National Association, as Trustee, with respect to the
10-1/2% Original Senior Subordinated Notes and the 10-1/2% Exchange
Senior Subordinated Notes due 2004, including the form of Note and the
guarantees of the Company, Wisco and Pavey - incorporated by reference
from Exhibit 4.3 of the Company's Registration Statement on Form S-1
dated March 25, 1994.
4.3.1 Supplemental Indenture dated July 31, 1995 to the Indenture identified
in Exhibit 4.3 -- incorporated by reference from Exhibit 4.4.1 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.3.2 Form of Second Supplemental Indenture to the Indenture identified in
Exhibit 4.3 -incorporated by reference from Exhibit 4.4.2 of the
Company's Registration Statement on Form S-1 dated September 21, 1995.
4.7 Form of Registration Rights Agreement among the Company and certain
holders of the Common Stock effective as of February 24, 1994 --
incorporated by reference from Exhibit 4.6 of the Company's
Registration Statement on Form S-1 dated March 25, 1994.
10.11 Form of Indemnity Agreement between the Company and each of its
officers and directors -- incorporated by reference from Exhibit 10.17
of the Company's Registration Statement on Form S-1 dated March 25,
1994.
10.12 Form of Indemnity Agreement between M-W Corp. and each of its officers
and directors -- incorporated by reference from Exhibit 10.18 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.13 Form of M-W Corp. Employee Stock Ownership Plan effective as of
February 23, 1994 and related Employee Stock Ownership Plan Trust
Agreement -- incorporated by reference from Exhibit 10.19 of the
Company's Registration Statement on Form S-1 dated March 25, 1994.
10.14 Form of M-W Corp. 401(k) Savings Retirement Plan -- incorporated by
reference from Exhibit 10.20 of the Company's Registration Statement
on Form S-1 dated March 25, 1994.
10.15 Company 1994 Stock Option Plan, as amended -- incorporated by
reference from Exhibit 10.15 of the Company's Registration Statement
on Form S-1 dated September 21, 1995.
10.16 Form of the Company Incentive Stock Option Agreement -- incorporated
by reference from Exhibit 10.22 of the Company's Registration
Statement on Form S-1 dated March 25, 1994.
10.17 Form of the Company Nonqualified Stock Option Agreement --
incorporated by from Exhibit 10.23 of the Company's Registration
Statement on Form S-1 dated March 25, 1994.
10.25 Share Purchase Agreement dated July 20, 1995, by and among the
shareholders of Supremex, 3159051 Canada Inc. and Schroder Investment
Canada Limited and Schroder Venture Managers (North America) Inc. --
incorporated by reference from Exhibit 10.25 of the Company's
18
<PAGE>
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.
10.32 Asset Purchase Agreement dated April 26, 1996 by and between Quality
Park Products, Inc. and Mail-Well I Corporation -- incorporated by
reference from Exhibit 1 of the Company's Form 8-K dated May 2, 1996.
10.33 Acquisition Agreement and Plan of Share Exchange by and among Graphic
Arts Center, Inc. and Shepard Poorman Communications Corporation dated
November 6, 1996 -- incorporated by reference from exhibit 10.33 of
the Company's Form 10-K for the year ended December 31, 1996.
10.34 Amendment No. 1 to Acquisition Agreement and Plan of Share Exchange by
and among Graphic Arts Center, Inc. and Shepard Poorman Communications
Corporation dated November 6, 1996-- incorporated by reference from
exhibit 10.34 of the Company's Form 10-K for the year ended December
31, 1996.
10.35 Asset Purchase Agreement dated as of October 15, 1996 by and between
Supremex, Inc. and PNG Products, Inc. Pac National Group and PNG
Envelope Internationale, Inc. -- incorporated by reference from
exhibit 10.35 of the Company's Form 10-K for the year ended December
31, 1996.
10.36 Master Lease Agreement dated as of August 1, 1996 between General
Electric Capital Corporation and Mail-Well, Inc., Mail-Well I
Corporation, Graphic Arts Center, Inc., Mail-Well West, Pavey Envelope
and Tag Corp., Wisco II, L.L.C and Wisco Envelope Corp. --
incorporated by reference from exhibit 10.36 of the Company's Form
10-K for the year ended December 31, 1996.
10.37 Third Amended and Restated Credit Agreement dated as of November 15,
1996, executed by Mail-Well I Corporation, as Borrower, and Wisco
Envelope Corp., Pavey Envelope and Tag Corp., Mail-Well West, Inc.,
Wisco II, L.L.C., Mail-Well Canada Holdings, Inc., Graphic Arts
Center, Inc. and Wisco III, L.L.C., as Guarantors, in favor of Banque
Paribas, as Agent, and the Lenders named herein -- incorporated by
reference from exhibit 10.37 of the Company's Form 10-K for the year
ended December 31, 1996.
10.38 Amended and Restated Credit Agreement dated as of November 15, 1996,
executed by Supremex, Inc., as borrower, and Mail-Well I Corporation
and Innova Envelope, Inc., as Guarantors, in favor of Banque Paribas,
as Agent, and the Lenders named herein - incorporated by reference
from exhibit 10.38 of the Company's Form 10-K for the year ended
December 31, 1996.
19
<PAGE>
10.39 Purchase and Contribution Agreement dated as of November 15, 1996
between Mail-Well I Corporation, Wisco Envelope Corp., Pavey Envelope
and Tag Corp., Mail-Well West, Inc., Graphic Arts Center, Inc., Wisco
III, L.L.C., Supremex, Inc., Innova Envelope, Inc., as Sellers, and
Mail-Well Trade Receivables Corp., as Purchaser -- incorporated by
reference from exhibit 10.39 of the Company's Form 10-K for the year
ended December 31, 1996.
10.40 Mail-Well Receivables Master Trust Pooling and Servicing Agreement
dated as of November 15, 1995 by and between Mail-Well Trade
Receivables Corporation, Seller, Mail-Well I Corporation, Servicer,
and Norwest Bank Colorado, National Association, Trustee --
incorporated by reference from exhibit 10.40 of the Company's Form 10-
K for the year ended December 31, 1996.
10.41 Series 1996-1 Supplement dated as of November 15, 1996 to Pooling and
Servicing Agreement, dated as of November 15, 1996, by and between
Mail-Well Trade Receivables Corporation, Seller, Mail-Well I
Corporation, Servicer, and Norwest Bank Colorado, National
Association, as Trustee on behalf of the Series 1996-1
Certificateholders -- incorporated by reference from exhibit 10.41 of
the Company's Form 10-K for the year ended December 31, 1996.
10.42 Series 1996-1 Certificate Purchase Agreement dated as of November 15,
1996 among Mail-Well Trade Receivables Corporation, as Seller,
Corporate Receivables Corporation, as Purchaser, Norwest Bank
Colorado, National Association, as Trustee, and Mail-Well I
Corporation, as Servicer -- incorporated by reference from exhibit
10.42 of the Company's Form 10-K for the year ended December 31, 1996.
10.43 Intercreditor Agreement dated as of November 15, 1996 by and among
Citicorp North America, Inc., as Securitization Company Agent, Banque
Paribas, New York Branch, as Liquidity Agent, Banque Paribas, as
Credit Lenders' Agent, Norwest Bank Colorado, National Association, as
Trustee, Mail-Well Trade Receivables Corporation, as Servicer,
originator and Mail-Well Credit Borrower, Supremex, Inc., as the
Supremex Credit Borrower and the other parties hereto -- incorporated
by reference from exhibit 10.43 of the Company's Form 10-K for the
year ended December 31, 1996.
10.44 Series 1996-1 Asset Purchase Agreement among Corporate Receivables
Corporation, the Liquidity Providers Parties hereto, Citicorp North
America, Inc., as Securitization Company Agent, Banque Paribas, New
York Branch, as Liquidity Agent, and Norwest Bank Colorado, National
Association, as trustee, dated as of November 15, 1996 -- incorporated
by reference from exhibit 10.44 of the Company's Form 10-K for the
year ended December 31, 1996.
10.45 Participation Agreement dated as of November 15, 1996 among Mail-Well
I Corporation, as Lessee and Guarantor, Certain Subsidiaries of
Mail-Well I Corporation, as Subsidiary Guarantors, Paribas Properties,
Inc., as Lessor, Various Financial Institutions Identified herein, as
Equity Lenders, Various Financial Institutions Identified herein, as
Financing Lenders and Banque Paribas, as Agent for the Financing
Lenders and Equity Lenders -- incorporated by reference from exhibit
10.45 of the Company's Form 10-K for the year ended December 31, 1996.
10.46 Loan Agreement dated as of November 15, 1996 among Paribas Properties,
Inc., as Lessor, Various Financial Institutions Identified herein, as
Financing Lenders, Various Financial Institutions Identified herein,
as Equity Lenders, and Banque Paribas, as Agent for the Lenders --
incorporated by reference from exhibit 10.46 of the Company's Form
10-K for the year ended December 31, 1996.
10.47 Master Equipment Lease and Security Agreement dated November 15, 1996
between Mail-Well I Corporation, as the Lessee or Debtor and Paribas
Properties, Inc., as the Lessor or Secured Party -- incorporated by
reference from exhibit 10.47 of the Company's Form 10-K for the year
ended December 31, 1996.
20
<PAGE>
10.48 Security Agreement (Second and Subordinated Security Interest) made
and entered into by Paribas Properties, Inc. and Mail-Well I
Corporation, as Debtors, and Banque Paribas, as Agent for Secured
Party date November 15, 1996 -- incorporated by reference from exhibit
10.48 of the Company's Form 10-K for the year ended December 31, 1996.
10.49 Appendix A to Participation Agreement, Master Lease, and Loan
Agreement -- incorporated by reference from exhibit 10.49 of the
Company's Form 10-K for the year ended December 31, 1996.
10.50 Lease Facility Guaranty dated as of November 15, 1996 made by
Mail-Well I Corporation, Mail-Well, Inc. and certain of their
Subsidiaries, as Guarantors, in favor of Various Financial
Institutions, as the Lenders, and Banque Paribas, as Agent for the
Lenders -- incorporated by reference from exhibit 10.50 of the
Company's Form 10-K for the year ended December 31, 1996.
10.51 Assignment of Lease and rent dated as of November 15, 1996 from
Paribas Properties, Inc., as Assignor to Banque Paribas, as Agent for
the Lenders, as Assignee -- incorporated by reference from exhibit
10.51 of the Company's Form 10-K for the year ended December 31, 1996.
10.52 Security Agreement (First and Prior Security Interest) made and
entered into by Paribas Properties, Inc. and Mail-Well I Corporation,
as Debtors, and Banque Paribas, as Agent for Secured Party dated
November 15, 1996 -- incorporated by reference from exhibit 10.52 of
the Company's Form 10-K for the year ended December 31, 1996.
10.53 Bill of Sale and Assignment of Equipment made and entered into on this
15th day of November, 1996 by Mail-Well I Corporation to and for the
benefit of Paribas Properties, Inc. -- incorporated by reference from
exhibit 10.53 of the Company's Form 10-K for the year ended December
31, 1996.
10.54 1997 Non-Qualified Stock Option Plan -- incorporated by reference from
exhibit 10.54 of the Company's Form 10-Q for the quarter ended March
31, 1997
10.55 1997 Non-Qualified Stock Option Agreement -- incorporated by reference
from exhibit 10.54 of the Company's Form 10-Q for the quarter ended
March 31, 1997
10.56 Company's 1994 Stock Option Plan as Amended on May 7, 1997
10.57 Company's Allied Acquisition Non-Qualified Stock Option Plan.
10.58* Mail-Well, Inc. 1998 Incentive Stock Option Plan
10.59* Mail-Well, Inc. 1998 Incentive Stock Option Plan Incentive Stock
Option Agreement
10.60* Credit Agreement dated as of March 16, 1998 among Mail-Well I
Corporation, certain Guarantors, Bank of America National Trust and
Savings Association, as Agent and other financial institutions
party thereto
10.61* Credit Agreement dated as of March 16, 1998 among Supremex Inc.,
certain Guarantors, Bank of America National Trust and Savings
Association, as Agent and other financial institutions party thereto
10.62* Participation Agreement dated as of December 15, 1997 among
Mail-Well I Corporation, Keybank National Association, as Trustee
and other financial institutions party thereto
10.63* Equipment Lease dated as of December 15, 1997 among Mail-Well I
Corporation, Keybank National Association, as Trustee and other
financial institutions party thereto
10.64* Guaranty Agreement dated as of December 15, 1997 among Mail-Well,
Inc., Graphic Arts Center, Inc., Griffin Envelope Inc., Murray
Envelope Corporation, Shepard Poorman Communications Corporation,
Wisco Envelope Corp., Wisco II, LLC, Wisco III, LLC, Mail-Well I
Corporation, Keybank National Association, as Trustee and other
financial institutions party thereto
10.65 Stock Purchase Agreement dated as of December 15, 1997 among
Mail-Well I Corporation and Poser Business Forms, Inc. and other
Selling Shareholders party thereto, incorporated by reference from
the Company's report on Form 8-K dated January 6, 1998
10.66 Asset Purchase Agreement dated as of January 31, 1998 among Lawson
Mardon Packaging USA, Inc (USA), incorporated by reference from the
Company's report on Form 8-K dated March 10, 1998
10.67 Asset Purchase Agreement dated as of January 31, 1998 among 3014597
Nova Scotia Company and Lawson Mardon Packaging Inc. (Canada),
incorporated by reference from the Company's report on Form 8-K
dated March 10, 1998
27.1* Financial Data Schedule - as of and for the three months ended
March 31, 1998
27.2* Financial Data Schedule - Quarters 1, 2 and 3 of 1997 and fiscal year
ended December 31, 1996
27.3* Financial Data Schedule - Quarters 1, 2 and 3 of 1996 and fiscal year
ended December 31, 1995
* Filed herewith.
(b) Reports on Form 8-K
1. Current report filed on Form 8-K dated as of January 6, 1998 in
connection with the acquisition of Poser Business Forms, Inc.
2. Current report on Form 8-K dated as of February 17, 1998 in connection
with the public sale of 2,432,300 shares of the Company's common stock
through a group of underwriters.
3. Current report filed on Form 8-K dated as of March 10, 1998 in
connection with the acquisition of the North American label division of
Lawson Mardon Packaging.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
MAIL-WELL, INC.
(Registrant)
By /s/ PAUL V. REILLY
---------------------
Paul V. Reilly
President,
Chief Operating Officer
May 12, 1998
21
<PAGE>
MAIL-WELL, INC.
1998 INCENTIVE STOCK OPTION PLAN
SECTION 1. PURPOSE OF THE PLAN. The purpose of this Mail-Well, Inc.
1998 Stock Option Plan ("Plan"), is to encourage ownership of common stock,
$.01 par value ("Common Stock"), of Mail-Well, Inc., a Colorado corporation
(the "Company"), by eligible key employees and directors of the Company and
its Affiliates (as defined below) and to provide increased incentive for such
employees and directors to render services and to exert maximum effort for
the business success of the Company. In addition, the Company expects that
the Plan will further strengthen the identification of employees and
directors with the stockholders. Certain options to be granted under this
Plan are intended to qualify as Incentive Stock Options ("ISOs") pursuant to
Section 422 of the Internal Revenue Code of 1986, as amended ("Code"), while
other options granted under this Plan will be nonqualified options which are
not intended to qualify as ISOs ("Nonqualified Options"), either or both as
provided in the agreements evidencing the options as provided in the Section
6 hereof. As used in this Plan, the term "Affiliates" means any "parent
corporation" of the Company and any "subsidiary corporation" of the Company
within the meaning of Code Sections 424(e) and (f), respectively.
SECTION 2. ADMINISTRATION OF THE PLAN.
(a) COMPOSITION OF COMMITTEE. The Plan shall be administered by
the Compensation Committee (the "Committee") comprised of two or more
Directors designated by the Board of Directors of the Company (the
"Board"), which shall also designate the Chairman of the Committee. If
the Company is governed by Rule 16b-3 promulgated by the Securities and
Exchange Commission ("Commission") pursuant to the Securities Exchange
Act of 1934, as amended ("Exchange Act"), no director shall serve as a
member of the Committee unless he is a "Non-Employee Director" within
the meaning of such Rule 16b-3.
(b) COMMITTEE ACTION. The Committee shall hold its meetings at
such times and places as it may determine. A majority of its members
shall constitute a quorum, and all determinations of the Committee shall
be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by a majority of the members
shall be fully effective as if it had been made by a majority vote of
its members at a meeting duly called and held. The Committee may
designate the Secretary of the Company or other Company employees to
assist the Committee in the administration of the Plan, and may grant
authority to such persons to execute award agreements or other documents
on behalf of the Committee and the Company. Any duly constituted
committee of the Board satisfying the qualifications of this Section 2
may be appointed as the Committee.
<PAGE>
(c) COMMITTEE EXPENSES. All expenses and liabilities incurred by
the Committee in the administration of the Plan shall be borne by the
Company. The Committee may employ attorneys, consultants, accountants or
other persons.
SECTION 3. STOCK RESERVED FOR THE PLAN. Subject to adjustment as
provided in Section 6(k) hereof, the aggregate number of shares of Common
Stock that may be optioned under the Plan is 500,000. The shares subject to
the Plan shall consist of authorized but unissued shares of Common Stock and
such number of shares shall be and is hereby reserved for sale for such
purpose. Any of such shares which may remain unsold and which are not
subject to outstanding options at the termination of the Plan shall cease to
be reserved for the purpose of the Plan, but until termination of the Plan or
the termination of the last of the options granted under the Plan, whichever
last occurs, the Company shall at all times reserve a sufficient number of
shares to meet the requirements of the Plan. Should any option expire or be
canceled prior to its exercise in full, the shares theretofore subject to
such option may again be made subject to an option under the Plan.
SECTION 4. ELIGIBILITY. The persons eligible to participate in the
Plan as a recipient of options ("Optionee") shall include only key employees
and directors of the Company or its Affiliates at the time the option is
granted. An employee who has been granted an option hereunder may be granted
an additional option or options, if the Committee shall so determine.
SECTION 5. GRANT OF OPTIONS.
(a) COMMITTEE DISCRETION. The Committee shall have sole and
absolute discretionary authority (i) to determine, authorize, and
designate those key employees and directors of the Company or its
Affiliates who are to receive options under the Plan, (ii) to determine
the number of shares of Common Stock to be covered by such options and
the terms thereof, and (iii) to determine the type of option granted:
ISO, Nonqualified Option or a combination of ISO and Nonqualified
Options; provided that a director who is not also an employee of the
Company may not receive any ISOs. The Committee shall thereupon grant
options in accordance with such determinations as evidenced by a written
option agreement. Subject to the express provisions of the Plan, the
Committee shall have discretionary authority to prescribe, amend and
rescind rules and regulations relating to the Plan, to interpret the
Plan, to prescribe and amend the terms of the option agreements (which
need not be identical) and to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(b) STOCKHOLDER APPROVAL. All options granted under this Plan are
subject to, and may not be exercised before, the approval of this Plan
by the stockholders prior to the first anniversary date of the Board
meeting held to approve the Plan, by the affirmative vote of the holders
of a majority of the outstanding shares of the Company present, or
represented by proxy, and entitled to vote thereat or by written consent
in accordance with applicable corporate law; provided that if such
<PAGE>
approval by the stockholders of the Company is not forthcoming, all
options previously granted under this Plan shall be void.
(c) LIMITATION ON INCENTIVE STOCK OPTIONS. The aggregate fair
market value (determined in accordance with Section 6(b) of this Plan at
the time the option is granted) of the Common Stock with respect to
which ISOs may be exercisable for the first time by any Optionee during
any calendar year under all such plans of the Company and its Affiliates
shall not exceed $100,000.
SECTION 6. TERMS AND CONDITIONS. Each option granted under the Plan
shall be evidenced by an agreement, in a form approved by the Committee,
which shall be subject to the following express terms and conditions and to
such other terms and conditions as the Committee may deem appropriate.
(a) OPTION PERIOD. The Committee shall promptly notify the
Optionee of the option grant and a written agreement shall promptly be
executed and delivered by and on behalf of the Company and the Optionee,
provided that the option grant shall expire if a written agreement is
not signed by said Optionee (or his agent or attorney) and returned to
the Company within 60 days from date of receipt by the Optionee of such
agreement. The date of grant shall be the date the option is actually
granted by the Committee, even though the written agreement may be
executed and delivered by the Company and the Optionee after that date.
Each option agreement shall specify the period for which the option
thereunder is granted (which in no event shall exceed ten years from the
date of grant) and shall provide that the option shall expire at the end
of such period. If the original term of an option is less than ten
years from the date of grant, the option may be amended prior to its
expiration, with the approval of the Committee and the Optionee, to
extend the term so that the term as amended is not more than ten years
from the date of grant. However, in the case of an ISO granted to an
individual who, at the time of grant, owns stock possessing more than 10
percent of the total combined voting power of all classes of stock of
the Company or its Affiliate ("Ten Percent Stockholder"), such period
shall not exceed five years from the date of grant.
(b) OPTION PRICE. The purchase price of each share of Common
Stock subject to each option granted pursuant to the Plan shall be
determined by the Committee at the time the option is granted and, in
the case of ISOs, shall not be less than 100% of the fair market value
of a share of Common Stock on the date the option is granted, as
determined by the Committee. In the case of an ISO granted to a Ten
Percent Stockholder, the option price shall not be less than 110% of the
fair market value of a share of Common Stock on the date the option is
granted. The purchase price of each share of Common Stock subject to a
Nonqualified Option under this Plan shall be determined by the Committee
prior to granting the option. The Committee shall set the purchase
price for each share subject to a Nonqualified Option at such price as
the Committee in its sole discretion shall determine, provided that the
purchase price of each share of
<PAGE>
Common Stock subject to a Nonqualified Option shall not be greater than
the fair market value of a share of Common Stock on the date the option
is granted as determined by the Committee.
For all purposes under the Plan, the fair market value of a share
of Common Stock on a particular date shall be equal to the mean of the
reported high and low sales prices of the Common Stock on the New York
Stock Exchange Composite Tape on that date, or if no prices are reported
on that date, on the last preceding date on which such prices of the
Common Stock are so reported. If the Common Stock is not traded on the
New York Stock Exchange at the time a determination of its fair market
value is required to be made hereunder, its fair market value shall be
deemed to be equal to the average between the closing bid and ask prices
of the Common Stock on the most recent date the Common Stock was
publicly traded.
In the event the Common Stock is not publicly traded at the time a
determination of its value is required to be made hereunder, the
determination of its fair market value shall be made by the Committee in
such manner as it deems appropriate.
(c) EXERCISE PERIOD. The Committee may provide in the option
agreement that an option may be exercised in whole, immediately, or is
to be exercisable in increments. However, no portion of any option may
be exercisable by an Optionee prior to the approval of the Plan by the
Stockholders of the Company.
(d) PROCEDURE FOR EXERCISE. Options shall be exercised by the
delivery of written notice to the Secretary of the Company setting forth
the number of shares with respect to which the option is being
exercised. Such notice shall be accompanied by cash or cashier's check,
bank draft, postal or express money order payable to the order of the
Company, or at the option of the Committee, in Common Stock theretofore
owned by such Optionee (or any combination of cash and Common Stock).
Notice may also be delivered by fax or telecopy provided that the
purchase price of such shares is delivered to the Company via wire
transfer on the same day the fax is received by the Company. The notice
shall specify the address to which the certificates for such shares are
to be mailed. An Optionee shall be deemed to be a stockholder with
respect to shares covered by an option on the date the Company receives
such written notice and such option payment.
As promptly as practicable after receipt of such written
notification and payment, the Company shall deliver to the Optionee
certificates for the number of shares with respect to which such option
has been so exercised, issued in the Optionee's name or such other name
as Optionee directs; provided, however, that such delivery shall be
deemed effected for all purposes when a stock transfer agent of the
Company shall have deposited such certificates in the United States
<PAGE>
mail, addressed to the Optionee at the address specified pursuant to
this Section 6(d).
(e) TERMINATION OF EMPLOYMENT. If an employee to whom an option
is granted ceases to be employed by the Company for any reason other
than death or disability or if a director to whom an option is granted
ceases to serve on the Board for any reason other than death or
disability, any option which is exercisable on the date of such
termination of employment or cessation from the Board shall expire upon
such date of such termination of employment or cessation from the Board;
provided, however, the Committee, in its sole discretion, may allow an
Optionee to exercise all or a portion of the Options granted but
unexercised for a period of time after the Optionee's termination of
employment or cessation from the Board provided that in no event shall
ISOs be exercised after the date three months from the effective date of
the termination of employment and provided further in no event may any
option be exercised after its expiration under the terms of the option
agreement.
(f) DISABILITY OR DEATH OF OPTIONEE. In the event of the
determination of disability or death of an Optionee under the Plan while
he is employed by the Company or while he serves on the Board, the
options previously granted to him may be exercised (to the extent he
would have been entitled to do so at the date of the determination of
disability or death) at any time and from time to time, within a
three-month period after such determination of disability or death, by
the former employee or director, the guardian of his estate, the
executor or administrator of his estate or by the person or persons to
whom his rights under the option shall pass by will or the laws of
descent and distribution, but in no event may the option be exercised
after its expiration under the terms of the option agreement. An
Optionee shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he is incapable of performing
services for the Company of the kind he was performing at the time the
disability occurred by reason of any medically determinable physical or
mental impairment which can be expected to result in death or to be of
long, continued and indefinite duration. The date of determination of
disability for purposes hereof shall be the date of such determination
by such physician. The Committee, in its sole discretion, may allow an
Optionee to exercise all or a portion of the Options granted but
unexercised for a longer period than three months after disability or
death provided that in no event shall ISOs be exercised after the date
12 months from the effective date of the termination of employment due
to disability or the date 18 months from the effective date of
termination of employment due to death (or 18 months after the death of
the optionee within 12 months of the termination of such optionee's
employment due to disability).
(g) ASSIGNABILITY. An option shall not be assignable or otherwise
transferable except by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined in the
Code or Title I of the Employee Retirement Income Security Act, as
amended, or the rules thereunder.
<PAGE>
During the lifetime of an Optionee, an option shall be exercisable only
by him.
(h) INCENTIVE STOCK OPTIONS. Each option agreement may contain
such terms and provisions as the Committee may determine to be necessary
or desirable in order to qualify an option designated as an incentive
stock option under Section 422 of the Code.
(i) NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights
as a stockholder with respect to shares covered by an option until the
option is exercised by the written notice and accompanied by payment as
provided in clause (d) above.
(j) EXTRAORDINARY CORPORATE TRANSACTIONS. The existence of
outstanding options shall not affect in any way the right or power of
the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations, exchanges, or other
changes in the Company's capital structure or its business, or any
merger or consolidation of the Company, or any issuance of Common Stock
or other securities or subscription rights thereto, or any issuance of
bonds, debentures, preferred or prior preference stock ahead of or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise. If the Company
recapitalizes or otherwise changes its capital structure, or merges,
consolidates, sells all of its assets or dissolves (each of the
foregoing a "Fundamental Change"), then thereafter upon any exercise of
an option theretofore granted the Optionee shall be entitled to purchase
under such option, in lieu of the number of shares of Common Stock as to
which option shall then be exercisable, the number and class of shares
of stock and securities to which the Optionee would have been entitled
pursuant to the terms of the Fundamental Change if, immediately prior to
such Fundamental Change, the Optionee had been the holder of record of
the number of shares of Common Stock as to which such option is then
exercisable.
(k) CHANGES IN COMPANY'S CAPITAL STRUCTURE. If the outstanding
shares of Common Stock or other securities of the Company, or both, for
which the option is then exercisable shall at any time be changed or
exchanged by declaration of a stock dividend, stock split, or
combination of shares, the number and kind of shares of Common Stock or
other securities which are subject to the Plan or subject to any options
theretofore granted, and the option prices, shall be appropriately and
equitably adjusted so as to maintain the proportionate number of shares
or other securities without changing the aggregate option price.
(l) ACCELERATION OF OPTIONS. Except as hereinbefore expressly
provided, (i) the issuance by the Company of shares of stock of any
class of securities convertible into shares of stock of any class, for
cash, property, labor or services, upon direct sale, upon the exercise
of rights or warrants to subscribe therefor, or
<PAGE>
upon conversion of shares or obligations of the Company convertible into
such shares or other securities, (ii) the payment of a dividend in
property other than Common Stock or (iii) the occurrence of any similar
transaction, and in any case whether or not for fair value, shall not
affect, and no adjustment by reason thereof shall be made with respect
to, the number of shares of Common Stock subject to options theretofore
granted or the purchase price per share, unless the Committee shall
determine in its sole discretion that an adjustment is necessary to
provide equitable treatment to Optionee. Notwithstanding anything to the
contrary contained in this Plan, the Committee may in its sole
discretion accelerate the time at which any option may be exercised,
including, but not limited to, upon the occurrence of the events
specified in this Section 6, and is authorized at any time (with the
consent of the Optionee) to purchase options pursuant to Section 7.
(m) STOCKHOLDERS AGREEMENT. The Committee shall provide in the
option agreement that prior to receiving any shares of Common Stock or
other securities on the exercise of the option, the Optionee (or the
Optionee's representative upon the Optionee's death) shall be required
to execute the American Mail-Well Employee Stockholders Agreement, or
the Company's Stockholders Agreement, whichever the Committee deems
appropriate.
(n) CHANGE OF CONTROL. In the event that (i) there is a proposed
action whereby the Company would not be the surviving entity in any
merger or consolidation (or survives only as a subsidiary of another
entity) other than a merger for the sole purpose of changing the
Company's state of incorporation, (ii) there is a proposed action
whereby the Company would sell all or substantially all of its assets
to any person or entity (other than a wholly-owned subsidiary), (iii)
any person or entity (including a "group" as contemplated by Section
13(d)(3) of the Exchange Act), acquires or gains ownership or control of
(including, without limitation, power to vote) more than 50% of the
outstanding shares of Common Stock, (iv) there is a proposed action
whereby the Company would be dissolved and liquidated, or (v) as a
result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall
cease to constitute a majority of the Board (each such event in clauses
(i) through (v) above is referred to herein as a "Corporate Change"),
all Optionees hereunder shall be given notice of such Corporate Change
and shall have a period of thirty (30) days thereafter to exercise their
options after receipt of such notice whether such options had vested in
accordance with their terms or not.
SECTION 7. RELINQUISHMENT OF OPTIONS.
(a) The Committee, in granting options hereunder, shall have
discretion to determine whether or not options shall include a right of
relinquishment as hereinafter provided by this Section 7. The Committee
shall also have discretion to determine whether an option agreement
evidencing an option initially granted by the Committee without a right
of relinquishment shall be amended or supplemented to include such a
right of relinquishment. Neither the Committee
<PAGE>
nor the Company shall be under any obligation or incur any liability to
any person by reason of the Committee's refusal to grant or include a
right of relinquishment in any option granted hereunder or in any option
agreement evidencing the same. Subject to the Committee's determination
in any case that the grant by it of a right of relinquishment is
consistent with Paragraph 1 hereof, any option granted under this Plan,
and the option agreement evidencing such option, may provide:
i) That the Optionee, or his heirs or other legal
representatives to the extent entitled to exercise the option under
the terms thereof, in lieu of purchasing the entire number of
shares subject to purchase thereunder, shall have the right to
relinquish all or any part of the then unexercised portion of the
option (to the extent then exercisable) for a number of shares of
Common Stock, for an amount of cash or for a combination of Common
Stock and cash to be determined in accordance with the following
provisions of this clause (i):
a) The written notice of exercise of such right of
relinquishment shall state the percentage, if any, of the
Appreciated Value (as defined below) that the Optionee elects
to receive in cash ("Cash Percentage"), such Cash Percentage
to be in increments of 10% of such Appreciated Value up to
100% thereof;
b) The number of shares of Common Stock, if any,
issuable pursuant to such relinquishment shall be the number
of such shares, rounded to the next greater number of full
shares, as shall be equal to the quotient obtained by dividing
(A) the difference between (I) the Appreciated Value and (II)
the result obtained by multiplying the Appreciated Value and
the Cash Percentage by (B) the then current market value per
share of Common Stock;
c) The amount of cash payable pursuant to such
relinquishment shall be an amount equal to the Appreciated
Value less the aggregate current market value of the Common
Stock issued pursuant to such relinquishment, if any, which
cash shall be paid by the Company subject to such conditions
as are deemed advisable by the Committee to permit compliance
by the Company with the withholding provisions applicable to
employers under the Code and any applicable state income tax
laws;
d) For the purpose of this clause (i), "Appreciated
Value" means the excess of (x) the aggregate current market
value of the shares of Common Stock covered by the option or
the portion thereof to be relinquished over (y) the aggregate
purchase price for such shares specified in such option;
<PAGE>
ii) That such right of relinquishment may be exercised only
upon receipt by the Company of a written notice of such
relinquishment which shall be dated the date of election to make
such relinquishment; and that, for the purposes of this Plan, such
date of election shall be deemed to be the date when such notice is
sent by registered or certified mail, or when receipt is
acknowledged by the Company, if mailed by other than registered or
certified mail or if delivered by hand or by any telegraphic
communications equipment of the sender or otherwise delivered;
provided, that, in the event the method just described for
determining such date of election shall not be or remain consistent
with the provisions of Section 16(b) of the Exchange Act or the
rules and regulations adopted by the Commission thereunder, as
presently existing or as may be hereafter amended, which
regulations exempt from the operation of Section 16(b) of the
Exchange Act in whole or in part any such relinquishment
transaction, then such date of election shall be determined by such
other method consistent with Section 16 (b) of the Exchange Act or
the rules and regulations thereunder as the Committee shall in its
discretion select and apply;
iii) That the "current market value" of a share of Common
Stock on a particular date shall be deemed to be its fair market
value on that date as determined in accordance with Paragraph 6
(b); and
iv) That the option, or any portion thereof, may be
relinquished only to the extent that (A) it is exercisable on the
date written notice of relinquishment is received by the Company,
(B) the Committee, subject to the provisions of Paragraph 7(b),
shall consent to the election of the holder to relinquish such
option in whole or in part for cash as set forth in such written
notice of relinquishment and (C) the holder of such option pays, or
makes provision satisfactory to the Company for the payment of, any
taxes which the Company is obligated to collect with respect to
such relinquishment.
(b) The Committee shall have sole discretion to consent to or
disapprove, and neither the Committee nor the Company shall be under any
liability by reason of the Committee's disapproval of, any election by a
holder of an option to relinquish such option in whole or in part for
cash as provided in Paragraph 7(a), except that no such consent to or
approval of a relinquishment for cash shall be required under the
following circumstances. Each Optionee who is subject to the
short-swing profits recapture provisions of Section 16(b) of the
Exchange Act ("Covered Optionee") shall be entitled to receive payment
only in cash when options are relinquished during any window period
commencing on the third business day following the Company's release of
a quarterly or annual summary statement of sales and earnings and ending
on the twelfth business day following such release ("Window Period");
provided, however, that payment shall be so made in cash only in
respect of 50% of the options covered by any
<PAGE>
stock option agreement. A Covered Optionee shall be entitled to receive
payment only in shares of Common Stock upon (a) the relinquishment of
options outside a Window Period and (b) the relinquishment of options
during a Window Period once such Optionee has received payment in cash
for the relinquishment of 50% of the options covered by any stock option
agreement.
(c) The Committee, in granting options hereunder, shall have
discretion to determine the terms upon which such options shall be
relinquishable, subject to the applicable provisions of this Plan, and
including such provisions as are deemed advisable to permit the
exemption from the operation from Section 16(b) of the Exchange Act of
any such relinquishment transaction, and options outstanding, and option
agreements evidencing such options, may be amended, if necessary, to
permit such exemption. If an option is relinquished, such option shall
be deemed to have been exercised to the extent of the number of shares
of Common Stock covered by the option or part thereof which is
relinquished, and no further options may be granted covering such shares
of Common Stock.
(d) Neither any option nor any right to relinquish the same to the
Company as contemplated by this Paragraph 7 shall be assignable or
otherwise transferable except by will or the laws of descent and
distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income
Security Act, as amended, or the rules thereunder.
(e) Except as provided in Section 7(f) below, no right of
relinquishment may be exercised within the first six months after the
initial award of any Option containing, or the amendment or
supplementation of any existing option agreement adding, the right of
relinquishment.
(f) No right of relinquishment may be exercised after the initial
award of any option containing, or the amendment or supplementation of
any existing option agreement adding the right of relinquishment, unless
such right of relinquishment is effective upon the Optionee's death,
disability or termination of his relationship with the Company and the
payment upon the exercise of such right is only in cash.
SECTION 8. AMENDMENTS OR TERMINATION. The Board may amend, alter or
discontinue the Plan, but no amendment or alteration shall be made which
would impair the rights of any Optionee, without his consent, under any
option theretofore granted, or which, without the approval of the
stockholders, would: (i) except as is provided in Section 6(k) of the Plan,
increase the total number of shares reserved for the purposes of the Plan,
(ii) change the class of persons eligible to participate in the Plan as
provided in Section 4 of the Plan, (iii) extend the applicable maximum option
period provided for in Section 6(a) of the Plan, (iv) extend the expiration
date of this Plan set forth in Section 14 of the Plan, (v) except as provided
in Section 6(k) of the Plan, decrease to any extent the option price of any
option granted under the Plan or (vi) withdraw the administration of the Plan
from the Committee.
<PAGE>
SECTION 9. COMPLIANCE WITH OTHER LAWS AND REGULATIONS. The Plan, the
grant and exercise of options thereunder, and the obligation of the Company
to sell and deliver shares under such options, shall be subject to all
applicable federal and state laws, rules and regulations and to such
approvals by any governmental or regulatory agency as may be required. The
Company shall not be required to issue or deliver any certificates for shares
of Common Stock prior to the completion of any registration or qualification
of such shares under any federal or state law or issuance of any ruling or
regulation of any government body which the Company shall, in its sole
discretion, determine to be necessary or advisable. Any adjustments provided
for in subparagraphs 6(j), (k) and (l) shall be subject to any shareholder
action required by applicable corporate law.
SECTION 10. PURCHASE FOR INVESTMENT. Unless the options and shares of
Common Stock covered by this Plan have been registered under the Securities
Act of 1933, as amended, or the Company has determined that such registration
is unnecessary, each person exercising an option under this Plan may be
required by the Company to give a representation in writing that he is
acquiring such shares for his own account for investment and not with a view
to, or for sale in connection with, the distribution of any part thereof.
SECTION 11. TAXES.
(a) The Company may make such provisions as it may deem
appropriate for the withholding of any taxes which it determines is
required in connection with any options granted under this Plan.
(b) Notwithstanding the terms of Paragraph 11(a), any Optionee may
pay all or any portion of the taxes required to be withheld by the
Company or paid by him in connection with the exercise of a nonqualified
option by electing to have the Company withhold shares of Common Stock,
or by delivering previously owned shares of Common Stock, having a fair
market value, determined in accordance with Paragraph 6(b), equal to the
amount required to be withheld or paid. An Optionee must make the
foregoing election on or before the date that the amount of tax to be
withheld is determined ("Tax Date"). All such elections are irrevocable
and subject to disapproval by the Committee.
SECTION 12. REPLACEMENT OF OPTIONS. The Committee from time to time
may permit an Optionee under the Plan to surrender for cancellation any
unexercised outstanding option and receive from the Company in exchange an
option for such number of shares of Common Stock as may be designated by the
Committee. The Committee may, with the consent of the person entitled to
exercise any outstanding option, amend such option, including reducing the
exercise price of any option to not less than the fair market value of the
Common Stock at the time of the amendment and extending the term thereof.
<PAGE>
SECTION 13. NO RIGHT TO COMPANY EMPLOYMENT. Nothing in this Plan or as
a result of any option granted pursuant to this Plan shall confer on any
individual any right to continue in the employ of the Company or interfere in
any way with the right of the Company to terminate an individual's employment
at any time. The option agreements may contain such provisions as the
Committee may approve with reference to the effect of approved leaves of
absence.
SECTION 14. LIABILITY OF COMPANY. The Company and any Affiliate which
is in existence or hereafter comes into existence shall not be liable to an
Optionee or other persons as to:
(a) THE NON-ISSUANCE OF SHARES. The non-issuance or sale of
shares as to which the Company has been unable to obtain from any
regulatory body having jurisdiction with the authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any
shares hereunder; and
(b) TAX CONSEQUENCES. Any tax consequence expected, but not
realized, by any Optionee or other person due to the exercise of any
option granted hereunder.
SECTION 15. EFFECTIVENESS AND EXPIRATION OF PLAN. The Plan shall be
effective on the date the Board adopts the Plan. If the stockholders of the
Company fail to approve the Plan within twelve months of the date the Board
approved the Plan, the Plan shall terminate and all options previously
granted under the Plan shall become void and of no effect. The Plan shall
expire ten years after the date the Board approves the Plan and thereafter no
option shall be granted pursuant to the Plan.
SECTION 16. NON-EXCLUSIVITY OF THE PLAN. Neither the adoption by the
Board nor the submission of the Plan to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board to adopt such other incentive arrangements as it may deem desirable,
including without limitation, the granting of restricted stock or stock
options otherwise than under the Plan, and such arrangements may be either
generally applicable or applicable only in specific cases.
SECTION 17. GOVERNING LAW. This Plan and any agreements hereunder
shall be interpreted and construed in accordance with the laws of the state
in which the Company is incorporated and applicable federal law.
<PAGE>
IN WITNESS WHEREOF, and as conclusive evidence of the adoption of the
foregoing by directors of the Company, Mail-Well, Inc. has caused these
presents to be duly executed in its name and behalf by its proper officers
thereunto duly authorized on February 4, 1998.
ATTEST: Mail-Well, Inc.
____________________________ By: _______________________________
Secretary Name: ________________________
Title: _________________________
[CORPORATE SEAL]
<PAGE>
MAIL-WELL, INC.
1998 STOCK OPTION PLAN
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Option Agreement") is between
Mail-Well, Inc., a Colorado corporation (the "Company"), and < < Name > > (the
"Optionee").
W I T N E S S E T H:
WHEREAS, the Company has heretofore adopted the Mail-Well, Inc. 1998
Stock Option Plan (the "Plan") for the purpose of providing employees of the
Company or its Affiliates (as defined in the Plan) with additional incentive
to promote the success of the business, to increase their proprietary
interest in the success of the Company, and to encourage them to remain in
the employ of the Company or its Affiliates; and
WHEREAS, the Company, acting through the Compensation Committee of its
Board of Directors (the "Committee"), has determined that its interests will
be advanced by the issuance to Optionee of an incentive stock option under
the Plan;
NOW THEREFORE, for and in consideration of these premises it is agreed
as follows:
1. OPTION. Subject to the terms and conditions contained herein, the
Company hereby irrevocably grants to Optionee the right and option ("Option")
to purchase from the Company < < Shares > > shares of the Company's common
stock, $0.01 par value ("Common Stock"), at a price of < < PurchasePrice > >
per share (the "Option Price"), which is deemed to be not less than the fair
market value of the Common Stock at the date of grant of this Option.
2. OPTION PERIOD. The Option herein granted may be exercised by
Optionee in whole or in part at any time during a ten (10) year period
beginning on < < EffectiveDate > > ("Option Period"), subject to the limitation
that said Option shall not be exercisable for more than a percentage of the
aggregate number of shares offered by this option determined by the number of
full years of employment with the Company or its Affiliates from the
effective date of the Optionee's grant, to the date of such exercise, in
accordance with the following schedule:
<TABLE>
<CAPTION>
Number of Percentage of
Full Years Shares Purchasable
---------- ------------------
<S> <C>
1 20%
2 40%
3 60%
4 80%
5 100%
</TABLE>
<PAGE>
Notwithstanding anything in this Agreement to the contrary, the Committee, in
its sole discretion may waive the foregoing schedule of vesting and upon
written notice to the Optionee, accelerate the earliest date or dates on
which any of the Options granted hereunder are exercisable.
3. PROCEDURE FOR EXERCISE. The Option herein granted may be exercised
by written notice by Optionee to the Secretary of the Company setting forth
the number of shares of Common Stock with respect to which the Option is to
be exercised accompanied by payment for the shares to be purchased, and
specifying the address to which the certificate for such shares is to be
mailed. Payment shall be by means of cash or cashier's check, bank draft,
postal or express money order payable to the order of the Company, or at the
option of the Optionee, in Common Stock theretofore owned by such Optionee
(or a combination of cash and Common Stock). As promptly as practicable
after receipt of such written notification and payment, the Company shall
deliver to Optionee certificates for the number of shares of Common Stock
with respect to which such Option has been so exercised.
4. TERMINATION OF EMPLOYMENT. If Optionee's employment with the
Company or its Affiliates is terminated during the Option Period for any
reason, Options granted to him which are not exercisable on such date
thereupon terminate. Subject to paragraphs 5 and 10 below, any Options which
are exercisable on the date of his termination of employment which have not
been exercised within ninety (90) days of such termination shall expire and
be of no force or effect.
5. DISABILITY OR DEATH. If Optionee's employment with the Company or
its Affiliates is terminated by his disability or death, all Options
hereunder exercisable at the date of such disability or death shall be
thereafter exercisable by Optionee, his executor or administrator, or the
person or persons to whom his rights under this Option Agreement shall pass
by will or by the laws of descent and distribution, as the case may be, for a
period of six months from the date of Optionee's disability or death, unless
this Option Agreement should earlier terminate in accordance with its other
terms. In no event may any Option be exercised after the end of the Option
Period. Optionee shall be deemed to be disabled if, in the opinion of a
physician selected by the Committee, he is incapable of performing services
for the Company or its Affiliates by reason of any medically determinable
physical or mental impairment which can be expected to result in death or to
be of long, continued and indefinite duration.
6. TRANSFERABILITY. This Option shall not be transferable by Optionee
otherwise than by Optionee's will or by the laws of descent and distribution.
During the lifetime of Optionee, the Option shall be exercisable only by him.
Any heir or legatee of Optionee shall take rights herein granted subject to
the terms and conditions hereof. No such transfer of this Option Agreement
to heirs or legatees of Optionee shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and
a copy of such evidence as the Committee may deem necessary to establish the
validity of the transfer and the acceptance by the transferee or transferees
of the terms and conditions hereof.
7. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock covered by this Option
Agreement until the date of
<PAGE>
issuance of a certificate for shares of Common Stock purchased pursuant to
this Option Agreement. Until such time, Optionee shall not be entitled to
dividends or to vote at meetings of the stockholders of the Company. Except
as provided in paragraph 9 hereof, no adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash or securities or other property)
paid or distributions or other rights granted in respect of any share of
Common Stock for which the record date for such payment, distribution or
grant is prior to the date upon which the Optionee shall have been issued
share certificates, as provided hereinabove.
8. EXTRAORDINARY CORPORATE TRANSACTIONS. If the Company recapitalizes
or otherwise changes its capital structure, or merges, consolidates, sells
all of its assets or dissolves (each of the foregoing a "Fundamental
Change"), then thereafter upon any exercise of an option theretofore granted,
the Optionee shall be entitled to purchase under such option, in lieu of the
number of shares of Common Stock as to which option shall then be
exercisable, the number and class of shares of stock and securities to which
the Optionee would have been entitled pursuant to the terms of the
Fundamental Change if, immediately prior to such Fundamental Change, the
Optionee had been the holder of record of the number of shares of Common
Stock as to which such option is then exercisable. If the Company shall not
be the surviving entity upon the occurrence of a Fundamental Change, the
Options granted hereunder shall be governed by subparagraph 6(n) of the Plan.
9. CHANGES IN CAPITAL STRUCTURE. The existence of outstanding Options
shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
Common Stock or subscription rights thereto, or any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceedings, whether of a similar
character or otherwise. If the outstanding shares of Common Stock of the
company shall at any time be changed or exchanged by declaration of a stock
dividend, stock split, combination of shares, or recapitalization, the number
and kind of shares subject to the Plan or subject to any Options theretofore
granted, and the Option prices, shall be appropriately and equitably adjusted
by the Committee so as to maintain the proportionate number of shares without
changing the aggregate Option price.
10. FORFEITURE. If Optionee's employment is terminated For Cause (as
defined below), or if Optionee shall, upon separation from employment for any
reason, accept employment with, consult for or acquire an ownership interest
in, an envelope manufacturing company, a printing company, (or any other
business which is in direct competition with the Company), doing business
within a 300 mile radius of any Company (or subsidiary) facility in the U.S.,
Canada, or any other country where the Company is doing business at that
time, at any time within one (1) year after the date of Optionee's separation
from employment, Optionee agrees that (i) all unexercised Options shall
terminate, (ii) the Company shall have the right to repurchase any or all
shares of Common Stock received upon the exercise of Options and which were
then held by Optionee for an amount equal to the Option Price times the
number of shares
<PAGE>
of Common Stock so repurchased and (iii) the Optionee shall pay to the
Company the amount by which the proceeds from any sale of the Common Stock
received upon exercise of Options exceeded the Option Price of such Common
Stock sold. "For Cause" shall mean (i) gross disregard of the Company's best
interest, (ii) misappropriation or embezzlement of corporate funds or other
property (iii) conviction of a felony involving moral turpitude or which in
the opinion of the Committee brings Optionee into disrepute or causes harm to
the Company's business, customer relations, financial condition or prospects,
or (iv) violation of any statutory or common law duty of loyalty to the
Company.
11. COMPLIANCE WITH SECURITIES LAWS. Upon the acquisition of any
shares pursuant to the exercise of the Option herein granted, Optionee (or
any person acting under paragraph 6) will enter into such written
representations, warranties and agreements as the Company may reasonably
request in order to comply with applicable securities laws or with this
Option Agreement.
12. COMPLIANCE WITH LAWS. Notwithstanding any of the other provisions
hereof, Optionee agrees that he will not exercise the Option(s) granted
hereby, and that the Company will not be obligated to issue any shares
pursuant to this Option Agreement, if the exercise of the Option(s) or the
issuance of such shares of Common Stock would constitute a violation by the
Optionee or by the Company of any provision of any law or regulation of any
governmental authority.
13. RESOLUTION OF DISPUTES. As a condition of the granting of the
Option hereby, the Optionee and his heirs and successors agree that any
dispute or disagreement which may arise hereunder shall be determined by the
Committee in its sole discretion and judgment, and that any such
determination and any interpretation by the Committee of the terms of this
Option Agreement shall be final and shall be binding and conclusive, for all
purposes, upon the Company, Optionee, his heirs and personal representatives.
14. STOCKHOLDER AGREEMENT. Optionee, or the Optionee's representative
upon the Optionee's death, prior to the exercise of an Option granted
hereunder, agrees to enter into the Company's Stockholders Agreement or the
Company's Employee Stockholders Agreement, whichever the Committee deems
appropriate.
15. LEGENDS ON CERTIFICATE. The certificates representing the shares
of Common Stock purchased by exercise of an Option will be stamped or
otherwise imprinted with legends in such form as the Company or its counsel
may require with respect to any applicable restrictions on sale or transfer
and the stock transfer records of the Company will reflect stop-transfer
instructions with respect to such shares.
16. NOTICES. Every notice hereunder shall be in writing and shall be
given by registered or certified mail. All notices of the exercise of any
Option hereunder shall be directed to Mail-Well , Inc., 23 Inverness Way
East, Englewood, Colorado 80112, Attention: Secretary. Any notice given by
the Company to Optionee directed to him at his address on file with the
Company shall be effective to bind him and any other person who shall acquire
rights hereunder.
<PAGE>
The Company shall be under no obligation whatsoever to advise Optionee of the
existence, maturity or termination of any of Optionee's rights hereunder and
Optionee shall be deemed to have familiarized himself with all matters
contained herein and in the Plan which may affect any of Optionee's rights or
privileges hereunder.
17. CONSTRUCTION AND INTERPRETATION. Whenever the term "Optionee" is
used herein under circumstances applicable to any other person or persons to
whom this award, in accordance with the provisions of paragraph 6 hereof, may
be transferred, the work "Optionee" shall be deemed to include such person or
persons. References to the masculine gender herein also include the feminine
gender for all purposes.
18. NOTICE OF DISPOSITION. If Optionee disposes of any shares of
Common Stock acquired pursuant to the exercise of an Option granted hereunder
prior to the earlier of (I) two years from the date of this Option Agreement
or (ii) one year from the date the shares of Common Stock were acquired,
Optionee shall notify the Company of such disposition within ten days of its
occurrence and deliver to the Company any amount of federal or state income
tax withholding required by law. Payment of the withholding shall be made in
accordance with Section 11 of the Plan. If the Optionee fails to pay the
withholding tax, the Company is authorized and Optionee hereby consents to
withhold from any cash remuneration then or thereafter payable to the
Optionee any tax required to be withheld by reason of any disposition named
herein.
19. AGREEMENT SUBJECT TO PLAN. This Option Agreement is subject to the
Plan. The terms and provisions of the Plan (including any subsequent
amendments thereto) are hereby incorporated herein by reference thereto. In
the event of a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable terms and provisions of the
Plan will govern and prevail. All definitions of words and terms contained
in the Plan shall be applicable to this Option Agreement.
20. EMPLOYMENT RELATIONSHIP. Employees shall be considered to be in
the employment of the Company as long as they remain employees of the Company
or a parent or subsidiary corporation (as defined in Section 424 of the
Internal Revenue Code of 1986, as amended). Any questions as to whether and
when there has been a termination of such employment and the cause of such
termination, shall be determined by the Committee, and its determination
shall be final. Nothing contained herein shall be construed as conferring
upon Optionee the right to continue in the employ of the Company, nor shall
anything contained herein be construed or interpreted to limit the existing
"employment at will" relationship between the Optionee and the Company.
21. BINDING EFFECT. This Option Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons
lawfully claiming under Optionee.
<PAGE>
In WITNESS WHEREOF, this Option Agreement has been executed as of the
____ day of ____________________, 1998.
MAIL-WELL, INC.
By:________________________________
ATTEST: Name:
Its:
___________________________
OPTIONEE
__________________________________
< < Name > >
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$200,000,000
CREDIT AGREEMENT
DATED AS OF MARCH 16, 1998
AMONG
MAIL-WELL I CORPORATION,
THE GUARANTORS
THAT ARE PARTY HERETO,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS ADMINISTRATIVE AGENT,
BANK OF NEW YORK,
CREDIT LYONNAIS NEW YORK BRANCH,
FLEET NATIONAL BANK, AND
NATIONSBANK OF TEXAS, N.A.,
AS CO-AGENTS,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA ROBERTSON STEPHENS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
ARTICLE I DEFINITIONS......................................................... 1
1.1 Certain Defined Terms................................................. 1
1.2 Other Interpretive Provisions......................................... 24
1.3 Accounting Principles................................................. 26
1.4 Currency Equivalents Generally........................................ 26
ARTICLE II THE CREDITS........................................................ 26
2.1 The Revolving Credit.................................................. 26
2.2 Loan Accounts......................................................... 27
2.3 Procedure for Committed Borrowing..................................... 28
2.4 Conversion and Continuation Elections for Committed Borrowings........ 29
2.5 Utilization of Revolving Commitments in Canadian Dollars.............. 31
2.6 Bid Borrowings........................................................ 32
2.7 Procedure for Bid Borrowings.......................................... 33
2.8 Voluntary Termination or Reduction of Commitments..................... 37
2.9 Optional Prepayments.................................................. 37
2.10 Currency Exchange Fluctuations........................................ 38
2.11 Cash Collateralization; Mandatory Prepayments of Revolving Loans...... 38
2.12 Repayment............................................................. 38
(a) The Revolving Credit............................................ 38
(b) Bid Loans....................................................... 38
2.13 Interest.............................................................. 39
2.14 Swingline Loans....................................................... 40
2.15 Fees.................................................................. 42
(a) Agency Fees/Bid Fees............................................ 42
(b) Commitment Fees................................................. 42
2.16 Computation of Fees and Interest...................................... 42
2.17 Payments by the Borrower.............................................. 43
2.18 Payments by the Banks to the Administrative Agent..................... 44
2.19 Sharing of Payments, Etc.............................................. 44
ARTICLE III THE LETTERS OF CREDIT............................................. 45
3.1 The Letter of Credit Subfacility...................................... 45
3.2 Issuance, Amendment and Renewal of Letters of Credit.................. 46
3.3 Existing Letters of Credit; Risk Participations, Drawings and
Reimbursements....................................................... 48
3.4 Repayment of Participations........................................... 50
3.5 Role of the Issuing Bank.............................................. 51
3.6 Obligations Absolute.................................................. 52
3.7 Cash Collateral Pledge................................................ 53
i
<PAGE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
3.8 Letter of Credit Fees................................................. 53
3.9 Uniform Customs and Practice.......................................... 54
ARTICLE IV TAXES, YIELD PROTECTION AND ILLEGALITY............................. 54
4.1 Taxes................................................................. 54
4.2 Illegality............................................................ 55
4.3 Increased Costs and Reduction of Return............................... 56
4.4 Funding Losses........................................................ 57
4.5 Inability to Determine Rates.......................................... 57
4.6 Certificates of Banks................................................. 58
4.7 Survival.............................................................. 58
ARTICLE V CONDITIONS PRECEDENT................................................ 58
5.1 Conditions of Initial Credit Extension................................ 58
(a) Credit Agreement; Notes......................................... 58
(b) Resolutions; Incumbency......................................... 58
(c) Organization Documents; Good Standing........................... 59
(d) Legal Opinions.................................................. 59
(e) Certificate..................................................... 59
(f) Termination of Existing Facility................................ 59
(g) Intercompany Subordinated Debt Documents........................ 60
(h) Other Documents................................................. 60
5.2 Conditions to All Credit Extensions................................... 60
(a) Notice; Application............................................. 60
(b) Continuation of Representations and Warranties.................. 60
(c) No Existing Default............................................. 60
ARTICLE VI REPRESENTATIONS AND WARRANTIES..................................... 60
6.1 Corporate Existence and Power......................................... 61
6.2 Corporate Authorization; No Contravention............................. 61
6.3 Governmental Authorization............................................ 61
6.4 Binding Effect........................................................ 61
6.5 Litigation............................................................ 62
6.6 No Default............................................................ 62
6.7 ERISA Compliance...................................................... 62
6.8 Use of Proceeds; Margin Regulations................................... 63
6.9 Title to Properties................................................... 63
6.10 Taxes................................................................. 63
6.11 Financial Condition................................................... 63
6.12 Environmental Matters................................................. 64
6.13 Regulated Entities.................................................... 64
6.14 No Burdensome Restrictions............................................ 64
6.15 Copyrights, Patents, Trademarks and Licenses, Etc..................... 64
ii
<PAGE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
6.16 Subsidiaries.......................................................... 64
6.17 Insurance............................................................. 64
6.18 Swap Obligations...................................................... 65
6.19 Full Disclosure....................................................... 65
ARTICLE VII AFFIRMATIVE COVENANTS............................................ 65
7.1 Financial Statements.................................................. 65
7.2 Certificates; Other Information....................................... 66
7.3 Notices............................................................... 66
7.4 Preservation of Corporate and Partnership Existence, Etc.............. 68
7.5 Maintenance of Property............................................... 68
7.6 Insurance............................................................. 68
7.7 Payment of Obligations................................................ 68
7.8 Compliance with Laws.................................................. 69
7.9 Inspection of Property and Books and Records.......................... 69
7.10 Environmental Laws.................................................... 69
7.11 Use of Proceeds....................................................... 69
7.12 Additional Guaranties................................................. 70
ARTICLE VIII NEGATIVE COVENANTS............................................... 70
8.1 Limitation on Liens................................................... 70
8.2 Disposition of Assets................................................. 72
8.3 Consolidations and Mergers............................................ 72
8.4 Loans and Investments................................................. 73
8.5 Limitation on Indebtedness............................................ 74
8.6 Transactions with Affiliates.......................................... 75
8.7 Use of Proceeds....................................................... 75
8.8 Contingent Obligations................................................ 76
8.9 Restricted Payments................................................... 76
8.10 ERISA................................................................. 77
8.11 Change in Business.................................................... 77
8.12 Change in Fiscal Year................................................. 77
8.13 Minimum Consolidated Net Worth........................................ 77
8.14 Maximum Leverage Ratio................................................ 77
8.15 Minimum Interest Coverage Ratio....................................... 78
8.16 Limitation on Modifications of Senior Subordinated Notes.............. 79
8.17 Limitation on Certain Restrictions on Subsidiaries.................... 79
8.18 Non-Material Subsidiaries............................................. 79
ARTICLE IX EVENTS OF DEFAULT.................................................. 80
9.1 Event of Default...................................................... 80
(a) Non-Payment..................................................... 80
(b) Representation or Warranty...................................... 80
iii
<PAGE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
(c) Specific Defaults............................................... 80
(d) Other Defaults.................................................. 80
(e) Cross-Default................................................... 80
(f) Insolvency; Voluntary Proceedings............................... 81
(g) Involuntary Proceedings......................................... 81
(h) ERISA........................................................... 81
(i) Monetary Judgments.............................................. 81
(j) Non-Monetary Judgments.......................................... 82
(k) Change of Control............................................... 82
(l) Loss of Licenses................................................ 82
(m) Adverse Change.................................................. 82
(n) Guarantor Defaults.............................................. 82
9.2 Remedies.............................................................. 82
9.3 Rights Not Exclusive.................................................. 83
9.4 Certain Financial Covenant Defaults................................... 83
ARTICLE X THE ADMINISTRATIVE AGENT............................................ 83
10.1 Appointment and Authorization; "Administrative Agent."................ 83
10.2 Delegation of Duties.................................................. 84
10.3 Liability of Administrative Agent..................................... 84
10.4 Reliance by Administrative Agent...................................... 85
10.5 Notice of Default..................................................... 85
10.6 Credit Decision....................................................... 86
10.7 Indemnification of Administrative Agent............................... 86
10.8 Administrative Agent in Individual Capacity........................... 87
10.9 Successor Administrative Agent........................................ 87
10.10 Withholding Tax....................................................... 87
10.11 Co-Agents............................................................. 89
ARTICLE XI MISCELLANEOUS...................................................... 89
11.1 Amendments and Waivers................................................ 89
11.2 Notices............................................................... 90
11.3 No Waiver; Cumulative Remedies........................................ 91
11.4 Costs and Expenses.................................................... 91
11.5 Indemnity............................................................. 91
(a) General Indemnity............................................... 91
(b) Environmental Indemnity......................................... 92
(c) Survival; Defense............................................... 92
(d) Existing Indemnification Rights................................. 93
11.6 Payments Set Aside.................................................... 93
11.7 Successors and Assigns................................................ 93
11.8 Assignments, Participations, Etc...................................... 93
11.9 Confidentiality....................................................... 95
iv
<PAGE>
<CAPTION>
SECTION PAGE
------- ----
<S> <C>
11.10 Set-off............................................................... 96
11.11 Notification of Addresses, Lending Offices, Etc....................... 96
11.12 Counterparts.......................................................... 96
11.13 Severability.......................................................... 96
11.14 No Third Parties Benefitted........................................... 96
11.15 Governing Law and Jurisdiction........................................ 97
11.16 Waiver of Jury Trial.................................................. 97
11.17 Guaranty.............................................................. 98
(a) Guaranty........................................................ 98
(b) Separate Obligation............................................. 98
(c) Limitation of Guaranty.......................................... 99
(d) Liability of Guarantor.......................................... 99
(e) Consents of Guarantor........................................... 100
(f) Guarantor's Waivers............................................. 101
(g) Financial Condition of Borrower................................. 102
(h) Subrogation..................................................... 102
(i) Subordination................................................... 103
(j) Continuing Guaranty............................................. 103
(k) Reinstatement................................................... 104
(l) Substantial Benefits............................................ 104
(m) Knowing and Explicit Waivers.................................... 104
11.18 Entire Agreement...................................................... 105
</TABLE>
v
<PAGE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
2.1 Commitments
3.3 Existing Letters of Credit
6.5 Litigation
6.7 ERISA
6.11 Permitted Liabilities
6.12 Environmental Matters
6.16 Subsidiaries and Minority Interests
6.17 Insurance Matters
8.1(a) Permitted Liens
8.5(b) Permitted Indebtedness
8.8(c) Contingent Obligations
11.2 Lending Offices; Addresses for Notices
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C Form of Compliance Certificate
Exhibit D Form of Legal Opinion of Counsel to the Borrower and Guarantors
Exhibit E Form of Assignment and Acceptance Agreement
Exhibit F Form of Invitation for Competitive Bids
Exhibit G Form of Competitive Bid Request
Exhibit H Form of Competitive Bid
Exhibit I Form or Committed Loan Note
Exhibit J Form of Bid Loan Note
</TABLE>
vi
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of March 16, 1998, by and among
MAIL-WELL I CORPORATION, a Delaware corporation (hereinafter referred to as
the "Borrower"); the Guarantors party to this Agreement; the several
financial institutions party to this Agreement (collectively called the
"BANKS" and individually called a "BANK"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Issuing Bank, Swingline Bank and as administrative
agent for itself and the other Banks (in such capacity, the "ADMINISTRATIVE
AGENT") and BANK OF NEW YORK, CREDIT LYONNAIS NEW YORK BRANCH, FLEET NATIONAL
BANK and NATIONSBANK OF TEXAS, N.A., as co-agents (the "CO-AGENTS").
WHEREAS, the Borrower (i) has requested the Banks to make available to
it revolving loans from time to time in an aggregate principal amount not to
exceed at any time outstanding the Aggregate Revolving Commitment as in
effect from time to time, and (ii) has requested the Issuing Bank to issue
Letters of Credit for its own account and for the account of the other L/C
Borrowers in an aggregate amount not to exceed at any time the L/C Commitment.
WHEREAS, the Banks have agreed severally to make available to the
Borrower a revolving credit facility and the Issuing Bank has agreed to issue
the Letters of Credit, in each case upon the terms and conditions set forth
in this Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. The following terms have the following
meanings when used in this Agreement (including in the Preamble and
Recitals hereof):
"ABSOLUTE RATE" has the meaning specified in subsection 2.7(c).
"ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bids
setting forth Absolute Rates pursuant to Section 2.7.
"ABSOLUTE RATE BID LOAN" means a Bid Loan that bears interest at a
rate determined with reference to the Absolute Rate.
"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 ("Norwest"), as
1
<PAGE>
Trustee, (b) Series 1996-1 Supplement to Pooling and Servicing Agreement
dated as of November 15, 1996, among MTRC, the Borrower and Norwest, 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, as Trustee (or any replacement of
such 1996-1 Asset Purchase Agreement that is reasonably acceptable to
the Agent and the Majority Banks), (d) Series 1996-1 Certificate
Purchase Agreement dated as of November 15, 1996, among MTRC, Corporate
Receivables Corporation, Norwest, 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 dated as of November 15, 1996, 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.
"ACQUISITION" means any transaction or series of related transactions
for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of
50% of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing any Person to become a
Subsidiary, (c) the power to elect, appoint, or cause the election or
appointment of at least a majority of the members of the board of directors
or similar governing body of such Person, or (d) a merger or consolidation
or any other combination with another Person (other than a Person that is a
Subsidiary) provided that the Borrower or its Subsidiary is the surviving
entity.
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities,
membership interests, partnership interests, by contract, or otherwise.
"ADMINISTRATIVE AGENT" means BofA in its capacity as administrative
agent for the Banks hereunder, and any successor agent arising under
Section 10.9.
"ADMINISTRATIVE AGENT'S PAYMENT OFFICE" means the address for payments
set forth on Schedule 11.2 or such other address as the Administrative
Agent may from time to time specify.
"AGENT-RELATED PERSONS" means BofA and any successor agent arising
under Section 10.9, together with their respective Affiliates (including,
in the case of BofA, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
2
<PAGE>
"AGGREGATE REVOLVING COMMITMENT" means, at any time, the combined
Revolving Commitments of all the Banks then in effect.
"AGREEMENT" means this Credit Agreement.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means, on any date, the per
annum percentage set forth below based on the ratio of Consolidated Funded
Debt to EBITDA for the then most recently completed four fiscal quarters of
the Borrower as derived from the Parent's quarterly or annual financial
statements most recently delivered to the Administrative Agent under
Section 7.1:
<TABLE>
<CAPTION>
Consolidated Applicable
Funded Debt to EBITDA Commitment Fee Percentage
--------------------- -------------------------
<S> <C>
Greater than or equal to 3.25 0.2500%
to 1.00
Less than 3.25 to 1.00 but 0.2000%
greater than or equal to 2.75
to 1.00
Less than 2.75 to 1.00 but 0.1750%
greater than or equal to 2.00
to 1.00
Less than 2.00 to 1.00 but 0.1500%
greater than or equal to 1.50
to 1.00
Less than 1.50 to 1.00 0.1375%
</TABLE>
The Applicable Commitment Fee Percentage will become effective two (2)
Business Days after receipt by the Administrative Agent of the Compliance
Certificate delivered pursuant to Section 7.2(a) in connection with the
quarterly or annual financial statements most recently delivered to the
Administrative Agent under Section 7.1. In the event that such Compliance
Certificate is not timely delivered to the Administrative Agent when
required under Section 7.2(a), the Applicable Commitment Fee Percentage
will be 0.2500%, effective two (2) Business Days after the date such
Compliance Certificate was due until two (2) Business Days after such
Compliance Certificate is received by the Administrative Agent. The
Applicable Commitment Fee Percentage from the Closing Date and continuing
for the first two full fiscal quarters thereafter, based upon the
Borrower's financial performance for the fiscal quarter ending September
30, 1997, will be greater than (based upon the actual Leverage Ratio) or
equal to 0.1750%. For purposes of determining Applicable Commitment Fee
Percentage, EBITDA, EBIT and interest expense shall be adjusted for
Acquisitions of "Acquired Subsidiaries" in the same manner set forth in
Section 8.15 for calculating compliance with Sections 8.14 and 8.15.
"APPLICABLE MARGIN" means, on any date:
3
<PAGE>
(i) with respect to each Base Rate Committed Loan or Prime
Rate Loan outstanding on such date, 0.00% per annum; and
(ii) with respect to each Offshore Rate Committed Loan
outstanding on such date, the applicable margin (on a per annum
basis) set forth below based on the ratio of Consolidated Funded
Debt to EBITDA for the then most recently completed four fiscal
quarters of the Borrower as derived from the Parent's quarterly or
annual financial statements most recently delivered to the
Administrative Agent under Section 7.1:
<TABLE>
<CAPTION>
Consolidated Funded Debt to EBITDA Applicable Margin
---------------------------------- -----------------
<S> <C>
Greater than or equal to 3.25 0.875%
to 1.00
Less than 3.25 to 1.00 but 0.750%
greater than or equal to 2.75
to 1.00
Less than 2.75 to 1.00 but 0.625%
greater than or equal to 2.00
to 1.00
Less than 2.00 to 1.00 but 0.500%
greater than or equal to 1.50
to 1.00
Less than 1.50 to 1.00 0.450%
</TABLE>
The Applicable Margin will become effective two (2) Business Days after
receipt by the Administrative Agent of the Compliance Certificate
delivered pursuant to Section 7.2(a) in connection with the quarterly or
annual financial statements most recently delivered to the
Administrative Agent under Section 7.1. In the event that such
Compliance Certificate is not timely delivered to the Administrative
Agent when required under Section 7.2(a), the Applicable Margin will be
0.875%, effective two (2) Business Days after the date such Compliance
Certificate was due until two (2) Business Days after such Compliance
Certificate is received by the Administrative Agent. The Applicable
Margin with respect to Offshore Rate Committed Loans from the Closing
Date and continuing for the first two full fiscal quarters thereafter,
based upon the Borrower's financial performance for the fiscal quarter
ending September 30, 1997, will be greater than (based upon the actual
Leverage Ratio) or equal to 0.625%. For purposes of determining
Applicable Margin, EBITDA, EBIT and interest expense shall be adjusted
for Acquisitions of "Acquired Subsidiaries" in the same manner set forth
in Section 8.15 for calculating compliance with Sections 8.14 and 8.15.
"ARRANGER" means BancAmerica Robertson Stephens.
"ASSIGNEE" has the meaning specified in Section 11.8(a).
4
<PAGE>
"ATTORNEY COSTS" means and includes all fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"BANK" has the meaning specified in the introductory clause hereto.
References to the "Banks" shall include each of the Issuing Bank and the
Swingline Bank in its capacity as such unless the context otherwise clearly
requires. For purposes of clarification only, to the extent that the
Issuing Bank or Swingline Bank may have any rights or obligations in
addition to those of the Banks due to its status as Issuing Bank or
Swingline Bank, its status as such will be specifically referenced.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, ET SEQ.).
"BASE RATE" means, for any day, the higher of: (a) 0.50% per annum
above the most recently announced Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to time by
BofA in San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may
be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
"BASE RATE COMMITTED LOAN" means a Committed Loan that bears interest
based on the Base Rate. Base Rate Committed Loans shall be denominated in
U.S. Dollars.
"BID BORROWING" means a Borrowing hereunder consisting of one or more
Bid Loans made to the Borrower on the same day by one or more Banks.
"BID LOAN" means a Loan by a Bank to the Borrower under Section 2.7,
which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan. Bid Loans may
only be denominated in U.S. Dollars.
"BID LOAN LENDER" means, in respect of any Bid Loan, the Bank making
such Bid Loan to the Borrower.
"BID LOAN NOTE" has the meaning specified in Section 2.2.
"BofA" means Bank of America National Trust and Savings Association, a
national banking association.
5
<PAGE>
"BORROWING" means (i) a borrowing hereunder consisting of Revolving
Loans of the same Type and in the same currency made to the Borrower on the
same day by the Banks, (ii) a Swingline Loan (or Swingline Loans) made to
the Borrower on the same day by the Swingline Bank, (iii) a borrowing
hereunder consisting of Bid Loans made to the Borrower on the same day by
the applicable Bid Loan Lenders, or (iv) an L/C Borrowing, in each case
pursuant to Article II or Article III, and include a Committed Borrowing
and a Bid Borrowing and, other than in the case of Base Rate Committed
Loans, Prime Rate Loans and L/C Borrowings, having the same Interest
Period.
"BORROWING DATE" means any date on which a Borrowing occurs.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco and Toronto, Canada are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Committed Loan or LIBOR Bid Loan denominated
in U.S. Dollars, means such a day on which dealings are carried on in the
applicable offshore dollar interbank market, and with respect to any
disbursements and payments in and calculations pertaining to any Canadian
Dollar Loan, a day on which commercial banks are open for foreign exchange
business in London, England, and on which dealings in Canadian dollars are
carried on in the applicable offshore foreign exchange interbank market in
which disbursement of or payment in Canadian dollars will be made or
received hereunder.
"CANADIAN DOLLARS" means lawful money of Canada.
"CANADIAN DOLLAR LOAN" means a Revolving Loan hereunder denominated in
Canadian dollars. Canadian Dollar Loans shall be Offshore Rate Committed
Loans or Prime Rate Loans.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CASH COLLATERALIZE" means to pledge and deposit with or deliver to
the Administrative Agent, for the benefit of the Administrative Agent, the
Issuing Bank and the Banks, as collateral for the L/C Obligations, cash or
deposit account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the Issuing Bank (which
documents are hereby consented to by the Banks). Derivatives of such term
shall have corresponding meaning.
"CHANGE OF CONTROL" means the occurrence of either of the following:
(a) any "person" or "group" (as such terms are used in subsections 13(d)
and 14(d) of the Exchange Act and the regulations thereunder), is or
becomes the "beneficial owner" (as such term is used in Rules 13d-3 and
13d-5 under the Exchange Act, except that a
6
<PAGE>
person shall be deemed to have "beneficial ownership" of all securities
that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of 30% or more of the then outstanding voting capital stock
of the Borrower, or (b) the Continuing Directors shall cease to
constitute at least a majority of the directors constituting the board
of directors of the Borrower.
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 5.1 are satisfied, made conditions subsequent or waived by
all Banks.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"COMMITTED BORROWING" means a Borrowing hereunder consisting of
Committed Loans made on the same day by the Banks ratably according to
their respective Pro Rata Shares and, in the case of Offshore Rate
Committed Loans, having the same Interest Periods.
"COMMITTED LOAN" means a Revolving Loan by a Bank to the Borrower
under Section 2.1, or a Swingline Loan by the Swingline Bank to the
Borrower under Section 2.14, and may be an Offshore Rate Committed Loan, a
Base Rate Committed Loan or a Prime Rate Loan (each, a "TYPE" of Committed
Loan).
"COMMITTED LOAN NOTE" has the meaning specified in Section 2.2.
"COMPETITIVE BID" means an offer by a Bank to make a Bid Loan in
accordance with subsection 2.7(c).
"COMPETITIVE BID REQUEST" has the meaning specified in
subsection 2.7(a).
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C.
"COMPUTATION DATE" has the meaning specified in subsection 2.5(a).
"CONSOLIDATED FUNDED DEBT" means all Funded Debt of the Borrower and
its Subsidiaries, determined on a consolidated basis eliminating
intercompany items.
"CONSOLIDATED NET INCOME" and "CONSOLIDATED NET LOSS" mean,
respectively, for any period, the aggregate net income or loss for such
period of the Borrower and its Subsidiaries on a consolidated basis but
without giving effect to any extraordinary noncash items.
7
<PAGE>
"CONSOLIDATED NET WORTH" means, as of any date of determination,
Consolidated Total Assets MINUS Consolidated Total Liabilities.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination,
the total assets of the Borrower and its Subsidiaries on a consolidated
basis.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, the total liabilities of the Borrower and its Subsidiaries
on a consolidated basis.
"CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person
(i) to purchase, repurchase or otherwise acquire such primary obligations
or any security therefor, (ii) to advance or provide funds for the payment
or discharge of any such primary obligation, or to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make payment of
such primary obligation, or (iv) otherwise to assure or hold harmless the
holder of any such primary obligation against loss in respect thereof
(each, a "GUARANTY OBLIGATION"); (b) with respect to any Surety Instrument
issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase
any materials, supplies or other property from, or to obtain the services
of, another Person if the relevant contract or other related document or
obligation requires that payment for such materials, supplies or other
property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered; or (d) in
respect of any Swap Contract. The amount of any Contingent Obligation
shall, in the case of Guaranty Obligations, be deemed equal to the stated
or determinable amount of the primary obligation in respect of which such
Guaranty Obligation is made or, if not stated or if indeterminable, the
maximum reasonably anticipated liability in respect thereof, and in the
case of other Contingent Obligations other than in respect of Swap
Contracts, shall be equal to the maximum reasonably anticipated liability
in respect thereof and, in the case of Contingent Obligations in respect of
Swap Contracts, shall be equal to the Swap Termination Value.
"CONTINUING DIRECTORS" means, as of any date, the collective reference
to all members of the board of directors of the Borrower who assumed office
after such date and whose appointment or nomination for election by the
Borrower's shareholders was approved by a vote of at least 50% of the
Continuing Directors in office immediately prior to such appointment or
nomination.
8
<PAGE>
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"CONVERSION/CONTINUATION DATE" means any date on which, under
Section 2.4, the Borrower (a) converts Committed Loans of one Type to
another Type, or (b) continues as Committed Loans of the same Type, but
with a new Interest Period, Committed Loans having Interest Periods
expiring on such date.
"CREDIT EXTENSION" means and includes (a) the making of any Revolving
Loans, Bid Loans or Swingline Loans hereunder, and (b) the Issuance of any
Letters of Credit hereunder (including the Existing Letters of Credit).
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"EBIT" means, for any period, Consolidated Net Income or Consolidated
Net Loss, as the case may be, for such period, PLUS the sum of (a) interest
expense, and (b) income tax expense, in each case, which were deductible in
determining Consolidated Net Income or Consolidated Net Loss of the
Borrower and its Subsidiaries on a consolidated basis for such period.
"EBITDA" means, for any period, EBIT for such period, PLUS the sum of
(a) depreciation expense and (b) amortization expense, in each case, which
were deductible in determining Consolidated Net Income or Consolidated Net
Loss of the Borrower and its Subsidiaries on a consolidated basis for such
period.
"EFFECTIVE AMOUNT" means (i) with respect to any Revolving Loans, Bid
Loans or Swingline Loans on any date, the aggregate outstanding principal
amount thereof after giving effect to any Borrowings and prepayments or
repayments of Revolving Loans, Bid Loans or Swingline Loans occurring on
such date; and (ii) with respect to any outstanding L/C Obligations on any
date, the amount of such L/C Obligations on such date after giving effect
to any Issuances of Letters of Credit occurring on such date and any other
changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements of outstanding unpaid drawings
under any Letters of Credit or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date.
For purposes of determining the Effective Amount in respect of any Canadian
Dollar Loans to be made as part of a Borrowing or of any outstanding
Canadian Dollar Loans, the amount of any such Canadian Dollar Loans shall
be the U.S. Dollar Equivalent Amount thereof, and for purposes of
determining the Effective Amount in respect of any Letters of Credit Issued
(subject to the terms hereof) in Canadian dollars or any outstanding L/C
Obligations denominated in Canadian dollars, the amount of any such Letters
of Credit
9
<PAGE>
and L/C Obligations shall be the U.S. Dollar Equivalent Amount thereof,
in each case based upon the calculation thereof as of the most recent
Computation Date therefor pursuant to subsection 2.5(a).
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is acting
through a branch or agency located in the United States or the Cayman
Islands; (iii) a Person that is primarily engaged in the business of
commercial banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary
of a Person of which a Bank is a Subsidiary, or (C) a Person of which a
Bank is a Subsidiary.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility of the Borrower or its Subsidiaries for violation of any
Environmental Law, or for release or injury to the environment.
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
"EQUIPMENT LEASE FACILITY DOCUMENTS" means (i) the Participation
Agreement dated December 27, 1997, among the Borrower, KeyBank National
Association ("KNA"), Key Corporate Capital, Inc. ("KCCI")(KNA and KCCI are
together referred to as the "Trust Certificate Purchasers", and KNA is
referred to as the "Lessor Trustee"), (ii) Lease dated December 26, 1997,
between the Lessor Trustee and the Borrower, (iii) Lease Supplement dated
December 26, 1997, between the Lessor Trustee and the Borrower, (iv)
Guaranty Agreement dated December 26, 1997, among the Guarantors, the Trust
Certificate Purchasers and the Lessor Trustee, and (v) other equipment
lease documents for additional equipment leases which are otherwise
permitted hereunder.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower or any Subsidiary of
the Borrower within the meaning of subsection 414(b) or (c) of the Code
(and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
10
<PAGE>
"ERISA EVENT" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated
as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate.
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 9.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXISTING FACILITY" means collectively (i) the Promissory Note dated
November 19, 1997, from Supremex, Inc., to Bank of America Canada and
(ii) the Promissory Note dated November 19, 1997, from the Borrower to
BofA.
"EXISTING LETTERS OF CREDIT" means the letters of credit described in
SCHEDULE 3.3.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Administrative Agent
of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by
the Administrative Agent.
"FEE LETTERS" has the meaning specified in Section 2.15(a).
11
<PAGE>
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"FX TRADING OFFICE" means the Foreign Exchange Trading Center #5752,
Los Angeles, California, of BofA, or such other of BofA's offices as BofA
may designate from time to time.
"FUNDED DEBT" of any Person means, as of the end of each fiscal
quarter of such Person, (a) all Indebtedness of such Person (including with
respect to any Loans hereunder) for borrowed money; (b) all noncontingent
reimbursement or payment obligations of such Person with respect to Surety
Instruments; (c) all obligations of such Person with respect to capital and
off-balance sheet leases; (d) the current portion of all obligations of
such Person arising with respect to preferred stock that is mandatorily
redeemable by such Person; (e) all indebtedness referred to in clauses (a)
through (d) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any Lien
upon or in property (including accounts and contracts rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness; (f) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (d); and (g) all Indebtedness in excess of $100,000,000
in connection with Permitted Receivables Purchase Facilities.
"FURTHER TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section 4.1.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to
the circumstances and consistently applied.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.
"GUARANTOR" means each of the Parent and each Material Subsidiary of
the Borrower organized in the United States (each such Material Subsidiary,
a "SUBSIDIARY GUARANTOR") in its capacity as a "guarantor" under
Section 11.17 of this Agreement or,
12
<PAGE>
as the case may be, under any separate agreement executed by it pursuant
to which it guarantees the Obligations.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section 11.17.
"GUARANTY" means the guaranty of each Guarantor made pursuant to
Section 11.17 and any other guaranty under any separate agreement executed
by any Guarantor pursuant to which it guarantees the Obligations.
"GUARANTY OBLIGATION" has the meaning specified in the definition of
"Contingent Obligation."
"HAZARDOUS MATERIALS" means all those substances that are regulated
by, or which may form the basis of liability under, any Environmental Law,
including any substance identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"HONOR DATE" has the meaning specified in Section 3.3(c).
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all noncontingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all obligations with respect to capital leases; (g) all
indebtedness referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(g) above.
For all purposes of this Agreement, the Indebtedness of any Person shall
include all recourse Indebtedness of any partnership or joint venture or
limited liability company in which such Person is a general partner or a
joint venturer or a member.
"INDEMNIFIED LIABILITIES" has the meaning specified in Section 11.5.
13
<PAGE>
"INDEMNIFIED PERSON" has the meaning specified in Section 11.5.
"INDEPENDENT AUDITOR" has the meaning specified in Section 7.1(a).
"INSOLVENCY PROCEEDING" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; in either event undertaken under U.S. Federal,
state or foreign law, including the Bankruptcy Code.
"INTERCOMPANY SUBORDINATED DEBT" means intercompany indebtedness of
the Borrower to the Parent in the amount of $147,436,000 on terms and
conditions satisfactory to the Borrower, the Agent and the Banks.
"INTEREST PAYMENT DATE" means, as to any Revolving Loan or Bid Loan
other than a Base Rate Committed Loan or a Prime Rate Loan, the last day of
each Interest Period applicable to such Revolving Loan or Bid Loan and, as
to any Base Rate Committed Loan or any Prime Rate Loan which is not a
Swingline Loan, the last day of each calendar quarter and each date such
Base Rate Committed Loan or Prime Rate Loan is converted into an Offshore
Rate Committed Loan or LIBOR Bid Loan and, with respect to any Base Rate
Committed Loan that is a Swingline Loan, the Business Day on which
principal of such Swingline Loan is repaid; PROVIDED, HOWEVER, that (a) if
any Interest Period for an Offshore Rate Committed Loan or LIBOR Bid Loan
exceeds three months, the date that falls three months after the beginning
of such Interest Period and after each Interest Payment Date thereafter is
also an Interest Payment Date, and (b) as to any Bid Loan, such intervening
dates prior to the maturity thereof as may be specified by the Borrower and
agreed to by the applicable Bid Loan Lender in the applicable Competitive
Bid shall also be Interest Payment Dates.
"INTEREST PERIOD" means, as to any Absolute Rate Bid Loan, the period
commencing on the Borrowing Date of such Bid Loan and ending on the date
seven to 183 days thereafter as selected by the Borrower in its Competitive
Bid Request, and as to any Offshore Rate Committed Loan or LIBOR Bid Loan,
the period commencing on the Borrowing Date of such Loan or, in the case of
Committed Loans other than Swingline Loans, on the Conversion/Continuation
Date on which such Committed Loan is converted into or continued as an
Offshore Rate Committed Loan, and ending on the date one, two, three or six
months thereafter as selected by the Borrower in its Notice of Borrowing or
Notice of Conversion/Continuation;
PROVIDED that:
14
<PAGE>
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate
Committed Loan or LIBOR Bid Loan, the result of such extension would
be to carry such Interest Period into another calendar month, in which
event such Interest Period shall end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate
Committed Loan or LIBOR Bid Loan that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the calendar month at
the end of such Interest Period; and
(iii) no Interest Period for any Loan shall extend beyond the
Revolving Termination Date.
"INVESTMENTS" has the meaning specified in Section 8.4.
"INVITATION FOR COMPETITIVE BIDS" means a solicitation for Competitive
Bids, substantially in the form of EXHIBIT F.
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"ISSUANCE DATE" has the meaning specified in Section 3.1(a).
"ISSUE" means, with respect to any Letter of Credit, to incorporate
the Existing Letters of Credit into this Agreement, or to issue or to
extend the expiry of, or to renew or increase the amount of, such Letter of
Credit; and the terms "ISSUED," "ISSUING" and "ISSUANCE" have corresponding
meanings.
"ISSUING BANK" means BofA in its capacity as issuer of one or more
Letters of Credit hereunder, together with any replacement letter of credit
issuer arising under Section 10.1(b) or Section 10.9, and any other Bank
which, if required for legal or credit reasons, Issues letters of credit
hereunder.
"JOINT VENTURE" means a single-purpose corporation, partnership,
limited liability company, joint venture or other similar legal arrangement
(whether created by contract or conducted through a separate legal entity)
now or hereafter formed by the Borrower or any of its Subsidiaries with
another Person in order to conduct a common venture or enterprise with such
Person.
"L/C ADVANCE" means each Bank's participation in any L/C Borrowing in
accordance with its Pro Rata Share.
15
<PAGE>
"L/C AMENDMENT APPLICATION" means an application form for amendment of
outstanding standby or commercial documentary letters of credit as shall at
any time be in use at the Issuing Bank, as the Issuing Bank shall request.
"L/C APPLICATION" means an application form for issuances of standby
or commercial documentary letters of credit as shall at any time be in use
at the Issuing Bank, as the Issuing Bank shall request.
"L/C BORROWER" means each of the Borrower and each Subsidiary of the
Borrower as account party for any Letter of Credit Issued hereunder.
"L/C BORROWING" means an extension of credit resulting from a drawing
under any Letter of Credit which shall not have been reimbursed on the date
when made nor converted into a Borrowing under Section 3.3(c).
"L/C COMMITMENT" means the commitment of the Issuing Bank to Issue,
and the commitment of the Banks severally to participate in, Letters of
Credit (including the Existing Letters of Credit) from time to time Issued
or outstanding under Article III, in an aggregate amount not to exceed on
any date $25,000,000. The L/C Commitment is a part of the Aggregate
Revolving Commitment, rather than a separate, independent commitment.
"L/C OBLIGATIONS" means at any time the sum of (a) the aggregate
undrawn amount of all Letters of Credit then outstanding, plus (b) the
amount of all unreimbursed drawings under all Letters of Credit, including
all outstanding L/C Borrowings.
"L/C-RELATED DOCUMENTS" means the Letters of Credit, the L/C
Applications, the L/C Amendment Applications and any other document
relating to any Letter of Credit, including any of the Issuing Bank's
standard form documents for letter of credit issuances.
"LENDING OFFICE" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office," as the case may be, on SCHEDULE 11.2, or such
other office or offices as such Bank may from time to time notify the
Borrower and the Administrative Agent.
"LETTERS OF CREDIT" means the Existing Letters of Credit and any
letters of credit (whether standby letters of credit or commercial
documentary letters of credit) Issued by the Issuing Bank pursuant to
Article III.
"LEVERAGE RATIO" means, as of the last day of any fiscal quarter, the
ratio of (a) Consolidated Funded Debt on such day to (b) EBITDA for the
period of four fiscal quarters ended on such day.
16
<PAGE>
"LIBO RATE" means, for any Interest Period with respect to a LIBOR Bid
Loan the rate of interest per annum determined by the Administrative Agent
to be the arithmetic mean (rounded upward to the nearest 1/16th of 1%) of
the rates of interest per annum notified to the Administrative Agent by
BofA as the rate of interest at which deposits in U.S. Dollars, in the
approximate amount of the Bid Loans to be borrowed in such Borrowing and
having a maturity comparable to such Interest Period, would be offered to
major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days, prior to the
commencement of such Interest Period.
"LIBOR AUCTION" means a solicitation of Competitive Bids setting
forth a LIBOR Bid Margin pursuant to Section 2.7.
"LIBOR BID LOAN" means any Bid Loan that bears interest at a rate
based upon the LIBO Rate.
"LIBOR BID MARGIN" has the meaning specified in subsection
2.7(c)(ii)(C).
"LIEN" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable
law) and any contingent or other agreement to provide any of the foregoing,
but not including the interest of a lessor under an operating lease.
"LOAN" means an extension of credit by a Bank to the Borrower under
Article II or Article III in the form of a Committed Loan, Bid Loan or L/C
Advance.
"LOAN DOCUMENTS" means this Agreement, the Notes, if any, the Fee
Letters, the L/C-Related Documents and all other documents delivered to the
Administrative Agent or any Bank in connection herewith.
"LOAN PARTY" means the Parent, the Borrower and each Subsidiary
Guarantor.
MAJORITY BANKS means (a) at any time prior to the Revolving
Termination Date, Banks then holding at least 51% of the U.S. Dollar
Equivalent Amount of the Revolving Commitments, and (b) thereafter, Banks
then holding at least 51% of the aggregate unpaid U.S. Dollar Equivalent
Amount of the Loans. For purposes of determining whether the Majority
Banks have approved any amendment, waiver or consent or taken any other
action hereunder, the U.S. Dollar Equivalent Amount of all
17
<PAGE>
unpaid Canadian Dollar Loans shall be calculated on the date such
amendment, waiver or consent is to become effective or such action is to
be taken.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) of the Borrower (considering all of its
assets), or of the Borrower and its Subsidiaries taken as a whole, which
would be expected to result in a material impairment of the ability of the
Borrower (considering all of its assets), or of the Borrower and its
Subsidiaries taken as a whole, to perform under any Loan Document and to
avoid any Default or Event of Default; or (b) a material adverse effect
upon the legality, validity, binding effect or enforceability against the
Borrower or any Guarantor of any Loan Document.
"MATERIAL SUBSIDIARY" means any Subsidiary, including its
Subsidiaries, which meets any of the following conditions: (a) the
Borrower's and its other Subsidiaries' investments in and advances to the
Subsidiary exceed 10% of the total assets of the Borrower and its
Subsidiaries consolidated as of the end of the most recently completed
fiscal year (for a proposed business combination to be accounted for as a
pooling of interests, this condition is also met when the number of common
shares exchanged or to be exchanged by the Borrower exceeds 10% of its
total common shares outstanding at the date the combination is initiated);
or (b) the Borrower's and its other Subsidiaries' proportionate share of
the total assets (after intercompany eliminations) of the Subsidiary
exceeds 10% of the total assets of the Borrower and its Subsidiaries
consolidated as of the end of the most recently completed fiscal year; or
(c) the Borrower's and its other Subsidiaries equity in the income from
continuing operations before income taxes, extraordinary items and
cumulative effect of a change in accounting principle of the Subsidiary
exceeds 10% of such income of the Borrower and its Subsidiaries
consolidated for the most recently completed fiscal year.
"MULTIEMPLOYER PLAN" means a "multiple employer plan" or a
"multiemployer plan," within the meaning of Sections 4064(a) and 4001(a)(3)
of ERISA, to which the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"NET SECURITIES PROCEEDS" has the meaning specified in Section 8.13.
"NOTES" means the Committed Loan Notes and the Bid Loan Notes.
"NOTICE OF BORROWING" means a notice in substantially the form of
EXHIBIT A.
18
<PAGE>
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of EXHIBIT B.
"OBLIGATIONS" means all Revolving Loans, Swingline Loans, Bid Loans,
L/C Obligations and other Indebtedness arising under any Loan Document and
all other advances, debts, liabilities, obligations, covenants and duties
owing by the Borrower or any other Loan Party to any Bank, the
Administrative Agent, or any Indemnified Person, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or to
become due, now existing or hereafter arising.
"OFFSHORE RATE" means, for any Interest Period, with respect to
Offshore Rate Committed Loans comprising part of the same Borrowing, the
rate of interest per annum (rounded upward to the next 1/16th of 1%)
determined by the Administrative Agent as follows:
LIBOR
Offshore Rate = -------------------------------------
1.00 -- Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Bank) under regulations issued
from time to time by the FRB for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the
Administrative Agent to be the arithmetic mean (rounded upward to the
nearest 1/16th of 1%) of the rates of interest per annum notified to
the Administrative Agent by BofA as the rate of interest at which
deposits in U.S. Dollars or Canadian dollars, as the case may be, in
the approximate amount of the Revolving Loans to be borrowed in such
Borrowing (or the approximate amount of the Revolving Loans to be
continued as or converted into Offshore Rate Committed Loans) and
having a maturity comparable to such Interest Period, would be offered
to major banks in the London interbank market at their request at
approximately 11:00 a.m. (London time) two Business Days prior to the
commencement of such Interest Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Committed Loans then outstanding as of the effective date of any
change in the Eurodollar Reserve Percentage.
"OFFSHORE RATE COMMITTED LOAN" means any Committed Loan that bears
interest based on the Offshore Rate.
19
<PAGE>
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, and for any partnership, the partnership agreement, any other
agreements or instruments relating to the rights of the partners of such
partnership or limiting or authorizing the activities of such Partnership,
and all applicable resolutions of such partnership.
"OTHER TAXES" means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"OVERNIGHT RATE" means, for any day, the rate of interest per annum at
which overnight deposits in Canadian dollars, in an amount approximately
equal to the amount with respect to which such rate is being determined,
would be offered for such day by the Administrative Agent to major banks in
the applicable offshore interbank market.
"PARENT" means Mail-Well, Inc., a Delaware corporation.
"PARTICIPANT" has the meaning specified in Section 11.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of
a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5)
plan years.
"PERMITTED LIENS" has the meaning specified in Section 8.1.
"PERMITTED RECEIVABLES" shall mean all obligations of any obligor
(whether now existing or hereafter arising) under a contract for sale of
goods or services by the Borrower or any of its Subsidiaries, which shall
include any obligation of such obligor (whether now existing or hereafter
arising) to pay interest, finance charges or amounts with respect thereto,
and, with respect to any of the foregoing receivables or obligations, (a)
all of the interest of the Borrower or any of its Subsidiaries in the goods
(including returned goods) the sale of which gave rise to such receivable
or obligation after the passage of title thereto to any obligor, (b) all
other Liens and
20
<PAGE>
property subject thereto from time to time purporting to secure payment
of such receivables or obligations, and (c) all guarantees, insurance,
letters of credit and other agreements or arrangements of whatever
character from time to time supporting or securing payment of any such
receivables or obligations.
"PERMITTED RECEIVABLES PURCHASE FACILITY" shall mean the facility
created by (i) the Accounts Receivable Securitization Facility Documents,
and (ii) any other agreement of the Borrower or any of its Subsidiaries
providing for sales, transfers or conveyances of Permitted Receivables
purporting to be sales (and considered sales under GAAP) that do not
provide, directly or indirectly, for recourse against the seller of such
Permitted Receivables (or against any of such seller's Affiliates) by way
of a guaranty or any other support arrangement, with respect to the amount
of such Permitted Receivables (based on the financial condition or
circumstances of the obligor thereunder), other than such limited recourse
as is reasonable given market standards for transactions of a similar type,
taking into account such factors as historical bad debt loss experience and
obligor concentration levels.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of the Borrower or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied:
(a) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments or assets held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person in conjunction with a securities repurchase program not
otherwise prohibited hereunder, and not for purposes of speculation or
taking a "market view"; and (b) such Swap Contracts do not contain any
provision ("walk-away" provision) exonerating the nondefaulting party from
its obligation to make payments on outstanding transactions to the
defaulting party.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or any Subsidiary of the Borrower sponsors or
maintains or to which the Borrower or any Subsidiary of the Borrower makes,
is making, or is obligated to make contributions and includes any Pension
Plan.
"PRIME RATE" means, for any day, the per annum rate of interest in
effect for such day as publicly announced from time to time by Bank of
America Canada in Toronto, Ontario, as its "prime rate." (The "prime rate"
is a rate set by Bank of America Canada based upon various factors
including Bank of America Canada's costs and desired return, general
economic conditions and other factors, and is used as a reference point
for pricing some loans, which may be priced at, above, or below such
announced rate.) Any change in the prime rate announced by Bank of
America
21
<PAGE>
Canada shall take effect at the opening of business on the day specified
in the public announcement of such change.
"PRIME RATE LOAN" means a Canadian Dollar Loan that bears interest
based on the Prime Rate.
"PRO RATA SHARE" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Revolving Commitment divided by the combined
Revolving Commitments of all Banks.
"REPORTABLE EVENT" means, any of the events set forth in
Section 4043(c) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived
in regulations issued by the PBGC.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"RESPONSIBLE OFFICER" means, with respect to the Parent, the Borrower
or any Subsidiary, its chief executive officer or its president, or any
other officer having substantially the same authority and responsibility;
or, with respect to compliance with financial covenants, its chief
financial officer or its treasurer, or any other officer having
substantially the same authority and responsibility.
"REVOLVING COMMITMENT" has the meaning set forth in Section 2.1.
"REVOLVING LOAN" has the meaning set forth in Section 2.1.
"REVOLVING TERMINATION DATE" means the earlier to occur of:
(a) March 17, 2003; and
(b) the date on which the Revolving Commitments terminate in
accordance with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated
Notes, the Senior Subordinated Note Indenture and all other documents
executed and delivered with respect to the Senior Subordinated Notes or
Senior Subordinated Note Indenture.
22
<PAGE>
"SENIOR SUBORDINATED NOTE INDENTURE" means the Indenture dated as of
February 24, 1994 between the Borrower, the Parent, Pavey Envelope and Tag
Corp., Wisco Envelope Corp. and Shawmut Bank, National Association.
"SENIOR SUBORDINATED NOTES" means the Borrower's (i) 101/2% Senior
Subordinated Notes due 2004 and (ii) 10 1/2% Series B Senior Subordinated
Notes due 2004, issued pursuant to the Senior Subordinated Note Indenture.
"SPOT RATE" for a currency means the rate quoted by BofA as the spot
rate for the purchase by BofA of such currency with another currency
through its FX Trading Office at approximately 8:00 a.m. (San Francisco
time) on the date two Business Days prior to the date as of which the
foreign exchange computation is made.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Borrower.
"SUBSIDIARY GUARANTOR" has the meaning specified in the definition of
"Guarantor".
"SUPREMEX CREDIT AGREEMENT" means the Credit Agreement dated as of
March 16, 1998, between Supremex, Inc., a Wholly Owned Subsidiary of the
Borrower, the financial institutions party thereto, and BofA, as
administrative agent for such financial institutions.
"SURETY INSTRUMENTS" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
"SWAP TERMINATION VALUE" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such
23
<PAGE>
Swap Contracts have been closed out and termination value(s) determined
in accordance therewith, such termination value(s), and (b) for any date
prior to the date referenced in clause (a) the amount(s) determined as
the mark-to-market value(s) for such Swap Contracts, as determined by
the Administrative Agent based upon one or more mid-market or other
readily available quotations provided by any recognized dealer in such
Swap Contracts (which may include any Bank).
"SWINGLINE BANK" means BofA, in its capacity as maker of Swingline
Loans hereunder.
"SWINGLINE COMMITMENT" has the meaning specified in subsection
2.14(a).
"SWINGLINE LOAN" has the meaning specified in subsection 2.14(a).
"TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Administrative Agent, respectively, taxes imposed on
or measured by its net income or gross receipts by the jurisdiction (or any
political subdivision thereof) under the laws of which such Bank or the
Administrative Agent, as the case may be, is organized or maintains a
lending office.
"TYPE" has the meaning specified in the definition of "Committed
Loan."
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"UNITED STATES," "US" and "U.S." each means the United States of
America.
"U.S. DOLLAR EQUIVALENT AMOUNT" means, at any time, (a) as to any
amount denominated in U.S. Dollars, the amount thereof at such time, and
(b) as to any amount denominated in Canadian dollars, the equivalent amount
in U.S. Dollars as determined by the Administrative Agent using the Spot
Rate for the purchase of U.S. Dollars with Canadian dollars on the most
recent Computation Date provided for in subsection 2.5(a).
"U.S. DOLLARS," "DOLLARS", "DOLLARS" and "$" each mean lawful money of
the United States.
"WHOLLY OWNED SUBSIDIARY" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned,
24
<PAGE>
beneficially and of record, by the Borrower, or by one or more of the
other Wholly Owned Subsidiaries, or both.
1.2 OTHER INTERPRETIVE PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding," and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Administrative Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the
25
<PAGE>
Borrower and its Subsidiaries, the Banks, the Issuing Bank and the other
parties, and are the products of all parties. Accordingly, they shall not be
construed against the Banks, the Issuing Bank or the Administrative Agent
merely because of the Administrative Agent's or Banks' or the Issuing Bank's
involvement in their preparation.
1.3 ACCOUNTING PRINCIPLES.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP; PROVIDED, that if any change in GAAP results in a change in the operation
or calculation of any of Sections 8.13, 8.14, or 8.15 or any of the defined
terms used therein, the Borrower shall promptly notify the Administrative Agent
thereof and, upon notice to the Borrower by the Administrative Agent on behalf
of the Majority Banks, compliance with any such covenant shall be determined on
the basis of GAAP in effect immediately before the relevant change in GAAP
became effective, until either such notice is withdrawn upon instruction from
the Majority Banks or such covenant is amended in a manner satisfactory to the
Borrower and the Majority Banks.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower.
1.4 CURRENCY EQUIVALENTS GENERALLY. For all purposes of this Agreement
(but not for purposes of the preparation of any financial statements delivered
pursuant hereto), the equivalent in Canadian dollars (or any other currency) of
an amount in U.S. Dollars, and the equivalent in U.S. Dollars of an amount in
Canadian dollars (or any other currency), shall be determined at the Spot Rate.
ARTICLE II
THE CREDITS
2.1 THE REVOLVING CREDIT. Each Bank severally agrees, on the terms and
conditions set forth herein, to make loans to the Borrower denominated in U.S.
Dollars or Canadian dollars (each such loan, a "REVOLVING LOAN") from time to
time on any Business Day during the period from the Closing Date to the
Revolving Termination Date, in an aggregate U.S. Dollar Equivalent Amount not to
exceed at any time outstanding (together with such Bank's Pro Rata Share of the
then Effective Amount of all L/C Obligations and of all Swingline Loans then
unpaid) the amount set forth in respect of such Bank on SCHEDULE 2.1 (such
amount as the same may be reduced under Section 2.8 or as a result of one or
more assignments under Section 11.8, the Bank's "REVOLVING COMMITMENT");
PROVIDED, HOWEVER, that, after giving effect to any Committed Borrowing of
Revolving Loans, the Effective Amount of all Revolving Loans, L/C Obligations,
Swingline Loans and Bid Loans together shall not at any time exceed the
Aggregate Revolving Commitment; PROVIDED FURTHER, that the Effective Amount of
the Revolving Loans of any Bank plus the participation of such
26
<PAGE>
Bank in the Effective Amount of all L/C Obligations and such Bank's Pro Rata
Share of the Effective Amount of all Swingline Loans shall not at any time
exceed such Bank's Revolving Commitment; AND PROVIDED FURTHER, that the
Effective Amount of all Canadian Dollar Loans shall not at any time exceed
U.S.$100,000,000. Within the limits of each Bank's Revolving Commitment, and
subject to the other terms and conditions hereof, the Borrower may borrow
under this Section 2.1, prepay under Section 2.9 and reborrow under this
Section 2.1.
The Borrower understands and agrees that the Existing Facility shall
terminate, without necessity of further act of the parties, upon execution of
this Agreement by the Borrower. The Borrower confirms and acknowledges its
obligations to pay to BofA on the Closing Date all amounts outstanding under the
Existing Facility, and the Borrower covenants and each other party hereto
acknowledges and agrees that the proceeds of the initial borrowings under this
Agreement shall be used to pay all principal and accrued interest (if any) and
all other amounts outstanding under the Existing Facility.
The parties hereto further acknowledge and agree that upon each voluntary
reduction or termination by Supremex of the "Commitments" (as such term is
defined in the Supremex Credit Agreement), the reduced or terminated portion of
the "Commitment" (as so defined) of each Bank party thereto shall be allocated
to and become a part of, and shall result in an increase by like amount of, such
Bank's Revolving Commitment hereunder, without necessity of further act of the
parties hereto. Such adjustment of the Revolving Commitment of each Bank
hereunder shall be effective immediately upon or concurrently with such
voluntary reduction or termination by Supremex of the "Commitments" under the
Supremex Credit Agreement. The Administrative Agent shall thereafter promptly
provide to the Borrower and each Bank a copy of a new SCHEDULE 2.1 which shall
set forth the adjusted Revolving Commitment of each Bank after giving effect to
such voluntary reduction or termination of the "Commitments" under the Supremex
Credit Agreement. Such new SCHEDULE 2.1 shall replace and supersede the
SCHEDULE 2.1 then in effect and shall become a part of this Agreement without
necessity of further act of the parties hereto.
2.2 LOAN ACCOUNTS.
(a) The Loans made by each Bank and the Letters of Credit Issued by
the Issuing Bank shall be evidenced by one or more accounts or records
maintained by such Bank, or the Issuing Bank, as the case may be, in the
ordinary course of business. The accounts or records maintained by the
Administrative Agent, each Bank, and the Issuing Bank, shall be conclusive
absent manifest error of the amount of the Loans made by the Banks to the
Borrower and the Letters of Credit Issued for the account of the L/C Borrowers,
and the interest and payments thereon. Any failure so to record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrower hereunder to pay any amount owing with respect to the Loans or any
Letter of Credit.
(b) Upon the request of any Bank made through the Administrative
Agent, the Committed Loans made by such Bank may be evidenced by one or more
notes ("Committed Loan Notes") and the Bid Loans made by such Bank may be
evidenced by one
27
<PAGE>
or more notes ("Bid Loan Notes"), instead of or in addition to loan accounts.
Each such Bank shall endorse on the schedules annexed to its Note(s) the
date, amount, applicable currency and maturity of each Loan made by it and
the amount and applicable currency of each payment of principal made by the
Borrower with respect thereto. Each such Bank is irrevocably authorized by
the Borrower to endorse its Note(s) and each Bank's record shall be
conclusive absent manifest error; PROVIDED, HOWEVER, that the failure of a
Bank to make, or an error in making, a notation thereon with respect to any
Loan shall not limit or otherwise affect the obligations of the Borrower
hereunder or under any such Note to such Bank.
2.3 PROCEDURE FOR COMMITTED BORROWING.
(a) Each Committed Borrowing shall be made upon the Borrower's
irrevocable written notice delivered to the Administrative Agent in the form of
a Notice of Borrowing (which notice must be received by the Administrative Agent
prior to 9:00 a.m. (San Francisco time)) at least (i) four Business Days prior
to the requested Borrowing Date, in the case of Canadian Dollar Loans, (ii)
three Business Days prior to the requested Borrowing Date, in the case of
Offshore Rate Committed Loans denominated in U.S. Dollars; and (iii) one
Business Day prior to the requested Borrowing Date, in the case of Base Rate
Committed Loans or Prime Rate Loans, specifying:
(A) the amount of the Committed Borrowing in U.S. Dollars
or Canadian dollars, as the case may be, which shall be in an
aggregate minimum U.S. Dollar Equivalent Amount of $5,000,000 or, in
the case of any Borrowing in U.S. Dollars only, any multiple of
$1,000,000 in excess thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
(C) the Type of Loans comprising the Committed Borrowing;
(D) with respect to Offshore Rate Committed Loans, the
duration of the Interest Period applicable to such Committed Loans
included in such notice. If the Notice of Borrowing fails to specify
the duration of the Interest Period for any Borrowing comprised of
Offshore Rate Committed Loans, such Interest Period shall be three
months; and
(E) whether such Committed Borrowing shall be denominated
in U.S. Dollars or Canadian dollars;
PROVIDED, HOWEVER, that with respect to any Committed Borrowing to be made on
the Closing Date, the Notice of Borrowing shall be delivered to the
Administrative Agent not later than 10:00 a.m. (San Francisco time) at least one
Business Day before the Closing Date and such Committed Borrowing will consist
of Base Rate Committed Loans only.
28
<PAGE>
(b) The U.S. Dollar Equivalent Amount of any Committed Borrowing
denominated in Canadian dollars will be determined by the Administrative Agent
for such Committed Borrowing on the Computation Date therefor in accordance with
subsection 2.5(a). The Administrative Agent will promptly notify each Bank of
its receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Committed Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Committed Borrowing available to the Administrative Agent for the account of
the Borrower at the Administrative Agent's Payment Office by 11:00 a.m. (San
Francisco time) on the Borrowing Date requested by the Borrower in funds
immediately available to the Administrative Agent and in the requested
currency. The proceeds of all such Committed Loans will then be made
available to the Borrower by the Administrative Agent at such office by
crediting the account of the Borrower on the books of BofA with the aggregate
of the amounts made available to the Administrative Agent by the Banks and in
like funds as received by the Administrative Agent, or if requested by the
Borrower, by wire transfer in accordance with written instructions provided
to the Administrative Agent by the Borrower of such funds as received by the
Administrative Agent, less customary fees for such wire transfer unless on
the date of the Borrowing all or any portion of the proceeds thereof shall
then be required to be applied to the repayment of any outstanding Swingline
Loans pursuant to Section 2.14 or the reimbursement of any outstanding
drawings under Letters of Credit pursuant to Section 3.3, in which case such
proceeds or portion thereof shall be applied to the repayment of such
Swingline Loans or the reimbursement of such Letter of Credit drawings, as
the case may be.
(d) After giving effect to any Committed Borrowing, unless the
Administrative Agent shall otherwise consent, there may not be more than ten
(10) different Interest Periods in effect in respect of all Committed Loans and
Bid Loans then outstanding.
2.4 CONVERSION AND CONTINUATION ELECTIONS FOR COMMITTED BORROWINGS.
(a) The Borrower may, upon irrevocable written notice to the
Administrative Agent in accordance with Section 2.4(b):
(i) elect to convert, as of any Business Day, any Base Rate
Committed Loans (other than Swingline Loans) or Prime Rate Loans (or any
part thereof in a U.S Dollar Equivalent Amount not less than $5,000,000,
or, in the case of Base Rate Committed Loans only, that is in an integral
multiple of $1,000,000 in excess thereof) into Offshore Rate Committed
Loans of the same currency;
(ii) elect to convert, as of the last day of the applicable
Interest Period, any Offshore Rate Committed Loans expiring on such day (or
any part thereof in a U.S. Dollar Equivalent Amount not less than
$1,000,000, or, in the case of Offshore Rate Committed Loans denominated in
U.S. Dollars only, that is in an integral multiple of $1,000,000 in excess
thereof) into Base Rate Committed Loans or Prime Rate Loans of the same
currency; or
29
<PAGE>
(iii) elect to continue (for the same or different Interest
Period), as of the last day of the applicable Interest Period, any Offshore
Rate Committed Loans expiring on such day (or any part thereof in a U.S.
Dollar Equivalent Amount not less than $5,000,000, or, in the case of
Offshore Rate Committed Loans denominated in U.S. Dollars only, that is in
an integral multiple of $1,000,000 in excess thereof);
PROVIDED, that if at any time the aggregate U.S. Dollar Equivalent Amount of
Offshore Rate Committed Loans in respect of any Committed Borrowing is reduced,
by payment, prepayment, or conversion of part thereof to be less than
$5,000,000, such Offshore Rate Committed Loans shall automatically convert into
Base Rate Committed Loans, in the case of Offshore Rate Committed Loans
denominated in U.S. Dollars, or Prime Rate Loans, in the case of Offshore Rate
Committed Loans denominated in Canadian dollars, and on and after such date the
right of the Borrower to continue such Committed Loans as, and convert such
Committed Loans into, Offshore Rate Committed Loans shall terminate.
(b) To convert or continue a Revolving Loan as provided in subsection
2.4(a), the Borrower shall deliver a Notice of Conversion/Continuation to be
received by the Administrative Agent not later than 9:00 a.m. (San Francisco
time) at least (i) three Business Days in advance of the Conversion/Continuation
Date, if the Committed Loans are to be converted into or continued as Offshore
Rate Committed Loans denominated in U.S. Dollars; (ii) four Business Days in
advance of the Conversion/Continuation Date, if the Committed Loans are to be
converted into or continued as Offshore Rate Committed Loans denominated in
Canadian dollars; and (iii) one Business Day in advance of the Conversion/
Continuation Date, if the Committed Loans are to be converted into Base Rate
Committed Loans or Prime Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date,
(B) the aggregate amount in U.S. Dollars or Canadian dollars, as
the case may be, of Committed Loans to be converted or continued;
(C) the Type of Committed Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Committed Loans or Prime Rate Loans, the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Committed Loans denominated in U.S. Dollars, the Borrower has
failed to select timely a new Interest Period to be applicable to such Offshore
Rate Committed Loans prior to the third Business Day in advance of the
expiration date of the current Interest Period applicable thereto as provided in
Subsection 2.4(b), or if any Default or Event of Default then exists, the
Borrower shall be deemed to have elected to convert such Offshore Rate Committed
Loans into Base Rate Committed Loans effective as of the expiration date of such
Interest Period, and all conditions to such conversion shall be deemed to have
been satisfied. If the Borrower
30
<PAGE>
has failed to select a new Interest Period to be applicable to Offshore Rate
Committed Loans denominated in Canadian dollars prior to the fourth Business
Day in advance of the expiration date of the current Interest Period
applicable thereto as provided in subsection 2.4(b), or if any Default or
Event of Default shall then exist, subject to the provisions of subsection
2.5(d), the Borrower shall be deemed to have elected to convert such Offshore
Rate Committed Loans into Prime Rate Loans effective as of the expiration
date of such Interest Period, and all conditions to such conversion shall be
deemed to have been satisfied.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Borrower, the Administrative Agent will promptly notify each
Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Committed Loans with respect to which the notice was
given held by each Bank.
(e) Unless the Majority Banks otherwise consent, during the existence
of a Default or Event of Default, the Borrower may not elect to have a Committed
Loan converted into or continued as an Offshore Rate Committed Loan.
(f) After giving effect to any conversion or continuation of
Committed Loans, unless the Administrative Agent shall otherwise consent, there
may not be more than ten (10) different Interest Periods in effect in respect of
all Committed Loans then outstanding.
2.5 UTILIZATION OF REVOLVING COMMITMENTS IN CANADIAN DOLLARS.
(a) The Administrative Agent will determine the U.S. Dollar
Equivalent Amount with respect to any (i) Borrowing comprised of Canadian Dollar
Loans and L/C Obligations as of the requested Borrowing Date, (ii) outstanding
Canadian Dollar Loans and L/C Obligations as of the last Business Day of each
calendar month, and (iii) outstanding Canadian Dollar Loans and L/C Obligations
as of any redenomination date pursuant to this Section 2.5 or Section 4.5 (each
such date under clauses (i) through (iii) a "COMPUTATION DATE").
(b) In the case of a proposed Borrowing denominated in Canadian
dollars, the Banks shall be under no obligation to make such Revolving Loans in
the requested currency as part of such Borrowing if the Administrative Agent has
received notice from any of the Banks by 5:00 p.m. (San Francisco time) three
Business Days prior to the date of such Borrowing that such Bank cannot provide
Revolving Loans in the requested currency, in which event the Administrative
Agent will give notice to the Borrower no later than 9:00 a.m. (San Francisco
time) on the second Business Day prior to the requested date of such Borrowing
that the Borrowing in the requested currency is not then available, and notice
thereof also will be given promptly by the Administrative Agent to the Banks.
If the Agent shall have so notified the Borrower that any such Borrowing in
Canadian dollars is not then available, the Borrower may, by notice to the
Administrative Agent not later than 5:00 p.m.
31
<PAGE>
(San Francisco time) two Business Days prior to the requested date of such
Borrowing, withdraw the Notice of Borrowing relating to such requested
Borrowing. If the Borrower does so withdraw such Notice of Borrowing, the
Borrowing requested therein shall not occur and the Administrative Agent will
promptly so notify each Bank. If the Borrower does not so withdraw such
Notice of Borrowing, the Administrative Agent will promptly so notify each
Bank and such Notice of Borrowing shall be deemed to be a Notice of Borrowing
that requests a Borrowing comprised of Base Rate Committed Loans in an
aggregate amount equal to the amount of the originally requested Borrowing as
expressed in U.S. Dollars in the Notice of Borrowing; and in such notice by
the Administrative Agent to each Bank the Administrative Agent will state
such aggregate amount of such Borrowing to be made in U.S. Dollars and such
Bank's Pro Rata Share thereof.
(c) In the case of a proposed continuation of Canadian Dollar Loans
for an additional Interest Period pursuant to Section 2.4, the Banks shall be
under no obligation to continue such Canadian Dollar Loans if the Administrative
Agent has received notice from any of the Banks by 5:00 p.m. (San Francisco
time) three Business Days prior to the day of such continuation that such Bank
cannot continue to provide Offshore Rate Committed Loans denominated in Canadian
dollars, in which event the Agent will give notice to the Borrower not later
than 9:00 a.m. (San Francisco time) on the second Business Day prior to the
requested date of such continuation that the continuation of such Canadian
Dollar Loans is not then available, and notice thereof also will be given
promptly by the Administrative Agent to the Banks. If the Administrative Agent
shall have so notified the Borrower that any such continuation of Canadian
Dollar Loans is not then available, any Notice of Continuation/Conversion with
respect thereto shall be deemed withdrawn and such Canadian Dollar Loans shall
be automatically converted into Prime Rate Loans with effect from the last day
of the Interest Period with respect to any such Canadian Dollar Loans, and all
conditions to such conversion shall be deemed to have been satisfied. The Agent
will promptly notify the Borrower and the Banks of any such automatic
conversion.
(d) Notwithstanding anything herein to the contrary, during the
existence of a Default or an Event of Default, upon the request of the Majority
Banks, all or any part of any outstanding Canadian Dollar Loans shall be
redenominated and converted into Base Rate Committed Loans in U.S. Dollars with
effect from (i) in the case of Prime Rate Loans, the next succeeding Business
Day following the Administrative Agent's receipt of such request from the
Majority Banks, or (ii) in the case of Offshore Rate Committed Loans denominated
in Canadian dollars, the last day of the Interest Period with respect to such
Canadian Dollar Loans, and all conditions to such conversion shall be deemed to
have been satisfied. The Administrative Agent will promptly notify the Borrower
of any such redenomination and conversion request.
(e) Notwithstanding anything herein to the contrary, no Prime Rate
Loan may be outstanding for more than 10 consecutive Business Days.
2.6 BID BORROWINGS. In addition to Committed Borrowings pursuant to
Section 2.3, each Bank severally agrees that the Borrower may, as set forth in
Section 2.7, from time to
32
<PAGE>
time request the Banks prior to the Revolving Termination Date to submit
offers to make Bid Loans to the Borrower; PROVIDED, HOWEVER, that the Banks
may, but shall have no obligation to, submit such offers and the Borrower
may, but shall have no obligation to, accept any such offers, and, if such
offers are accepted by the Borrower, to make such Bid Loans; and PROVIDED,
FURTHER, that at no time shall (a) the Effective Amount of all Bid Loans,
plus the Effective Amount of all Revolving Loans, plus the Effective Amount
of all Swingline Loans, plus the Effective Amount of all L/C Obligations
exceed the Aggregate Revolving Commitment; and (b) the Effective Amount of
all Bid Loans exceed 50% of the Aggregate Revolving Commitment.
2.7 PROCEDURE FOR BID BORROWINGS.
(a) When the Borrower wishes to request the Banks to submit offers to
make Bid Loans hereunder, the Borrower shall transmit to the Administrative
Agent by telephone call followed promptly by facsimile transmission a notice in
substantially the form of EXHIBIT G (a "COMPETITIVE BID REQUEST") so as to be
received no later than 8:00 a.m. (San Francisco time) (x) four Business Days
prior to the date of a proposed Bid Borrowing in the case of a LIBOR Auction, or
(y) two Business Days prior to the date of a proposed Bid Borrowing in the case
of an Absolute Rate Auction, specifying:
(i) the date of such Bid Borrowing, which shall be a
Business Day;
(ii) the aggregate amount of such Bid Borrowing, which shall
be a minimum amount of $10,000,000 or in multiples of $1,000,000 in
excess thereof;
(iii) whether the Competitive Bids requested are to be for
LIBOR Bid Loans or Absolute Rate Bid Loans; and
(iv) the duration of the Interest Period applicable thereto,
subject to the provisions of the definition of "Interest Period" herein.
Subject to subsection 2.7(c), the Borrower may not request Competitive Bids for
more than three Interest Periods in a single Competitive Bid Request and may not
request Competitive Bids more than once in any period of five Business Days.
(b) Upon receipt of a Competitive Bid Request, the Administrative
Agent will promptly send to the Banks by facsimile transmission an Invitation
for Competitive Bids, which shall constitute an invitation by the Borrower to
each Bank to submit Competitive Bids offering to make the Bid Loans to which
such Competitive Bid Request relates in accordance with this Section 2.7.
(c) (i) Each Bank may at its discretion submit a Competitive Bid
containing an offer or offers to make Bid Loans in response to any
Invitation for Competitive Bids. Each Competitive Bid must comply with
the requirements of this subsection 2.7(c) and must be submitted to the
Administrative Agent by facsimile
33
<PAGE>
transmission at the Administrative Agent's office for notices set forth
on the signature pages hereto not later than (1) 6:30 a.m. (San
Francisco time) three Business Days prior to the proposed date of
Borrowing, in the case of a LIBOR Auction or (2) 6:30 a.m. (San
Francisco time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction; PROVIDED that Competitive Bids submitted by the
Administrative Agent (or any Affiliate of the Administrative Agent) in
the capacity of a Bank may be submitted, and may only be submitted, if
the Administrative Agent or such Affiliate notifies the Borrower of the
terms of the offer or offers contained therein not later than (A) 6:15
a.m. (San Francisco time) three Business Days prior to the proposed date
of Borrowing, in the case of a LIBOR Auction or (B) 6:15 a.m. (San
Francisco time) on the proposed date of Borrowing, in the case of an
Absolute Rate Auction.
(ii) Each Competitive Bid shall be in substantially the form
of EXHIBIT H, specifying therein:
(A) the proposed date of Borrowing;
(B) the principal amount of each Bid Loan for which such
Competitive Bid is being made, which principal amount (x) may be equal
to, greater than or less than the Revolving Commitment of the quoting
Bank, (y) must be $10,000,000 or in multiples of $1,000,000 in excess
thereof, and (z) may not exceed the principal amount of Bid Loans for
which Competitive Bids were requested;
(C) in case the Borrower elects a LIBOR Auction, the margin
above or below LIBO Rate (the "LIBOR BID MARGIN") offered for each
such Bid Loan, expressed in multiples of 1/1000th of one basis point
to be added to or subtracted from the applicable LIBO Rate and the
Interest Period applicable thereto;
(D) in case the Borrower elects an Absolute Rate Auction,
the rate of interest per annum expressed in multiples of 1/1000th of
one basis point (the "ABSOLUTE RATE") offered for each such Bid Loan;
and
(E) the identity of the quoting Bank.
A Competitive Bid may contain up to three separate offers by the
quoting Bank with respect to each Interest Period specified in the
related Invitation for Competitive Bids.
(iii) Any Competitive Bid shall be disregarded if it:
(A) is not substantially in conformity with EXHIBIT H or
does not specify all of the information required by subsection (c)(ii)
of this Section;
34
<PAGE>
(B) contains qualifying, conditional or similar language;
(C) proposes terms other than or in addition to those set
forth in the applicable Invitation for Competitive Bids; or
(D) arrives after the time set forth in subsection (c)(i).
(d) Promptly on receipt and not later than 7:00 a.m. (San Francisco
time) three Business Days prior to the proposed date of Borrowing, in the case
of a LIBOR Auction, or 7:00 a.m. (San Francisco time) on the proposed date of
Borrowing, in the case of an Absolute Rate Auction, the Administrative Agent
will notify the Borrower of the terms (i) of any Competitive Bid submitted by a
Bank that is in accordance with subsection 2.7(c), and (ii) of any Competitive
Bid that amends, modifies or is otherwise inconsistent with a previous
Competitive Bid submitted by such Bank with respect to the same Competitive Bid
Request. Any such subsequent Competitive Bid shall be disregarded by the
Administrative Agent unless such subsequent Competitive Bid is submitted solely
to correct a manifest error in such former Competitive Bid and only if received
within the times set forth in subsection 2.7(c). The Administrative Agent's
notice to the Borrower shall specify (1) the aggregate principal amount of Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Request; and (2) the respective principal amounts
and LIBOR Bid Margins or Absolute Rates, as the case may be, so offered.
Subject only to the provisions of Sections 4.2, 4.5 and 5.2 hereof and the
provisions of this subsection (d), any Competitive Bid shall be irrevocable
except with the written consent of the Administrative Agent given on the written
instructions of the Borrower.
(e) Not later than 7:30 a.m. (San Francisco time) three Business Days
prior to the proposed date of Borrowing, in the case of a LIBOR Auction, or
7:30 a.m. (San Francisco time) on the proposed date of Borrowing, in the case of
an Absolute Rate Auction, the Borrower shall notify the Administrative Agent of
their acceptance or non-acceptance of the offers so notified to them pursuant to
subsection 2.7(d). The Borrower shall be under no obligation to accept any
offer and may choose to reject all offers. In the case of acceptance, such
notice shall specify the aggregate principal amount of offers for each Interest
Period that is accepted. The Borrower may accept any Competitive Bid in whole
or in part; PROVIDED that:
(i) the aggregate principal amount of each Bid Borrowing may
not exceed the applicable amount set forth in the related Competitive
Bid Request;
(ii) the principal amount of each Bid Borrowing must be
$10,000,000 or in any multiple of $1,000,000 in excess thereof;
(iii) acceptance of offers may only be made on the basis of
ascending LIBOR Bid Margins or Absolute Rates within each Interest
Period, as the case may be; and
35
<PAGE>
(iv) the Borrower may not accept any offer that is described
in subsection 2.7(c)(iii) or that otherwise fails to comply with the
requirements of this Agreement.
(f) If offers are made by two or more Banks with the same LIBOR Bid
Margins or Absolute Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which such offers are accepted for the
related Interest Period, the principal amount of Bid Loans in respect of which
such offers are accepted shall be allocated by the Administrative Agent among
such Banks as nearly as possible (in such multiples, not less than $1,000,000,
as the Administrative Agent may deem appropriate) in proportion to the aggregate
principal amounts of such offers. Determination by the Administrative Agent of
the amounts of Bid Loans shall be conclusive in the absence of manifest error.
(g) (i) The Administrative Agent will promptly notify each Bank
having submitted a Competitive Bid if its offer has been accepted and, if
its offer has been accepted, of the amount of the Bid Loan or Bid Loans to
be made by it on the date of the Bid Borrowing.
(ii) Each Bank, which has received notice pursuant to subsection
2.7(g)(i) that its Competitive Bid has been accepted, shall make the
amounts of such Bid Loans available to the Administrative Agent for the
account of the Borrower at the Administrative Agent's Payment Office, by
11:00 a.m. (San Francisco time) in the case of Absolute Rate Bid Loans, and
by 11:00 a.m. (San Francisco time) in the case of LIBOR Bid Loans, on such
date of Bid Borrowing, in funds immediately available to the Administrative
Agent for the account of the Borrower at the Administrative Agent's Payment
Office.
(iii) Promptly following each Bid Borrowing, the Administrative
Agent shall notify each Bank of the ranges of bids submitted and the
highest and lowest Bids accepted for each Interest Period requested by
the Borrower and the aggregate amount borrowed pursuant to such Bid
Borrowing.
(iv) From time to time, the Borrower and the Banks shall furnish
such information to the Administrative Agent as the Administrative Agent
may request relating to the making of Bid Loans, including the amounts,
interest rates, dates of borrowings and maturities thereof, for purposes of
the allocation of amounts received from the Borrower for payment of all
amounts owing hereunder.
(h) If, on or prior to the proposed date of Borrowing, the Revolving
Commitments have not been terminated and if, on such proposed date of Borrowing
all applicable conditions to funding referenced in Sections 4.2, 4.5 and 5.2
hereof are satisfied, the Banks whose offers the Borrower has accepted will fund
each Bid Loan so accepted. Nothing in this Section 2.7 shall be construed as a
right of first offer in favor of the Banks or to otherwise limit the ability of
the Borrower to request and accept credit facilities from any Person (including
any of the Banks), provided that no Default or Event of Default would
36
<PAGE>
otherwise arise or exist as a result of the Borrower executing, delivering or
performing under such credit facilities.
2.8 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS.
(a) The Borrower may, upon five Business Days' prior notice to the
Administrative Agent, terminate the Revolving Commitments, or permanently
reduce the Revolving Commitments by an aggregate minimum amount of $5,000,000
or any multiple of $1,000,000 in excess thereof; PROVIDED that (i) no such
reduction or termination shall be permitted if, after giving effect thereto
and to any prepayments of Loans made on the effective date thereof, (A) the
then Effective Amount of all Revolving Loans plus the Effective Amount of all
L/C Obligations plus the Effective Amount of all Swingline Loans plus the
Effective Amount of all Bid Loans would exceed the Aggregate Revolving
Commitment then in effect, or (B) the Effective Amount of all L/C Obligations
would exceed the L/C Commitment then in effect; and (ii) once reduced in
accordance with this Section 2.8, neither the Revolving Commitments nor the
L/C Commitment may be increased. Any Revolving Commitment reduction notice
shall specify the extent (if any) to which any such reduction shall be
applied to reduce as well the L/C Commitment. The L/C Commitment shall at no
time exceed the Aggregate Revolving Commitment. Any reduction of the
Aggregate Revolving Commitment shall be applied ratably to each Bank's
Revolving Commitment in accordance with such Bank's Pro Rata Share. If the
Revolving Commitments are terminated in their entirety, all accrued
commitment fees to the effective date of such termination of Revolving
Commitment, shall be paid on the effective date of such termination.
(b) At no time shall the Swingline Commitment exceed the Aggregate
Revolving Commitment, and any reduction of the Revolving Commitments which
reduces the Aggregate Revolving Commitment below the then-current amount of the
Swingline Commitment shall result in an automatic corresponding reduction of the
Swingline Commitment to the amount of the Aggregate Revolving Commitment, as so
reduced, without any action on the part of the Swingline Bank. At no time shall
the Swingline Commitment exceed the Revolving Commitment of the Swingline Bank,
and any reduction of the Revolving Commitments which reduces the Revolving
Commitment of the Swingline Bank below the then-current amount of the Swingline
Commitment shall result in an automatic corresponding reduction of the Swingline
Commitment to the amount of the Revolving Commitment of the Swingline Bank, as
so reduced, without any action on the part of the Swingline Bank.
2.9 OPTIONAL PREPAYMENTS.
(a) Subject to Section 4.4, the Borrower may, at any time or from
time to time, upon irrevocable notice received by the Administrative Agent, in
the case of Offshore Rate Committed Loans, not later than 9:00 a.m. (San
Francisco time) three Business Days prior to the requested prepayment date, and,
in the case of Base Rate Committed Loans or Prime Rate Loans, not less than one
Business Day prior to the requested prepayment date, (i) ratably prepay
Revolving Loans in whole or in part, in minimum U.S. Dollar Equivalent
37
<PAGE>
Amounts of $5,000,000 (or such lesser principal amount then outstanding) or,
in the case of Revolving Loans denominated in U.S. Dollars only, any multiple
of $1,000,000 in excess thereof, and (ii) prepay in whole or in part
Swingline Loans, in amounts of one million dollars ($1,000,000) (or such
lesser principal amount then outstanding) or any multiple of one hundred
thousand dollars ($100,000) in excess thereof, or in other amounts with the
consent of the Swingline Bank. Such notice of prepayment shall specify the
date, amount and applicable currency of such prepayment and the Type(s) of
Revolving Loans to be prepaid. The Administrative Agent will promptly notify
each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by the Borrower, the
Borrower shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein, together with
accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 4.4.
(b) Bid Loans may not be voluntarily prepaid other than with the
consent of the applicable Bid Loan Lender.
2.10 CURRENCY EXCHANGE FLUCTUATIONS. Subject to Section 4.4, if on any
Computation Date the Administrative Agent shall have determined that the
Effective Amount of all Revolving Loans, L/C Obligations, Swingline Loans and
Bid Loans together exceeds the Aggregate Revolving Commitment by more than
$500,000, due to a change in the applicable rate of exchange between U.S.
Dollars and Canadian dollars, then the Administrative Agent shall give notice to
the Borrower that a prepayment (or a Cash Collateralization in the case of L/C
Obligations) is required under this Section, and the Borrower agrees thereupon
to make prepayments of Revolving Loans, Swingline Loans, Bid Loans and/or L/C
Advances (or Cash Collateralize L/C Obligations) such that, after giving effect
to such prepayment (or Cash Collateralization), the Effective Amount of all
Revolving Loans, L/C Obligations, Swingline Loans and Bid Loans together does
not exceed the Aggregate Revolving Commitment.
2.11 CASH COLLATERALIZATION; MANDATORY PREPAYMENTS OF LOANS. If on any
date the Effective Amount of L/C Obligations exceeds the L/C Commitment, the
Borrower shall Cash Collateralize on such date the outstanding Letters of Credit
in an amount equal to the excess of the maximum amount then available to be
drawn under the Letters of Credit over the L/C Commitment. Subject to
Section 4.4, if on any date after giving effect to any Cash Collateralization
made on such date pursuant to the preceding sentence, the Effective Amount of
all Revolving Loans, Swingline Loans, Bid Loans and L/C Obligations together
exceeds the Aggregate Revolving Commitment, the Borrower shall immediately, and
without notice or demand, prepay the outstanding principal amount of the
Revolving Loans, Swingline Loans, Bid Loans and/or L/C Advances by an amount
equal to the applicable excess.
2.12 REPAYMENT.
(a) THE REVOLVING CREDIT. The Borrower shall repay to the Banks on
the Revolving Termination Date the aggregate principal amount of all Loans
outstanding on such date.
38
<PAGE>
(b) BID LOANS. The Borrower shall repay each Bid Loan on the last
day of the relevant Interest Period.
2.13 INTEREST.
(a) Each Revolving Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate, the Base Rate or the Prime Rate, as the case may be
(and subject to a Borrower's right to convert to other Types of Loans under
Section 2.4), PLUS the Applicable Margin. Each Swingline Loan shall bear
interest on the outstanding principal amount thereof from the applicable
Borrowing Date at a rate per annum equal to the Base Rate PLUS the Applicable
Margin, or at such other rate as may be agreed to by the Swingline Bank. Each
Bid Loan shall bear interest on the outstanding principal amount thereof from
the relevant Borrowing Date at a rate per annum equal to the LIBO Rate plus (or
minus) the LIBOR Bid Margin, or at the Absolute Rate, as the case may be.
(b) Interest on each Revolving Loan, Bid Loan and Swingline Loan
shall be paid in arrears on each Interest Payment Date. Interest shall also be
paid on the date of any prepayment of Loans under Section 2.9 or 2.11 for the
portion of the Loans so prepaid and upon payment (including prepayment) in full
thereof and, during the existence of any Event of Default, interest shall be
paid on demand of the Administrative Agent at the request or with the consent of
the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, during the
existence of any Event of Default under Section 9.1(a), 9.1(c), 9.1(e), 9.1(k),
or 9.1(m) as a consequence of the failure of the Borrower to observe or perform
or cause to be observed or performed any term, covenant or agreement contained
in Section 7.11 or Article VIII, or after acceleration, the Borrower shall pay
interest (after as well as before any entry of judgment thereon to the extent
permitted by law) on the principal amount of all outstanding Obligations, at a
rate per annum which is determined by adding two percent (2.00%) per annum to
the Applicable Margin then in effect for such Obligations and, in the case of
Obligations not subject to an Applicable Margin, at a rate per annum equal to
the Base Rate plus two percent (2.00%); PROVIDED, HOWEVER, that, on and after
the expiration of any Interest Period applicable to any Offshore Rate Committed
Loan or LIBOR Bid Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate PLUS two percent (2.00%). All such
interest shall be payable upon demand.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such
39
<PAGE>
event the Borrower shall pay such Bank interest at the highest rate permitted
by applicable law.
2.14 SWINGLINE LOANS.
(a) Subject to the terms and conditions hereof, the Swingline Bank
agrees to make a portion of the Aggregate Revolving Commitment available to the
Borrower by making swingline loans denominated in U.S. Dollars (individually, a
"SWINGLINE LOAN"; collectively, the "SWINGLINE LOANS") to the Borrower on any
Business Day during the period from the Closing Date to the Revolving
Termination Date in accordance with the procedures set forth in this Section
2.14 in an aggregate principal amount at any one time outstanding not to exceed
Fifteen Million Dollars ($15,000,000), notwithstanding the fact that such
Swingline Loans, when aggregated with the Swingline Bank's outstanding Revolving
Loans, may exceed the Swingline Bank's Revolving Commitment (the amount of such
commitment of the Swingline Bank to make Swingline Loans to the Borrower
pursuant to this subsection 2.14(a), as the same shall be reduced pursuant to
subsection 2.8(b) or as a result of any assignment pursuant to Section 11.8, the
Swingline Bank's "SWINGLINE COMMITMENT"); PROVIDED, that at no time shall
(i) the sum of the Effective Amount of all Swingline Loans PLUS the Effective
Amount of all Revolving Loans PLUS the Effective Amount of all Bid Loans PLUS
the Effective Amount of all L/C Obligations exceed the Aggregate Revolving
Commitment, or (ii) the Effective Amount of all Swingline Loans exceed the
Swingline Commitment. Additionally, no more than three Swingline Loans may be
outstanding at any one time, and all Swingline Loans shall at all times be Base
Rate Committed Loans or accrue interest at such other rate as may be agreed to
by the Swingline Bank and the Borrower. Within the foregoing limits, and
subject to the other terms and conditions hereof, the Borrower may borrow under
this subsection 2.14(a), prepay pursuant to Section 2.9 and reborrow pursuant to
this subsection 2.14(a).
(b) The Borrower shall provide the Administrative Agent irrevocable
written notice (including notice via facsimile confirmed immediately by a
telephone call) in the form of a Notice of Borrowing of any Swingline Loan
requested hereunder (which notice must be received by the Administrative Agent
prior to 12:00 noon (San Francisco time) on the requested Borrowing date)
specifying (i) the amount to be borrowed, and (ii) the requested Borrowing date,
which must be a Business Day. Unless the Swingline Bank has received notice
prior to 2:00 p.m. on such Borrowing date from the Administrative Agent
(including at the request of any Bank) (A) directing the Swingline Bank not to
make the requested Swingline Loan as a result of the limitations set forth in
the PROVISO set forth in the first sentence of subsection 2.14(a); or (B) that
one or more conditions specified in Article V are not then satisfied; THEN,
subject to the terms and conditions hereof, the Swingline Bank will, not later
than 3:00 p.m. (San Francisco time) on the Borrowing date specified in such
Notice of Borrowing, make the amount of its Swingline Loan available to the
Borrower by crediting the account of the Borrower on the books of BofA. Each
Borrowing pursuant to this Section shall be in an aggregate principal amount
equal to one million dollars ($1,000,000) or a multiple of one hundred thousand
dollars ($100,000) in excess thereof, unless otherwise
40
<PAGE>
agreed by the Swingline Bank. The Administrative Agent will notify the Banks
on a quarterly basis if any Swingline Loan Borrowings occurred during such
quarter.
(c) The Borrower shall repay to the Swingline Bank in full on the
Revolving Termination Date the aggregate principal amount of the Swingline
Loans outstanding on the Revolving Termination Date.
(d) For one Business Day during each successive five Business Day
period the aggregate principal amount of Swingline Loans shall be $0 (a
"CLEAN-UP DAY"). The Borrower shall prepay the outstanding principal amount
of the Swingline Loans in whole to the extent required so that a Clean-Up Day
may occur in each such five Business Day period as provided in this
subsection 2.14(d) (which Swingline Loans may not be reborrowed until such
Clean-Up Day has ended).
(e) If:
(1) any Swingline Loans shall remain outstanding at 9:00 a.m.
(San Francisco, California time) on the Business Day immediately prior to a
Clean-Up Day and by such time on such Business Day the Administrative Agent
shall have received neither:
(A) a Notice of Borrowing delivered pursuant to Section 2.3
requesting that Revolving Loans be made pursuant to subsection 2.1(a)
on the Clean-Up Day in an amount at least equal to the aggregate
principal amount of such Swingline Loans; nor
(B) any other notice indicating the Borrower's intent to
repay such Swingline Loans with funds obtained from other sources; or
(2) any Swingline Loans shall remain outstanding during the
existence of a Default or Event of Default and the Swingline Bank shall in
its sole discretion notify the Administrative Agent that the Swingline Bank
desires that such Swingline Loans be converted into Revolving Loans;
THEN the Administrative Agent shall be deemed to have received a Notice of
Borrowing from the Borrower pursuant to Section 2.3 requesting that Base Rate
Committed Loans be made pursuant to subsection 2.1(a) on such Clean-Up Day (in
the case of the circumstances described in clause (1) above) or on the first
Business Day subsequent to the date of such notice from the Swingline Bank (in
the case of the circumstances described in clause (2) above) in an amount equal
to the aggregate amount of such Swingline Loans, and the procedures set forth in
subsections 2.3(b) and 2.3(c) shall be followed in making such Base Rate
Committed Loans; PROVIDED, that such Base Rate Committed Loans shall be made
notwithstanding the Borrower's failure to comply with Section 5.2; and PROVIDED,
FURTHER, that if a Borrowing of Revolving Loans becomes legally impracticable
and if so required by the Swingline Bank at the time such Revolving Loans are
required to be made by the Banks in
41
<PAGE>
accordance with this subsection 2.14(e), each Bank agrees that in lieu of
making Revolving Loans as described in this subsection 2.14(e), such Bank
shall purchase a participation from the Swingline Bank in the applicable
Swingline Loans in an amount equal to such Bank's Pro Rata Share of such
Swingline Loans, and the procedures set forth in subsections 2.3(b) and
2.3(c) shall be followed in connection with the purchases of such
participations. Upon such purchases of participations the prepayment
requirements of subsection 2.14(d) shall be deemed waived with respect to
such Swingline Loans. The proceeds of such Base Rate Committed Loans, or
participations purchased, shall be applied to repay such Swingline Loans. A
copy of each notice given by the Administrative Agent to the Banks pursuant
to this subsection 2.14(e) with respect to the making of Revolving Loans, or
the purchases of participations, shall be promptly delivered by the
Administrative Agent to the Borrower. Each Bank's obligation in accordance
with this Agreement to make the Revolving Loans, or purchase the
participations, as contemplated by this subsection 2.14(e), shall be absolute
and unconditional and shall not be affected by any circumstance, including
(x) any set-off, counterclaim, recoupment, defense or other right which such
Bank may have against the Swingline Bank, the Borrower or any other Person
for any reason whatsoever; (y) the occurrence or continuance of a Default, an
Event of Default or a Material Adverse Effect; or (z) any other circumstance,
happening or event whatsoever, whether or not similar to any of the foregoing.
2.15 FEES.
(a) AGENCY FEES/BID FEES. The Borrower shall pay an agency fee and a
bid fee to the Administrative Agent for the Administrative Agent's own account,
as required by the letter agreements among the Borrower, the Arranger and the
Administrative Agent dated as of November 21, 1997, and March 16, 1998,
respectively (the "FEE LETTERS").
(b) COMMITMENT FEES. The Borrower shall pay to the Administrative
Agent for the account of each Bank a commitment fee on the actual daily unused
portion of such Bank's Revolving Commitment, computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter based upon the daily
utilization for that quarter as calculated by the Administrative Agent (Bid
Loans and Swingline Loans shall not constitute utilization), equal to such
unused portion as so calculated multiplied by the Applicable Commitment Fee
Percentage for such period. Such commitment fee shall accrue from the Closing
Date to the Revolving Termination Date and shall be due and payable quarterly in
arrears on the last Business Day of each quarter commencing on March 31, 1998
through the Revolving Termination Date, with the final payment to be made on the
Revolving Termination Date; PROVIDED that, in connection with any termination of
Revolving Commitments under Section 2.8, the accrued commitment fee calculated
for the period ending on such date shall also be paid on the date of such
termination. The commitment fees provided in this Section shall accrue at all
times after the Closing Date, including at any time during which one or more
conditions in Article V are not met.
42
<PAGE>
2.16 COMPUTATION OF FEES AND INTEREST.
(a) All computations of interest for Base Rate Committed Loans
when the Base Rate is determined by BofA's "reference rate" shall be made on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year).
Interest and fees shall accrue during each period during which interest or
such fees are computed from the first day thereof to the last day thereof.
(b) For purposes of determining utilization of each Bank's Revolving
Commitment in order to calculate the commitment fee due under subsection
2.15(b), the amount of any outstanding Canadian Dollar Loan on any date shall be
determined based upon the U.S. Dollar Equivalent Amount as of the most recent
Computation Date with respect to such Canadian Dollar Loan.
(c) Each determination of an interest rate or a U.S. Dollar
Equivalent Amount by the Administrative Agent shall be conclusive and binding on
the Borrower and the Banks in the absence of manifest error.
2.17 PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Administrative Agent
for the account of the Banks at the Administrative Agent's Payment Office, and
shall be made in U.S Dollars or, in the case of payments on account of Credit
Extensions denominated in Canadian dollars, Canadian dollars, and in immediately
available funds, no later than 11:00 a.m. (San Francisco time) on the date
specified herein. The Administrative Agent will promptly distribute to each
Bank its Pro Rata Share (or other applicable share as expressly provided herein)
of such payment in like funds as received. Any payment received by the
Administrative Agent later than 11:00 a.m. (San Francisco time) shall be deemed
to have been received on the following Business Day and any applicable interest
or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the Borrower
prior to the date on which any payment is due to the Banks that the Borrower
will not make such payment in full as and when required, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal
43
<PAGE>
to the amount then due such Bank. If and to the extent the Borrower has not
made such payment in full to the Administrative Agent, each Bank shall repay
to the Administrative Agent on demand such amount distributed to such Bank,
together with interest thereon at the Federal Funds Rate for each day from
the date such amount is distributed to such Bank until the date repaid.
2.18 PAYMENTS BY THE BANKS TO THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Bank will not make available as and when required hereunder to the
Administrative Agent for the account of the Borrower the amount of that Bank's
Pro Rata Share of the Borrowing, the Administrative Agent may assume that each
Bank has made such amount available to the Administrative Agent in immediately
available funds on the Borrowing Date and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Administrative Agent in
immediately available funds and the Administrative Agent in such circumstances
has made available to the Borrower such amount, that Bank shall on the Business
Day following such Borrowing Date make such amount available to the
Administrative Agent, together with interest at the Federal Funds Rate or, in
the case of any Borrowing consisting of Canadian Dollar Loans, the Overnight
Rate, for each day during such period. A notice of the Administrative Agent
submitted to any Bank with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Administrative Agent shall constitute such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Administrative Agent on the Business Day
following the Borrowing Date, the Administrative Agent will notify the Borrower
by the next succeeding Business Day of such failure to fund and, upon demand by
the Administrative Agent, the Borrower shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
interest thereon for each day elapsed since the date of such Borrowing, at a
rate per annum equal to the interest rate applicable at the time to the Loans
comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.19 SHARING OF PAYMENTS, ETC. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank
44
<PAGE>
to share the excess payment pro rata with each of them; PROVIDED, HOWEVER,
that if all or any portion of such excess payment is thereafter recovered
from the purchasing Bank, such purchase shall to that extent be rescinded and
each other Bank shall repay to the purchasing Bank the purchase price paid
therefor, together with an amount equal to such paying Bank's ratable share
(according to the proportion of (i) the amount of such paying Bank's required
repayment to (ii) the total amount so recovered from the purchasing Bank) of
any interest or other amount paid or payable by the purchasing Bank in
respect of the total amount so recovered. The Borrower agrees that any Bank
so purchasing a participation from another Bank may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off, but subject to Section 11.10) with respect to such participation as
fully as if such Bank were the direct creditor of the Borrower in the amount
of such participation. The Administrative Agent will keep records (which
shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
ARTICLE III
THE LETTERS OF CREDIT
3.1 THE LETTER OF CREDIT SUBFACILITY.
(a) On the terms and conditions set forth herein (i) the Issuing Bank
agrees, (A) from time to time on any Business Day during the period from the
Closing Date to the Revolving Termination Date to issue Letters of Credit for
the account of an L/C Borrower, and to amend or renew Letters of Credit
previously issued by it, in accordance with Sections 3.2(c) and 3.2(d), and
(B) to honor drafts under the Letters of Credit; and (ii) the Banks severally
agree to participate in Letters of Credit Issued for the account of an L/C
Borrower; PROVIDED, that the Issuing Bank shall not be obligated to Issue, and
no Bank shall be obligated to participate in, any Letter of Credit if as of the
date of and after giving effect to the Issuance of such Letter of Credit (the
"ISSUANCE DATE") (1) the Effective Amount of all Revolving Loans, L/C
Obligations, Swingline Loans and Bid Loans together exceeds (or would exceed)
the Aggregate Revolving Commitment, or (2) the participation of such Bank in the
Effective Amount of all L/C Obligations plus the Effective Amount of the
Revolving Loans of such Bank plus such Bank's Pro Rata Share of the Effective
Amount of all Swingline Loans exceeds (or would exceed) such Bank's Revolving
Commitment. Within the foregoing limits, and subject to the other terms and
conditions hereof, the Borrower's ability to obtain Letters of Credit shall be
fully revolving, and, accordingly, the Borrower may, during the foregoing
period, obtain Letters of Credit to replace Letters of Credit which have expired
or which have been drawn upon and reimbursed.
45
<PAGE>
(b) The Issuing Bank is under no obligation to Issue any Letter of
Credit if:
(i) any order, judgment or decree of any Governmental Authority
or arbitrator shall by its terms purport to enjoin or restrain the Issuing
Bank from Issuing such Letter of Credit, or any Requirement of Law
applicable to the Issuing Bank or any request or directive (whether or not
having the force of law) from any Governmental Authority with jurisdiction
over the Issuing Bank shall prohibit, or request that the Issuing Bank
refrain from, the Issuance of letters of credit generally or such Letter of
Credit in particular or shall impose upon the Issuing Bank with respect to
such Letter of Credit any restriction, reserve or capital requirement (for
which the Issuing Bank is not otherwise compensated hereunder) not in
effect on the Closing Date, or shall impose upon the Issuing Bank any
unreimbursed loss, cost or expense which was not applicable on the Closing
Date and which the Issuing Bank in good faith deems material to it;
(ii) the Issuing Bank has received written notice from any Bank,
the Administrative Agent or the Borrower, on or prior to the Business Day
prior to the requested date of Issuance of such Letter of Credit, that one
or more of the applicable conditions contained in Article V is not then
satisfied;
(iii) the expiry date of any requested Letter of Credit is
(A) more than one year after the date of Issuance, or (B) after the
Revolving Termination Date, unless all of the Banks have approved such
expiry date in writing;
(iv) the expiry date of any requested Letter of Credit is prior
to the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(v) any requested Letter of Credit does not provide for drafts,
or is not otherwise in form and substance acceptable to the Issuing Bank,
or the Issuance of a Letter of Credit shall violate any applicable policies
of the Issuing Bank;
(vi) any standby Letter of Credit is for the purpose of
supporting the issuance of any letter of credit by any other Person;
(vii) unless the Issuing Bank otherwise agrees, such Letter
of Credit is in a face amount less than $50,000 (other than the Existing
Letters of Credit that are in a face amount less than $50,000 and any
renewals thereof) or denominated in a currency other than Dollars or
Canadian dollars; or
(viii) the Issuing Bank is also the Administrative Agent and
the Administrative Agent shall have for any reason ceased to be the
Administrative Agent pursuant to Section 11.9, in which case any other Bank
may, upon the request or with the consent of the Borrower act as Issuing
Bank.
46
<PAGE>
3.2 ISSUANCE, AMENDMENT AND RENEWAL OF LETTERS OF CREDIT.
(a) Each Letter of Credit shall be issued upon the irrevocable
written request of the Borrower received by the Issuing Bank (with a copy sent
by the Borrower to the Administrative Agent) at least four days (or such shorter
time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of issuance. Each such request for
issuance of a Letter of Credit shall be by facsimile, confirmed immediately in
an original writing, in the form of an L/C Application, and shall specify in
form and detail satisfactory to the Issuing Bank: (i) the proposed date of
issuance of the Letter of Credit (which shall be a Business Day); (ii) the face
amount of the Letter of Credit; (iii) the expiry date of the Letter of Credit;
(iv) the name and address of the beneficiary thereof; (v) the documents to be
presented by the beneficiary of the Letter of Credit in case of any drawing
thereunder; (vi) the full text of any certificate to be presented by the
beneficiary in case of any drawing thereunder; (vii) the identity of the L/C
Borrower; and (viii) such other matters as the Issuing Bank may require.
(b) At least two Business Days prior to the Issuance of any Letter of
Credit, the Issuing Bank will confirm with the Administrative Agent (by
telephone or in writing) that the Administrative Agent has received a copy of
the L/C Application or L/C Amendment Application from the Borrower and, if not,
the Issuing Bank will provide the Administrative Agent with a copy thereof.
Unless the Issuing Bank has received notice on or before the Business Day
immediately preceding the date the Issuing Bank is to issue a requested Letter
of Credit from the Administrative Agent (A) directing the Issuing Bank not to
Issue such Letter of Credit because such Issuance is not then permitted under
Section 3.1(a) as a result of the limitations set forth in clauses (1) or (2)
thereof or Section 3.1(b)(ii); or (B) that one or more conditions specified in
Article V are not then satisfied; then, subject to the terms and conditions
hereof, the Issuing Bank shall, on the requested date, Issue a Letter of Credit
for the account of the applicable L/C Borrower in accordance with the Issuing
Bank's usual and customary business practices.
(c) From time to time while a Letter of Credit is outstanding and
prior to the Revolving Termination Date, the Issuing Bank will, upon the written
request of the Borrower received by the Issuing Bank (with a copy sent by the
Borrower to the Administrative Agent) at least four (4) days (or such shorter
time as the Issuing Bank may agree in a particular instance in its sole
discretion) prior to the proposed date of amendment, amend any Letter of Credit
issued by it. Each such request for amendment of a Letter of Credit shall be
made by facsimile, confirmed immediately in an original writing, made in the
form of an L/C Amendment Application and shall specify in form and detail
satisfactory to the Issuing Bank: (i) the Letter of Credit to be amended;
(ii) the proposed date of amendment of the Letter of Credit (which shall be a
Business Day); (iii) the nature of the proposed amendment; and (iv) such other
matters as the Issuing Bank may require. The Issuing Bank shall be under no
obligation to amend any Letter of Credit if: (A) the Issuing Bank would have no
obligation at such time to issue such Letter of Credit in its amended form under
the terms of this Agreement; or (B) the beneficiary of any such Letter of Credit
does not accept
47
<PAGE>
the proposed amendment to the Letter of Credit. The Administrative Agent
will promptly notify the Banks of the receipt by it of any L/C Application or
L/C Amendment Application.
(d) The Issuing Bank and the Banks agree that, while a Letter of
Credit is outstanding and prior to the Revolving Termination Date, at the option
of the Borrower and upon the written request of the Borrower received by the
Issuing Bank (with a copy sent by the Borrower to the Administrative Agent) at
least five days (or such shorter time as the Issuing Bank may agree in a
particular instance in its sole discretion) prior to the proposed date of
notification of renewal, the Issuing Bank shall be entitled to authorize the
automatic renewal of any Letter of Credit issued by it. Each such request for
renewal of a Letter of Credit shall be made by facsimile, confirmed immediately
in an original writing, in the form of an L/C Amendment Application, and shall
specify in form and detail satisfactory to the Issuing Bank: (i) the Letter of
Credit to be renewed; (ii) the proposed date of notification of renewal of the
Letter of Credit (which shall be a Business Day); (iii) the revised expiry date
of the Letter of Credit; and (iv) such other matters as the Issuing Bank may
require. The Issuing Bank shall be under no obligation so to renew any Letter
of Credit if: (A) the Issuing Bank would have no obligation at such time to
issue or amend such Letter of Credit in its renewed form under the terms of this
Agreement; or (B) the beneficiary of any such Letter of Credit does not accept
the proposed renewal of the Letter of Credit. If any outstanding Letter of
Credit shall provide that it shall be automatically renewed unless the
beneficiary thereof receives notice from the Issuing Bank that such Letter of
Credit shall not be renewed, and if at the time of renewal the Issuing Bank
would be entitled to authorize the automatic renewal of such Letter of Credit in
accordance with this subsection 3.2(d) upon the request of the Borrower but the
Issuing Bank shall not have received any L/C Amendment Application from the
Borrower with respect to such renewal or other written direction by the Borrower
with respect thereto, the Issuing Bank shall nonetheless be permitted to allow
such Letter of Credit to renew, and the Borrower and the Banks hereby authorize
such renewal, and, accordingly, the Issuing Bank shall be deemed to have
received an L/C Amendment Application from the Borrower requesting such renewal.
(e) The Issuing Bank may, at its election (or as required by the
Administrative Agent at the direction of the Majority Banks), deliver any
notices of termination or other communications to any Letter of Credit
beneficiary or transferee, and take any other action as necessary or
appropriate, at any time and from time to time, in order to cause the expiry
date of such Letter of Credit to be a date not later than the Revolving
Termination Date.
(f) This Agreement shall control in the event of any conflict with
any L/C-Related Document (other than any Letter of Credit).
(g) The Issuing Bank will also deliver to the Administrative Agent,
concurrently or promptly following its delivery of a Letter of Credit, or
amendment to or renewal of a Letter of Credit, to an advising bank or a
beneficiary, a true and complete copy of each such Letter of Credit or amendment
to or renewal of a Letter of Credit.
48
<PAGE>
3.3 EXISTING LETTERS OF CREDIT; RISK PARTICIPATIONS, DRAWINGS AND
REIMBURSEMENTS.
(a) On and after the Closing Date, the Existing Letters of Credit
shall be deemed for all purposes, including for purposes of the fees to be
collected pursuant to Sections 3.8(a) and 3.8(c), and reimbursement of costs and
expenses to the extent provided herein, Letters of Credit outstanding under this
Agreement and entitled to the benefits of this Agreement and the other Loan
Documents, and shall be governed by the applications and agreements pertaining
thereto and by this Agreement. Each Bank acknowledges and agrees that the
Existing Letters of Credit constitute Letters of Credit outstanding under this
Agreement on and as of the Closing Date. Each Bank shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank
on the Closing Date a participation in each such Letter of Credit and each
drawing thereunder in an amount equal to the product of (i) such Bank's Pro Rata
Share times (ii) the maximum amount available to be drawn under such Letter of
Credit and the amount of such drawing, respectively. The Existing Letters of
Credit shall be deemed to utilize pro rata the Revolving Commitment of each
Bank.
(b) Immediately upon the Issuance of each Letter of Credit in
addition to those described in Section 3.3(a), each Bank shall be deemed to, and
hereby irrevocably and unconditionally agrees to, purchase from the Issuing Bank
a participation in such Letter of Credit and each drawing thereunder in an
amount equal to the product of (i) the Pro Rata Share of such Bank, times
(ii) the maximum amount available to be drawn under such Letter of Credit and
the amount of such drawing, respectively. Each Issuance of a Letter of Credit
shall be deemed to utilize the Revolving Commitment of each Bank by an amount
equal to the amount of such participation.
(c) In the event of any request for a drawing under a Letter of
Credit by the beneficiary or transferee thereof, the Issuing Bank will promptly
notify the Borrower. The Borrower shall reimburse the Issuing Bank prior to
10:00 a.m. (San Francisco time), on each date that any amount is paid by the
Issuing Bank under any Letter of Credit (each such date, an "HONOR DATE"), in an
amount equal to the amount (and in the same currency) so paid by the Issuing
Bank. In the event the Borrower fails to reimburse the Issuing Bank for the
full amount of any drawing under any Letter of Credit by 10:00 a.m.
(San Francisco time) on the Honor Date, the Issuing Bank will promptly notify
the Administrative Agent and the Administrative Agent will promptly notify each
Bank thereof, and the Borrower shall be deemed to have requested that Base Rate
Committed Loans in an aggregate principal amount equal to the U.S. Dollar
Equivalent Amount of such unreimbursed drawing be made by each of the Banks to
be disbursed on the Honor Date under such Letter of Credit, subject to the
amount of the unutilized portion of the Aggregate Revolving Commitment and
subject to the conditions set forth in Section 5.2. Any notice given by the
Issuing Bank or the Administrative Agent pursuant to this subsection 3.3(c) may
be oral if immediately confirmed in writing (including by facsimile); provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.
49
<PAGE>
(d) Each Bank shall upon any notice pursuant to Section 3.3(c) make
available to the Administrative Agent for the account of the Issuing Bank an
amount in Dollars or Canadian dollars, as the case may be, and in immediately
available funds equal to its Pro Rata Share of the U.S. Dollar Equivalent Amount
of the drawing, whereupon the participating Banks shall (subject to
Section 3.3(e)) each be deemed to have made a Revolving Loan consisting of a
Base Rate Committed Loan or a Prime Rate Loan, as the case may be, to the
Borrower in that amount. If any Bank so notified fails to make available to the
Administrative Agent for the account of the Issuing Bank the amount of such
Bank's Pro Rata Share of the amount of the drawing by no later than 2:00 p.m.
(San Francisco time) on the Honor Date, then interest shall accrue on such
Bank's obligation to make such payment, from the Honor Date to the date such
Bank makes such payment, at a rate per annum equal to the Federal Funds Rate in
effect from time to time during such period. The Administrative Agent will
promptly give notice of the occurrence of the Honor Date, but failure of the
Administrative Agent to give any such notice on the Honor Date or in sufficient
time to enable any Bank to effect such payment on such date shall not relieve
such Bank from its obligations under this Section 3.3.
(e) With respect to any unreimbursed drawing that is not converted
into Revolving Loans consisting of Base Rate Committed Loans or Prime Rate Loans
to the Borrower in whole or in part, because of the Borrower's failure to
satisfy the conditions set forth in Section 5.2 or for any other reason, the
Borrower shall be deemed to have incurred from the Issuing Bank an L/C Borrowing
in the amount of such drawing, which L/C Borrowing shall be due and payable on
demand (together with interest) and shall bear interest at a rate per annum
equal to the Base Rate, PLUS two percent (2.00%), and each Bank's payment to the
Issuing Bank pursuant to Section 3.3(d) shall be deemed payment in respect of
its participation in such L/C Borrowing and shall constitute an L/C Advance from
such Bank in satisfaction of its participation obligation under this
Section 3.3.
(f) Each Bank's obligation in accordance with this Agreement to make
the Revolving Loans or L/C Advances, as contemplated by this Section 3.3, as a
result of a drawing under a Letter of Credit, shall be absolute and
unconditional and without recourse to the Issuing Bank and shall not be affected
by any circumstance, including (i) any set-off, counterclaim, recoupment,
defense or other right which such Bank may have against the Issuing Bank, the
Borrower, any guarantor or any other Person for any reason whatsoever; (ii) the
occurrence or continuance of a Default, an Event of Default or a Material
Adverse Effect; or (iii) any other circumstance, happening or event whatsoever,
whether or not similar to any of the foregoing; PROVIDED, HOWEVER, that without
limiting any Bank's obligation to make L/C Advances hereunder, each Bank's
obligation to make Revolving Loans under this Section 3.3 is subject to the
conditions set forth in Section 5.2.
3.4 REPAYMENT OF PARTICIPATIONS.
(a) Upon (and only upon) receipt by the Administrative Agent for
the account of the Issuing Bank of immediately available funds from the
Borrower (i) in reimbursement of any payment made by the Issuing Bank under
the Letter of Credit with
50
<PAGE>
respect to which any Bank has paid the Administrative Agent for the account
of the Issuing Bank for such Bank's participation in the Letter of Credit
pursuant to Section 3.3 or (ii) in payment of interest thereon, the
Administrative Agent will pay to each Bank, in like funds as those received
by the Administrative Agent for the account of the Issuing Bank, the amount
of such Bank's Pro Rata Share of such funds, and the Issuing Bank shall
receive and retain the amount of the Pro Rata Share of such funds of any Bank
that did not so pay the Administrative Agent for the account of the Issuing
Bank.
(b) If the Administrative Agent or the Issuing Bank is required at
any time to return to the Borrower, or to a trustee, receiver, liquidator,
custodian, or any official in any Insolvency Proceeding, any portion of the
payments made by the Borrower (or any other Person) to the Administrative Agent
for the account of the Issuing Bank pursuant to Section 3.4(a) in reimbursement
of a payment made under the Letter of Credit or interest or fee thereon, each
Bank shall, on demand of the Administrative Agent, forthwith return to the
Administrative Agent or the Issuing Bank the amount of its Pro Rata Share of any
amounts so returned by the Administrative Agent or the Issuing Bank plus
interest thereon from the date such demand is made to the date such amounts are
returned by such Bank to the Administrative Agent or the Issuing Bank, at a rate
per annum equal to the Federal Funds Rate in effect from time to time.
3.5 ROLE OF THE ISSUING BANK.
(a) Each Bank and the Borrower agree that, in paying any drawing
under a Letter of Credit, the Issuing Bank shall not have any responsibility to
obtain any document (other than any sight draft and certificates expressly
required by the Letter of Credit) or to ascertain or inquire as to the validity
or accuracy of any such document or the authority of the Person executing or
delivering any such document.
(b) No Agent-Related Person nor any of the respective correspondents,
participants or assignees of the Issuing Bank shall be liable to any Bank for:
(i) any action taken or omitted in connection herewith at the request or with
the approval of the Banks (including the Majority Banks, as applicable);
(ii) any action taken or omitted in the absence of gross negligence or willful
misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any L/C-Related Document.
(c) The Borrower hereby assumes all risks of the acts or omissions
of any beneficiary or transferee with respect to its use of any Letter of
Credit; PROVIDED, HOWEVER, that this assumption is not intended to, and shall
not, preclude the Borrower's pursuit of such rights and remedies as it may
have against the beneficiary or transferee at law or under any other
agreement. No Agent-Related Person, nor any of the respective
correspondents, participants or assignees of the Issuing Bank, shall be
liable or responsible for any of the matters described in clauses (i) through
(vii) of Section 3.6; PROVIDED, however, anything in such clauses to the
contrary notwithstanding, that the Borrower may have a claim against the
Issuing Bank, and the Issuing Bank may be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the
51
<PAGE>
Borrower which the Borrower proves were caused by the Issuing Bank's willful
misconduct or gross negligence or the Issuing Bank's willful failure to pay
under any Letter of Credit after the presentation to it by the beneficiary of
a sight draft and certificate(s) strictly complying with the terms and
conditions of a Letter of Credit. In furtherance and not in limitation of
the foregoing: (i) 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; and (ii) the Issuing
Bank shall not be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.
3.6 OBLIGATIONS ABSOLUTE. The obligations of the Borrower under this
Agreement and any L/C-Related Document to reimburse the Issuing Bank for a
drawing under a Letter of Credit, and to repay any L/C Borrowing and any drawing
under a Letter of Credit converted into Revolving Loans, shall be unconditional
and irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and each such other L/C-Related Document under all circumstances,
including the following:
(i) any lack of validity or enforceability of this Agreement,
any L/C-Related Document or other Loan Document;
(ii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the obligations of the Borrower in respect
of any Letter of Credit or any other amendment or waiver of or any consent
to departure from all or any of the L/C-Related Documents;
(iii) the existence of any claim, set-off, defense or other
right that an L/C Borrower may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuing Bank or any
other Person, whether in connection with this Agreement, the transactions
contemplated hereby or by the L/C-Related Documents or any unrelated
transaction;
(iv) any draft, demand, certificate 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; or any loss or delay in the transmission or
otherwise of any document required in order to make a drawing under any
Letter of Credit;
(v) any payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or certificate that does not strictly
comply with the terms of any Letter of Credit; or any payment made by the
Issuing Bank under any Letter of Credit to any Person purporting to be a
trustee in bankruptcy, debtor-in-possession, assignee for the benefit of
creditors, liquidator, receiver or other
52
<PAGE>
representative of or successor to any beneficiary or any transferee of
any Letter of Credit, including any arising in connection with any
Insolvency Proceeding;
(vi) any exchange, release or non-perfection of any collateral,
or any release or amendment or waiver of or consent to departure from any
other guarantee, for all or any of the obligations of the Borrower in
respect of any Letter of Credit;
(vii) any misapplication by the beneficiary of any Letter of
Credit of the proceeds of any drawing under such Letter of Credit; or
(viii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing, including any other circumstance
that might otherwise constitute a defense available to, or a discharge of,
the Borrower.
The availability of Letters of Credit hereunder for the account of L/C
Borrowers other than the Borrower is at the request and for the convenience
of the Borrower and shall in no way limit or otherwise affect the
Borrower's reimbursement and repayment obligations under this Agreement or
any L/C-Related Document.
3.7 CASH COLLATERAL PLEDGE. Upon (a) the request of the Administrative
Agent, (i) if the Issuing Bank has honored any full or partial drawing request
on any Letter of Credit and such drawing has resulted in an L/C Borrowing
hereunder, or (ii) if, as of the Revolving Termination Date, any Letters of
Credit may for any reason remain outstanding and partially or wholly undrawn, or
(b) the occurrence of the circumstances described in Section 2.11 requiring the
Borrower to Cash Collateralize Letters of Credit, then, the Borrower shall
immediately Cash Collateralize or cause to be Cash Collateralized the L/C
Obligations in an amount equal to such L/C Obligations. Such amount, when
received by the Administrative Agent, shall be held by the Administrative Agent
and maintained in blocked deposit accounts at BofA as Cash Collateral for
reimbursement obligations of the Borrower in respect of the L/C Obligations and
for the other Obligations. The Borrower hereby grants to the Administrative
Agent, for the benefit of the Administrative Agent, the Issuing Bank and the
Banks, a security interest in all such cash, deposit accounts and deposit
account balances. After payment in full of all L/C Obligations and the expiry
of all Letters of Credit, the proceeds of any Cash Collateral shall be used to
satisfy any other Obligations then outstanding, or, if (i) no other Obligations
are then outstanding, or (ii) the proceeds of any Cash Collateral shall exceed
the Obligations then outstanding, such proceeds or excess proceeds, as the case
may be, shall be returned to the Borrower upon the Borrower's written request to
the Administrative Agent, PROVIDED that no Default or Event of Default then
exists or would result therefrom. The Borrower shall execute and cause to be
executed such further agreements, documents and instruments and shall take and
cause to be taken such further actions in connection with such Cash
Collateralization as the Administrative Agent may reasonably request.
53
<PAGE>
3.8 LETTER OF CREDIT FEES.
(a) The Borrower shall pay to the Administrative Agent for the
account of each of the Banks a letter of credit fee based on the average daily
maximum amount available to be drawn on outstanding Letters of Credit at a rate
equal to (i) in the case of standby Letters of Credit, the Applicable Margin for
Offshore Rate Committed Loans, adjusted as provided in the definition of
"Applicable Margin," and (ii) in the case of commercial documentary Letters of
Credit, 1/2 of the Applicable Margin for Offshore Rate Committed Loans, adjusted
as provided in the definition of "Applicable Margin," each of which fee shall be
computed on a quarterly basis in arrears on the last Business Day of each
calendar quarter based upon Letters of Credit outstanding for that quarter as
calculated by the Administrative Agent. Such letter of credit fees shall be due
and payable quarterly in arrears on the last Business Day of each calendar
quarter during which Letters of Credit are outstanding, commencing on the first
such quarterly date to occur after the Closing Date, through the Revolving
Termination Date (or such later date upon which the outstanding Letters of
Credit shall expire), with the final payment to be made on the Revolving
Termination Date (or such later expiration date, if any).
(b) The Borrower shall pay to the Issuing Bank a letter of credit
fronting fee for each Letter of Credit Issued by the Issuing Bank as required
under the Fee Letters. Such Letter of Credit fronting fee shall be
non-refundable, due and payable quarterly in advance commencing on each date
of Issuance of a Letter of Credit.
(c) The Borrower shall pay to the Issuing Bank from time to time on
demand the normal issuance, presentation, amendment and other processing fees,
and other standard costs and charges, of the Issuing Bank relating to letters of
credit as from time to time in effect.
3.9 UNIFORM CUSTOMS AND PRACTICE. The Uniform Customs and Practice for
Documentary Credits as published by the International Chamber of Commerce most
recently at the time of issuance of any Letter of Credit shall (unless otherwise
expressly provided in the Letters of Credit) apply to the Letters of Credit.
ARTICLE IV
TAXES, YIELD PROTECTION AND ILLEGALITY
4.1 TAXES.
(a) Any and all payments by the Borrower to each Bank, or the
Administrative Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrower shall pay all Other Taxes.
54
<PAGE>
(b) If the Borrower shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Administrative Agent, then:
(i) the sum payable shall be increased as necessary so that,
after making all required deductions and withholdings (including deductions
and withholdings applicable to additional sums payable under this Section),
such Bank or the Administrative Agent, as the case may be, receives and
retains an amount equal to the sum it would have received and retained had
no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Borrower shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest is
paid, Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Borrower agrees to indemnify and hold harmless each Bank and
the Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Bank or the Administrative Agent makes
written demand therefor.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes, Other Taxes or Further Taxes, the Borrower shall furnish to each Bank or
the Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to such
Bank or the Administrative Agent.
(e) If the Borrower is required to pay any amount to any Bank or the
Administrative Agent pursuant to subsection (b) or (c) of this Section, then
such Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the sole and absolute judgment of such Bank is not
otherwise disadvantageous to such Bank.
4.2 ILLEGALITY.
55
<PAGE>
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office, to make Offshore Rate Committed
Loans or LIBOR Bid Loans, then, on notice thereof by the Bank to the Borrower
through the Administrative Agent, any obligation of that Bank to make Offshore
Rate Committed Loans or LIBOR Bid Committed Loans (including in respect of any
LIBOR Bid Loan as to which the Borrower has accepted such Bank's Competitive
Bid, but as to which the Borrowing Date has not arrived) shall be suspended
until the Bank notifies the Administrative Agent and the Borrower that the
circumstances giving rise to such determination no longer exist.
(b) If a Bank determines that it is unlawful for such Bank to
maintain any Offshore Rate Committed Loan or LIBOR Bid Loan, the Borrower shall,
upon its receipt of notice of such fact and demand from such Bank (with a copy
to the Administrative Agent), prepay in full such Offshore Rate Committed Loans
or LIBOR Bid Loans of that Bank then outstanding, together with interest accrued
thereon and amounts required under Section 4.4, either on the last day of the
Interest Period thereof, if the Bank may lawfully continue to maintain such
Offshore Rate Committed Loans or LIBOR Bid Loans to such day, or immediately, if
the Bank may not lawfully continue to maintain such Offshore Rate Committed
Loans or LIBOR Bid Loans. If the Borrower is required to so prepay any Offshore
Rate Committed Loan or LIBOR Bid Loan, then concurrently with such prepayment,
the Borrower shall borrow from the affected Bank, in the amount of such
repayment, a Base Rate Committed Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Committed Loans or LIBOR Bid Loans has been so terminated or suspended, the
Borrower may elect, by giving notice to the Bank through the Administrative
Agent, that all Loans which would otherwise be made by the Bank as Offshore Rate
Committed Loans or LIBOR Bid Loans shall be instead Base Rate Committed Loans.
4.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Bank determines that, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or
(ii) the compliance by that Bank 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 such Bank of agreeing to make or
making, funding or maintaining any Loans or participating in Letters of Credit,
or, in the case of the Issuing Bank, any increase in the cost to the Issuing
Bank of agreeing to Issue, Issuing or maintaining any Letter of Credit or of
agreeing to make or making, funding or maintaining any unpaid drawing under any
Letter of Credit, then the Borrower shall be liable for, and shall from time to
time, upon demand (with a copy of such demand to be sent to the Administrative
Agent), pay to the Administrative Agent for the account of such Bank or the
Issuing Bank, additional amounts as are sufficient to compensate such Bank or
such Issuing Bank for such increased costs.
56.
<PAGE>
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Revolving Commitment, loans, credits or obligations under
this Agreement, then, upon demand of such Bank to the Borrower through the
Administrative Agent, the Borrower shall immediately pay to the Bank, from time
to time as specified by the Bank, additional amounts sufficient to compensate
the Bank for such increase.
4.4 FUNDING LOSSES. The Borrower shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any Offshore Rate Committed Loan or LIBOR Bid Loan (including
after any acceleration thereof);
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.9;
(d) the prepayment (including pursuant to Section 2.11) or other
payment (including after acceleration thereof) of an Offshore Rate Committed
Loan, or LIBOR Bid Loan on a day that is not the last day of the relevant
Interest Period; or
(e) the conversion of any Offshore Rate Committed Loan or LIBOR Bid
Loan to a Base Rate Committed Loan on a day that is not the last day of the
relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Committed Loans or LIBOR
Bid Loans hereunder or from fees payable to terminate the deposits from which
such funds were obtained or from charges relating to any Canadian Dollar Loans.
For purposes of calculating amounts payable by the Borrower to the Banks under
this Section and under Section 4.3(a), each Offshore Rate Committed Loan or
LIBOR Bid Loan made by a Bank (and each related reserve, special deposit or
similar requirement) shall be conclusively deemed to have been funded at the
LIBO Rate or the Offshore Rate used in determining the interest rate for such
LIBOR Bid or
57.
<PAGE>
Offshore Rate Committed Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Offshore Rate Committed Loan is in fact so funded.
4.5 INABILITY TO DETERMINE RATES. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the LIBO Rate or the Offshore Rate for any requested Interest Period with
respect to a proposed LIBOR Bid Loan or Offshore Rate Committed Loan, or that
the LIBO Rate or the Offshore Rate applicable pursuant to Section 2.13(a) for
any requested Interest Period with respect to a proposed Offshore Rate Committed
Loan or LIBOR Bid Loan does not adequately and fairly reflect the cost to the
Banks of funding such Loan, the Administrative Agent will promptly so notify the
Borrower and each Bank. Thereafter, the obligation of the Banks to make or
maintain Offshore Rate Committed Loans or LIBOR Bid Loans hereunder shall be
suspended until the Administrative Agent upon the instruction of the Majority
Banks revokes such notice in writing. Upon receipt of such notice, the Borrower
may revoke any Notice of Borrowing or Notice of Conversion/Continuation then
submitted by it. If the Borrower does not revoke such notice, the Banks shall
make, convert or continue the Loans, as proposed by the Borrower, in the amount
specified in the applicable notice submitted by the Borrower, but such Loans
shall be made, converted or continued as Base Rate Committed Loans instead of
Offshore Rate Committed Loans or LIBOR Bid Loans. In the case of any Canadian
Dollar Loans, the Borrowing, conversion or continuation shall be in an aggregate
amount equal to the U.S. Dollar Equivalent Amount of the originally requested
Borrowing, conversion or continuation in Canadian dollars, and to that end any
outstanding Canadian Dollar Loans which are the subject of any such conversion
or continuation shall be redenominated and converted into Base Rate Committed
Loans in U.S. Dollars with effect from the last day of the Interest Period with
respect to any such Canadian Dollar Loans, and all conditions to such conversion
shall be deemed to have been satisfied.
4.6 CERTIFICATES OF BANKS. Any Bank claiming reimbursement or
compensation under this Article IV shall deliver to the Borrower (with a copy to
the Administrative Agent) a certificate setting forth in reasonable detail the
amount payable to the Bank hereunder and such certificate shall be conclusive
and binding on the Borrower in the absence of manifest error.
4.7 SURVIVAL. The agreements and obligations of the Borrower in this
Article IV shall survive the payment of all other Obligations.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS OF INITIAL CREDIT EXTENSION. The obligation of each Bank
(including the Issuing Bank) to make its initial Credit Extension hereunder and
to receive through the Administrative Agent the initial Competitive Bid Request
is subject to the condition that the
58.
<PAGE>
Administrative Agent shall have received on or before the Closing Date all of
the following, in form and substance satisfactory to the Administrative Agent
and each Bank, and in sufficient copies for each Bank:
(a) CREDIT AGREEMENT; NOTES. This Agreement, and, if requested by
any Bank, the Notes, each executed by each party thereto;
(b) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the respective boards of
directors of each Loan Party authorizing the transactions contemplated
hereby, certified as of the Closing Date by the Loan Party's Secretary or
an Assistant Secretary, respectively; and
(ii) A certificate of the Secretary or Assistant Secretary of
each Loan Party, certifying the names and true signatures of the officers
of such Loan Party authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be delivered by
it hereunder;
(c) ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the following
documents (except as provided under Section 11.19):
(i) the articles or certificate of incorporation and the bylaws
of each Loan Party or, if applicable, the partnership agreement, each as in
effect on the Closing Date, certified by the Secretary or Assistant
Secretary or general partner of each Loan Party as of the Closing Date; and
(ii) a good standing certificate from the Secretary of State (or
similar, applicable Governmental Authority) as of a recent date, and, if
requested by the Administrative Agent or any Bank, a bring-down certificate
by facsimile dated on or about the Closing Date;
(d) LEGAL OPINIONS. An opinion of Rothgerber, Appel, Powers &
Johnson LLP, counsel to the Borrower and the Guarantors and addressed to the
Administrative Agent and the Banks, substantially in the form of EXHIBIT D;
(e) CERTIFICATE. A certificate signed by a Responsible Officer of
each Loan Party, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article VI
are true and correct on and as of such date, as though made on and as of
such date;
(ii) no Default or Event of Default exists or would result from
the initial Credit Extension;
59.
<PAGE>
(iii) there has occurred since September 30, 1997, no event
or circumstance that has resulted or could reasonably be expected to result
in a Material Adverse Effect; and
(iv) in the case of the Borrower, the Borrower has received cash
proceeds of at least $147,436,000 in respect of the Intercompany
Subordinated Debt;
(f) TERMINATION OF EXISTING FACILITY. Evidence satisfactory to the
Administrative Agent confirming that if any principal, interest, fees, costs or
other amounts are outstanding under the Existing Facility, all such amounts have
been paid in full by the Closing Date or that the Revolving Loans borrowed by
the Borrower on the Closing Date will be used to repay such outstanding amounts,
and that the Existing Facility shall thereby terminate on the Closing Date;
(g) INTERCOMPANY SUBORDINATED DEBT DOCUMENTS. Copies of all
principal documents evidencing the Intercompany Subordinated Debt; and
(h) OTHER DOCUMENTS. Such other approvals, opinions, documents or
materials as the Administrative Agent or any Bank may reasonably request.
5.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Bank to
make any Committed Loan to be made by it and the obligation of any Bank to make
any Bid Loan as to which the Borrower has accepted the relevant Competitive Bid
(including its initial Loan) or to continue or convert any Committed Loan under
Section 2.4 (other than pursuant to Section 2.4(c)) and the obligation of the
Issuing Bank to Issue any Letter of Credit (including the initial Letter of
Credit) is subject to the satisfaction of the following conditions precedent on
the relevant Borrowing Date, Conversion/Continuation Date or Issuance Date:
(a) NOTICE; APPLICATION. In the case of any Borrowing or
continuation or conversion (other than pursuant to Section 2.4(c)), the
Administrative Agent shall have received (with, in the case of the initial Loan
only, a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable, and in the case of any Issuance of any
Letter of Credit, the Issuing Bank and the Administrative Agent shall have
received an L/C Application or L/C Amendment Application, as required under
Section 3.2;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in Article VI shall be true and correct on and as
of such Borrowing Date, Conversion/Continuation Date or Issuance Date with the
same effect as if made on and as of such Borrowing Date, Conversion/Continuation
Date or Issuance Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date); and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Credit Extension or continuation or conversion.
60.
<PAGE>
Each Notice of Borrowing, Notice of Conversion/Continuation, L/C Application
or L/C Amendment Application and Competitive Bid Request submitted by the
Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice and as of each
Borrowing Date, Conversion/Continuation Date or Issuance Date, as applicable,
that the conditions in this Section 5.2 are satisfied.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
The Borrower and each other Loan Party represents and warrants to the
Administrative Agent and each Bank that:
6.1 CORPORATE EXISTENCE AND POWER. Each Loan Party:
(a) is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, organization or formation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation or partnership and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license except to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect; and
(d) is in compliance with all Requirements of Law except to the
extent that the failure to comply could not reasonably be expected to have a
Material Adverse Effect.
6.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by each Loan Party of this Agreement and each other Loan
Document to which each Loan Party is party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of such Loan Party's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which any Loan Party is a party or any order, injunction, writ
or decree of any Governmental Authority to which any Loan Party or its
property is subject; or
61.
<PAGE>
(c) violate any Requirement of Law.
6.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Loan Party of
this Agreement or any other Loan Document.
6.4 BINDING EFFECT. This Agreement and each other Loan Document to which
any of the Loan Parties is a party constitute the legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
6.5 LITIGATION. Except as specifically disclosed in SCHEDULE 6.5, there
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Loan Parties, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against any Loan Party, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to any Loan Party or its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order or any order of any nature has been issued by
any court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
6.6 NO DEFAULT. No Default or Event of Default exists or would result
from the incurring of any Obligations by any Loan Party. As of the Closing
Date, none of the Loan Parties nor any of their Subsidiaries is in default under
or with respect to any Contractual Obligation in any respect which, individually
or together with all such defaults, could reasonably be expected to have a
Material Adverse Effect, or that would, if such default had occurred after the
Closing Date, create an Event of Default under Section 9.1(e).
6.7 ERISA COMPLIANCE.
(a) As of the Closing Date, each Plan is in compliance with the
applicable provisions of ERISA, the Code and other federal or state law except
to the extent to which the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. Each Plan which is intended to qualify under
subsection 401(a) of the Code has received a favorable determination letter from
the IRS and to the best knowledge of each Loan Party, nothing has occurred which
would cause the loss of such qualification. As of the Closing
62.
<PAGE>
Date, each Loan Party and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any Plan.
(b) As of the Closing Date, there are no pending or, to the best
knowledge of each Loan Party, threatened claims, actions or lawsuits, or action
by any Governmental Authority, with respect to any Plan which has had or could
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, there has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
(c) As of the Closing Date, (i) no ERISA Event has occurred or is
reasonably expected to occur; and (ii) no event or circumstance has occurred or
exists that, if such event or circumstance had occurred or arisen after the
Closing Date, would create an Event of Default under Section 9.1(h).
6.8 USE OF PROCEEDS; MARGIN REGULATIONS. The proceeds of the Loans are to
be used solely for the purposes set forth in and permitted by Section 7.11 and
Section 8.7. None of the Loan Parties nor any Subsidiary of a Loan Party is
generally engaged in the business of purchasing or selling Margin Stock or
extending credit for the purpose of purchasing or carrying Margin Stock.
6.9 TITLE TO PROPERTIES. Each Loan Party and each Subsidiary of a Loan
Party has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
respective businesses, except for such defects in title as could not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. As of the Closing Date, the property of the Loan Parties and
their respective Subsidiaries is subject to no Liens, other than Permitted
Liens.
6.10 TAXES. The Loan Parties and their respective Subsidiaries have filed
all Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
any Loan Party or any Subsidiary of a Loan Party that would, if made, have a
Material Adverse Effect.
6.11 FINANCIAL CONDITION.
(a) The audited consolidated financial statements of the Borrower and
its Subsidiaries dated September 30, 1997, and the related consolidated
statements of income or operations, shareholders' equity and cash flows for the
fiscal year ended on that date:
63.
<PAGE>
(i) were prepared in accordance with GAAP;
(ii) fairly present the financial condition of the Borrower and
its Subsidiaries as of the date thereof and results of operations for the
period covered thereby; and
(iii) except as specifically disclosed in SCHEDULE 6.11, show
all material indebtedness and other liabilities, direct or contingent, of
the Borrower and its consolidated Subsidiaries as of the date hereof,
including liabilities for taxes, material commitments and Contingent
Obligations required to be disclosed in accordance with GAAP.
(b) Since September 30, 1997 (assuming that this Agreement were in
effect on such date and thereafter), there has been no Material Adverse Effect.
6.12 ENVIRONMENTAL MATTERS. Each Loan Party conducts in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on its business, operations and properties, and as
a result thereof each Loan Party has reasonably concluded that, except as
specifically disclosed in SCHEDULE 6.12, such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
6.13 REGULATED ENTITIES. No Loan Party, nor any Person controlling any
Loan Party, nor any Subsidiary of a Loan Party, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. No Loan Party is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.
6.14 NO BURDENSOME RESTRICTIONS. None of the Loan Parties nor any
Subsidiary of a Loan Party is a party to or bound by any Contractual Obligation,
or subject to any restriction in any Organization Document, or any Requirement
of Law, which could reasonably be expected to have a Material Adverse Effect.
6.15 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. To the best of
each Loan Party's knowledge, each Loan Party or its Subsidiaries own or are
licensed or otherwise have the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, authorizations
and other rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other Person. To
the best knowledge of each Loan Party, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Loan Party or any Subsidiary of any Loan
Party infringes upon any rights held by any other Person. Except as
specifically disclosed in SCHEDULE 6.5, no claim or litigation regarding any of
the foregoing is pending or threatened, and no patent, invention, device,
application, principle or any statute, law, rule, regulation, standard or code
is pending
64.
<PAGE>
or, to the knowledge of each Loan Party, proposed, which, in either case,
could reasonably be expected to have a Material Adverse Effect.
6.16 SUBSIDIARIES. As of the Closing Date, no Loan Party has any
Subsidiaries other than those specifically disclosed in part (a) of
SCHEDULE 6.16 hereto, which shows the form of organization and ownership of each
such corporation, and has no equity investments in any other corporation or
entity other than those specifically disclosed in part (b) of SCHEDULE 6.16.
Except as disclosed on SCHEDULE 6.16, each Subsidiary is a Wholly Owned
Subsidiary of the Borrower.
6.17 INSURANCE. Except as specifically disclosed in SCHEDULE 6.17, the
properties of the Loan Parties and their respective Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of any
Loan Party, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where any Loan Party or such Subsidiary
operates.
6.18 SWAP OBLIGATIONS. None of the Loan Parties nor any of its
Subsidiaries has incurred any outstanding obligations under any Swap Contracts,
other than Permitted Swap Obligations. Each Loan Party has voluntarily entered
into each Swap Contract to which it is a party based upon its own independent
assessment of its consolidated assets, liabilities and commitments, in each case
as an appropriate means of mitigating and managing risks associated with such
matters, and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.
6.19 FULL DISCLOSURE. To the best knowledge after due inquiry of any
Responsible Officer of any of the Loan Parties, none of the representations or
warranties made by any Loan Party or any Subsidiary in the Loan Documents as of
the date such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of any Loan Party or any Subsidiary of any Loan Party
in connection with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of any Loan Party to the Banks prior to the
Closing Date), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.
65.
<PAGE>
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Bank shall have any Revolving Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:
7.1 FINANCIAL STATEMENTS. The Borrower shall deliver to the
Administrative Agent, in form and detail satisfactory to the Administrative
Agent and the Majority Banks, with sufficient copies for each Bank:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year, a copy of the audited consolidated and consolidating
balance sheets of the Parent and its Subsidiaries as at the end of such year and
the related consolidated and consolidating statements of income or operations,
shareholders' equity and cash flows for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, and accompanied by
the opinion of Deloitte and Touche or another nationally recognized independent
public accounting firm ("INDEPENDENT AUDITOR") which report shall state that
such consolidated and consolidating financial statements present fairly the
financial position for the periods indicated in conformity with GAAP applied on
a basis consistent with prior years, and together with SEC Form 10K's for each
Subsidiary required to file such form with the SEC. The Independent Auditor's
opinion shall not be qualified or limited because of a restricted or limited
examination by the Independent Auditor of any material portion of the Parent's
or any Subsidiary's records; and
(b) as soon as available and in any event within 45 days after the
end of each fiscal quarter, a copy for the immediately preceding fiscal quarter
of the unaudited consolidated balance sheets of the Parent and its Subsidiaries
as of the end of such quarter and the related consolidated statements of income,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, and certified by a Responsible
Officer as fairly presenting, in accordance with GAAP (subject to ordinary, good
faith year-end audit adjustments), the financial position and the results of
operations of the Parent and the Subsidiaries, together with SEC Form 10Q's for
each Subsidiary required to file such form with the SEC.
7.2 CERTIFICATES; OTHER INFORMATION. The Borrower shall furnish to the
Administrative Agent, with sufficient copies for each Bank:
(a) concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) and (b), a Compliance Certificate executed by a
Responsible Officer;
(b) except for SEC Forms 10K and 10Q to be delivered pursuant to
Sections 7.1(a) and (b), promptly, and in any event no later than 10 days after
the same is made available to the Borrower's or any Subsidiaries' shareholders
or is filed with the SEC,
66.
<PAGE>
copies of all financial statements and reports that the Borrower or any
Subsidiary sends to its shareholders, and copies of all financial statements
and regular, periodical or special reports that each the Borrower or any
Subsidiary may make to, or file with, the SEC;
(c) upon the request from time to time of the Administrative Agent,
the Swap Termination Values, together with a description of the method by which
such values were determined, relating to any then-outstanding Swap Contracts to
which the Borrower or any of its Subsidiaries is party; and
(d) promptly, such additional information regarding the business,
financial or corporate affairs of the Parent, the Borrower or any Subsidiary as
the Administrative Agent, at the request of any Bank, may from time to time
reasonably request.
7.3 NOTICES. The Loan Parties shall promptly notify the Administrative
Agent and each Bank of:
(a) the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;
(b) any matter that has resulted or could reasonably result in a
Material Adverse Effect, including: (i) breach or non-performance of, or any
default under, a Contractual Obligation of any Loan Party or any Subsidiary of a
Loan Party; (ii) any dispute, litigation, investigation, proceeding or
suspension between any Loan Party or any Subsidiary of a Loan Party and any
Governmental Authority; (iii) the commencement of, or any material development
in, any litigation or proceeding affecting any Loan Party or any Subsidiary of a
Loan Party, including pursuant to any applicable Environmental Laws; or (iv) the
imposition of any fine or penalty by any Governmental Authority against or with
respect to any facility or plants of any Loan Party or any Subsidiary of a Loan
Party;
(c) the occurrence of any of the following events affecting any Loan
Party or any ERISA Affiliate (but in no event more than 10 days after such
event), and deliver to the Administrative Agent and each Bank a copy of any
notice with respect to such event that is filed with a Governmental Authority
and any notice delivered by a Governmental Authority to any Loan Party or any
ERISA Affiliate with respect to such event:
(i) an ERISA Event;
(ii) an increase in the Unfunded Pension Liability of any Pension
Plan, including as a result of the adoption of any amendment to a Plan
subject to Section 412 of the Code, that could reasonably be likely to
cause or result in an Event of Default under Section 9.1(h); or
67.
<PAGE>
(iii) the adoption of, or the commencement of contributions
to, any Plan subject to Section 412 of the Code by any Loan Party or any
ERISA Affiliate other than any such Plan in effect and receiving
contributions as of the Closing Date.
(d) any Acquisition, or the incurrence of any Contractual Obligations
with respect to any Acquisition, by the Borrower or any Subsidiary of the
Borrower, if the aggregate cash and noncash consideration (including assumption
of liabilities and including all Contingent Obligations, but excluding normal
current liabilities incurred by the Borrower or such Subsidiary by its
assumption of the working capital position of the acquired Person) in connection
with such Acquisition is (or could reasonably be expected to become) $10,000,000
or more; and
(e) any Change of Control or any event or circumstance that is
reasonably likely to result in any Change of Control.
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action any Loan Party or any affected
Subsidiary of any Loan Party proposes to take with respect thereto and at what
time. Each notice under subsection 7.3(a) shall describe with particularity any
and all clauses or provisions of this Agreement or other Loan Document that have
been (or foreseeably will be) breached or violated. Each notice under
subsection 7.3(d) shall be accompanied by the most recent fiscal year-end
financial statements and, if available, such other interim financial statements
of the acquired Person.
7.4 PRESERVATION OF CORPORATE AND PARTNERSHIP EXISTENCE, ETC. Each Loan
Party (other than the Parent) shall, and shall cause each of its Subsidiaries
to:
(a) (i) preserve and maintain in full force and effect (A) its
corporate or partnership existence, as the case may be, and good standing under
the laws of its state or jurisdiction of incorporation or organization, and
(B) all governmental rights, privileges, qualifications, permits, licenses and
franchises necessary or desirable in the normal conduct of its business; and
(ii) use reasonable efforts, in the ordinary course of business, to preserve its
business organization and goodwill; PROVIDED, HOWEVER, that the foregoing shall
not prevent any transaction permitted by Section 8.2 or 8.3, or the termination
of the existence of any Subsidiary (other than the Borrower) if, in the opinion
of the Board of Directors of the Borrower such termination is in the best
interest of the Borrower and is not otherwise prohibited by this Agreement; and
(b) preserve or renew and maintain all of its registered patents,
trademarks, trade names and service marks and other intellectual property
assets, the nonpreservation or nonmaintenance of which could reasonably be
expected to have a Material Adverse Effect.
7.5 MAINTENANCE OF PROPERTY. The Loan Parties (other than the Parent)
shall maintain, and shall cause each of its Subsidiaries to maintain and
preserve all its property which is used or useful in its business in good
working order and condition, ordinary wear
68.
<PAGE>
and tear excepted, and make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect. Each Loan Party (other than
the Parent) shall use the standard of care typical in the industry in the
operation and maintenance of its facilities.
7.6 INSURANCE. Each Loan Party shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable independent
insurers, insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in the same
or similar business, of such types and in such amounts as are customarily
carried under similar circumstances by such other Persons.
7.7 PAYMENT OF OBLIGATIONS. Each Loan Party (other than the Parent)
shall, and shall cause each of its Subsidiaries to, pay and discharge as the
same shall become due and payable, all their respective material obligations and
liabilities, including:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same are being
contested in good faith by appropriate proceedings and adequate reserves in
accordance with GAAP are being maintained by such Loan Party or such Subsidiary;
(b) all lawful material claims which, if unpaid, would by law become
a Lien upon its property; and
(c) all Indebtedness, as and when due and payable (but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness), unless contested in good faith by appropriate proceedings
and adequate reserves in accordance with GAAP are being maintained by such Loan
Party or such Subsidiary, except to the extent that the nonpayment thereof would
not result in or reasonably be expected to result in a Material Adverse Effect.
7.8 COMPLIANCE WITH LAWS. Each of the Loan Parties shall comply, and
shall cause each of its Subsidiaries to comply, in all respects with all
Requirements of Law of any Governmental Authority having jurisdiction over it or
its business or properties (including the Federal Fair Labor Standards Act),
unless such noncompliance is being contested in good faith by appropriate
proceedings and adequate reserves in accordance with GAAP are being maintained
by such Loan Party or such Subsidiary with respect thereto, except to the extent
any such noncompliance, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
7.9 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. Each of the Loan
Parties (other than the Parent) shall maintain and shall cause each of its
Subsidiaries to maintain proper books of record and account, in which full, true
and correct entries in conformity with GAAP shall be made of all financial
transactions and matters involving the assets and business of such Loan Party
and such Subsidiary. Each of the Loan Parties (other than the Parent) shall
permit, and shall cause each of its Subsidiaries to permit, representatives and
independent
69.
<PAGE>
contractors of the Administrative Agent or any Bank to visit and inspect any
of their respective properties, to examine their respective corporate,
financial and operating records, and make copies thereof or abstracts
therefrom, and to discuss their respective affairs, finances and accounts
with their respective directors, officers, and independent public accountants
at such reasonable times during normal business hours and as often as may be
reasonably desired, upon reasonable advance notice to such Loan Parties;
PROVIDED, HOWEVER, when an Event of Default exists the Administrative Agent
or any Bank may do any of the foregoing at the expense of such Loan Parties
at any time during normal business hours and without advance notice.
7.10 ENVIRONMENTAL LAWS. Each Loan Party shall, and shall cause each of
its Subsidiaries to, conduct its operations and keep and maintain its property
in compliance with all Environmental Laws, if any noncompliance, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
7.11 USE OF PROCEEDS. The Borrower shall use the proceeds of the Loans for
working capital, other general corporate purposes and for nonhostile, invited
Acquisitions, in each case not in contravention of any Requirement of Law or of
any Loan Document; PROVIDED, HOWEVER, that the Borrower shall not directly or
indirectly use the proceeds of the Loans for any Acquisition of any Person if
such Acquisition has not been approved by the board of directors (or other body
exercising similar authority) of such Person.
7.12 ADDITIONAL GUARANTIES. The Borrower agrees to cause each Material
Subsidiary established, created, arising or acquired to promptly execute and
deliver a guaranty of all Obligations in form and substance satisfactory to the
Administrative Agent.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Bank shall have any Revolving Commitment hereunder, or any
Loan or other Obligation shall remain unpaid or unsatisfied, unless the Majority
Banks waive compliance in writing:
8.1 LIMITATION ON LIENS. The Loan Parties (other than the Parent) shall
not, and shall not suffer or permit any of their Subsidiaries to, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property, whether now owned or hereafter acquired,
other than the following ("PERMITTED LIENS"):
(a) any Lien existing on property of any of such Loan Party or any of
its respective Subsidiaries on the Closing Date securing Indebtedness
outstanding on the Closing Date and disclosed in SCHEDULE 8.1(a);
70.
<PAGE>
(b) any Lien created under any Loan Document or the Equipment Lease
Facility Documents or pursuant to Permitted Receivables Purchase Facilities
permitted hereunder;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the extent
that nonpayment thereof is permitted by Section 7.7(a), provided that no notice
of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of business
which are not delinquent or remain payable without penalty or which are being
contested in good faith and by appropriate proceedings, which proceedings have
the effect of preventing the forfeiture or sale of the property subject thereto;
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in connection
with workers' compensation, unemployment insurance and other social security
legislation;
(f) Liens on the property of any such Loan Party or its Subsidiaries
securing (i) the nondelinquent performance of bids, trade contracts (other than
for borrowed money), leases, statutory obligations, (ii) contingent obligations
on surety and appeal bonds, and (iii) other nondelinquent obligations of a like
nature; in each case, incurred in the ordinary course of business;
(g) Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
liens in the aggregate at any time outstanding for the Loan Parties and their
respective Subsidiaries do not exceed $2,500,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or interfere
with the ordinary conduct of the businesses of the Loan Parties and their
respective Subsidiaries;
(i) Liens on assets acquired after the date of this Agreement as
permitted by Section 8.4(e); PROVIDED, HOWEVER, that such Liens existed at the
time the respective assets were acquired and were not created in anticipation
thereof;
(j) purchase money security interests on any property acquired or
held by any of the Loan Parties or their respective Subsidiaries in the ordinary
course of business, securing Indebtedness incurred or assumed for the purpose of
financing all or any part of the cost of acquiring such property; PROVIDED THAT
(i) any such Lien attaches to such property concurrently with or within 20 days
after the acquisition thereof, (ii) such Lien attaches solely
71.
<PAGE>
to the property so acquired in such transaction, (iii) the principal amount
of the Indebtedness secured thereby does not exceed 100% of the cost of such
property, (iv) the principal amount of the Indebtedness secured by any and
all such purchase money security interests shall not at any time exceed,
together with Indebtedness permitted under Section 8.5(c), $15,000,000; and
(v) no Default or Event of Default then exists or would result therefrom;
(k) Liens securing obligations in respect of capital leases on assets
subject to such leases, provided that such capital leases are otherwise
permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights and
remedies as to deposit accounts or other funds maintained with a creditor
depository institution; PROVIDED THAT (i) such deposit account is not a
dedicated cash collateral account and is not subject to restrictions against
access by any of the Loan Parties in excess of those set forth by regulations
promulgated by the FRB, and (ii) such deposit account is not intended by any of
the Loan Parties or any of their respective Subsidiaries to provide collateral
to the depository institution; and
(m) Liens arising pursuant to Section 412(n) of the Code or
Section 4069(a) of ERISA if (i) the delinquent payments to which the Lien
relates are made within ten (10) days after any Loan Party or any Subsidiary of
any Loan Party learns of the failure to make payment or (ii) the obligation to
make such payments is being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Loan Party in accordance with GAAP.
8.2 DISPOSITION OF ASSETS. The Loan Parties (other than the Parent) shall
not, and shall not suffer or permit any of their Subsidiaries to, directly or
indirectly, sell, assign, lease, convey, transfer or otherwise dispose of
(whether in one or a series of transactions) any property (including accounts
and notes receivable, with or without recourse) or enter into any agreement to
do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to the
purchase price of such replacement equipment;
(c) sales or assignments of undivided percentage interests in certain
accounts receivable pursuant to Permitted Receivables Purchase Facilities, so
long as the aggregate financing amount payable from such accounts receivable
does not exceed $150,000,000; and
(d) dispositions not otherwise permitted hereunder which are made for
fair market value (including sales pursuant to sale-leaseback transactions);
PROVIDED THAT (i) at the
72.
<PAGE>
time of any disposition, no Default or Event of Default shall exist or shall
result from such disposition, (ii) the aggregate sales price from such
disposition shall be paid in cash, and (iii) the aggregate value of all
assets so sold by the Loan Parties and their respective Subsidiaries,
together, shall not exceed in any 12-month period ten percent (10%) of
Consolidated Total Assets as of the end of the immediately preceding fiscal
year.
8.3 CONSOLIDATIONS AND MERGERS. The Loan Parties (other than the Parent)
shall not, and shall not suffer or permit any of their Subsidiaries to, merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to or in favor of
any Person, except:
(a) any Subsidiary may merge with the Borrower, provided that the
Borrower shall be the continuing or surviving corporation, or with any one or
more Subsidiaries, provided that if any transaction shall be between a
Subsidiary and a Wholly Owned Subsidiary, the Wholly Owned Subsidiary shall be
the continuing or surviving corporation;
(b) any Subsidiary may sell all or substantially all of its assets
(upon voluntary liquidation or otherwise), to the Borrower; and
(c) Acquisitions by the Borrower or its Subsidiaries which are
consummated as a merger and which are otherwise permitted by Section 8.4(e).
8.4 LOANS AND INVESTMENTS. The Loan Parties (other than the Parent) shall
not purchase or acquire, or suffer or permit any of their Subsidiaries to
purchase or acquire, or make any commitment therefor, any capital stock, equity
interest, or any obligations or other securities of, or any interest in, any
Person, or make or commit to make any Acquisitions, or make or commit to make
any advance, loan, extension of credit or capital contribution to or any other
investment in, or joint venture with, any Person including any Affiliate of any
of the Loan Parties (together, "INVESTMENTS"), except for:
(a) Investments held by a Loan Party or its Subsidiaries in the form
of cash equivalents or short term marketable securities;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business of a Loan Party or its Subsidiaries;
(c) Investments not otherwise prohibited by this Agreement or any of
the other Loan Documents by a Loan Party or its Subsidiaries in a Loan Party
(other than the Parent) or its Subsidiaries;
73.
<PAGE>
(d) extensions of credit by a Loan Party or its Subsidiaries to any
of their respective Wholly Owned Subsidiaries, or by any of such Wholly Owned
Subsidiaries to another such Wholly Owned Subsidiary;
(e) Investments not otherwise permitted pursuant to subsections (a),
(b), (c) or (d) of this Section in, or Acquisitions of, Persons not Subsidiaries
of a Loan Party, or the assets of such Persons, engaged in other lines of
business substantially similar or related to the lines of business of the
Borrower or its Subsidiaries, PROVIDED THAT at the time of any such Investment
or Acquisition and at the time that a Loan Party or its Subsidiary incurs any
Contractual Obligation with respect to any such Investment or Acquisition:
(i) no Default or Event of Default shall have occurred and be
continuing or result therefrom; and
(ii) assuming that such Investment or Acquisition had occurred on
the first day of the calculation period for each covenant set forth in
Sections 8.13, 8.14 and 8.15, the Borrower would have been in compliance
with said covenants as of the end of the most recent fiscal quarter after
giving effect to such Investment or Acquisition; and
PROVIDED, FURTHER, that any such Investment or Acquisition of any such Person or
the assets of such Person shall (A) result in such Person becoming a Wholly
Owned Subsidiary of a Loan Party or its Subsidiaries, or (B) result in such
Person or the assets of such Person being subsumed by (1) a Loan Party, or (2) a
Subsidiary of a Loan Party.
(f) Investments constituting Permitted Swap Obligations or payments
or advances under Swap Contracts relating to Permitted Swap Obligations; and
(g) additional Investments after the Closing Date not to exceed, on
any date of determination, an amount equal to $40,000,000 plus 50% of the
increase in the Consolidated Net Worth of the Borrower and its Subsidiaries from
the Closing Date to the last day of the fiscal quarter most recently ended for
which financial statements have been delivered to the Administrative Agent;
PROVIDED that no Default or Event of Default shall have occurred and be
continuing or result therefrom.
8.5 LIMITATION ON INDEBTEDNESS. The Loan Parties (other than the Parent)
shall not, and shall not suffer or permit any Subsidiary to, create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement;
(b) Indebtedness existing on the Closing Date and set forth in
SCHEDULE 8.5(b) and any extensions and renewals of such Indebtedness on terms
otherwise permitted pursuant to this Agreement, so long as the principal amount
is not increased,
74.
<PAGE>
additional collateral is not given and unsecured Indebtedness is not made
secured Indebtedness;
(c) Indebtedness secured by Liens permitted by Section 8.1(j) in an
aggregate amount outstanding not to exceed $15,000,000;
(d) Indebtedness owing by any Loan Party to any other Loan Party
(other than the Parent) (including Intercompany Subordinated Debt) that is not
otherwise prohibited by this Agreement or any of the other Loan Documents;
(e) Indebtedness arising as a consequence of extensions of credit
permitted under Section 8.4(d) and Investments permitted pursuant to
Section 8.4(e);
(f) Indebtedness of the Borrower and its Subsidiaries owing under the
Senior Subordinated Note Documents or any refinancing of such Indebtedness with
other subordinated Indebtedness on terms satisfactory to the Majority Banks;
(g) Indebtedness owing in connection with Permitted Receivables
Purchase Facilities permitted under Section 8.2(c);
(h) Indebtedness incurred pursuant to the Equipment Lease Facility
Documents in an aggregate amount not to exceed $60,000,000;
(i) liabilities of the Borrower in respect of unfunded vested
benefits under any Plan to the extent that the existence of such liabilities
will not constitute, cause or result in a Default or Event of Default;
(j) Indebtedness owing under any seller financing arrangements to the
extent otherwise permitted under Sections 8.1 and 8.8;
(k) Indebtedness owing under the Supremex Credit Agreement;
(l) additional unsecured Indebtedness of non-Material Subsidiaries
and Subsidiaries not located in the United States not exceeding $50,000,000 in
the aggregate at any time outstanding; and
(m) additional unsecured Indebtedness of the Borrower and Material
Subsidiaries; provided that no Event of Default exists or would result from the
incurrence of such additional unsecured Indebtedness.
8.6 TRANSACTIONS WITH AFFILIATES. The Loan Parties (other than the
Parent) shall not, and shall not suffer or permit any of their Subsidiaries to,
enter into any transaction with any Affiliate of such Loan Party, except upon
fair and reasonable terms no less favorable to such Loan Party or such
Subsidiary than would obtain in a comparable arm's-length transaction with a
Person not an Affiliate of such Loan Party or such Subsidiary.
75.
<PAGE>
8.7 USE OF PROCEEDS.
(a) The Borrower shall not, and shall not suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly,
(i) to purchase or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Borrower or any Subsidiary or any other Person incurred to
purchase or carry Margin Stock, or (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock.
(b) The Borrower shall not, directly or indirectly, use any portion
of the Loan proceeds (i) knowingly to purchase Ineligible Securities from the
Arranger during any period in which the Arranger makes a market in such
Ineligible Securities, (ii) knowingly to purchase during the underwriting or
placement period Ineligible Securities being underwritten or privately placed by
the Arranger, or (iii) to make payments of principal or interest on Ineligible
Securities underwritten or privately placed by the Arranger and issued by or for
the benefit of any of the Borrower or any Affiliate of the Borrower. The
Arranger is a registered broker-dealer and permitted to underwrite and deal in
certain Ineligible Securities; and "INELIGIBLE SECURITIES" means securities
which may not be underwritten or dealt in by member banks of the Federal Reserve
System under Section 16 of the Banking Act of 1933 (12 U.S.C. Section 24,
Seventh), as amended.
8.8 CONTINGENT OBLIGATIONS. The Loan Parties (other than the Parent)
shall not, and shall not suffer or permit any Subsidiary of a Loan Party to,
create, incur, assume or suffer to exist any Contingent Obligations except:
(a) endorsements for collection or deposit in the ordinary course of
business;
(b) Permitted Swap Obligations;
(c) Contingent Obligations of the Loan Parties and their respective
Subsidiaries existing as of the Closing Date and listed in SCHEDULE 8.8(C);
(d) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business and which otherwise constitute
Indebtedness permitted pursuant to Section 8.5; and
(e) Guaranty Obligations incurred in the ordinary course of business
which otherwise constitute Indebtedness permitted pursuant to Section 8.5 and
which do not exceed in aggregate principal amount $20,000,000.
8.9 RESTRICTED PAYMENTS. The Borrower shall not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of its capital
stock, or purchase, redeem or otherwise acquire
76
<PAGE>
for value any shares of its capital stock or any warrants, rights or options
to acquire such shares, now or hereafter outstanding; except that the
Borrower may (as long as the Borrower is in pro forma compliance with this
Agreement):
(a) declare and make dividend payments or other distributions payable
solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of its common stock
or warrants or options to acquire any such shares with the proceeds received
from the substantially concurrent issue of new shares of its common stock;
(c) declare or pay cash dividends to the Parent and purchase, redeem
or otherwise acquire shares of its capital stock or warrants, rights or options
to acquire any such shares for cash, PROVIDED, THAT, immediately after giving
effect to such proposed action, no Default or Event of Default would exist; and
(d) declare or pay cash dividends to the Parent to pay its operating
expenses incurred in the ordinary course of business and other normal corporate
overhead costs and expenses, including indirect costs of Acquisitions by the
Borrower or its Subsidiaries (such as Attorneys' Costs in respect of such
Acquisitions and salaries of employees of the Parent), which are incurred by the
Parent; PROVIDED, THAT, immediately after giving effect to such proposed action,
no Default or Event of Default would exist.
8.10 ERISA. The Loan Parties (other than the Parent) shall not, and shall
not suffer or permit any of its ERISA Affiliates to: (a) engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; (b) cause or permit any Plan which is qualified under subsection
401(a) of the Code to lose such qualification; or (c) fail to make all required
contributions to any Plan subject to subsection 412 of the Code; but only to the
extent that any such act or failure to act, separately or together with all
other such acts or failures to act, in any of the foregoing clauses (a), (b) or
(c) has resulted or could reasonably expected to result in liability of the Loan
Parties in an aggregate amount in excess of $1,000,000; or (d) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
8.11 CHANGE IN BUSINESS. Except as permitted pursuant to Section 8.4, the
Borrower shall not, and shall not suffer or permit any Subsidiary to, engage in
any material line of business substantially different from those lines of
business carried on by the Borrower and its respective Subsidiaries on the date
hereof, including as a consequence of any Acquisition.
8.12 CHANGE IN FISCAL YEAR. The Borrower shall not change its fiscal year
or the fiscal year of any of its consolidated Subsidiaries.
8.13 MINIMUM CONSOLIDATED NET WORTH. The Borrower shall not permit, as of
the last day of any fiscal quarter, Consolidated Net Worth to be less than the
sum of:
(a) 85% of Consolidated Net Worth as of September 30, 1997, PLUS
77
<PAGE>
(b) 50% of Consolidated Net Income from September 30,1997 through the
end of each fiscal quarter thereafter, determined quarterly on a consolidated
basis and not reduced by any Consolidated Net Loss, PLUS
(c) 75% of the Net Securities Proceeds arising on or after
September 30, 1997 to the date of determination.
As used herein, "Net Securities Proceeds" means, with respect to any sale or
issuance of equity securities (whether common or preferred, options, warrants or
capital appreciation rights, but excluding any sales or issuances of stock
pursuant to employee stock purchase plans, employee stock option plans or other
employee benefit plans), the excess of (A) the gross cash and noncash proceeds
received or receivable by the Borrower or any Subsidiary from such issuance
MINUS (B) the sum of (i) all reasonable Attorney Costs and underwriting and
accounting fees and disbursements and government fees actually paid (or
reasonably expected to be paid during the fiscal year in which such sale or
issuance occurs) in connection with such sale or issuance which are not payable
to the Borrower or to any Affiliate of the Borrower or any Subsidiary; and
(ii) all taxes actually paid in connection with such sale or issuance.
8.14 MAXIMUM LEVERAGE RATIO. The Borrower shall not permit, as of the last
day of any fiscal quarter, the Leverage Ratio, measured for the period
consisting of the four consecutive fiscal quarters ending on such day, to exceed
3.75 to 1.00; PROVIDED HOWEVER, the Leverage Ratio shall be reduced to 3.25 to
1.00 on the earlier to occur of (a) the fourth anniversary of the Closing Date
or (b) the repayment of any portion of the principal on the Intercompany
Subordinated Debt or the making of any restricted payment permitted pursuant to
Section 8.9 (other than restricted payments pursuant to clause (d) thereof).
8.15 MINIMUM INTEREST COVERAGE RATIO. The Borrower shall not permit, as of
the last day of any fiscal quarter, the ratio of (a) EBIT, measured for the
period consisting of the four consecutive fiscal quarters ending on such day, to
(b) interest expense, measured for the period consisting of the four consecutive
fiscal quarters ending on such day, which were deductible in determining
Consolidated Net Income or Consolidated Net Loss for such period, to be less
than 2.00 to 1.00.
For purposes of calculating compliance with Sections 8.14 and 8.15, EBITDA,
EBIT and interest expense shall be adjusted for Acquisitions of consolidated
Subsidiaries (each an "Acquired Subsidiary") made by the Borrower or any
Subsidiary during the 4-quarter period (the "Compliance Period") for which the
"Maximum Leverage Ratio" or "Minimum Interest Coverage Ratio" is being
calculated pursuant to Section 8.14 or 8.15, as the case may be. Such
adjustment shall be made as follows:
(i) actual financial results of each such Acquired Subsidiary from
the date of its Acquisition through the end of the Compliance Period shall
be included in the above-referenced consolidated measures of EBITDA, EBIT
and interest expense in accordance with GAAP;
78
<PAGE>
(ii) historical financial results of each such Acquired Subsidiary may
be included in the above-referenced consolidated measures of EBITDA, EBIT
and interest expense if any one of the following conditions is satisfied:
(1) audited financial statements of such Acquired Subsidiary are available
for its most recent fiscal year-end; (2) such Acquired Subsidiary is a
Subsidiary or division of a public company for which audited financial
statements are available for such company's most recent fiscal year-end; or
(3) reviewed financial statements of such Acquired Subsidiary prepared in
accordance with GAAP are available for its most recent fiscal year-end;
(iii) if one or more of the conditions set forth in the preceding
paragraph (ii) are satisfied, and the Borrower elects to include the
historical financial results of such Acquired Subsidiary in the
above-referenced consolidated measures of EBITDA, EBIT and interest
expense, then such historical financial results shall be so included as
follows: (1) the Borrower shall determine in accordance with GAAP the
relevant financial results of such Acquired Subsidiary for the period of
four fiscal quarters of such Acquired Subsidiary ending on the date of
its fiscal quarter most recently ended prior to the date of its
Acquisition, (2) the Borrower may make adjustments to such financial
results for specified expense items of such Acquired Subsidiary
eliminated as a result of its Acquisition, and (3) the Borrower shall
include in the above-referenced measures of EBIT, EBITDA and interest
expense only such portion of such relevant historical financial results
that is obtained by multiplying such financial results by the quotient
obtained by dividing (x) the number of days elapsed from the first day
of the Compliance Period to the date of the Acquisition of such Acquired
Subsidiary, by (y) 365;
PROVIDED, HOWEVER, that amounts that would otherwise be included in EBITDA,
EBIT or interest expense on account of Acquisitions made by any of the
Borrower or its Subsidiaries shall be excluded unless the Administrative
Agent and the Banks have been provided with satisfactory independent
verification of such historical financial results.
8.16 LIMITATION ON MODIFICATIONS OF SENIOR SUBORDINATED NOTES; MODIFICATION
OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER AGREEMENTS; ETC. The
Borrower shall not and shall not permit any of its Subsidiaries to (i) make (or
give any notice in respect of) any voluntary or optional payment or prepayment
on or redemption or acquisition for value of, or any prepayment or redemption as
a result of any asset sale, change of control or similar event of, any Senior
Subordinated Notes (other than such payments which are funded by equity
contributions from the Parent), or amend or modify, or permit the amendment or
modification of, any provision of the Senior Subordinated Notes or any agreement
(including, without limitation, any Senior Subordinated Note Document) relating
thereto, (ii) amend, modify or change the Equipment Lease Facility Documents,
the terms of the Intercompany Subordinated Debt or the Accounts Receivable
Securitization Facility Documents or (iii) amend modify or change its
Certificate of Incorporation (including without limitation, by the filing or
modification of any certificate of designation) or By-Laws, other than any
79
<PAGE>
amendments, modifications or changes pursuant to this clause (iii) which do
not in any way adversely affect the interests of the Banks.
8.17 LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The Borrower will
not, and will not permit any of its non-Material Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on its ability to (a) pay dividends or make any other
distributions on its capital stock or any other interest or participation in its
profits owned by the Borrower or any of its Subsidiaries, or pay any
Indebtedness owed to the Borrower or any Subsidiary of the Borrower, (b) make
loans or advances to the Borrower or any Subsidiary of the Borrower or (c)
transfer any of its properties or assets to the Borrower, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) customary provisions restricting subletting or assignment of any lease
governing a leasehold interest of the Borrower or a Subsidiary of the Borrower
and (iii) customary provisions restricting assignment of any licensing agreement
entered into by the Borrower or a Subsidiary of the Borrower in the ordinary
course of business.
8.18 NON-MATERIAL SUBSIDIARIES. The Borrower shall not permit the total
revenues or total assets of all non-Material Subsidiaries together to exceed at
any time 20% of the total revenues or total assets, as the case may be, of the
Borrower and its Subsidiaries measured on a consolidated basis in accordance
with GAAP.
ARTICLE IX
EVENTS OF DEFAULT
9.1 EVENT OF DEFAULT. Any of the following shall constitute an "EVENT OF
DEFAULT":
(a) NON-PAYMENT. The Borrower fails to pay, (i) when and as required
to be paid herein, any amount of principal of any Loan, or (ii) within three (3)
days after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
any Loan Party or any of their respective Subsidiaries made or deemed made
herein, in any other Loan Document, or which is contained in any certificate,
document or financial or other statement by any of the Loan Parties, any of
their respective Subsidiaries, or any Responsible Officer, furnished at any time
under this Agreement, or in or under any other Loan Document, is incorrect in
any material respect on or as of the date made or deemed made; or
(c) SPECIFIC DEFAULTS. Any Loan Party (other than the Parent) fails
to perform or observe any term, covenant or agreement contained in Article VII
(other than any of Sections 7.2, 7.6, 7.7, 7.8 or 7.10) or in Article VIII; or
80
<PAGE>
(d) OTHER DEFAULTS. Any Loan Party (other than the Parent, except
for purposes of Section 11.17) fails to perform or observe any other term or
covenant contained in this Agreement or any other Loan Document, and such
default shall continue unremedied for a period of 20 days after the earlier of
(i) the date upon which a Responsible Officer knew or reasonably should have
known of such failure or (ii) the date upon which written notice thereof is
given to such Loan Party by the Administrative Agent or any Bank; or
(e) CROSS-DEFAULT. (i) Any Loan Party (A) fails to make any payment
in respect of any Indebtedness or Contingent Obligation (other than in respect
of Swap Contracts), having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $5,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent Obligation, and
such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if the effect of
such failure, event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which the
Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap
Contract) or (B) any Termination Event (as so defined) as to which the Borrower
or any Subsidiary is an Affected Party (as so defined), and, in either event,
the Swap Termination Value owed by the Borrower or such Subsidiary as a result
thereof is greater than $5,000,000; or
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. Any Loan Party or any
Subsidiary of a Loan Party (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against any Loan Party or any Subsidiary of a
Loan Party, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of any Loan Party's or
any such Subsidiary's properties, and any such proceeding or petition shall not
be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) any Loan Party or any Subsidiary of a
Loan Party admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding;
81
<PAGE>
or (iii) any Loan Party or any Subsidiary of a Loan Party acquiesces in the
appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in possession (or agent therefor), or other similar Person for
itself or a substantial portion of its property or business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability of the Loan Parties under Title IV of ERISA to the Pension
Plan, Multiemployer Plan or the PBGC; (ii) any Unfunded Pension Liability with
respect to any or all Pension Plans shall exist; or (iii) the Loan Parties or
any ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan; but only to
the extent that any of the foregoing, separately or in the aggregate, has or
could reasonably be expected to have a Material Adverse Effect; or
(i) MONETARY JUDGMENTS. One or more noninterlocutory judgments,
noninterlocutory orders, decrees or arbitration awards is entered against any of
the Loan Parties or any of their respective Subsidiaries involving in the
aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $5,000,000 or more,
and the same shall remain unsatisfied, unvacated and unstayed pending appeal for
a period of 10 days after the entry thereof; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree is entered against any of the Loan Parties or any of their respective
Subsidiaries which does or would reasonably be expected to have a Material
Adverse Effect, and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(k) CHANGE OF CONTROL. There occurs any Change of Control; or
(l) LOSS OF LICENSES. Any Governmental Authority revokes or fails to
renew any material license, permit or franchise of the Borrower or any of its
Subsidiaries, or the Borrower or any of its Subsidiaries for any reason loses
any material license, permit or franchise, or the Borrower or any of its
Subsidiaries suffers the imposition of any restraining order, escrow, suspension
or impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise if any
such revocation, failure, loss or imposition results, or is reasonably expected
to result, in a Material Adverse Effect; or
(m) ADVERSE CHANGE. There occurs a Material Adverse Effect; or
(n) GUARANTOR DEFAULTS. Any Guarantor fails in any material respect
to perform or observe any term, covenant or agreement as a guarantor of the
Obligations pursuant to Section 11.17 (or other separate guaranty agreement), or
the guaranty set forth
82
<PAGE>
therein (or in such other agreement) of any Guarantor is for any reason
partially (including with respect to future advances) or wholly revoked or
invalidated, or otherwise ceases to be in full force and effect, or any
Guarantor (or any other Person) contests in any manner the validity or
enforceability thereof or denies that it has any further liability or
obligation thereunder; or any event described at subsections (f) or (g) of
this Section occurs with respect to any Guarantor.
(o) SUPREMEX DEFAULT. There occurs any "Event of Default" under and
as defined in the Supremex Credit Agreement.
9.2 REMEDIES. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 9.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent or any Bank.
9.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
9.4 CERTAIN FINANCIAL COVENANT DEFAULTS. In the event that, after taking
into account any extraordinary charge to earnings taken or to be taken as of the
end of any fiscal period of the Borrower or any Subsidiary (a "CHARGE"), and if
solely by virtue of such Charge, there would exist an Event of Default due to
the breach of any of Sections 8.13, 8.14 or 8.15 as of such fiscal period end
date, such Event of Default shall be deemed to arise upon the earlier of (a) the
date after such fiscal period end date on which the Borrower announces publicly
it will take, is taking or has taken such Charge (including an announcement in
the form of a statement in a report filed with the SEC) or, if such announcement
is made prior to
83
<PAGE>
such fiscal period end date, the date that is such fiscal period end date,
and (b) the date the Borrower delivers to the Administrative Agent its
audited annual or unaudited quarterly financial statements in respect of such
fiscal period reflecting such Charge as taken.
ARTICLE X
THE ADMINISTRATIVE AGENT
10.1 APPOINTMENT AND AUTHORIZATION; "ADMINISTRATIVE AGENT."
(a) Each Bank hereby irrevocably (subject to Section 10.9) appoints,
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent have or be deemed to have any fiduciary relationship with
any Bank, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Administrative Agent. Without limiting
the generality of the foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Administrative Agent is not intended to connote
any fiduciary or other implied (or express) obligations arising under agency
doctrine of any applicable law. Instead, such term is used merely as a matter
of market custom, and is intended to create or reflect only an administrative
relationship between independent contracting parties.
(b) The Issuing Bank shall act on behalf of the Banks with respect to
any Letters of Credit Issued by it and the documents associated therewith until
such time and except for so long as the Administrative Agent may agree at the
request of the Majority Banks to act for such Issuing Bank with respect thereto;
PROVIDED, HOWEVER, that the Issuing Bank shall have all of the benefits and
immunities (i) provided to the Administrative Agent in this Article X with
respect to any acts taken or omissions suffered by the Issuing Bank in
connection with Letters of Credit Issued by it (including the Existing Letters
of Credit) or proposed to be Issued by it and the application and agreements for
letters of credit pertaining to the Letters of Credit as fully as if the term
"Administrative Agent," as used in this Article X, included the Issuing Bank
with respect to such acts or omissions, and (ii) as additionally provided in
this Agreement with respect to the Issuing Bank.
(c) The provisions of this Article X shall survive the payment of all
Obligations hereunder and inure to the benefit of BofA, including after its
resignation or replacement as the Administrative Agent, as to any actions taken
or omitted to be taken by BofA while it was the Administrative Agent.
84
<PAGE>
10.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of
its duties under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agent
or attorney-in-fact that it selects with reasonable care.
10.3 LIABILITY OF ADMINISTRATIVE AGENT.
(a) None of the Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Borrower or any Subsidiary or Affiliate
of the Borrower, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any of its
Subsidiaries or Affiliates.
(b) Upon receipt thereof, the Administrative Agent shall forward to
each Bank originals or copies, as specified in this Agreement or any other Loan
Document, of all agreements, instruments, opinions, financial statements,
notices and other documents delivered by any Loan party, or any other Person to
the Administrative Agent pursuant to any Loan Document for distribution to the
Banks.
10.4 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement 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 counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks 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 Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or
85
<PAGE>
consent of the Majority Banks and such request and any action taken or
failure to act pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 5.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
10.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Banks, unless the Administrative Agent shall have received
written notice from a Bank or a Loan Party referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default." The Administrative Agent will notify the Banks of its
receipt of any such notice. The Administrative Agent shall take such action
with respect to such Default or Event of Default as may be requested by the
Majority Banks in accordance with Article IX; PROVIDED, HOWEVER, that unless
and until the Administrative Agent has received any such request, the
Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable or in the best interest of the Banks.
10.6 CREDIT DECISION. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that
no act by the Administrative Agent hereinafter taken, including any review of
the affairs of the Borrower or any other Loan Party and its respective
Subsidiaries, shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Bank. Each Bank represents to the
Administrative Agent that it has, independently and without reliance upon any
Agent-Related Person and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other condition and
credit worthiness of the Borrower and its respective Subsidiaries, and each
other Loan Party, and all applicable bank regulatory laws relating to the
transactions contemplated hereby, and made its own decision to enter into
this Agreement and to extend credit to the Borrower hereunder. Each Bank
also represents that it will, independently and without reliance upon any
Agent-Related Person 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 Agreement
and the other Loan Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and credit worthiness of the Borrower
and its respective Subsidiaries and each other Loan Party. Except for
notices, reports and other documents expressly herein required to be
furnished to the Banks by the Administrative Agent, the Administrative Agent
shall not have any duty or responsibility to provide any Bank with any credit
or other information concerning the
86
<PAGE>
business, prospects, operations, property, financial and other condition or
credit worthiness of the Borrower or any other Loan Party which may come into
the possession of any of the Agent-Related Persons.
10.7 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify
upon demand the Agent-Related Persons (to the extent not reimbursed by or on
behalf of the Borrower and without limiting the obligation of the Borrower to
do so), pro rata, from and against any and all Indemnified Liabilities;
PROVIDED, HOWEVER, that no Bank shall be liable for the payment to the
Agent-Related Persons of any portion of such Indemnified Liabilities
resulting solely from such Person's gross negligence or willful misconduct.
Without limitation of the foregoing, each Bank shall reimburse the
Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Administrative 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, any other Loan Document,
or any document contemplated by or referred to herein, to the extent that the
Administrative Agent is not reimbursed for such expenses by or on behalf of
the Borrower and its Subsidiaries. The undertaking in this Section shall
survive the payment of all Obligations hereunder and the resignation or
replacement of the Administrative Agent.
10.8 ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. BofA 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 Borrower and its Subsidiaries and Affiliates as though BofA were not
the Administrative Agent hereunder and without notice to or consent of the
Banks. The Banks acknowledge that, pursuant to such activities, BofA or its
Affiliates may receive information regarding the Borrower or its Affiliates
(including information that may be subject to confidentiality obligations in
favor of the Borrower or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information
to them. With respect to its Loans, BofA shall have the same rights and
powers under this Agreement as any other Bank and may exercise the same as
though it were not the Administrative Agent, and the terms "Bank" and "Banks"
include BofA in its individual capacity.
10.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may, and
at the request of the Majority Banks shall, resign as Administrative Agent
upon 30 days' notice to the Banks. If the Administrative Agent resigns under
this Agreement, the Majority Banks shall appoint from among the Banks a
successor agent for the Banks. If no successor agent is appointed prior to
the effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Banks and the
Borrower, a successor agent from among the Banks. Upon the acceptance of its
appointment as successor agent hereunder, such successor agent shall succeed
to all the rights, powers and duties of the retiring Administrative Agent and
the term "Administrative Agent" shall mean such successor agent and the
retiring Administrative Agent's appointment, powers and duties as
87
<PAGE>
Administrative Agent shall be terminated. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article X and Sections 11.4 and 11.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Administrative Agent
under this Agreement. If no successor agent has accepted appointment as
Administrative Agent by the date which is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Banks shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Majority Banks appoint a successor agent as
provided for above. Notwithstanding the foregoing, however, BofA may not be
removed as the Administrative Agent at the request of the Majority Banks
unless BofA shall also simultaneously be replaced as Issuing Bank hereunder
pursuant to documentation in form and substance reasonably satisfactory to
BofA.
10.10 WITHHOLDING TAX.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Administrative Agent, to deliver to the
Administrative Agent:
(i) if such Bank claims an exemption from, or a reduction of,
withholding tax under a United States tax treaty, two properly completed
and executed copies of IRS Form 1001 before the payment of any interest in
the first calendar year and before the payment of any interest in each
third succeeding calendar year during which interest may be paid under this
Agreement;
(ii) if such Bank claims that interest paid under this Agreement
is exempt from United States withholding tax because it is effectively
connected with a United States trade or business of such Bank, two properly
completed and executed copies of IRS Form 4224 before the payment of any
interest is due in the first taxable year of such Bank and in each
succeeding taxable year of such Bank during which interest may be paid
under this Agreement, and
(iii) such other form or forms as may be required under the
Code or other laws of the United States as a condition to exemption from,
or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Bank, such Bank agrees to notify the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Bank.
88
<PAGE>
To the extent of such percentage amount, the Administrative Agent will treat
such Bank's IRS Form 1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Administrative Agent, then the Administrative Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation an
amount equivalent to the applicable withholding tax imposed by Sections 1441 and
1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Administrative Agent.
10.11 CO-AGENTS. None of the Banks identified on the facing page or
signature pages of this Agreement as a "co-agent" shall have any right, power,
obligation, liability, responsibility or duty under this Agreement other than
those applicable to all Banks as such. Without limiting the foregoing, none of
the Banks so identified as a "co-agent" shall have or be deemed to have any
fiduciary relationship with any Bank. Each Bank acknowledges that it has not
relied, and will not rely, on any of the Banks so identified in deciding to
enter into this Agreement or in taking or not taking action hereunder.
ARTICLE XI
MISCELLANEOUS
89
<PAGE>
11.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision
of this Agreement or any other Loan Document, and no consent with respect to
any departure by the Borrower or any other Loan Party therefrom, shall be
effective unless the same shall be in writing and signed by the Majority
Banks (or by the Administrative Agent at the written request of the Majority
Banks) and the Loan Parties party thereto and acknowledged by the
Administrative Agent, and then any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given;
PROVIDED, HOWEVER, that no such waiver, amendment, or consent shall, unless
in writing and signed by all the Banks and the Loan Parties party thereto and
acknowledged by the Administrative Agent, do any of the following:
(a) increase or extend the Revolving Commitment (including the L/C
Commitment) of any Bank or the Swingline Commitment of the Swingline Bank (or
reinstate any Revolving Commitment terminated pursuant to Section 9.2);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or (subject to clause (ii) below) any fees or other amounts payable
hereunder or under any other Loan Document;
(d) change the percentage of the Revolving Commitments or of the
aggregate unpaid principal amount of the Loans which is required for the Banks
or any of them to take any action hereunder;
(e) release any Guarantor from its obligations under any Guaranty; or
(f) amend this Section, or Section 2.19, or any provision herein
providing for consent or other action by all Banks;
and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document, and
(ii) the Fee Letters may be amended, or rights or privileges thereunder waived,
in a writing executed by the parties thereto.
11.2 NOTICES.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by any Loan Party by facsimile (i) shall be immediately confirmed by
a telephone call to the recipient at the number specified on SCHEDULE 11.2, and
(ii) shall be followed promptly by delivery of a hard
90
<PAGE>
copy original thereof) and mailed, faxed or delivered, to the address or
facsimile number specified for notices on SCHEDULE 11.2; or, as directed to
the Loan Parties or the Administrative Agent, to such other address as shall
be designated by such party in a written notice to the other parties, and as
directed to any other party, at such other address as shall be designated by
such party in a written notice to the Loan Parties and the Administrative
Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or X to the Administrative Agent or pursuant to
Article III to the Issuing Bank shall not be effective until actually received
by the Administrative Agent or the Issuing Bank, as the case may be.
(c) Any agreement of the Administrative Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Borrower. The Administrative Agent and the Banks
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by any of the Loan Parties to give such notice and the
Administrative Agent and the Banks shall not have any liability to any of the
Loan Parties or other Person on account of any action taken or not taken by the
Administrative Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Loans shall not be affected
in any way or to any extent by any failure by the Administrative Agent and the
Banks to receive written confirmation of any telephonic or facsimile notice or
the receipt by the Administrative Agent and the Banks of a confirmation which is
at variance with the terms understood by the Administrative Agent and the Banks
to be contained in the telephonic or facsimile notice.
11.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any Bank, 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 any other right, remedy, power or privilege.
11.4 COSTS AND EXPENSES. The Borrower shall:
(a) whether or not the transactions hereby are consummated, pay or
reimburse BofA (including in its capacity as Administrative Agent) and the
Arranger within five Business Days after demand for all costs and expenses
incurred by BofA (including in its capacity as Administrative Agent) or the
Arranger in connection with the development, preparation, delivery,
administration, syndication and execution of, and any amendment, supplement,
waiver or modification to (in each case, whether or not consummated), this
Agreement, any Loan Document and any other documents prepared in connection
herewith or therewith, and the consummation of the transactions contemplated
hereby and thereby, including reasonable Attorney Costs incurred by BofA
(including in its capacity as Administrative Agent) with respect thereto; and
91
<PAGE>
(b) pay or reimburse the Administrative Agent, the Arranger and each
Bank within five Business Days after demand for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding).
11.5 INDEMNITY.
(a) GENERAL INDEMNITY. Whether or not the transactions contemplated
hereby are consummated, the Loan Parties shall indemnify, defend and hold the
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"INDEMNIFIED PERSON") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Administrative Agent or replacement of any Bank) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, or related to any foreign
exchange transactions entered into in connection herewith, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"); PROVIDED, that the Loan Parties shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person. The agreements in this Section shall survive payment
of all other Obligations.
(b) ENVIRONMENTAL INDEMNITY.
(i) The Loan Parties hereby agree to indemnify, defend and hold
harmless each Indemnified Person, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs and the
allocated cost of internal environmental audit or review services), which
may be incurred by or asserted against such Indemnified Person in
connection with or arising out of any pending or threatened investigation,
litigation or proceeding, or any action taken by any Person, with respect
to any Environmental Claim arising out of or related to any property of any
of the Loan Parties or any of their respective Subsidiaries. No action
taken by legal counsel chosen by the Administrative Agent or any Bank in
defending against any such investigation, litigation or proceeding or
requested remedial, removal or
92
<PAGE>
response action shall vitiate or any way impair the Loan Parties'
obligation and duty hereunder to indemnify and hold harmless the
Administrative Agent and each Bank.
(ii) In no event shall any site visit, observation, or testing by
the Administrative Agent or any Bank be deemed a representation or warranty
that Hazardous Materials are or are not present in, on, or under the site,
or that there has been or shall be compliance with any Environmental Law.
Neither the Loan Parties nor any other Person is entitled to rely on any
site visit, observation, or testing by the Administrative Agent or any
Bank. Neither the Administrative Agent nor any Bank owes any duty of care
to protect the Loan Parties or any other Person against, or to inform the
Loan Parties or any other party of, any Hazardous Materials or any other
adverse condition affecting any site or property. Neither the
Administrative Agent nor any Bank shall be obligated to disclose to the
Loan Parties or any other Person any report or findings made as a result
of, or in connection with, any site visit, observation, or testing by the
Administrative Agent or any Bank.
(c) SURVIVAL; DEFENSE. The obligations in this Section 11.5 shall
survive payment of all other Obligations. At the election of any Indemnified
Person, each of the Loan Parties shall defend such Indemnified Person using
legal counsel satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Loan Parties.
(d) EXISTING INDEMNIFICATION RIGHTS. All rights of the
Administrative Agent and the Banks in respect of any indemnification and
otherwise for reimbursement or payment of any losses, costs, charges,
expenses or disbursements (including Attorney Costs) under or in respect of
the Existing Facility shall survive the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby.
11.6 PAYMENTS SET ASIDE. To the extent that any of the Loan Parties
makes a payment to the Administrative Agent or the Banks, or the
Administrative Agent or the Banks exercise their right of set-off, and such
payment or the proceeds of such set-off or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required
(including pursuant to any settlement entered into by the Administrative
Agent or such Bank in its discretion) to be repaid to a trustee, receiver or
any other party, in connection with any Insolvency Proceeding or otherwise,
then (a) to the extent of such recovery the obligation or part thereof
originally intended to be satisfied shall be revived and continued in full
force and effect as if such payment had not been made or such set-off had not
occurred, and (b) each Bank severally agrees to pay to the Administrative
Agent upon demand its pro rata share of any amount so recovered from or
repaid by the Administrative Agent.
11.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except that none of the Loan Parties may
assign or transfer any of its rights or obligations
93
<PAGE>
under this Agreement without the prior written consent of the Administrative
Agent and each Bank.
11.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Bank may, with the written consent of the Administrative
Agent and with the written consent of the Borrower at all times other than
during the existence of an Event of Default, which consent of the Borrower,
if required, and the Administrative Agent shall not be unreasonably withheld,
at any time assign and delegate to one or more Eligible Assignees (each an
"ASSIGNEE") all, or any ratable part of all, of the Loans, the Revolving
Commitment and the other rights and obligations of such Bank hereunder, in a
minimum amount of $10,000,000 (or the remaining amount of their Revolving
Commitment, if lower); PROVIDED, HOWEVER, that (i) such Bank also assigns and
delegates to such Assignee(s) a ratable portion of its "Loans" and
"Commitment" under the Supremex Credit Agreement, and (ii) the Borrower and
the Administrative Agent may continue to deal solely and directly with such
Bank in connection with the interest so assigned to an Assignee until
(A) written notice of such assignment, together with payment instructions,
addresses and related information with respect to the Assignee, shall have
been given to the Borrower and the Administrative Agent by such Bank and the
Assignee; (B) such Bank and its Assignee shall have delivered to the Borrower
and the Administrative Agent an Assignment and Acceptance in the form of
EXHIBIT E ("ASSIGNMENT AND ACCEPTANCE") together with any Note or Notes
subject to such assignment and (C) the assignor Bank or Assignee has paid to
the Administrative Agent a processing fee in the amount of $3,500. In
connection with any assignment by BofA, its Swingline Commitment may be in
whole or in part included as part of the assignment transaction, and the
Assignment and Acceptance may be appropriately modified to include an
assignment and delegation of its Swingline Commitment and any outstanding
Swingline Loans. If the consent of the Administrative Agent and of the
Borrower shall be required for any such assignment, the Bank proposing to
make such assignment shall give the Administrative Agent and the Borrower no
less than 20 calendar days' notice of such requested consent.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and
Acceptance and payment of the processing fee and requesting new Notes (and
provided that it consents to such assignment in accordance with Section
11.8(a)), the Borrower shall execute and deliver to the Administrative Agent,
new Notes evidencing such Assignee's assigned Loans and
94
<PAGE>
Revolving Commitment and, if the assignor Bank has retained a portion of its
Loans and its Revolving Commitment, replacement Notes in the principal amount
of the Loans retained by the assignor Bank (such Notes to be in exchange for,
but not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but
only to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Revolving Commitments arising therefrom. The
Revolving Commitment allocated to each Assignee shall reduce the Revolving
Commitment of the assigning Bank PRO TANTO.
(d) Any Bank may, with the written consent of the Borrower at all
times other than during the existence of an Event of Default, which consent of
the Borrower, if required, shall not be unreasonably withheld, at any time sell
to one or more commercial banks or other Persons not Affiliates of the Borrower
(a "PARTICIPANT") participating interests in any Loans, the Revolving Commitment
of that Bank and the other interests of that Bank (the "originating Bank")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Bank's obligations under this Agreement shall remain unchanged,
(ii) the originating Bank shall remain solely responsible for the performance of
such obligations, (iii) the Borrower and the Administrative Agent shall continue
to deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as pursuant to subsections (a), (b) or (c) of the
FIRST PROVISO to Section 11.1, in which event such Participant shall (if agreed
by the originating Bank) be entitled to vote with respect to such amendment,
consent or waiver. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 4.1, 4.3 and 11.5 as though it were also
a Bank hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank (as the case may be) under this
Agreement. If the consent of the Borrower shall be required for any such
participation, the Bank proposing to make such participation shall give the
Administrative Agent and the Borrower no less than 20 calendar days' notice of
such requested consent.
(e) Notwithstanding any other provision in this Agreement, any
Bank may at any time create a security interest in, or pledge, all or any
portion of its rights under and interest in this Agreement and the Note held
by it (other than in respect of Swingline Loans) in favor of any Federal
Reserve Bank in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may enforce
such pledge or security interest in any manner permitted under applicable law.
95
<PAGE>
11.9 CONFIDENTIALITY. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information, identified as "confidential"
or "secret" by the Borrower and provided to it by any of the Loan Parties or
any of their respective Subsidiaries, or by the Administrative Agent on such
Loan Party's or such Subsidiary's behalf, under this Agreement or any other
Loan Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with any of the Loan Parties or any of
their respective Subsidiaries; except to the extent such information (i) was
or becomes generally available to the public other than as a result of
disclosure by the Bank, or (ii) was or becomes available on a nonconfidential
basis from a source other than the Loan Parties, provided that such source is
not bound by a confidentiality agreement with the Loan Parties known to the
Bank; PROVIDED, HOWEVER, that any Bank may disclose such information (A) at
the request or pursuant to any requirement of any Governmental Authority to
which the Bank is subject or in connection with an examination of such Bank
by any such authority; (B) pursuant to subpoena or other court process,
provided that the Bank shall use reasonable, good faith efforts to provide
prior written notice to the Borrower (unless the Bank is prohibited from
doing so by any applicable Requirement of Law); (C) when required to do so in
accordance with the provisions of any applicable Requirement of Law; (D) to
the extent reasonably required in connection with any litigation or
proceeding to which the Administrative Agent, any Bank or their respective
Affiliates may be party, provided that the Bank shall use reasonable, good
faith efforts to provide prior written notice to the Borrower (unless the
Bank is prohibited from doing so by any applicable Requirement of Law); (E)
to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document; (F) to such Bank's
independent auditors and other professional advisors; (G) to any Participant
or Assignee, actual or potential, provided that such Person agrees in writing
to keep such information confidential to the same extent required of the
Banks hereunder; (H) as to any Bank or its Affiliate, as expressly permitted
under the terms of any other document or agreement regarding confidentiality
to which any of the Loan Parties or any of their respective Subsidiaries is
party to or is deemed party to with such Bank or such Affiliate; and (I) to
its Affiliates.
11.10 SET-OFF. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time,
without prior notice to the Loan Parties, any such notice being waived by the
Loan Parties 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 by, and other indebtedness at any time owing by, such Bank
to or for the credit or the account of the Loan Parties against any and all
Obligations owing to such Bank, now or hereafter existing, irrespective of
whether or not the Administrative Agent or such Bank shall have made demand
under this Agreement or any Loan Document and although such Obligations may
be contingent or unmatured. Each Bank agrees promptly to notify the Loan
Parties and the Administrative Agent after any such set-off and application
made by such Bank; PROVIDED, HOWEVER, that the failure to give such notice
shall not affect the validity of such set-off and application.
96
<PAGE>
11.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
11.12 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
11.13 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement
required hereunder.
11.14 NO THIRD PARTIES BENEFITTED. This Agreement is made and entered
into for the sole protection and legal benefit of the Loan Parties, the
Banks, the Administrative Agent, the Indemnified Persons and the
Agent-Related Persons, and their permitted successors and assigns, and no
other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this
Agreement or any of the other Loan Documents.
11.15 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED
THAT THE ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING
UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA,
AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES,
THE ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE
LOAN PARTIES, THE ADMINISTRATIVE AGENT, AND THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE LOAN PARTIES, THE
ADMINISTRATIVE AGENT, AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY
SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY CALIFORNIA LAW.
97
<PAGE>
11.16 WAIVER OF JURY TRIAL. THE LOAN PARTIES, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT
BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. THE LOAN PARTIES, THE BANKS, AND THE ADMINISTRATIVE
AGENT EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR
THEREOF. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
11.17 GUARANTY.
(a) GUARANTY. Each of the Parent and the Subsidiary Guarantors,
unconditionally and irrevocably, jointly and severally guarantees to the
Administrative Agent and the Banks, and their respective successors,
endorsers, transferees and assigns, the full and prompt payment when due
(whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise) and performance of the Obligations of the
Borrower to the Administrative Agent, the Issuing Bank and the Banks (the
"Guaranteed Obligations"). The Guaranteed Obligations include interest
which, but for an Insolvency Proceeding, would have accrued on such
Guaranteed Obligations, whether or not a claim is allowed against the
Borrower for such interest in any such Insolvency Proceeding.
(b) SEPARATE OBLIGATION. Each Guarantor acknowledges and agrees
(i) that the Guaranteed Obligations are separate and distinct from any
indebtedness, obligations or liabilities arising under or in connection with
any other agreement, instrument or guaranty, including under any provision of
this Agreement other than this Section 11.17, executed at any time by such
Guarantor in favor of the Administrative Agent, the Issuing Bank or any of
the Banks, and (ii) such Guarantor shall pay and perform all of the
Guaranteed Obligations as required under this Section 11.17, and the
Administrative Agent, the Issuing Bank and the Banks may enforce any and all
of their rights and remedies hereunder, without regard to any other
agreement, instrument or guaranty, including any provision of this Agreement
other than this Section 11.17, at any time executed by such Guarantor in
favor of the Administrative Agent, the Issuing Bank or any of the Banks,
regardless of whether or not any such other agreement, instrument or
guaranty, or any provision thereof or hereof, shall for any reason become
unenforceable or any of the indebtedness, obligations or liabilities
thereunder shall
98
<PAGE>
have been discharged, whether by performance, avoidance or otherwise. Each
Guarantor acknowledges that in providing benefits to the Borrower and such
Guarantor, the Administrative Agent, the Issuing Bank and the Banks are
relying upon the enforceability of this Section 11.17 and the Guaranteed
Obligations as separate and distinct indebtedness, obligations and
liabilities of such Guarantor, and each Guarantor agrees that the
Administrative Agent, the Issuing Bank and the Banks would be denied the full
benefit of their bargain if at any time this Section 11.17 or the Guaranteed
Obligations were treated any differently. The fact that the Guaranty of each
Guarantor is set forth in this Agreement rather than in a separate guaranty
document is for the convenience of the Borrower and the Guarantors and shall
in no way impair or adversely affect the rights or benefits of the Banks, the
Issuing Bank or the Administrative Agent under this Section 11.17. Each
Guarantor agrees to execute and deliver a separate agreement, immediately
upon request at any time of the Administrative Agent, the Issuing Bank or any
Bank, evidencing such Guarantor's obligations under this Section 11.17. Upon
the occurrence of any Event of Default, a separate action or actions may be
brought against each Guarantor, whether or not the Borrower or any other
guarantor or Person is joined therein or a separate action or actions are
brought against the Borrower or any such other guarantor or Person.
(c) LIMITATION OF GUARANTY. To the extent that any court of
competent jurisdiction shall impose by final judgment under applicable law
(including the California Uniform Fraudulent Transfer Act and Sections 544
and 548 of the Bankruptcy Code) any limitations on the amount of any
Guarantor's liability with respect to the Guaranteed Obligations which the
Administrative Agent, the Issuing Bank or the Banks can enforce under this
Section 11.17, the Administrative Agent, the Issuing Bank and the Banks by
their acceptance hereof accept such limitation on the amount of such
Guarantor's liability hereunder to the extent needed to make this Section
11.17 fully enforceable and nonavoidable.
(d) LIABILITY OF GUARANTOR. The liability of each Guarantor under
this Section 11.17 shall be irrevocable, absolute, independent and
unconditional, and shall not be affected by any circumstance which might
constitute a discharge of a surety or guarantor other than the indefeasible
payment and performance in full of all Guaranteed Obligations. In
furtherance of the foregoing and without limiting the generality thereof,
each Guarantor agrees as follows:
(i) such Guarantor's liability hereunder shall be the immediate,
direct, and primary obligation of such Guarantor and shall not be
contingent upon the Administrative Agent's, the Issuing Bank's or any
Bank's exercise or enforcement of any remedy it may have against the
Borrower or any other Person, or against any collateral or other security
for any Guaranteed Obligations;
(ii) this Guaranty is a guaranty of payment when due and not
merely of collectibility;
(iii) the Administrative Agent, the Issuing Bank and the
Banks may enforce this Section 11.17 upon the occurrence of an Event of
Default notwithstanding
99
<PAGE>
the existence of any dispute among the Administrative Agent, the Issuing
Bank and the Banks and the Borrower with respect to the existence of such
Event of Default;
(iv) such Guarantor's payment of a portion, but not all, of the
Guaranteed Obligations shall in no way limit, affect, modify or abridge
such Guarantor's liability for any portion of the Guaranteed Obligations
remaining unsatisfied; and
(v) such Guarantor's liability with respect to the Guaranteed
Obligations shall remain in full force and effect without regard to, and
shall not be impaired or affected by, nor shall such Guarantor be
exonerated or discharged by, any of the following events:
(A) any Insolvency Proceeding;
(B) any limitation, discharge, or cessation of the
liability of the Borrower or any other guarantor or Person for any
Guaranteed Obligations due to any statute, regulation or rule of law,
or any invalidity or unenforceability in whole or in part of any of
the Guaranteed Obligations or the Loan Documents;
(C) any merger, acquisition, consolidation or change in
structure of the Borrower or any other guarantor or Person, or any
sale, lease, transfer or other disposition of any or all of the assets
or shares of the Borrower or any other guarantor or other Person;
(D) any assignment or other transfer, in whole or in part,
of the Administrative Agent's, the Issuing Bank's or any Bank's
interests in and rights under this Guaranty or the other Loan
Documents;
(E) any claim, defense, counterclaim or set-off, other than
that of prior performance, that the Borrower, such Guarantor, any
other guarantor or other Person may have or assert, including any
defense of incapacity or lack of corporate or other authority to
execute any of the Loan Documents;
(F) the Administrative Agent's, the Issuing Bank's or any
Bank's amendment, modification, renewal, extension, cancellation or
surrender of any Loan Document or any Guaranteed Obligations;
(G) the Administrative Agent's, the Issuing Bank's or any
Bank's exercise or nonexercise of any power, right or remedy with
respect to any Guaranteed Obligations or any collateral;
100
<PAGE>
(H) the Administrative Agent's, the Issuing Bank's or any
Bank's vote, claim, distribution, election, acceptance, action or
inaction in any Insolvency Proceeding;
(I) any other guaranty, whether by any Guarantor or any
other Person, of all or any part of the Guaranteed Obligations or any
other indebtedness, obligations or liabilities of the Borrower to the
Administrative Agent, the Issuing Bank or the Banks.
(e) CONSENTS OF GUARANTOR. Each Guarantor hereby unconditionally
consents and agrees that, without notice to or further assent from such
Guarantor:
(i) the principal amount of the Guaranteed Obligations may be
increased or decreased and additional indebtedness or obligations of the
Borrower under the Loan Documents may be incurred and the time, manner,
place or terms of any payment under any Loan Document be extended or
changed, by one or more amendments, modifications, renewals or extensions
of any Loan Document or otherwise;
(ii) the time for the Borrower's (or any other Person's)
performance of or compliance with any term, covenant or agreement on its
part to be performed or observed under any Loan Document may be extended,
or such performance or compliance waived, or failure in or departure from
such performance or compliance consented to, all in such manner and upon
such terms as the Administrative Agent, the Issuing Bank and the Banks (or
the Majority Banks, as the case may be) may deem proper;
(iii) the Administrative Agent, the Issuing Bank and the
Banks may request and accept other guaranties and may take and hold other
security as collateral for the Guaranteed Obligations, and may, from time
to time, in whole or in part, exchange, sell, surrender, release,
subordinate, modify, waive, rescind, compromise or extend such other
guaranties or security and may permit or consent to any such action or the
result of any such action, and may apply such security and direct the order
or manner of sale thereof;
(iv) the Administrative Agent, the Issuing Bank and the Banks may
exercise, or waive or otherwise refrain from exercising, any other right,
remedy, power or privilege even if the exercise thereof affects or
eliminates any right of subrogation or any other right of such Guarantor
against the Borrower;
(f) GUARANTOR'S WAIVERS. Each Guarantor waives and agrees not to
assert:
(i) any right to require the Administrative Agent, the Issuing
Bank or any Bank to proceed against the Borrower, any other guarantor or
any other Person,
101
<PAGE>
or to pursue any other right, remedy, power or privilege of the
Administrative Agent, the Issuing Bank or any Bank whatsoever;
(ii) the defense of the statute of limitations in any action
hereunder or for the collection or performance of the Guaranteed
Obligations;
(iii) any defense arising by reason of any lack of corporate
or other authority or any other defense of the Borrower, such Guarantor or
any other Person;
(iv) any defense based upon the Administrative Agent's, the
Issuing Bank's or any Bank's errors or omissions in the administration of
the Guaranteed Obligations;
(v) any rights to set-offs and counterclaims;
(vi) without limiting the generality of the foregoing, to the
fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by applicable law limiting the liability of or
exonerating guarantors or sureties, or which may conflict with the terms of
this Section 11.17, including any and all benefits that otherwise might be
available to such Guarantor under California Civil Code Sections 1432,
2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure Sections 580a, 580b, 580d and 726; and
(vii) any and all notice of the acceptance of this Guaranty,
and any and all notice of the creation, renewal, modification, extension or
accrual of the Guaranteed Obligations, or the reliance by the
Administrative Agent, the Issuing Bank and the Banks upon this Guaranty, or
the exercise of any right, power or privilege hereunder. The Guaranteed
Obligations shall conclusively be deemed to have been created, contracted,
incurred and permitted to exist in reliance upon this Guaranty. Each
Guarantor waives promptness, diligence, presentment, protest, demand for
payment, notice of default, dishonor or nonpayment and all other notices to
or upon the Borrower, such Guarantor or any other Person with respect to
the Guaranteed Obligations.
(g) FINANCIAL CONDITION OF BORROWER. No Guarantor shall have any
right to require the Administrative Agent, the Issuing Bank or the Banks to
obtain or disclose any information with respect to: the financial condition or
character of the Borrower or the ability of the Borrower to pay and perform the
Guaranteed Obligations; the Guaranteed Obligations; any collateral or other
security for any or all of the Guaranteed Obligations; the existence or
nonexistence of any other guarantees of all or any part of the Guaranteed
Obligations; any action or inaction on the part of the Administrative Agent, the
Issuing Bank or the Banks or any other Person; or any other matter, fact or
occurrence whatsoever. Each Guarantor hereby acknowledges that it has
undertaken its own independent investigation of the financial condition of the
Borrower and all other matters pertaining to this Guaranty and further
102
<PAGE>
acknowledges that it is not relying in any manner upon any representation or
statement of the Administrative Agent, the Issuing Bank or any Bank with respect
thereto.
(h) SUBROGATION. Until the Guaranteed Obligations shall be satisfied
in full and the Revolving Commitments shall be terminated, each Guarantor shall
not have, and shall not directly or indirectly exercise, (i) any rights that it
may acquire by way of subrogation under this Section 11.17, by any payment
hereunder or otherwise, (ii) any rights of contribution, indemnification,
reimbursement or similar suretyship claims arising out of this Section 11.17 or
(iii) any other right which it might otherwise have or acquire (in any way
whatsoever) which could entitle it at any time to share or participate in any
right, remedy or security of the Banks, the Issuing Bank or the Administrative
Agent as against the Borrower or other guarantors, whether in connection with
this Section 11.17, any of the other Loan Documents or otherwise. If any amount
shall be paid to any Guarantor on account of the foregoing rights at any time
when all the Guaranteed Obligations shall not have been paid in full, such
amount shall be held in trust for the benefit of the Administrative Agent, the
Issuing Bank and the Banks and shall forthwith be paid to the Administrative
Agent to be credited and applied to the Guaranteed Obligations, whether matured
or unmatured, in accordance with the terms of the Loan Documents.
(i) SUBORDINATION. All payments on account of all indebtedness,
liabilities and other obligations of the Borrower to any Guarantor, whether now
existing or hereafter arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined (the
"Subordinated Debt") shall be subject, subordinate and junior in right of
payment and exercise of remedies, to the extent and in the manner set forth
herein, to the prior payment in full in cash or cash equivalents of the
Guaranteed Obligations. As long as any of the Guaranteed Obligations shall
remain outstanding and unpaid, each Guarantor shall not accept or receive any
payment or distribution by or on behalf of the Borrower, directly or indirectly,
or assets of the Borrower, of any kind or character, whether in cash, property
or securities, including on account of the purchase, redemption or other
acquisition of Subordinated Debt, as a result of any collection, sale or other
disposition of collateral, or by setoff, exchange or in any other manner, for or
on account of the Subordinated Debt ("Subordinated Debt Payments"), except that
prior to the occurrence of any Default, such Guarantor shall be entitled to
accept and receive regularly scheduled payments on the Subordinated Debt, in
accordance with past business practices of such Guarantor and the Borrower and
not in contravention of the terms of the Loan Documents.
In the event that any Subordinated Debt Payments shall be received in
contravention of this Section, such Subordinated Debt Payments shall be held in
trust for the benefit of the Administrative Agent, the Issuing Bank and the
Banks and shall be paid over or delivered to the Administrative Agent for
application to the payment in full in cash or cash equivalents of all Guaranteed
Obligations remaining unpaid to the extent necessary to give effect to this
Section after giving effect to any concurrent payments or distributions to the
Administrative Agent, the Issuing Bank and the Banks in respect of the
Guaranteed Obligations.
103
<PAGE>
(j) CONTINUING GUARANTY. This Guaranty is a continuing guaranty and
agreement of subordination and shall continue in effect and be binding upon each
Guarantor until termination of the Revolving Commitments and payment and
performance in full of the Guaranteed Obligations, including Guaranteed
Obligations which may exist continuously or which may arise from time to time
under successive transactions, and each Guarantor expressly acknowledges that
this Guaranty shall remain in full force and effect notwithstanding that there
may be periods in which no Guaranteed Obligations exist. This Guaranty shall
continue in effect and be binding upon each Guarantor until actual receipt by
the Administrative Agent of written notice from such Guarantor of its intention
to discontinue its Guaranty as to future transactions (which notice shall not be
effective until noon on the day five Business Days following such receipt);
PROVIDED that no revocation or termination of this Guaranty in respect of any
Guarantor shall affect in any way any rights of the Administrative Agent, the
Issuing Bank and the Banks hereunder with respect to any Guaranteed Obligations
arising or outstanding on the date of receipt of such notice, including any
subsequent continuation, extension, or renewal thereof, or change in the terms
or conditions thereof, or any Guaranteed Obligations made or created after such
date to the extent made or created pursuant to a legally binding commitment of
any of the Issuing Bank or the Banks in existence as of the date of such
revocation (collectively, "Existing Guaranteed Obligations"), and the sole
effect of such notice shall be to exclude from this Guaranty in respect of such
Guarantor Guaranteed Obligations thereafter arising which are unconnected to any
Existing Guaranteed Obligations.
(k) REINSTATEMENT. This Guaranty shall continue to be effective or
shall be reinstated and revived, as the case may be, if, for any reason, any
payment of the Guaranteed Obligations by or on behalf of the Borrower (or
receipt of any proceeds of collateral) shall be rescinded, invalidated, declared
to be fraudulent or preferential, set aside, voided or otherwise required to be
repaid to the Borrower, its estate, trustee, receiver or any other Person
(including under the Bankruptcy Code or other state or federal law), or must
otherwise be restored by the Administrative Agent, the Issuing Bank or any Bank,
whether as a result of Insolvency Proceedings or otherwise. All losses,
damages, costs and expenses that the Administrative Agent, the Issuing Bank or
the Banks may suffer or incur as a result of any voided or otherwise set aside
payments shall be specifically covered by the indemnity in favor of the Banks,
the Issuing Bank and the Administrative Agent contained in Section 11.5.
(l) SUBSTANTIAL BENEFITS. The funds that have been borrowed from the
Banks by the Borrower, and the Issuance of any Letter of Credit by the Issuing
Bank, have been and are to be contemporaneously used for the direct or indirect
benefit of the Borrower and each Guarantor. It is the position, intent and
expectation of the parties that the Borrower and each Guarantor have derived and
will derive significant and substantial direct or indirect benefits from the
accommodations that have been made by the Banks and the Issuing Bank under the
Loan Documents. Each Guarantor has received at least "reasonably equivalent
value" (as such phrase is used in Section 548 of the Bankruptcy Code, in Section
3439.04 of the California Uniform Fraudulent Transfer Act and in comparable
provisions of other applicable law) and more than sufficient consideration to
support its obligations hereunder in respect of the Guaranteed Obligations and
under any of the Loan Documents to which it is a party.
104
<PAGE>
Immediately prior to and after and giving effect to the incurrence of each
Guarantor's obligations under this Guaranty, such Guarantor will be solvent.
(m) KNOWING AND EXPLICIT WAIVERS. EACH GUARANTOR ACKNOWLEDGES THAT
IT EITHER HAS OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAS HAD THE OPPORTUNITY TO
OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS
SECTION 11.17. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT EACH OF THE WAIVERS
AND CONSENTS SET FORTH HEREIN ARE MADE WITH FULL KNOWLEDGE OF THEIR SIGNIFICANCE
AND CONSEQUENCES, AND THAT ALL SUCH WAIVERS AND CONSENTS HEREIN ARE EXPLICIT AND
KNOWING AND WHICH EACH GUARANTOR EXPECTS TO BE FULLY ENFORCEABLE.
If, while any Subordinated Debt is outstanding, any Insolvency Proceeding is
commenced by or against the Borrower or its property, the Administrative Agent,
when so instructed by the Issuing Bank and/or the Majority Banks, is hereby
irrevocably authorized and empowered (in the name of the Issuing Bank and the
Banks or in the name of the applicable Guarantor or otherwise), but shall have
no obligation, to demand, sue for, collect and receive every payment or
distribution in respect of the Subordinated Debt and give acquittance therefor
and to file claims and proofs of claim and take such other action (including
voting the Subordinated Debt) as it may deem necessary or advisable for the
exercise or enforcement of any of the rights or interests of the Administrative
Agent, the Issuing Bank and the Banks; and each Guarantor shall promptly take
such action as the Administrative Agent (on instruction from the Issuing Bank
and/or the Majority Banks) may reasonably request (A) to collect the
Subordinated Debt for the account of the Issuing Bank and the Banks and to file
appropriate claims or proofs of claim in respect of the Subordinated Debt,
(B) to execute and deliver to the Administrative Agent such powers of attorney,
assignments and other instruments as it may request to enable it to enforce any
and all claims with respect to the Subordinated Debt, and (C) to collect and
receive any and all Subordinated Debt Payments.
11.18 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Loan
Parties, the Banks and the Administrative Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
11.19 CERTAIN POST-CLOSING MATTERS. Each Loan Party shall, not
later than 10 days following the Closing Date, deliver to the Administrative
Agent a tax status certificate for such Loan Party in respect of its state of
incorporation. The Borrower shall also deliver to the Administrative Agent,
not later than 10 days following the Closing Date, the items listed on
SCHEDULE 11.19.
[SIGNATURE PAGES FOLLOW]
105
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California by their properly and
duly authorized officers as of the day and year first above written.
MAIL-WELL I CORPORATION, a
Delaware corporation
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
MAIL-WELL, INC., a Delaware
Corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
<PAGE>
MAIL-WELL CANADA HOLDINGS, INC.,
a Delaware corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
MURRAY ENVELOPE HOLDINGS, INC.,
a Colorado Corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
MURRAY ENVELOPE CORP., a
Mississippi Corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
GRAPHIC ARTS CENTER, INC., a
Delaware Corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
MAIL-WELL WEST, INC., a Delaware
Corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
<PAGE>
WISCO ENVELOPE CORP., a Tennessee
Corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
WISCO II, LLC, a Delaware limited
liability company, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
WISCO III, LLC, a Delaware limited
liability company, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
POSER BUSINESS FORMS, INC., a
Delaware corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
MAIL-WELL LABEL HOLDINGS, INC.,
a Colorado corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
<PAGE>
MAIL-WELL LABEL USA, INC., a
Colorado corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
GRIFFIN ENVELOPE INC., a
Washington corporation, as a Guarantor
By: /s/ Kevin R. Howley
-----------------------------------
Kevin R. Howley
Title: Vice President-Treasurer
--------------------------------
<PAGE>
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative
Agent, Issuing Bank, Swingline Bank and
a Bank
By: /s/ [illegible]
-----------------------------------
Title: Vice President
--------------------------------
<PAGE>
BANK OF NEW YORK, as Co-Agent and a Bank
By: /s/ Robert Louk
-----------------------------------
Robert Louk
Title: Vice President
--------------------------------
<PAGE>
CREDIT LYONNAIS NEW YORK BRANCH,
as Co-Agent and Bank
By: /s/ Robert Ivosevich
-----------------------------------
Robert Ivosevich
Title: Senior Vice President
--------------------------------
<PAGE>
FLEET NATIONAL BANK,
as Co-Agent and a Bank
By: /s/ Jeffrey C. Lynch
-----------------------------------
Jeffrey C. Lynch
Title: Vice President
--------------------------------
<PAGE>
NATIONSBANK OF TEXAS, N.A.,
as Co-Agent and a Bank
By: /s/ Kimberley A. Knop
-----------------------------------
Kimberley A. Knop
Title: Vice President
--------------------------------
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
-----------------------------------
F.C.H. Ashby
Title: Senior Manager
Loan Operations
--------------------------------
<PAGE>
THE CHASE MANHATTAN BANK
By: /s/ Mary Elisabeth Swerz
-----------------------------------
Mary Elisabeth Swerz
Title: Vice President
--------------------------------
<PAGE>
U.S. BANK NATIONAL ASSOCIATION,
D/B/A COLORADO NATIONAL BANK
By: /s/ Wesley G. Zepelin
-----------------------------------
Wesley G. Zepelin
Title: Vice President
--------------------------------
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By: /s/ [illegible]
-----------------------------------
Title: Vice President
--------------------------------
<PAGE>
KEYBANK NATIONAL ASSOCIATION
By: /s/ [illegible]
-----------------------------------
Title: Vice President
--------------------------------
<PAGE>
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/ [illegible]
-----------------------------------
Title: VP
--------------------------------
<PAGE>
UNION BANK OF CALIFORNIA, N.A.,
By: /s/ David W. Kinkela
-----------------------------------
David W. Kinkela
Title: Assistant Vice President
--------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
U.S.$100,000,000
CREDIT AGREEMENT
DATED AS OF MARCH 16, 1998
AMONG
SUPREMEX, INC.,
THE GUARANTORS
THAT ARE PARTY HERETO,
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
AS ADMINISTRATIVE AGENT,
BANK OF NEW YORK,
CREDIT LYONNAIS NEW YORK BRANCH
FLEET NATIONAL BANK
NATIONSBANK OF TEXAS, N.A.,
AS CO-AGENTS,
AND
THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO
ARRANGED BY
BANCAMERICA ROBERTSON STEPHENS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C> <C>
ARTICLE I DEFINITIONS...................................................... 1
1.1 Certain Defined Terms............................................ 1
1.2 Other Interpretive Provisions.................................... 17
1.3 Accounting Principles............................................ 18
1.4 Currency Equivalents Generally................................... 18
ARTICLE II THE CREDIT....................................................... 18
2.1 The Revolving Credit............................................. 18
2.2 Loan Accounts.................................................... 19
2.3 Procedure for Borrowing.......................................... 19
2.4 Conversion and Continuation Elections for Borrowings............. 21
2.5 Utilization of Commitments in Canadian Dollars................... 22
2.6 Voluntary Termination or Reduction of Commitments................ 23
2.7 Optional Prepayments............................................. 24
2.8 Currency Exchange Fluctuations................................... 24
2.9 Mandatory Prepayments of Loans................................... 24
2.10 Repayment........................................................ 24
2.11 Interest......................................................... 25
2.12 Commitment Fee................................................... 25
2.13 Computation of Fees and Interest................................. 26
2.14 Payments by the Borrower......................................... 26
2.15 Payments by the Banks to the Administrative Agent................ 27
2.16 Sharing of Payments, Etc......................................... 28
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY........................... 28
3.1 Taxes............................................................ 28
3.2 Illegality....................................................... 29
3.3 Increased Costs and Reduction of Return.......................... 30
3.4 Funding Losses................................................... 30
3.5 Inability to Determine Rates..................................... 31
3.6 Certificates of Banks............................................ 32
3.7 Survival......................................................... 32
ARTICLE IV CONDITIONS PRECEDENT............................................. 32
4.1 Conditions of Initial Loans...................................... 32
(a) Credit Agreement; Notes..................................... 32
(b) Resolutions; Incumbency..................................... 32
(c) Organization Documents...................................... 32
(d) Legal Opinions.............................................. 32
(e) Certificate................................................. 33
i.
<PAGE>
Page
-------
(f) Termination of Existing Facility............................ 33
(g).............................................................. 33
(g).............................................................. 33
(h) Other Documents............................................. 33
4.2 Conditions to All Credit Extensions.............................. 33
(a) Notice; Application......................................... 33
(b) Continuation of Representations and Warranties.............. 33
(c) No Existing Default......................................... 34
ARTICLE V REPRESENTATIONS AND WARRANTIES................................... 34
5.1 Corporate Existence and Power.................................... 34
5.2 Corporate Authorization; No Contravention........................ 34
5.3 Governmental Authorization....................................... 35
5.4 Binding Effect................................................... 35
5.5 Litigation....................................................... 35
5.6 No Default....................................................... 35
5.7 ERISA Compliance................................................. 35
5.8 Use of Proceeds; Margin Regulations.............................. 36
5.9 Title to Properties.............................................. 36
5.10 Taxes............................................................ 36
5.11 No Material Adverse Effect....................................... 37
5.12 Environmental Matters............................................ 37
5.13 Regulated Entities............................................... 37
5.14 No Burdensome Restrictions....................................... 37
5.15 Copyrights, Patents, Trademarks and Licenses, Etc................ 37
5.16 Subsidiaries..................................................... 37
5.17 Insurance........................................................ 38
5.18 Swap Obligations................................................. 38
5.19 Full Disclosure.................................................. 38
ARTICLE VI AFFIRMATIVE AND NEGATIVE COVENANTS............................... 38
ARTICLE VII EVENTS OF DEFAULT................................................ 39
7.1 Event of Default................................................. 39
(a) Non-Payment................................................. 39
(b) Representation or Warranty.................................. 39
(c) Specific Defaults........................................... 39
(d) Other Defaults.............................................. 39
(e) Cross-Default............................................... 39
(f) Insolvency; Voluntary Proceedings........................... 40
(g) Involuntary Proceedings..................................... 40
(h) ERISA....................................................... 40
(i) Monetary Judgments.......................................... 40
ii.
<PAGE>
Page
----
(j) Non-Monetary Judgments...................................... 41
(k) Change of Control........................................... 41
(l) Loss of Licenses............................................ 41
(m) Adverse Change.............................................. 41
(n) Guarantor Defaults.......................................... 41
7.2 Remedies......................................................... 41
7.3 Rights Not Exclusive............................................. 42
ARTICLE VIII THE ADMINISTRATIVE AGENT......................................... 42
8.1 Appointment and Authorization; "Administrative Agent."........... 42
8.2 Delegation of Duties............................................. 43
8.3 Liability of Administrative Agent................................ 43
8.4 Reliance by Administrative Agent................................. 43
8.5 Notice of Default................................................ 44
8.6 Credit Decision.................................................. 44
8.7 Indemnification of Administrative Agent.......................... 45
8.8 Administrative Agent in Individual Capacity...................... 45
8.9 Successor Administrative Agent................................... 45
8.10 Withholding Tax.................................................. 46
8.11 Co-Agents........................................................ 47
ARTICLE IX MISCELLANEOUS.................................................... 47
9.1 Amendments and Waivers........................................... 47
9.2 Notices.......................................................... 48
9.3 No Waiver; Cumulative Remedies................................... 49
9.4 Costs and Expenses............................................... 49
9.5 Indemnity........................................................ 50
(a) General Indemnity........................................... 50
(b) Environmental Indemnity..................................... 50
(c) Survival; Defense........................................... 51
(d) Existing Indemnification Rights............................. 51
9.6 Payments Set Aside............................................... 51
9.7 Successors and Assigns........................................... 51
9.8 Assignments, Participations, Etc................................. 51
9.9 Confidentiality.................................................. 53
9.10 Set-off.......................................................... 54
9.11 Notification of Addresses, Lending Offices, Etc.................. 54
9.12 Counterparts..................................................... 54
9.13 Severability..................................................... 55
9.14 No Third Parties Benefitted...................................... 55
9.15 Governing Law and Jurisdiction................................... 55
9.16 Waiver of Jury Trial............................................. 55
iii.
<PAGE>
Page
----
9.17 Guaranty......................................................... 56
(a) Guaranty.................................................... 56
(b) Separate Obligation......................................... 56
(c) Limitation of Guaranty...................................... 57
(d) Liability of Guarantor...................................... 57
(e) Consents of Guarantor....................................... 58
(f) Guarantor's Waivers......................................... 59
(g) Financial Condition of Borrower............................. 60
(h) Subrogation................................................. 60
(i) Subordination............................................... 61
(j) Continuing Guaranty......................................... 61
(k) Reinstatement............................................... 62
(l) Substantial Benefits........................................ 62
(m) Knowing and Explicit Waivers................................ 62
9.18 Entire Agreement................................................. 63
</TABLE>
iv.
<PAGE>
SCHEDULES
2.1 Commitments
3.3 Existing Letters of Credit
5.5 Litigation
5.7 ERISA
5.11 Permitted Liabilities
5.12 Environmental Matters
5.16 Subsidiaries and Minority Interests
5.17 Insurance Matters
9.2 Lending Offices; Addresses for Notices
EXHIBITS
Exhibit A Form of Notice of Borrowing
Exhibit B Form of Notice of Conversion/Continuation
Exhibit C-1 Form of Legal Opinion of Counsel to the Borrower
Exhibit C-2 Form of Legal Opinion of Counsel to the Guarantors
Exhibit D Form of Assignment and Acceptance Agreement
Exhibit E Form of Note
v.
<PAGE>
CREDIT AGREEMENT
This CREDIT AGREEMENT is entered into as of March 16, 1998, by and among
SUPREMEX, INC., a Canadian corporation (hereinafter referred to as the
"Borrower"); the Guarantors party to this Agreement; the several financial
institutions party to this Agreement (collectively called the "BANKS" and
individually called a "BANK"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as administrative agent for itself and the other Banks (in such
capacity, the "ADMINISTRATIVE AGENT") and BANK OF NEW YORK, CREDIT LYONNAIS
NEW YORK BRANCH, FLEET NATIONAL BANK and NATIONSBANK OF TEXAS, N.A., as
co-agents (the "CO-AGENTS").
WHEREAS, the Borrower has requested the Banks to make available to it a
revolving loan in an aggregate principal amount not to exceed the Aggregate
Commitment.
WHEREAS, the Banks have agreed severally to make available to the
Borrower such term loan upon the terms and conditions set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. The following terms have the following
meanings when used in this Agreement (including in the Preamble and
Recitals hereof):
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common
control with, such Person. A Person shall be deemed to control another
Person if the controlling Person possesses, directly or indirectly, the
power to direct or cause the direction of the management and policies of
the other Person, whether through the ownership of voting securities,
membership interests, partnership interests, by contract, or otherwise.
"ADMINISTRATIVE AGENT" means BofA in its capacity as administrative
agent for the Banks hereunder, and any successor agent arising under
Section 8.9.
"ADMINISTRATIVE AGENT'S PAYMENT OFFICE" means the address for payments
set forth on Schedule 9.2 or such other address as the Administrative Agent
may from time to time specify.
"AGENT-RELATED PERSONS" means BofA and any successor agent arising
under Section 9.7, together with their respective Affiliates (including, in
the case of BofA, the Arranger), and the officers, directors, employees,
agents and attorneys-in-fact of such Persons and Affiliates.
1.
<PAGE>
"AGGREGATE COMMITMENT" means, at any time, the combined Commitments of
all the Banks then in effect.
"AGREEMENT" means this Credit Agreement.
"APPLICABLE COMMITMENT FEE PERCENTAGE" means, on any date, the per
annum percentage set forth below based on the Leverage Ratio of Mail-Well I
as derived from the Parent's quarterly or annual financial statements most
recently delivered to the Administrative Agent under Section 7.1 of the
Mail-Well I Credit Agreement:
<TABLE>
<CAPTION>
Applicable
LEVERAGE RATIO OF MAIL-WELL I COMMITMENT FEE PERCENTAGE
----------------------------- -------------------------
<S> <C>
Greater than or equal to 3.25 to 1.00 0.2500%
Less than 3.25 to 1.00 but greater than 0.2000%
or equal to 2.75 to 1.00
Less than 2.75 to 1.00 but greater than 0.1750%
or equal to 2.00 to 1.00
Less than 2.00 to 1.00 but greater than 0.1500%
or equal to 1.50 to 1.00
Less than 1.50 to 1.00 0.1375%
</TABLE>
The Applicable Commitment Fee Percentage will become effective two (2)
Business Days after receipt by the Administrative Agent of the Compliance
Certificate delivered pursuant to Section 7.2(a) of the Mail-Well I Credit
Agreement in connection with the quarterly financial statements most
recently delivered to the Administrative Agent under Section 7.1 of the
Mail-Well I Credit Agreement. In the event that such Compliance
Certificate is not timely delivered to the Administrative Agent when
required under Section 7.2(a) of the Mail-Well I Credit Agreement, the
Applicable Commitment Fee Percentage will be 0.2500%, effective two (2)
Business Days after the date such Compliance Certificate was due until two
(2) Business Days after such Compliance Certificate is received by the
Administrative Agent. The Applicable Commitment Fee Percentage from the
Closing Date and continuing for the first two full fiscal quarters
thereafter, based upon the Borrower's financial performance for the fiscal
quarter ending September 30, 1997, will be greater than (based upon the
actual Leverage Ratio of Mail-Well I) or equal to 0.1750%. For purposes of
determining Applicable Commitment Fee Percentage, EBITDA, EBIT and interest
expense shall be adjusted for Acquisitions of "Acquired Subsidiaries" in
the same manner set forth in Section 8.15 of the Mail-Well I Credit
Agreement for calculating compliance with Sections 8.14 and 8.15 thereof.
2.
<PAGE>
"APPLICABLE MARGIN" means, on any date:
(i) with respect to each Base Rate Loan or Prime Rate Loan
outstanding on such date, 0.00% per annum; and
(ii) with respect to each Offshore Rate Loan outstanding on such
date, the applicable margin (on a per annum basis) set forth below
based on the Leverage Ratio of Mail-Well I as derived from the
Parent's quarterly or annual financial statements most recently
delivered to the Administrative Agent under Section 7.1 of the
Mail-Well I Credit Agreement:
The Applicable Margin will become effective two (2) Business Days after
receipt by the Administrative Agent of the Compliance Certificate delivered
pursuant to Section 7.2(a) of the Mail-Well I Credit Agreement in
connection with the quarterly or annual financial statements most recently
delivered to the Administrative Agent under Section 7.1 thereof. In the
event that such Compliance Certificate is not timely delivered to the
Administrative Agent when required under Section 7.2(a) of the Mail-Well I
Credit Agreement, the Applicable Margin will be 0.875%, effective two (2)
Business Days after the date such Compliance Certificate was due until two
(2) Business Days after such Compliance Certificate is received by the
Administrative Agent. The Applicable Margin with respect to Offshore Rate
Loans from the Closing Date and continuing for the first two full fiscal
quarters thereafter, based upon Mail-Well I's financial performance for the
fiscal quarter ending September 30, 1997, will be greater than (based upon
the actual Leverage Ratio of Mail-Well I) or equal to 0.625%. For purposes
of determining Applicable Margin, EBITDA, EBIT and interest expense shall
be adjusted for Acquisitions of "Acquired Subsidiaries" in the same manner
set forth in Section 8.15 of the Mail-Well I Credit Agreement for
calculating compliance with Sections 8.14 and 8.15 thereof.
"ARRANGER" means BancAmerica Robertson Stephens.
3.
<PAGE>
"ASSIGNEE" has the meaning specified in Section 9.8(a).
"ATTORNEY COSTS" means and includes all fees and disbursements of any
law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"BANK" has the meaning specified in the introductory clause hereto.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (11
U.S.C. Section 101, ET SEQ.).
<TABLE>
<CAPTION>
LEVERAGE RATIO OF MAIL-WELL I APPLICABLE MARGIN
- ------------------------------ -----------------
<S> <C>
Greater than or equal to 3.25 to 1.00 0.875%
Less than 3.25 to 1.00 but greater than 0.750%
or equal to 2.75 to 1.00
Less than 2.75 to 1.00 but greater than 0.625%
or equal to 2.00 to 1.00
Less than 2.00 to 1.00 but greater than 0.500%
or equal to 1.50 to 1.00
Less than 1.50 to 1.00
</TABLE>
"BASE RATE" means, for any day, the higher of: (a) 0.50% per annum
above the most recently announced Federal Funds Rate; and (b) the rate of
interest in effect for such day as publicly announced from time to time by
BofA in San Francisco, California, as its "reference rate." (The
"reference rate" is a rate set by BofA based upon various factors including
BofA's costs and desired return, general economic conditions and other
factors, and is used as a reference point for pricing some loans, which may
be priced at, above, or below such announced rate.)
Any change in the reference rate announced by BofA shall take effect
at the opening of business on the day specified in the public announcement
of such change.
"BASE RATE LOAN" means a Loan that bears interest based on the Base
Rate. Base Rate Loans shall be denominated in U.S. Dollars.
"BOFA" means Bank of America National Trust and Savings Association, a
national banking association.
"BORROWING" means a borrowing hereunder consisting of Loans of the
same Type and in the same currency made to the Borrower on the same day by
the Banks pursuant to Article II and, other than in the case of Base Rate
Loans and Prime Rate Loans, having the same Interest Period.
"BORROWING DATE" means any date on which a Borrowing occurs.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks in San Francisco and Toronto, Canada are
authorized or required by law to close and, if the applicable Business Day
relates to any Offshore Rate Loan, means such a day on which dealings are
carried on in the applicable offshore interbank market and, with respect to
any disbursements and payments in and calculations pertaining to any
Canadian Dollar Loan, a day on which commercial banks are open for foreign
exchange business in London, England, and on which dealings in Canadian
dollars are carried on in the applicable offshore foreign exchange
interbank market in which disbursement of or payment in Canadian dollars
will be made or received hereunder.
4.
<PAGE>
"CANADIAN DOLLARS" means lawful money of Canada.
"CANADIAN DOLLAR LOAN" means a Loan hereunder denominated in Canadian
dollars. Canadian Dollar Loans shall be Offshore Rate Loans or Prime Rate
Loans.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other
law, rule or regulation, whether or not having the force of law, in each
case, regarding capital adequacy of any bank or of any corporation
controlling a bank.
"CHANGE OF CONTROL" means, in respect of any Person, the occurrence of
either of the following: (a) any "person" or "group" (as such terms are
used in subsections 13(d) and 14(d) of the Exchange Act and the regulations
thereunder), is or becomes the "beneficial owner" (as such term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person
has the right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of 30% or more of
the then outstanding voting capital stock of such Person, or (b) the
Continuing Directors shall cease to constitute at least a majority of the
directors constituting the board of directors of such Person.
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 4.1 are satisfied, made conditions subsequent or waived by
all Banks.
"CODE" means the Internal Revenue Code of 1986, and regulations
promulgated thereunder.
"COMMITMENT" has the meaning set forth in Section 2.1.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of EXHIBIT C to the Mail-Well I Credit Agreement.
"COMPUTATION DATE" has the meaning specified in subsection 2.5(a).
"CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or
without recourse, (a) with respect to any Indebtedness, lease, dividend,
letter of credit or other obligation (the "primary obligations") of another
Person (the "primary obligor"), including any obligation of that Person (i)
to purchase, repurchase or otherwise acquire such primary obligations or
any security therefor, (ii) to advance or provide funds for the payment or
discharge of any such primary obligation, or to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net
worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such
primary obligation of the ability of the primary obligor to make
5.
<PAGE>
payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in
respect thereof (each, a "GUARANTY OBLIGATION"); (b) with respect to any
Surety Instrument issued for the account of that Person or as to which
that Person is otherwise liable for reimbursement of drawings or
payments; (c) to purchase any materials, supplies or other property
from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment
for such materials, supplies or other property, or for such services,
shall be made regardless of whether delivery of such materials, supplies
or other property is ever made or tendered, or such services are ever
performed or tendered; or (d) in respect of any Swap Contract. The
amount of any Contingent Obligation shall, in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty Obligation is made
or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof, and in the case of other
Contingent Obligations other than in respect of Swap Contracts, shall be
equal to the maximum reasonably anticipated liability in respect thereof
and, in the case of Contingent Obligations in respect of Swap Contracts,
shall be equal to the Swap Termination Value.
"CONTINUING DIRECTORS" means, in respect of any Person as of any date,
the collective reference to all members of the board of directors of such
Person who assumed office after such date and whose appointment or
nomination for election by such Person's shareholders was approved by a
vote of at least 50% of the Continuing Directors in office immediately
prior to such appointment or nomination.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"CONVERSION/CONTINUATION DATE" means any date on which, under Section
2.4, the Borrower (a) converts Loans of one Type to another Type, or (b)
continues as Loans of the same Type, but with a new Interest Period, Loans
having Interest Periods expiring on such date.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise
remedied during such time) constitute an Event of Default.
"ELIGIBLE ASSIGNEE" means (i) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined
capital and surplus of at least $100,000,000; (ii) a commercial bank
organized under the laws of any other country which is a member of the
Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having a combined capital
and surplus of at least $100,000,000, provided that such bank is
6.
<PAGE>
acting through a branch or agency located in the United States or the
Cayman Islands; (iii) a Person that is primarily engaged in the business
of commercial banking and that is (A) a Subsidiary of a Bank, (B) a
Subsidiary of a Person of which a Bank is a Subsidiary, or (C) a Person
of which a Bank is a Subsidiary.
"ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
Governmental Authority or other Person alleging potential liability or
responsibility of the Borrower or its Subsidiaries for violation of any
Environmental Law, or for release or injury to the environment.
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign laws,
statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative orders, directed duties, licenses,
authorizations and permits of, and agreements with, any Governmental
Authorities, in each case relating to environmental, health, safety and
land use matters.
"ERISA" means the Employee Retirement Income Security Act of 1974, and
regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Borrower or any Subsidiary of
the Borrower within the meaning of subsection 414(b) or (c) of the Code
(and Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a Pension
Plan; (b) a withdrawal by the Borrower or any Subsidiary of the Borrower or
any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated
as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate from a Multiemployer Plan or notification that a
Multiemployer Plan is in reorganization; (d) the filing of a notice of
intent to terminate, the treatment of a Plan amendment as a termination
under Section 4041 or 4041A of ERISA, or the commencement of proceedings by
the PBGC to terminate a Pension Plan or Multiemployer Plan; (e) an event or
condition which might reasonably be expected to constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon the
Borrower or any Subsidiary of the Borrower or any ERISA Affiliate.
"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 8.1.
7.
<PAGE>
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"EXISTING FACILITY" means collectively (i) the Promissory Note dated
November 19, 1997, from Supremex, Inc. to Bank of America Canada and (ii)
the Promissory Note dated November 19, 1997, from the Borrower to BofA.
"FDIC" means the Federal Deposit Insurance Corporation, and any
Governmental Authority succeeding to any of its principal functions.
"FEDERAL FUNDS RATE" means, for any day, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Bank of New York (including
any such successor, "H.15(519)") on the preceding Business Day opposite the
caption "Federal Funds (Effective)"; or, if for any relevant day such rate
is not so published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Administrative Agent
of the rates for the last transaction in overnight Federal funds arranged
prior to 9:00 a.m. (New York City time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by
the Administrative Agent.
"FRB" means the Board of Governors of the Federal Reserve System, and
any Governmental Authority succeeding to any of its principal functions.
"FURTHER TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges (including, without limitation, net income taxes and franchise
taxes), and all liabilities with respect thereto, imposed by any
jurisdiction on account of amounts payable or paid pursuant to Section 3.1.
"FX TRADING OFFICE" means the Foreign Exchange Trading Center #5752,
Los Angeles, California, of BofA, or such other of BofA's offices as BofA
may designate from time to time.
"GAAP" means (i) generally accepted accounting principles set forth
from time to time in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public Accountants
and statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), or (ii) in the case of
the Borrower, generally accepted accounting principles in the Province of
Ontario, Canada, in each case which are applicable to the circumstances and
consistently applied.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary
or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or
8.
<PAGE>
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"GUARANTOR" means each of the Parent and Mail-Well I in its capacity
as a "guarantor" under Section 9.17 of this Agreement or, as the case may
be, under any separate agreement executed by it pursuant to which it
guarantees the Obligations.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section 9.17.
"GUARANTY" means the guaranty of each Guarantor made pursuant to
Section 9.17 and any other guaranty under any separate agreement executed
by any Guarantor pursuant to which it guarantees the Obligations.
"GUARANTY OBLIGATION" has the meaning specified in the definition of
"Contingent Obligation."
"HAZARDOUS MATERIALS" means all those substances that are regulated
by, or which may form the basis of liability under, any Environmental Law,
including any substance identified under any Environmental Law as a
pollutant, contaminant, hazardous waste, hazardous constituent, special
waste, hazardous substance, hazardous material, or toxic substance, or
petroleum or petroleum derived substance or waste.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all noncontingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets
or businesses; (e) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to property acquired by the Person
(even though the rights and remedies of the seller or bank under such
agreement in the event of default are limited to repossession or sale of
such property); (f) all obligations with respect to capital leases; (g) all
indebtedness referred to in clauses (a) through (f) above secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in property (including
accounts and contracts rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such
Indebtedness; and (h) all Guaranty Obligations in respect of indebtedness
or obligations of others of the kinds referred to in clauses (a) through
(g) above.
For all purposes of this Agreement, the Indebtedness of any Person shall
include all recourse Indebtedness of any partnership or joint venture or
limited liability company in which such Person is a general partner or a
joint venturer or a member.
9.
<PAGE>
"INDEMNIFIED LIABILITIES" has the meaning specified in Section 9.5.
"INDEMNIFIED PERSON" has the meaning specified in Section 9.5.
"INSOLVENCY PROCEEDING" means, with respect to any Person, (a) any
case, action or proceeding with respect to such Person before any court or
other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (b) any general assignment for the benefit of creditors,
composition, marshaling of assets for creditors, or other, similar
arrangement in respect of its creditors generally or any substantial
portion of its creditors; in either event undertaken under U.S. Federal,
state or foreign law, including the Bankruptcy Code.
"INTEREST PAYMENT DATE" means, as to any Offshore Rate Loan, the last
day of each Interest Period applicable to such Loan and, as to any Base
Rate Loan or Prime Rate Loan, the last day of each calendar quarter and
each date such Base Rate Loan or Prime Rate Loan is converted into an
Offshore Rate Loan; PROVIDED, HOWEVER, that if any Interest Period for an
Offshore Rate Loan exceeds three months, the date that falls three months
after the beginning of such Interest Period and after each Interest Payment
Date thereafter is also an Interest Payment Date.
"INTEREST PERIOD" means, as to any Offshore Rate Loan, the period
commencing on the Borrowing Date of such Loan or on the
Conversion/Continuation Date on which a Loan is converted into or
continued as an Offshore Rate Loan, and ending on the date one, two,
three or six months thereafter as selected by the Borrower in its Notice
of Borrowing or Notice of Conversion/Continuation;
PROVIDED that:
(i) if any Interest Period would otherwise end on a day that is
not a Business Day, that Interest Period shall be extended to the
following Business Day unless, in the case of an Offshore Rate Loan,
the result of such extension would be to carry such Interest Period
into another calendar month, in which event such Interest Period shall
end on the preceding Business Day;
(ii) any Interest Period pertaining to an Offshore Rate Loan
that begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period;
and
(iii) no Interest Period for any Loan shall extend beyond the
Revolving Termination Date.
10.
<PAGE>
"IRS" means the Internal Revenue Service, and any Governmental
Authority succeeding to any of its principal functions under the Code.
"LENDING OFFICE" means, as to any Bank, the office or offices of such
Bank specified as its "Lending Office" or "Domestic Lending Office" or
"Offshore Lending Office," as the case may be, on SCHEDULE 9.2, or such
other office or offices as such Bank may from time to time notify the
Borrower and the Administrative Agent.
"LIEN" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preferential arrangement of any kind or nature
whatsoever in respect of any property (including those created by, arising
under or evidenced by any conditional sale or other title retention
agreement, the interest of a lessor under a capital lease, any financing
lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable
law) and any contingent or other agreement to provide any of the foregoing,
but not including the interest of a lessor under an operating lease.
"LOAN" means an extension of credit by a Bank to the Borrower under
Article II, and may be an Offshore Rate Loan, a Base Rate Loan or a Prime
Rate Loan (each a "Type" of Loan).
"LOAN DOCUMENTS" means this Agreement, the Notes, if any, and all
other documents delivered to the Administrative Agent or any Bank in
connection herewith.
"LOAN PARTY" means the Borrower and each Guarantor.
"MAIL-WELL I" means Mail-Well I Corporation, a Delaware Corporation.
"MAIL-WELL I CREDIT AGREEMENT" means the Credit Agreement dated as of
March 16, 1998, by and among Mail-Well I, the "Guarantors" party thereto,
the "Banks" party thereto, the "Co-Agents" party thereto and BofA, as
administrative agent for such Banks.
"MAJORITY BANKS" means (a) at any time prior to the Revolving
Termination Date, Banks then holding at least 51% of the U.S. Dollar
Equivalent Amount of the Commitments, and (b) thereafter, Banks then
holding at least 51% of the aggregate unpaid U.S. Dollar Equivalent Amount
of the Loans. For purposes of determining whether the Majority Banks have
approved any amendment, waiver or consent or taken any other action
hereunder, the U.S. Dollar Equivalent Amount of all unpaid Canadian Dollar
Loans shall be calculated on the date such amendment, waiver or consent is
to become effective or such action is to be taken.
11.
<PAGE>
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) of any Loan Party (considering all of
its assets), or of such Loan Party and its Subsidiaries taken as a whole,
which would be expected to result in a material impairment of the ability
of such Loan Party (considering all of its assets), or of such Loan Party
and its Subsidiaries taken as a whole, to perform under any Loan Document
and to avoid any Default or Event of Default; or (b) a material adverse
effect upon the legality, validity, binding effect or enforceability
against the Borrower or any Guarantor of any Loan Document.
"MULTIEMPLOYER PLAN" means a "multiple employer plan" or a
"multiemployer plan," within the meaning of Sections 4064(a) and 4001(a)(3)
of ERISA, to which the Borrower or any Subsidiary of the Borrower or any
ERISA Affiliate makes, is making, or is obligated to make contributions or,
during the preceding three calendar years, has made, or been obligated to
make, contributions.
"NOTES" has the meaning specified in Section 2.2.
"NOTICE OF BORROWING" means a notice in substantially the form of
EXHIBIT A.
"NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
the form of EXHIBIT B.
"OBLIGATIONS" means all Loans and other Indebtedness arising under any
Loan Document and all other advances, debts, liabilities, obligations,
covenants and duties owing by the Borrower or any other Loan Party to any
Bank, the Administrative Agent, or any Indemnified Person, whether direct
or indirect (including those acquired by assignment), absolute or
contingent, due or to become due, now existing or hereafter arising.
"OFFSHORE RATE" means, for any Interest Period, with respect to
Offshore Rate Loans comprising part of the same Borrowing, the rate of
interest per annum (rounded upward to the next 1/16th of 1%) determined by
the Administrative Agent as follows:
Offshore Rate = LIBOR
---------------------------------------
1.00 -- Eurodollar Reserve Percentage
Where,
"EURODOLLAR RESERVE PERCENTAGE" means for any day for any
Interest Period the maximum reserve percentage (expressed as a
decimal, rounded upward to the next 1/100th of 1%) in effect on such
day (whether or not applicable to any Bank) under regulations issued
from time to time by the FRB
12.
<PAGE>
for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with
respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"); and
"LIBOR" means the rate of interest per annum determined by the
Administrative Agent to be the arithmetic mean (rounded upward to the
nearest 1/16th of 1%) of the rates of interest per annum notified to
the Administrative Agent by BofA as the rate of interest at which
deposits in U.S. Dollars or Canadian dollars, as the case may be, in
the approximate amount of the Loans to be borrowed in such Borrowing
(or the approximate amount of the Loans to be continued as or
converted into Offshore Rate Loans) and having a maturity comparable
to such Interest Period, would be offered to major banks in the London
interbank market at their request at approximately 11:00 a.m. (London
time) two Business Days prior to the commencement of such Interest
Period.
The Offshore Rate shall be adjusted automatically as to all Offshore
Rate Loans then outstanding as of the effective date of any change in the
Eurodollar Reserve Percentage.
"OFFSHORE RATE LOAN" means any Loan that bears interest based on the
Offshore Rate.
"ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
or articles of incorporation, the bylaws, any certificate of determination
or instrument relating to the rights of preferred shareholders of such
corporation, any shareholder rights agreement, and all applicable
resolutions of the board of directors (or any committee thereof) of such
corporation, and for any partnership, the partnership agreement, any other
agreements or instruments relating to the rights of the partners of such
partnership or limiting or authorizing the activities of such partnership,
and all applicable resolutions of such partnership.
"OTHER TAXES" means any present or future stamp, court or documentary
taxes or any other excise or property taxes, charges or similar levies
which arise from any payment made hereunder or from the execution,
delivery, performance, enforcement or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents.
"OVERNIGHT RATE" means, for any day, the rate of interest per annum at
which overnight deposits in Canadian dollars, in an amount approximately
equal to the amount with respect to which such rate is being determined,
would be offered for such day by the Administrative Agent to major banks in
the applicable offshore interbank market.
"PARENT" means Mail-Well, Inc., a Delaware corporation.
13.
<PAGE>
"PARTICIPANT" has the meaning specified in Section 9.8(d).
"PBGC" means the Pension Benefit Guaranty Corporation, or any
Governmental Authority succeeding to any of its principal functions under
ERISA.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Borrower or any Subsidiary of
the Borrower or any ERISA Affiliate sponsors, maintains, or to which it
makes, is making, or is obligated to make contributions, or in the case of
a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5)
plan years.
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of the Borrower or any Subsidiary existing or arising under Swap
Contracts, provided that each of the following criteria is satisfied: (a)
such obligations are (or were) entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated
with liabilities, commitments or assets held or reasonably anticipated by
such Person, or changes in the value of securities issued by such Person in
conjunction with a securities repurchase program not otherwise prohibited
hereunder, and not for purposes of speculation or taking a "market view";
and (b) such Swap Contracts do not contain any provision ("walk-away"
provision) exonerating the nondefaulting party from its obligation to make
payments on outstanding transactions to the defaulting party.
"PERSON" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust,
unincorporated association, joint venture or Governmental Authority.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Borrower or any Subsidiary of the Borrower sponsors or
maintains or to which the Borrower or any Subsidiary of the Borrower makes,
is making, or is obligated to make contributions and includes any Pension
Plan.
"PRIME RATE" means, for any day, the per annum rate of interest in
effect for such day as publicly announced from time to time by Bank of
America Canada in Toronto, Ontario, as its "prime rate." (The "prime rate"
is a rate set by Bank of America Canada based upon various factors
including Bank of America Canada's costs and desired return, general
economic conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such announced
rate.) Any change in the prime rate announced by Bank of America Canada
shall take effect at the opening of business on the day specified in the
public announcement of such change.
"PRIME RATE LOAN" means a Canadian Dollar Loan that bears interest
based on the Prime Rate.
14.
<PAGE>
"PRO RATA SHARE" means, as to any Bank at any time, the percentage
equivalent (expressed as a decimal, rounded to the ninth decimal place) at
such time of such Bank's Commitment divided by the combined Commitments of
all Banks.
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event
for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of
a Governmental Authority, in each case applicable to or binding upon the
Person or any of its property or to which the Person or any of its property
is subject.
"RESPONSIBLE OFFICER" means, with respect to the Borrower or any other
Loan Party or any Subsidiary of the Borrower or such Loan Party, its chief
executive officer or its president, or any other officer having
substantially the same authority and responsibility; or, with respect to
compliance with financial covenants, its chief financial officer or its
treasurer, or any other officer having substantially the same authority and
responsibility.
"REVOLVING TERMINATION DATE" means the earlier to occur of:
(a) September 16, 1998; and
(b) the date on which the Commitments terminate in accordance
with the provisions of this Agreement.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"SPOT RATE" for a currency means the rate quoted by BofA as the spot
rate for the purchase by BofA of such currency with another currency
through its FX Trading Office at approximately 8:00 a.m. (San Francisco
time) on the date two Business Days prior to the date as of which the
foreign exchange computation is made.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, limited liability company, joint venture or other business
entity of which more than 50% of the voting stock, membership interests or
other equity interests (in the case of Persons other than corporations), is
owned or controlled directly or indirectly by the Person, or one or more of
the Subsidiaries of the Person, or a combination thereof. Unless the
context otherwise clearly requires, references herein to a "Subsidiary"
refer to a Subsidiary of the Borrower.
15.
<PAGE>
"SURETY INSTRUMENTS" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap
or option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or
any combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
"SWAP TERMINATION VALUE" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a) the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined by the Administrative Agent based upon one or more mid-market or
other readily available quotations provided by any recognized dealer in
such Swap Contracts (which may include any Bank).
"TAXES" means any and all present or future taxes, levies,
assessments, imposts, duties, deductions, fees, withholdings or similar
charges, and all liabilities with respect thereto, excluding, in the case
of each Bank and the Administrative Agent, respectively, taxes imposed on
or measured by its net income or gross receipts by the jurisdiction (or any
political subdivision thereof) under the laws of which such Bank or the
Administrative Agent, as the case may be, is organized or maintains a
lending office.
"TYPE" has the meaning specified in the definition of "Loan."
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"UNITED STATES," "US" and "U.S." each means the United States of
America.
"U.S. DOLLAR EQUIVALENT AMOUNT" means, at any time, (a) as to any
amount denominated in U.S. Dollars, the amount thereof at such time, and
(b) as to any amount denominated in Canadian dollars, the equivalent amount
in U.S. Dollars as determined by the Administrative Agent using the Spot
Rate for the purchase of U.S.
16.
<PAGE>
Dollars with Canadian dollars on the most recent Computation Date provided
for in subsection 2.5(a).
"U.S. DOLLARS," "DOLLARS", "DOLLARS" and "$" each mean lawful money of
the United States.
"WHOLLY OWNED SUBSIDIARY" means any corporation in which (other than
directors' qualifying shares required by law) 100% of the capital stock of
each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination
is being made, is owned, beneficially and of record, by the Borrower, or by
one or more of the other Wholly Owned Subsidiaries, or both.
1.2 OTHER INTERPRETIVE PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding," and the word
"through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications thereto, but
only to the extent such amendments and other modifications are not prohibited by
the terms of any Loan Document, and (ii) references to any statute or regulation
are to be construed as including all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting the statute or
regulation.
(e) The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.
17.
<PAGE>
(f) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters. All
such limitations, tests and measurements are cumulative and shall each be
performed in accordance with their terms. Unless otherwise expressly provided,
any reference to any action of the Administrative Agent or the Banks by way of
consent, approval or waiver shall be deemed modified by the phrase "in its/their
sole discretion."
(g) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Administrative
Agent, the Borrower and its Subsidiaries, the Banks and the other parties, and
are the products of all parties. Accordingly, they shall not be construed
against the Banks or the Administrative Agent merely because of the
Administrative Agent's or Banks' involvement in their preparation.
1.3 ACCOUNTING PRINCIPLES.
(a) Unless the context otherwise clearly requires, all accounting
terms not expressly defined herein shall be construed, and all financial
computations required under this Agreement shall be made, in accordance with
GAAP.
(b) References herein to "fiscal year" and "fiscal quarter" refer to
such fiscal periods of the Borrower, unless otherwise specified.
1.4 CURRENCY EQUIVALENTS GENERALLY. For all purposes of this Agreement
(but not for purposes of the preparation of any financial statements delivered
pursuant hereto), the equivalent in Canadian dollars (or any other currency) of
an amount in U.S. Dollars, and the equivalent in U.S. Dollars of an amount in
Canadian dollars (or any other currency), shall be determined at the Spot Rate.
ARTICLE II
THE CREDIT
2.1 THE REVOLVING CREDIT. Each Bank severally agrees, on the terms and
conditions set forth herein, to make loans to the Borrower denominated in U.S.
Dollars or Canadian dollars (each such loan, a "LOAN") from time to time on any
Business Day during the period from the Closing Date to the Revolving
Termination Date, in an aggregate U.S. Dollar Equivalent Amount outstanding not
to exceed at any time the amount set forth on SCHEDULE 2.1 in respect of such
Bank (such amount as the same may be reduced under Section 2.6 or as a result of
one or more assignments under Section 9.8, the Bank's "COMMITMENT"); PROVIDED,
HOWEVER, that, after giving effect to any Borrowing of Loans, the U.S. Dollar
Equivalent Amount of the outstanding Loans of all the Banks together shall not
at any time exceed the aggregate Commitments of the Banks. Within the limits of
each Bank's Commitment, and subject to the other terms and conditions hereof,
the Borrower may borrow under this Section 2.1, prepay under Section 2.7 and
reborrow under this Section 2.1.
18.
<PAGE>
The Borrower understands and agrees that the Existing Facility shall
terminate, without necessity of further act of the parties, upon execution of
this Agreement by the Borrower. The Borrower confirms and acknowledges its
obligations to pay to BofA on the Closing Date all amounts outstanding under the
Existing Facility, and the Borrower covenants and each other party hereto
acknowledges and agrees that proceeds of the initial Borrowings under this
Agreement shall be used to pay all principal and accrued interest (if any) and
all other amounts outstanding under the Existing Facility.
2.2 LOAN ACCOUNTS.
(a) The Loans made by each Bank shall be evidenced by one or more
accounts or records maintained by such Bank in the ordinary course of business.
The accounts or records maintained by the Administrative Agent and each Bank
shall be conclusive absent manifest error of the amount of the Loans made by the
Banks to the Borrower and the interest and payments thereon. Any failure so to
record or any error in doing so shall not, however, limit or otherwise affect
the obligation of the Borrower hereunder to pay any amount owing with respect to
the Loans.
(b) Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more notes
("Notes") instead of or in addition to loan accounts. Each such Bank shall
endorse on the schedules annexed to its Note(s) the date, amount, applicable
currency and maturity of each Loan made by it and the amount and applicable
currency of each payment of principal made by the Borrower with respect
thereto. Each such Bank is irrevocably authorized by the Borrower to endorse
its Note(s) and each Bank's record shall be conclusive absent manifest error;
PROVIDED, HOWEVER, that the failure of a Bank to make, or an error in making,
a notation thereon with respect to any Loan shall not limit or otherwise
affect the obligations of the Borrower hereunder or under any such Note to
such Bank.
2.3 PROCEDURE FOR BORROWING.
(a) Each Borrowing shall be made upon the Borrower's irrevocable
written notice delivered to the Administrative Agent in the form of a Notice of
Borrowing (which notice must be received by the Administrative Agent prior to
9:00 a.m. (San Francisco time)) at least (i) four Business Days prior to the
requested Borrowing Date in the case of Canadian Dollar Loans, (ii) three
Business Days prior to the requested Borrowing Date, in the case of Offshore
Rate Loans denominated in U.S. Dollars; and (iii) one Business Day prior to the
requested Borrowing Date, in the case of Base Rate Loans or Prime Rate Loans,
specifying:
(A) the amount of the Borrowing in U.S. Dollars or Canadian
Dollars, as the case may be, which shall be in an aggregate minimum
U.S. Dollar Equivalent Amount of $5,000,000 or, in the case of any
Borrowing in U.S. Dollars only, any multiple of $1,000,000 in excess
thereof;
(B) the requested Borrowing Date, which shall be a Business
Day;
19.
<PAGE>
(C) the Type of Loans comprising the Borrowing;
(D) with respect to Offshore Rate Loans, the duration of
the Interest Period applicable to such Loans included in such notice.
If the Notice of Borrowing fails to specify the duration of the
Interest Period for any Borrowing comprised of Offshore Rate Loans,
such Interest Period shall be three months; and
(E) whether such Borrowing shall be denominated in U.S.
Dollars or Canadian dollars;
PROVIDED, HOWEVER, that with respect to any Borrowing to be made on the Closing
Date, the Notice of Borrowing may be delivered to the Administrative Agent not
later than 11:00 a.m. (San Francisco time) at least three Business Days before
the Closing Date.
(b) The U.S. Dollar Equivalent Amount of any Borrowing of Canadian
Dollar Loans will be determined by the Administrative Agent for such Borrowing
on the Computation Date therefor in accordance with subsection 2.5(a). The
Administrative Agent will promptly notify each Bank of its receipt of any Notice
of Borrowing and of the amount of such Bank's Pro Rata Share of that Borrowing.
(c) Each Bank will make the amount of its Pro Rata Share of each
Borrowing available to the Administrative Agent for the account of the Borrower
at the Administrative Agent's Payment Office by 11:00 a.m. (San Francisco time)
on the Borrowing Date requested by the Borrower in funds immediately available
to the Administrative Agent and in the requested currency. The proceeds of all
such Loans will then be made available to the Borrower by the Administrative
Agent at such office by crediting the account of the Borrower on the books of
BofA with the aggregate of the amounts made available to the Administrative
Agent by the Banks and in like funds as received by the Administrative Agent, or
if requested by the Borrower, by wire transfer in accordance with written
instructions provided to the Administrative Agent by the Borrower of such funds
as received by the Administrative Agent, less customary fees for such wire
transfer.
(d) After giving effect to any Borrowing, unless the Administrative
Agent shall otherwise consent, there may not be more than ten (10) different
Interest Periods in effect in respect of all Loans then outstanding.
2.4 CONVERSION AND CONTINUATION ELECTIONS FOR BORROWINGS.
(a) The Borrower may, upon irrevocable written notice to the
Administrative Agent in accordance with Section 2.4(b),
(i) elect to convert, as of any Business Day, any Base Rate Loans or
Prime Rate Loans (or any part thereof in a U.S. Dollar Equivalent Amount
not less than
20.
<PAGE>
$5,000,000, or, in the case of Base Rate Loans only, that is in an
integral multiple of $1,000,000 in excess thereof) into Offshore Rate
Loans of the same currency;
(ii) elect to convert, as of the last day of the applicable Interest
Period, any Offshore Rate Loans expiring on such day (or any part thereof
in a U.S. Dollar Equivalent Amount not less than $1,000,000, or, in the
case of Offshore Rate Loans denominated in U.S. Dollars only, that is in an
integral multiple of $1,000,000 in excess thereof) into Base Rate Loans or
Prime Rate Loans of the same currency; or
(iii) elect to continue (for the same or different Interest Period),
as of the last day of the applicable Interest Period, any Offshore Rate
Loans having Interest Periods expiring on such day (or any part thereof in
a U.S. Dollar Equivalent Amount not less than $5,000,000, or, in the case
of Offshore Rate Loans denominated in U.S. Dollars only, that is in an
integral multiple of $1,000,000 in excess thereof);
PROVIDED, that if at any time the aggregate U.S. Dollar Equivalent Amount of
Offshore Rate Loans is reduced, by payment, prepayment, or conversion of part
thereof to be less than $5,000,000, such Offshore Rate Loans shall automatically
convert into Base Rate Loans, in the case of Offshore Rate Loans denominated in
U.S. Dollars, or Prime Rate Loans, in the case of Offshore Rate Loans
denominated in Canadian dollars, and on and after such date the right of the
Borrower to continue such Loans as, and convert such Loans into, Offshore Rate
Loans shall terminate.
(b) To convert or continue a Loan as provided in subsection 2.4(a),
the Borrower shall deliver a Notice of Conversion/Continuation to be received by
the Administrative Agent not later than 9:00 a.m. (San Francisco time) at least
(i) three Business Days in advance of the Conversion/Continuation Date, if the
Loans are to be converted into or continued as Offshore Rate Loans denominated
in U.S. Dollars; (ii) four Business Days in advance of the
Conversion/Continuation Date, if the Loans are to be converted into or continued
as Offshore Rate Loans denominated in Canadian dollars; and (iii) one Business
Day in advance of the Conversion/Continuation Date, if the Loans are to be
converted into Base Rate or Prime Rate Loans, specifying:
(A) the proposed Conversion/Continuation Date,
(B) the aggregate amount in U.S. Dollars or Canadian
dollars, as the case may be, of Loans to be converted or continued;
(C) the Type of Loans resulting from the proposed
conversion or continuation; and
(D) other than in the case of conversions into Base Rate
Loans or Prime Rate Loans, the duration of the requested Interest
Period.
21.
<PAGE>
(c) If upon the expiration of any Interest Period applicable to
Offshore Rate Loans denominated in U.S. Dollars, the Borrower has failed to
select a new Interest Period to be applicable to such Offshore Rate Loans prior
to the third Business Day in advance of the expiration date of the current
Interest Period applicable thereto as provided in Subsection 2.4(b), or if any
Default or Event of Default then exists, the Borrower shall be deemed to have
elected to convert such Offshore Rate Loans into Base Rate Loans effective as of
the expiration date of such Interest Period, and all conditions to such
conversion shall be deemed to have been satisfied. If the Borrower has failed
to select a new Interest Period to be applicable to Offshore Rate Loans
denominated in Canadian dollars prior to the fourth Business Day in advance of
the expiration date of the current Interest Period applicable thereto as
provided in subsection 2.4(b), or if any Default or Event of Default shall then
exist, subject to the provisions of subsection 2.5(d), the Borrower shall be
deemed to have elected to convert such Offshore Rate Loans into Prime Rate Loans
effective as of the expiration date of such Interest Period, and all conditions
to such conversion shall be deemed to have been satisfied.
(d) The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Borrower, the Administrative Agent will promptly notify each
Bank of the details of any automatic conversion. All conversions and
continuations shall be made ratably according to the respective outstanding
principal amounts of the Loans with respect to which the notice was given held
by each Bank.
(e) Unless the Majority Banks otherwise consent, during the existence
of a Default or Event of Default, the Borrower may not elect to have a Loan
converted into or continued as an Offshore Rate Loan.
(f) After giving effect to any conversion or continuation of Loans,
unless the Administrative Agent shall otherwise consent, there may not be more
than ten (10) different Interest Periods in effect in respect of all Loans then
outstanding.
2.5 UTILIZATION OF COMMITMENTS IN CANADIAN DOLLARS. (a) The
Administrative Agent will determine the U.S. Dollar Equivalent Amount with
respect to any (i) Borrowing comprised of Canadian Dollar Loans as of the
requested Borrowing Date, (ii) outstanding Canadian Dollar Loans as of the last
Business Day of each calendar month, and (iii) outstanding Canadian Dollar Loans
as of any redenomination date pursuant to this Section 2.5 or Section 3.5 (each
such date under clauses (i) through (iii) a "COMPUTATION DATE").
(b) In the case of a proposed Borrowing of Canadian Dollar Loans, the
Banks shall be under no obligation to make such Canadian Dollar Loans as part of
such Borrowing if the Administrative Agent has received notice from any of the
Banks by 5:00 p.m. (San Francisco time) three Business Days prior to the date of
such Borrowing that such Bank cannot provide Loans in Canadian dollars, in which
event the Administrative Agent will give notice to the Borrower no later than
9:00 a.m. (San Francisco time) on the second Business Day prior to the requested
date of such Borrowing that the Borrowing in Canadian
22.
<PAGE>
dollars is not then available, and notice thereof also will be given promptly
by the Administrative Agent to the Banks. If the Agent shall have so
notified the Borrower that any such Borrowing in Canadian dollars is not then
available, the Borrower may, by notice to the Administrative Agent not later
than 5:00 p.m. (San Francisco time) two Business Days prior to the requested
date of such Borrowing, withdraw the Notice of Borrowing relating to such
requested Borrowing. If the Borrower does so withdraw such Notice of
Borrowing, the Borrowing requested therein shall not occur and the
Administrative Agent will promptly so notify each Bank. If the Borrower does
not so withdraw such Notice of Borrowing, the Administrative Agent will
promptly so notify each Bank and such Notice of Borrowing shall be deemed to
be a Notice of Borrowing that requests a Borrowing comprised of Base Rate
Loans in an aggregate amount equal to the amount of the originally requested
Borrowing as expressed in U.S. Dollars in the Notice of Borrowing; and in
such notice by the Administrative Agent to each Bank the Administrative Agent
will state such aggregate amount of such Borrowing to be made in U.S. Dollars
and such Bank's Pro Rata Share thereof.
(c) In the case of a proposed continuation of Canadian Dollar Loans
for an additional Interest Period pursuant to Section 2.4, the Banks shall be
under no obligation to continue such Canadian Dollar Loans if the Administrative
Agent has received notice from any of the Banks by 5:00 p.m. (San Francisco
time) three Business Days prior to the day of such continuation that such Bank
cannot continue to provide Offshore Rate Loans denominated in Canadian dollars,
in which event the Agent will give notice to the Borrower not later than 9:00
a.m. (San Francisco time) on the second Business Day prior to the requested date
of such continuation that the continuation of such Canadian Dollar Loans is not
then available, and notice thereof also will be given promptly by the
Administrative Agent to the Banks. If the Administrative Agent shall have so
notified the Borrower that any such continuation of Canadian Dollar Loans is not
then available, any Notice of Conversion/Continuation with respect thereto shall
be deemed withdrawn and such Canadian Dollar Loans shall be automatically
converted into Prime Rate Loans with effect from the last day of the applicable
Interest Period with respect to such Canadian Dollar Loans, and all conditions
to such conversion shall be deemed to have been satisfied. The Agent will
promptly notify the Borrower and the Banks of any such automatic conversion.
(d) Notwithstanding anything herein to the contrary, during the
existence of a Default or an Event of Default, upon the request of the Majority
Banks, all or any part of any outstanding Canadian Dollar Loans shall be
redenominated and converted into Base Rate Loans in U.S. Dollars with effect
from (i) in the case of Prime Rate Loans, the next succeeding Business Day
following the Administrative Agent's receipt of such request from the Majority
Banks, or (ii) in the case of Offshore Rate Loans denominated in Canadian
dollars, the last day of the Interest Period with respect to such Canadian
Dollar Loans, and all conditions to such conversion shall be deemed to have been
satisfied. The Administrative Agent will promptly notify the Borrower of any
such redenomination and conversion request.
(e) Notwithstanding anything herein to the contrary, no Prime Rate
Loan may be outstanding for more than 10 consecutive Business Days.
23.
<PAGE>
2.6 VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS.
(a) The Borrower may, upon five Business Days' prior notice to the
Administrative Agent, terminate the Commitments, or permanently reduce the
Commitments by an aggregate minimum U.S. Dollar Equivalent Amount of $5,000,000
or any multiple of $1,000,000 in excess thereof; PROVIDED that (i) no such
reduction or termination shall be permitted if, after giving effect thereto and
to any prepayments of Loans made on the effective date thereof, the U.S. Dollar
Equivalent Amount of all Loans then outstanding would exceed the combined
Commitments then in effect; and (ii) once reduced in accordance with this
Section 2.6, the Commitments may not be increased. Any reduction of the
Commitments shall be applied ratably to each Bank's Commitment in accordance
with such Bank's Pro Rata Share. If the Commitments are terminated in their
entirety, all accrued commitment fees to the effective date of such termination
of Commitments, shall be paid on the effective date of such termination.
2.7 OPTIONAL PREPAYMENTS. Subject to Section 3.4, the Borrower may, at
any time or from time to time, upon irrevocable notice received by the
Administrative Agent, in the case of Offshore Rate Loans, not later than 9:00
a.m. (San Francisco time) three Business Days prior to the requested prepayment
date, and, in the case of Base Rate Loans or Prime Rate Loans, not less than one
Business Day prior to the requested prepayment date, ratably prepay Loans in
whole or in part, in minimum U.S. Dollar Equivalent Amounts of $5,000,000 (or
such lesser principal amount then outstanding) or, in the case of Loans
denominated in U.S. Dollars only, any multiple of $1,000,000 in excess thereof.
Such notice of prepayment shall specify the date and amount of such prepayment
and the Type(s) of Loans to be prepaid. The Administrative Agent will promptly
notify each Bank of its receipt of any such notice, and of such Bank's Pro Rata
Share of such prepayment. If such notice is given by the Borrower, the Borrower
shall make such prepayment and the payment amount specified in such notice shall
be due and payable on the date specified therein, together with accrued interest
to each such date on the amount prepaid and any amounts required pursuant to
Section 3.4.
2.8 CURRENCY EXCHANGE FLUCTUATIONS. Subject to Section 3.4, if on any
Computation Date the Administrative Agent shall have determined that the
aggregate U.S. Dollar Equivalent Amount of all outstanding Loans exceeds the
combined Commitments by more than $500,000, due to a change in the applicable
rate of exchange between U.S. Dollars and Canadian dollars, then the
Administrative Agent shall give notice to the Borrower that a prepayment is
required under this Section, and the Borrower agrees thereupon to make
prepayments of Loans such that, after giving effect to such prepayment, the
aggregate U.S. Dollar Equivalent Amount of all outstanding Loans does not exceed
the combined Commitments.
2.9 MANDATORY PREPAYMENTS OF LOANS. Subject to Section 3.4, if on any
date the U.S. Dollar Equivalent Amount of all outstanding Loans together exceeds
the combined Commitments, the Borrower shall immediately, and without notice or
demand, prepay the outstanding principal amount of the Loans by an amount equal
to the applicable excess.
24.
<PAGE>
2.10 REPAYMENT. The Borrower shall repay to the Banks on the Revolving
Termination Date the aggregate principal amount of all Loans outstanding on such
date.
2.11 INTEREST.
(a) Each Loan shall bear interest on the outstanding principal amount
thereof from the applicable Borrowing Date at a rate per annum equal to the
Offshore Rate, the Base Rate or the Prime Rate, as the case may be, (and subject
to the Borrower's right to convert to other Types of Loans under Section 2.4),
PLUS the Applicable Margin.
(b) Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Loans under Section 2.7 for the portion of the Loans so prepaid and upon payment
(including prepayment) in full thereof and, during the existence of any Event of
Default, interest shall be paid on demand of the Administrative Agent at the
request or with the consent of the Majority Banks.
(c) Notwithstanding subsection (a) of this Section, during the
existence of any Event of Default under Section 7.1(a), 7.1(c), 7.1(e), 7.1(k),
or 7.1(m) as a consequence of the failure of the Borrower to observe or perform
or cause to be observed or performed any term, covenant or agreement contained
in Section 7.11 or Article VIII of the Mail-Well I Credit Agreement (as such
Section 7.11 and Article VIII are incorporated herein by reference), or after
acceleration, the Borrower shall pay interest (after as well as before any entry
of judgment thereon to the extent permitted by law) on the principal amount of
all outstanding Obligations, at a rate per annum which is determined by adding
two percent (2.00%) per annum to the Applicable Margin then in effect for such
Obligations and, in the case of Obligations not subject to an Applicable Margin,
at a rate per annum equal to the Base Rate plus two percent (2.00%); PROVIDED,
HOWEVER, that, on and after the expiration of any Interest Period applicable to
any Offshore Rate Loan outstanding on the date of occurrence of such Event of
Default or acceleration, the principal amount of such Loan shall, during the
continuation of such Event of Default or after acceleration, bear interest at a
rate per annum equal to the Base Rate PLUS two percent (2.00%). All such
interest shall be payable upon demand.
(d) Anything herein to the contrary notwithstanding, the obligations
of the Borrower to any Bank hereunder shall be subject to the limitation that
payments of interest shall not be required for any period for which interest is
computed hereunder, to the extent (but only to the extent) that contracting for
or receiving such payment by such Bank would be contrary to the provisions of
any law applicable to such Bank limiting the highest rate of interest that may
be lawfully contracted for, charged or received by such Bank, and in such event
the Borrower shall pay such Bank interest at the highest rate permitted by
applicable law.
25.
<PAGE>
2.12 COMMITMENT FEE. The Borrower shall pay to the Administrative Agent
for the account of each Bank a commitment fee on the actual daily unused portion
of such Bank's Commitment, computed on a quarterly basis in arrears on the last
Business Day of each calendar quarter based upon the daily utilization for that
quarter as calculated by the Administrative Agent, equal to such unused portion
as so calculated multiplied by the Applicable Commitment Fee Percentage for such
period. Such commitment fee shall accrue from the Closing Date to the Revolving
Termination Date and shall be due and payable quarterly in arrears on the last
Business Day of each quarter commencing on March 31, 1998 through the Revolving
Termination Date, with the final payment to be made on the Revolving Termination
Date; PROVIDED that, in connection with any termination of the Commitments under
Section 2.6, the accrued commitment fee calculated for the period ending on such
date shall also be paid on the date of such termination. The commitment fees
provided in this Section shall accrue at all times after the Closing Date,
including at any time during which one or more conditions in Article IV are not
met.
2.13 COMPUTATION OF FEES AND INTEREST.
(a) All computations of interest for Base Rate Loans when the Base
Rate is determined by BofA's "reference rate" shall be made on the basis of a
year of 365 or 366 days, as the case may be, and actual days elapsed. All other
computations of fees and interest shall be made on the basis of a 360-day year
and actual days elapsed (which results in more interest being paid than if
computed on the basis of a 365-day year). Interest and fees shall accrue during
each period during which interest or such fees are computed from the first day
thereof to the last day thereof.
(b) For purposes of determining utilization of each Bank's Commitment
in order to calculate the commitment fee due under Section 2.12, the amount of
any outstanding Canadian Dollar Loan on any date shall be determined based upon
the U.S. Dollar Equivalent Amount as of the most recent Computation Date with
respect to such Canadian Dollar Loan.
(c) Each determination of an interest rate or a U.S. Dollar
Equivalent Amount by the Administrative Agent shall be conclusive and binding on
the Borrower and the Banks in the absence of manifest error.
2.14 PAYMENTS BY THE BORROWER.
(a) All payments to be made by the Borrower shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Borrower shall be made to the Administrative
Agent for the account of the Banks at the Administrative Agent's Payment
Office, and shall be made in U.S. Dollars or, in the case of payments of
interest or principal on account of Canadian Dollar Loans, Canadian dollars,
and in immediately available funds, no later than 11:00 a.m. (San Francisco
time) on the date specified herein. The Administrative Agent will promptly
distribute to each Bank its Pro Rata Share (or other applicable share as
expressly provided herein) of such payment in like funds as received. Any
payment received by the Administrative Agent later than 11:00 a.m.
26.
<PAGE>
(San Francisco time) shall be deemed to have been received on the following
Business Day and any applicable interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
(c) Unless the Administrative Agent receives notice from the Borrower
prior to the date on which any payment is due to the Banks that the Borrower
will not make such payment in full as and when required, the Administrative
Agent may assume that the Borrower has made such payment in full to the
Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Borrower has not made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.
2.15 PAYMENTS BY THE BANKS TO THE ADMINISTRATIVE AGENT.
(a) Unless the Administrative Agent receives notice from a Bank on or
prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Bank will not make available as and when required hereunder to the
Administrative Agent for the account of the Borrower the amount of that Bank's
Pro Rata Share of the Borrowing, the Administrative Agent may assume that each
Bank has made such amount available to the Administrative Agent in immediately
available funds on the Borrowing Date and the Administrative Agent may (but
shall not be so required), in reliance upon such assumption, make available to
the Borrower on such date a corresponding amount. If and to the extent any Bank
shall not have made its full amount available to the Administrative Agent in
immediately available funds and the Administrative Agent in such circumstances
has made available to the Borrower such amount, that Bank shall on the Business
Day following such Borrowing Date make such amount available to the
Administrative Agent, together with interest at the Federal Funds Rate or, in
the case of any Borrowing consisting of Canadian Dollar Loans, the Overnight
Rate, for each day during such period. A notice of the Administrative Agent
submitted to any Bank with respect to amounts owing under this subsection (a)
shall be conclusive, absent manifest error. If such amount is so made
available, such payment to the Administrative Agent shall constitute such Bank's
Loan on the date of Borrowing for all purposes of this Agreement. If such
amount is not made available to the Administrative Agent on the Business Day
following the Borrowing Date, the Administrative Agent will notify the Borrower
by the next succeeding Business Day of such failure to fund and, upon demand by
the Administrative Agent, the Borrower shall pay such amount to the
Administrative Agent for the Administrative Agent's account, together with
interest thereon for each day elapsed since the
27.
<PAGE>
date of such Borrowing, at a rate per annum equal to the interest rate
applicable at the time to the Loans comprising such Borrowing.
(b) The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make the Loan to be made by such other Bank on any Borrowing Date.
2.16 SHARING OF PAYMENTS, ETC. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Loans made by it any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) in excess of its Pro Rata Share (or other share
contemplated hereunder), such Bank shall immediately (a) notify the
Administrative Agent of such fact, and (b) purchase from the other Banks such
participations in the Loans made by them as shall be necessary to cause such
purchasing Bank to share the excess payment pro rata with each of them;
PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from the purchasing Bank, such purchase shall to that
extent be rescinded and each other Bank shall repay to the purchasing Bank the
purchase price paid therefor, together with an amount equal to such paying
Bank's ratable share (according to the proportion of (i) the amount of such
paying Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower
agrees that any Bank so purchasing a participation from another Bank may, to the
fullest extent permitted by law, exercise all its rights of payment (including
the right of set-off, but subject to Section 9.10) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation. The Administrative Agent will keep records
(which shall be conclusive and binding in the absence of manifest error) of
participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.
ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.1 TAXES.
(a) Any and all payments by the Borrower to each Bank, or the
Administrative Agent under this Agreement and any other Loan Document shall be
made free and clear of, and without deduction or withholding for, any Taxes. In
addition, the Borrower shall pay all Other Taxes.
(b) If the Borrower shall be required by law to deduct or withhold
any Taxes, Other Taxes or Further Taxes from or in respect of any sum payable
hereunder to any Bank or the Administrative Agent, then:
28.
<PAGE>
(i) the sum payable shall be increased as necessary so
that, after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under
this Section), such Bank or the Administrative Agent, as the case may be,
receives and retains an amount equal to the sum it would have received and
retained had no such deductions or withholdings been made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount deducted or
withheld to the relevant taxing authority or other authority in accordance
with applicable law; and
(iv) the Borrower shall also pay to each Bank or the
Administrative Agent for the account of such Bank, at the time interest is
paid, Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if
such Taxes, Other Taxes or Further Taxes had not been imposed.
(c) The Borrower agrees to indemnify and hold harmless each Bank and
the Administrative Agent for the full amount of (i) Taxes, (ii) Other Taxes, and
(iii) Further Taxes in the amount that the respective Bank specifies as
necessary to preserve the after-tax yield the Bank would have received if such
Taxes, Other Taxes or Further Taxes had not been imposed, and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Taxes, Other Taxes or Further Taxes
were correctly or legally asserted. Payment under this indemnification shall be
made within 30 days after the date the Bank or the Administrative Agent makes
written demand therefor.
(d) Within 30 days after the date of any payment by the Borrower of
Taxes, Other Taxes or Further Taxes, the Borrower shall furnish to each Bank or
the Administrative Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment satisfactory to such
Bank or the Administrative Agent.
(e) If the Borrower is required to pay any amount to any Bank or the
Administrative Agent pursuant to subsection (b) or (c) of this Section, then
such Bank shall use reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Borrower which may thereafter
accrue, if such change in the sole and absolute judgment of such Bank is not
otherwise disadvantageous to such Bank.
3.2 ILLEGALITY.
(a) If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable
29.
<PAGE>
Lending Office, to make Offshore Rate Loans, then, on notice thereof by the
Bank to the Borrower through the Administrative Agent, any obligation of that
Bank to make Offshore Rate Loans shall be suspended until the Bank notifies
the Administrative Agent and the Borrower that the circumstances giving rise
to such determination no longer exist.
(b) If a Bank determines that it is unlawful for such Bank to
maintain any Offshore Rate Loan, the Borrower shall, upon its receipt of notice
of such fact and demand from such Bank (with a copy to the Administrative
Agent), prepay in full such Offshore Rate Loans of that Bank then outstanding,
together with interest accrued thereon and amounts required under Section 3.4,
either on the last day of the Interest Period thereof, if the Bank may lawfully
continue to maintain such Offshore Rate Loans to such day, or immediately, if
the Bank may not lawfully continue to maintain such Offshore Rate Loans. If the
Borrower is required to so prepay any Offshore Rate Loan, then concurrently with
such prepayment, the Borrower shall borrow from the affected Bank, in the amount
of such repayment, a Base Rate Loan.
(c) If the obligation of any Bank to make or maintain Offshore Rate
Loans has been so terminated or suspended, the Borrower may elect, by giving
notice to the Bank through the Administrative Agent, that all Loans which would
otherwise be made or maintained by the Bank as Offshore Rate Loans shall be
instead Base Rate Loans.
3.3 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Bank determines that, due to either (i) the introduction
of or any change in or in the interpretation of any law or regulation or (ii)
the compliance by that Bank 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 such Bank of agreeing to make or making,
funding or maintaining any Loans, then the Borrower shall be liable for, and
shall from time to time, upon demand (with a copy of such demand to be sent to
the Administrative Agent), pay to the Administrative Agent for the account of
such Bank, additional amounts as are sufficient to compensate such Bank for such
increased costs.
(b) If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation controlling
the Bank and (taking into consideration such Bank's or such corporation's
policies with respect to capital adequacy and such Bank's desired return on
capital) determines that the amount of such capital is increased as a
consequence of its Commitment, Loans, credits or obligations under this
Agreement, then, upon demand of such Bank to the Borrower through the
Administrative Agent, the Borrower shall immediately pay
30.
<PAGE>
to the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.
3.4 FUNDING LOSSES. The Borrower shall reimburse each Bank and hold each
Bank harmless from any loss or expense which the Bank may sustain or incur as a
consequence of:
(a) the failure of the Borrower to make on a timely basis any payment
of principal of any Offshore Rate Loan (including after any acceleration
thereof);
(b) the failure of the Borrower to borrow, continue or convert a Loan
after the Borrower has given (or is deemed to have given) a Notice of Borrowing
or a Notice of Conversion/Continuation;
(c) the failure of the Borrower to make any prepayment in accordance
with any notice delivered under Section 2.7;
(d) the prepayment or other payment (including after acceleration
thereof) of an Offshore Rate Loan on a day that is not the last day of the
relevant Interest Period; or
(e) the conversion of any Offshore Rate Loan to a Base Rate Loan on a
day that is not the last day of the relevant Interest Period;
including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans hereunder or from
fees payable to terminate the deposits from which such funds were obtained or
from charges relating to any Canadian Dollar Loans. For purposes of calculating
amounts payable by the Borrower to the Banks under this Section and under
Section 3.3(a), each Offshore Rate Loan made by a Bank (and each related
reserve, special deposit or similar requirement) shall be conclusively deemed to
have been funded at the Offshore Rate used in determining the interest rate for
such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.
3.5 INABILITY TO DETERMINE RATES. If the Administrative Agent determines
that for any reason adequate and reasonable means do not exist for determining
the Offshore Rate for any requested Interest Period with respect to a proposed
Offshore Rate Loan, or that the Offshore Rate applicable pursuant to Section
2.11(a) for any requested Interest Period with respect to a proposed Offshore
Rate Loan does not adequately and fairly reflect the cost to the Banks of
funding such Loan, the Administrative Agent will promptly so notify the Borrower
and each Bank. Thereafter, the obligation of the Banks to make or maintain
Offshore Rate Loans hereunder shall be suspended until the Administrative Agent
upon the instruction of the Majority Banks revokes such notice in writing. Upon
receipt of such notice, the Borrower may revoke any Notice of Borrowing or
Notice of Conversion/Continuation then submitted by it. If the Borrower does
not revoke such notice, the Banks shall make, convert or continue the Loans, as
proposed by the Borrower, in the amount specified in the applicable notice
31.
<PAGE>
submitted by the Borrower, but such Loans shall be made, converted or continued
as Base Rate Loans instead of Offshore Rate Loans. In the case of any Canadian
Dollar Loans, the Borrowing, conversion or continuation shall be in an aggregate
amount equal to the U.S. Dollar Equivalent Amount of the originally requested
Borrowing, conversion or continuation in Canadian dollars, and to that end any
outstanding Canadian Dollar Loans which are the subject of any such conversion
or continuation shall be redenominated and converted into Base Rate Loans in
U.S. Dollars with effect from the last day of the Interest Period with respect
to any such Canadian Dollar Loans, and all conditions to such conversion shall
be deemed to have been satisfied.
3.6 CERTIFICATES OF BANKS. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the Borrower (with a copy
to the Administrative Agent) a certificate setting forth in reasonable detail
the amount payable to the Bank hereunder and such certificate shall be
conclusive and binding on the Borrower in the absence of manifest error.
3.7 SURVIVAL. The agreements and obligations of the Borrower in this
Article III shall survive the payment of all other Obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.1 CONDITIONS OF INITIAL LOANS. The obligation of each Bank to make its
initial Loan hereunder is subject to the condition that the Administrative Agent
shall have received on or before the Closing Date all of the following, in form
and substance satisfactory to the Administrative Agent and each Bank, and in
sufficient copies for each Bank:
(a) CREDIT AGREEMENT; NOTES. This Agreement, and, if requested by
any Bank, the Notes, each executed by each party thereto;
(b) RESOLUTIONS; INCUMBENCY.
(i) Copies of the resolutions of the respective boards of
directors of each Loan Party authorizing the transactions contemplated
hereby, certified as of the Closing Date by the Loan Party's Secretary or
an Assistant Secretary, respectively; and
(ii) A certificate of the Secretary or Assistant Secretary
of each Loan Party, certifying the names and true signatures of the
officers of such Loan Party authorized to execute, deliver and perform, as
applicable, this Agreement, and all other Loan Documents to be delivered by
it hereunder;
(c) ORGANIZATION DOCUMENTS. Except as provided in Section 9.19, the
articles or certificate of incorporation and the bylaws of each Loan Party, each
as in effect on
32.
<PAGE>
the Closing Date, certified by the Secretary or Assistant Secretary of each
Loan Party as of the Closing Date;
(d) LEGAL OPINIONS. An opinion of (i) Cassels, Brock & Blackwell,
Canadian counsel to the Borrower, and (ii) Rothgerber, Appel, Powers & Johnson
LLP, counsel to the Guarantors, each addressed to the Administrative Agent and
the Banks, substantially in the form of EXHIBIT C-1 and EXHIBIT C-2,
respectively;
(e) CERTIFICATE. A certificate signed by a Responsible Officer of
each Loan Party, dated as of the Closing Date, stating that:
(i) the representations and warranties contained in Article
V are true and correct on and as of such date, as though made on and as of
such date;
(ii) no Default or Event of Default exists or would result
from the initial Borrowing; and
(iii) there has occurred since September 30, 1997, no
event or circumstance that has resulted or could reasonably be expected to
result in a Material Adverse Effect;
(f) TERMINATION OF EXISTING FACILITY. Evidence satisfactory to the
Administrative Agent confirming that if any principal, interest, fees, costs or
other amounts are outstanding under the Existing Facility, all such amounts have
been paid in full by the Closing Date or that the Loans borrowed by the Borrower
on the Closing Date will be used to repay such outstanding amounts, and that the
Existing Facility shall thereby terminate on the Closing Date;
(g) SATISFACTION OF MAIL-WELL I CONDITIONS PRECEDENT. All conditions
to closing set forth in Section 5.1 of the Mail-Well I Credit Agreement shall
have been satisfied, made conditions subsequent or waived by the Banks party
thereto;
(g) FUNDING INDEMNITY LETTER. A funding indemnity letter in respect
of the Borrowing to be made on the Closing Date; and
(h) OTHER DOCUMENTS. Such other approvals, opinions, documents or
materials as the Administrative Agent or any Bank may reasonably request.
4.2 CONDITIONS TO ALL CREDIT EXTENSIONS. The obligation of each Bank to
make any Loan to be made by it (including its initial Loan) or to continue or
convert any Loan under Section 2.4 (other than pursuant to Section 2.4(c)) is
subject to the satisfaction of the following conditions precedent on the
relevant Borrowing Date or Conversion/Continuation Date:
33.
<PAGE>
(a) NOTICE; APPLICATION. In the case of any Borrowing or
Continuation/Conversion (other than pursuant to Section 2.4(c)), the
Administrative Agent shall have received (with, in the case of the initial
Loan only, a copy for each Bank) a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable;
(b) CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date or Conversion/Continuation Date with the same effect as
if made on and as of such Borrowing Date or Conversion/Continuation Date (except
to the extent such representations and warranties expressly refer to an earlier
date, in which case they shall be true and correct as of such earlier date); and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Borrowing or continuation or conversion.
Each Notice of Borrowing and Notice of Conversion/Continuation submitted by the
Borrower hereunder shall constitute a representation and warranty by the
Borrower hereunder, as of the date of each such notice and as of each Borrowing
Date and Conversion/Continuation Date as applicable, that the conditions in this
Section 4.2 are satisfied.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower and each other Loan Party represents and warrants to the
Administrative Agent and each Bank that:
5.1 CORPORATE EXISTENCE AND POWER. Each Loan Party:
(a) is a corporation, limited liability company or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, organization or formation;
(b) has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;
(c) is duly qualified as a foreign corporation or partnership and is
licensed and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of property or the conduct of its business
requires such qualification or license except to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect; and
34.
<PAGE>
(d) is in compliance with all Requirements of Law except to the
extent that the failure to comply could not reasonably be expected to have a
Material Adverse Effect.
5.2 CORPORATE AUTHORIZATION; NO CONTRAVENTION. The execution, delivery
and performance by each Loan Party of this Agreement and each other Loan
Document to which each Loan Party is party, have been duly authorized by all
necessary corporate action, and do not and will not:
(a) contravene the terms of any of such Loan Party's Organization
Documents;
(b) conflict with or result in any breach or contravention of, or the
creation of any Lien under, any document evidencing any Contractual Obligation
to which any Loan Party is a party or any order, injunction, writ or decree of
any Governmental Authority to which any Loan Party or its property is subject;
or
(c) violate any Requirement of Law.
5.3 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, any Loan Party of
this Agreement or any other Loan Document.
5.4 BINDING EFFECT. This Agreement and each other Loan Document to which
any of the Loan Parties is a party constitute the legal, valid and binding
obligations of such Loan Party, enforceable against such Loan Party in
accordance with their respective terms, except as enforceability may be limited
by applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5.5 LITIGATION. Except as specifically disclosed in SCHEDULE 5.5, there
are no actions, suits, proceedings, claims or disputes pending, or to the best
knowledge of the Loan Parties, threatened or contemplated, at law, in equity, in
arbitration or before any Governmental Authority, against any Loan Party, or its
Subsidiaries or any of their respective properties which:
(a) purport to affect or pertain to this Agreement or any other Loan
Document, or any of the transactions contemplated hereby or thereby; or
(b) if determined adversely to any Loan Party or its Subsidiaries,
would reasonably be expected to have a Material Adverse Effect. No injunction,
writ, temporary restraining order or any order of any nature has been issued by
any court or other Governmental Authority purporting to enjoin or restrain the
execution, delivery or performance of this Agreement or any other Loan Document,
or directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.
35.
<PAGE>
5.6 NO DEFAULT. No Default or Event of Default exists or would result
from the incurring of any Obligations by any Loan Party. As of the Closing
Date, none of the Loan Parties nor any of their Subsidiaries is in default under
or with respect to any Contractual Obligation in any respect which, individually
or together with all such defaults, could reasonably be expected to have a
Material Adverse Effect, or that would, if such default had occurred after the
Closing Date, create an Event of Default under Section 7.1(e).
5.7 ERISA COMPLIANCE.
(a) As of the Closing Date, each Plan is in compliance with the
applicable provisions of ERISA, the Code and other federal or state law except
to the extent to which the failure to so comply could not reasonably be expected
to have a Material Adverse Effect. Each Plan which is intended to qualify under
subsection 401(a) of the Code has received a favorable determination letter from
the IRS and to the best knowledge of each Loan Party, nothing has occurred which
would cause the loss of such qualification. As of the Closing Date, each Loan
Party and each ERISA Affiliate has made all required contributions to any Plan
subject to Section 412 of the Code, and no application for a funding waiver or
an extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.
(b) As of the Closing Date, there are no pending or, to the best
knowledge of each Loan Party, threatened claims, actions or lawsuits, or action
by any Governmental Authority, with respect to any Plan which has or could
reasonably be expected to have a Material Adverse Effect. As of the Closing
Date, there has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted or could
reasonably be expected to result in a Material Adverse Effect.
(c) As of the Closing Date, (i) no ERISA Event has occurred or is
reasonably expected to occur; and (ii) no event or circumstance has occurred or
exists that, if such event or circumstance had occurred or arisen after the
Closing Date, would create an Event of Default under Section 8.1(h).
5.8 USE OF PROCEEDS; MARGIN REGULATIONS. The Borrower shall use the
proceeds of the Loans for working capital, other general corporate purposes and
for nonhostile, invited acquisitions, in each case not in contravention of any
Requirement of Law or of any Loan Document, and the Borrower shall not directly
or indirectly use the proceeds of the Loans for any acquisition of any Person if
such acquisition has not been approved by the board of directors (or other body
exercising similar authority) of such Person. None of the Loan Parties nor any
Subsidiary of a Loan Party is generally engaged in the business of purchasing or
selling Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
5.9 TITLE TO PROPERTIES. Each Loan Party and each Subsidiary of a Loan
Party has good record and marketable title in fee simple to, or valid leasehold
interests in, all real property necessary or used in the ordinary conduct of its
respective businesses, except for
36.
<PAGE>
such defects in title as could not, individually or in the aggregate, be
reasonably expected to have a Material Adverse Effect. As of the Closing
Date, the property of the Loan Parties and their respective Subsidiaries is
subject to no Liens, other than Liens permitted under the Mail-Well I Credit
Agreement.
5.10 TAXES. The Loan Parties and their respective Subsidiaries have filed
all Federal and other material tax returns and reports required to be filed, and
have paid all Federal and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP. There is no proposed tax assessment against
any Loan Party or any Subsidiary of a Loan Party that would, if made, have a
Material Adverse Effect.
5.11 NO MATERIAL ADVERSE EFFECT. Since September 30, 1997 (assuming that
this Agreement were in effect on such date and thereafter), there has been no
Material Adverse Effect.
5.12 ENVIRONMENTAL MATTERS. Each Loan Party conducts in the ordinary
course of business a review of the effect of existing Environmental Laws and
existing Environmental Claims on its business, operations and properties, and as
a result thereof each Loan Party has reasonably concluded that, except as
specifically disclosed in SCHEDULE 5.12, such Environmental Laws and
Environmental Claims could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
5.13 REGULATED ENTITIES. No Loan Party, nor any Person controlling any
Loan Party, nor any Subsidiary of a Loan Party, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. No Loan Party is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, any state public utilities code,
or any other Federal or state statute or regulation limiting its ability to
incur Indebtedness.
5.14 NO BURDENSOME RESTRICTIONS. None of the Loan Parties nor any
Subsidiary of a Loan Party is a party to or bound by any Contractual Obligation,
or subject to any restriction in any Organization Document, or any Requirement
of Law, which could reasonably be expected to have a Material Adverse Effect.
5.15 COPYRIGHTS, PATENTS, TRADEMARKS AND LICENSES, ETC. To the best of
each Loan Party's knowledge, each Loan Party or its Subsidiaries own or are
licensed or otherwise have the right to use all of the patents, trademarks,
service marks, trade names, copyrights, contractual franchises, authorizations
and other rights that are reasonably necessary for the operation of their
respective businesses, without conflict with the rights of any other Person. To
the best knowledge of each Loan Party, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or now
contemplated to be employed, by any Loan Party or any Subsidiary of any Loan
Party infringes upon any rights
37.
<PAGE>
held by any other Person. Except as specifically disclosed in SCHEDULE 5.5,
no claim or litigation regarding any of the foregoing is pending or
threatened, and no patent, invention, device, application, principle or any
statute, law, rule, regulation, standard or code is pending or, to the
knowledge of each Loan Party, proposed, which, in either case, could
reasonably be expected to have a Material Adverse Effect.
5.16 SUBSIDIARIES. As of the Closing Date, no Loan Party has any
Subsidiaries other than those specifically disclosed in part (a) of SCHEDULE
5.16 hereto, which shows the form of organization and ownership of each such
corporation, and has no equity investments in any other corporation or entity
other than those specifically disclosed in part (b) of SCHEDULE 5.16. Except as
disclosed on SCHEDULE 5.16, each Subsidiary is a Wholly Owned Subsidiary of the
Borrower.
5.17 INSURANCE. Except as specifically disclosed in SCHEDULE 5.17, the
properties of the Loan Parties and their respective Subsidiaries are insured
with financially sound and reputable insurance companies not Affiliates of any
Loan Party, in such amounts, with such deductibles and covering such risks as
are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where any Loan Party or such Subsidiary
operates.
5.18 SWAP OBLIGATIONS. None of the Loan Parties nor any of its
Subsidiaries has incurred any outstanding obligations under any Swap Contracts,
other than Permitted Swap Obligations. Each Loan Party has voluntarily entered
into each Swap Contract to which it is a party based upon its own independent
assessment of its consolidated assets, liabilities and commitments, in each case
as an appropriate means of mitigating and managing risks associated with such
matters, and has not relied on any swap counterparty or any Affiliate of any
swap counterparty in determining whether to enter into any Swap Contract.
5.19 FULL DISCLOSURE. To the best knowledge after due inquiry of any
Responsible Officer of any of the Loan Parties, none of the representations or
warranties made by any Loan Party or any Subsidiary in the Loan Documents as of
the date such representations and warranties are made or deemed made, and none
of the statements contained in any exhibit, report, statement or certificate
furnished by or on behalf of any Loan Party or any Subsidiary of any Loan Party
in connection with the Loan Documents (including the offering and disclosure
materials delivered by or on behalf of any Loan Party to the Banks prior to the
Closing Date), contains any untrue statement of a material fact or omits any
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they are made, not
misleading as of the time when made or delivered.
38.
<PAGE>
ARTICLE VI
AFFIRMATIVE AND NEGATIVE COVENANTS
So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing, the Borrower shall comply with all of the covenants
set forth in Articles VII and VIII (other than Sections 7.1, 7.2(a) and (b),
7.12, 8.13, 8.14, 8.15, 8.17 and 8.18 thereof) of the Mail-Well I Credit
Agreement, as if the Borrower were the "Borrower" and a "Loan Party" thereunder,
all of which covenants are incorporated herein by reference as if fully set
forth herein (without giving effect to any termination of the Mail-Well I Credit
Agreement), defined terms used in such Articles VII and VIII (and in the
definitions of such defined terms) having the meanings given to such terms in
the Mail-Well I Credit Agreement.
ARTICLE VII
EVENTS OF DEFAULT
7.1 EVENT OF DEFAULT. Any of the following shall constitute an "EVENT OF
DEFAULT":
(a) NON-PAYMENT. The Borrower fails to pay, (i) when and as required
to be paid herein, any amount of principal of any Loan, or (ii) within three (3)
days after the same becomes due, any interest, fee or any other amount payable
hereunder or under any other Loan Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
any Loan Party or any of their respective Subsidiaries made or deemed made
herein, in any other Loan Document, or which is contained in any certificate,
document or financial or other statement by any of the Loan Parties, any of
their respective Subsidiaries, or any Responsible Officer, furnished at any time
under this Agreement, or in or under any other Loan Document, is incorrect in
any material respect on or as of the date made or deemed made; or
(c) SPECIFIC DEFAULTS. Any Loan Party (other than the Parent) fails
to perform or observe any term, covenant or agreement contained in Article VI
hereof (other than any of Sections 7.2, 7.6, 7.7, 7.8 or 7.10 of the Mail-Well
Credit Agreement as incorporated herein by reference); or
(d) OTHER DEFAULTS. Any Loan Party (other than the Parent, except
for purposes of Section 9.17) fails to perform or observe any other term or
covenant contained in this Agreement or any other Loan Document, and such
default shall continue unremedied for a period of 20 days after the earlier of
(i) the date upon which a Responsible Officer knew or reasonably should have
known of such failure or (ii) the date upon which written notice thereof is
given to such Loan Party by the Administrative Agent or any Bank; or
39.
<PAGE>
(e) CROSS-DEFAULT. (i) Any Loan Party (A) fails to make any payment
in respect of any Indebtedness or Contingent Obligation (other than in respect
of Swap Contracts), having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $5,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise); or (B) fails to perform or observe any other condition or
covenant, or any other event shall occur or condition exist, under any agreement
or instrument relating to any such Indebtedness or Contingent Obligation, and
such failure continues after the applicable grace or notice period, if any,
specified in the relevant document on the date of such failure if the effect of
such failure, event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded; or (ii) there occurs under
any Swap Contract an Early Termination Date (as defined in such Swap Contract)
resulting from (A) any event of default under such Swap Contract as to which the
Borrower, Mail-Well I or any such Subsidiary is the Defaulting Party (as defined
in such Swap Contract) or (B) any Termination Event (as so defined) as to which
the Borrower, Mail-Well I or any such Subsidiary is an Affected Party (as so
defined), and, in either event, the Swap Termination Value owed by the Borrower,
Mail-Well I or such Subsidiary as a result thereof is greater than $5,000,000;
or
(f) INSOLVENCY; VOLUNTARY PROCEEDINGS. Any Loan Party or any
Subsidiary of a Loan Party (i) ceases or fails to be solvent, or generally fails
to pay, or admits in writing its inability to pay, its debts as they become due,
subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily ceases to conduct its business in the ordinary
course; (iii) commences any Insolvency Proceeding with respect to itself; or
(iv) takes any action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against any Loan Party or any Subsidiary of a
Loan Party, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of any Loan Party's or
any such Subsidiary's properties, and any such proceeding or petition shall not
be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) any Loan Party or any Subsidiary of a
Loan Party admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) any Loan Party or any
Subsidiary of a Loan Party acquiesces in the appointment of a receiver, trustee,
custodian, conservator, liquidator, mortgagee in possession (or agent therefor),
or other similar Person for itself or a substantial portion of its property or
business; or
(h) ERISA. (i) An ERISA Event shall occur with respect to a Pension
Plan or Multiemployer Plan which has resulted or could reasonably be expected to
result in liability
40.
<PAGE>
of the Loan Parties under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC; (ii) any Unfunded Pension Liability with
respect to any or all Pension Plans shall exist; or (iii) the Loan Parties or
any ERISA Affiliate shall fail to pay when due, after the expiration of any
applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan;
but only to the extent that any of the foregoing, separately or in the
aggregate, has or could reasonably be expected to have a Material Adverse
Effect; or
(i) MONETARY JUDGMENTS. One or more noninterlocutory judgments,
noninterlocutory orders, decrees or arbitration awards is entered against any of
the Loan Parties or any of their respective Subsidiaries involving in the
aggregate a liability (to the extent not covered by independent third-party
insurance as to which the insurer does not dispute coverage) as to any single or
related series of transactions, incidents or conditions, of $5,000,000 or more,
and the same shall remain unsatisfied, unvacated and unstayed pending appeal for
a period of 10 days after the entry thereof; or
(j) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree is entered against any of the Loan Parties or any of their respective
Subsidiaries which does or would reasonably be expected to have a Material
Adverse Effect, and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
(k) CHANGE OF CONTROL. There occurs any Change of Control in respect
of the Borrower or any other Loan Party; or
(l) LOSS OF LICENSES. Any Governmental Authority revokes or fails to
renew any material license, permit or franchise of the Borrower or any of its
Subsidiaries, or the Borrower or any of its Subsidiaries for any reason loses
any material license, permit or franchise, or the Borrower or any of its
Subsidiaries suffers the imposition of any restraining order, escrow, suspension
or impound of funds in connection with any proceeding (judicial or
administrative) with respect to any material license, permit or franchise if any
such revocation, failure, loss or imposition results, or is reasonably expected
to result, in a Material Adverse Effect; or
(m) ADVERSE CHANGE. There occurs a Material Adverse Effect; or
(n) GUARANTOR DEFAULTS. Any Guarantor fails in any material respect
to perform or observe any term, covenant or agreement as a guarantor of the
Obligations pursuant to Section 9.17 (or other separate guaranty agreement), or
the guaranty set forth therein (or in such other agreement) of any Guarantor is
for any reason partially (including with respect to future advances) or wholly
revoked or invalidated, or otherwise ceases to be in full force and effect, or
any Guarantor (or any other Person) contests in any manner the validity or
enforceability thereof or denies that it has any further liability or obligation
thereunder; or any event described at subsections (f) or (g) of this Section
occurs with respect to any Guarantor.
41.
<PAGE>
(o) MAIL-WELL I DEFAULT. There occurs any "Event of Default" under
and as defined in the Mail-Well I Credit Agreement.
7.2 REMEDIES. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks,
(a) declare the commitment of each Bank to make Loans to be
terminated, whereupon such commitments shall be terminated;
(b) declare the unpaid principal amount of all outstanding Loans, all
interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Borrower; and
(c) exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;
PROVIDED, HOWEVER, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 7.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make or maintain Loans shall automatically terminate and the unpaid principal
amount of all outstanding Loans and all interest and other amounts as aforesaid
shall automatically become due and payable without further act of the
Administrative Agent or any Bank.
7.3 RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
8.1 APPOINTMENT AND AUTHORIZATION; "ADMINISTRATIVE AGENT."
(a) Each Bank hereby irrevocably (subject to Section 8.9) appoints,
designates and authorizes the Administrative Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan Document and
to exercise such powers and perform such duties as are expressly delegated to it
by the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, the Administrative Agent shall not have any duties or
responsibilities, except those expressly set forth herein, nor shall the
Administrative Agent
42.
<PAGE>
have or be deemed to have any fiduciary relationship with any Bank, and no
implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent. Without limiting the
generality of the foregoing sentence, the use of the term "agent" in this
Agreement with reference to the Administrative Agent is not intended to
connote any fiduciary or other implied (or express) obligations arising under
agency doctrine of any applicable law. Instead, such term is used merely as
a matter of market custom, and is intended to create or reflect only an
administrative relationship between independent contracting parties.
(b) The provisions of this Article VIII shall survive the payment of
all Obligations hereunder and inure to the benefit of BofA, including after its
resignation or replacement as the Administrative Agent, as to any actions taken
or omitted to be taken by BofA while it was the Administrative Agent.
8.2 DELEGATION OF DUTIES. The Administrative Agent may execute any of its
duties under this Agreement or any other Loan Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agent or
attorney-in-fact that it selects with reasonable care.
8.3 LIABILITY OF ADMINISTRATIVE AGENT.
(a) None of the Agent-Related Persons shall (i) be liable for any
action taken or omitted to be taken by any of them under or in connection with
this Agreement or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful misconduct), or (ii) be
responsible in any manner to any of the Banks for any recital, statement,
representation or warranty made by the Borrower or any Subsidiary or Affiliate
of the Borrower, or any officer thereof, contained in this Agreement or in any
other Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document, or the validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or thereunder. No
Agent-Related Person shall be under any obligation to any Bank to ascertain or
to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Loan Document, or to
inspect the properties, books or records of the Borrower or any of its
Subsidiaries or Affiliates.
(b) Upon receipt thereof, the Administrative Agent shall forward to
each Bank originals or copies, as specified in this Agreement or any other Loan
Document, of all agreements, instruments, opinions, financial statements,
notices and other documents delivered by any Loan party, or any other Person to
the Administrative Agent pursuant to any Loan Document for distribution to the
Banks.
43.
<PAGE>
8.4 RELIANCE BY ADMINISTRATIVE AGENT.
(a) The Administrative Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement 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 counsel to the
Borrower), independent accountants and other experts selected by the
Administrative Agent. The Administrative Agent shall be fully justified in
failing or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Majority Banks as it deems appropriate and, if it so requests, it shall first be
indemnified to its satisfaction by the Banks 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 Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other Loan
Document in accordance with a request or consent of the Majority Banks and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all of the Banks.
(b) For purposes of determining compliance with the conditions
specified in Section 4.1, each Bank that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter either sent by the Administrative Agent to such Bank
for consent, approval, acceptance or satisfaction, or required thereunder to be
consented to or approved by or acceptable or satisfactory to the Bank.
8.5 NOTICE OF DEFAULT. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default,
except with respect to defaults in the payment of principal, interest and fees
required to be paid to the Administrative Agent for the account of the Banks,
unless the Administrative Agent shall have received written notice from a Bank
or a Loan Party referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." The
Administrative Agent will notify the Banks of its receipt of any such notice.
The Administrative Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Banks in accordance with
Article VII; PROVIDED, HOWEVER, that unless and until the Administrative Agent
has received any such request, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable or in the best
interest of the Banks.
8.6 CREDIT DECISION. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by the Administrative Agent hereinafter taken, including any review of the
affairs of the Borrower or any other Loan Party and its respective Subsidiaries,
shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Bank. Each Bank represents to the Administrative
Agent that it has, independently and without reliance upon any Agent-Related
44.
<PAGE>
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and credit worthiness of the
Borrower and its respective Subsidiaries, and each other Loan Party, and all
applicable bank regulatory laws relating to the transactions contemplated
hereby, and made its own decision to enter into this Agreement and to extend
credit to the Borrower hereunder. Each Bank also represents that it will,
independently and without reliance upon any Agent-Related Person 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 Agreement and the other Loan Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and credit
worthiness of the Borrower and its respective Subsidiaries and each other Loan
Party. Except for notices, reports and other documents expressly herein
required to be furnished to the Banks by the Administrative Agent, the
Administrative Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, prospects,
operations, property, financial and other condition or credit worthiness of the
Borrower or any other Loan Party which may come into the possession of any of
the Agent-Related Persons.
8.7 INDEMNIFICATION OF ADMINISTRATIVE AGENT. Whether or not the
transactions contemplated hereby are consummated, the Banks shall indemnify upon
demand the Agent-Related Persons (to the extent not reimbursed by or on behalf
of the Borrower and without limiting the obligation of the Borrower to do so),
pro rata, from and against any and all Indemnified Liabilities; PROVIDED,
HOWEVER, that no Bank shall be liable for the payment to the Agent-Related
Persons of any portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Bank shall reimburse the Administrative Agent upon demand for
its ratable share of any costs or out-of-pocket expenses (including Attorney
Costs) incurred by the Administrative 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, any other
Loan Document, or any document contemplated by or referred to herein, to the
extent that the Administrative Agent is not reimbursed for such expenses by or
on behalf of the Borrower and its Subsidiaries. The undertaking in this Section
shall survive the payment of all Obligations hereunder and the resignation or
replacement of the Administrative Agent.
8.8 ADMINISTRATIVE AGENT IN INDIVIDUAL CAPACITY. BofA 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 Borrower and
its Subsidiaries and Affiliates as though BofA were not the Administrative Agent
hereunder and without notice to or consent of the Banks. The Banks acknowledge
that, pursuant to such activities, BofA or its Affiliates may receive
information regarding the Borrower or its Affiliates (including information that
may be subject to confidentiality obligations in favor of the Borrower or such
Affiliate) and acknowledge that the Administrative Agent shall be under no
obligation to provide such
45.
<PAGE>
information to them. With respect to its Loans, BofA shall have the same
rights and powers under this Agreement as any other Bank and may exercise the
same as though it were not the Administrative Agent, and the terms "Bank" and
"Banks" include BofA in its individual capacity.
8.9 SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent may, and at
the request of the Majority Banks shall, resign as Administrative Agent upon 30
days' notice to the Banks. If the Administrative Agent resigns under this
Agreement, the Majority Banks shall appoint from among the Banks a successor
agent for the Banks. If no successor agent is appointed prior to the effective
date of the resignation of the Administrative Agent, the Administrative Agent
may appoint, after consulting with the Banks and the Borrower, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Administrative Agent and the term "Administrative Agent"
shall mean such successor agent and the retiring Administrative Agent's
appointment, powers and duties as Administrative Agent shall be terminated.
After any retiring Administrative Agent's resignation hereunder as
Administrative Agent, the provisions of this Article VIII and Sections 9.4 and
9.5 shall inure to its benefit as to any actions taken or omitted to be taken by
it while it was Administrative Agent under this Agreement. If no successor
agent has accepted appointment as Administrative Agent by the date which is 30
days following a retiring Administrative Agent's notice of resignation, the
retiring Administrative Agent's resignation shall nevertheless thereupon become
effective and the Banks shall perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Majority Banks appoint a
successor agent as provided for above.
8.10 WITHHOLDING TAX.
(a) If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in favor of the Administrative Agent, to deliver to the
Administrative Agent:
(i) if such Bank claims an exemption from, or a reduction
of, withholding tax under a United States tax treaty, two properly
completed and executed copies of IRS Form 1001 before the payment of any
interest in the first calendar year and before the payment of any interest
in each third succeeding calendar year during which interest may be paid
under this Agreement;
(ii) if such Bank claims that interest paid under this
Agreement is exempt from United States withholding tax because it is
effectively connected with a United States trade or business of such Bank,
two properly completed and executed copies of IRS Form 4224 before the
payment of any interest is due in the first taxable year of such Bank and
in each succeeding taxable year of such Bank during which interest may be
paid under this Agreement, and
46.
<PAGE>
(iii) such other form or forms as may be required under
the Code or other laws of the United States as a condition to exemption
from, or reduction of, United States withholding tax.
Such Bank agrees to promptly notify the Administrative Agent of any change in
circumstances which would modify or render invalid any claimed exemption or
reduction.
(b) If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 and such Bank
sells, assigns, grants a participation in, or otherwise transfers all or part of
the Obligations of the Borrower to such Bank, such Bank agrees to notify the
Administrative Agent of the percentage amount in which it is no longer the
beneficial owner of Obligations of the Borrower to such Bank. To the extent of
such percentage amount, the Administrative Agent will treat such Bank's IRS Form
1001 as no longer valid.
(c) If any Bank claiming exemption from United States withholding tax
by filing IRS Form 4224 with the Administrative Agent sells, assigns, grants a
participation in, or otherwise transfers all or part of the Obligations of the
Borrower to such Bank, such Bank agrees to undertake sole responsibility for
complying with the withholding tax requirements imposed by Sections 1441 and
1442 of the Code.
(d) If any Bank is entitled to a reduction in the applicable
withholding tax, the Administrative Agent may withhold from any interest payment
to such Bank an amount equivalent to the applicable withholding tax after taking
into account such reduction. However, if the forms or other documentation
required by subsection (a) of this Section are not delivered to the
Administrative Agent, then the Administrative Agent may withhold from any
interest payment to such Bank not providing such forms or other documentation an
amount equivalent to the applicable withholding tax imposed by Sections 1441 and
1442 of the Code, without reduction.
(e) If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Administrative Agent did
not properly withhold tax from amounts paid to or for the account of any Bank
(because the appropriate form was not delivered or was not properly executed, or
because such Bank failed to notify the Administrative Agent of a change in
circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason) such Bank shall indemnify the
Administrative Agent fully for all amounts paid, directly or indirectly, by the
Administrative Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this Section, together with all costs and expenses
(including Attorney Costs). The obligation of the Banks under this subsection
shall survive the payment of all Obligations and the resignation or replacement
of the Administrative Agent.
8.11 CO-AGENTS. None of the Banks identified on the facing page or
signature pages of this Agreement as a "co-agent" shall have any right, power,
obligation, liability,
47.
<PAGE>
responsibility or duty under this Agreement other than those applicable to
all Banks as such. Without limiting the foregoing, none of the Banks so
identified as a "co-agent" shall have or be deemed to have any fiduciary
relationship with any Bank. Each Bank acknowledges that it has not relied,
and will not rely, on any of the Banks so identified in deciding to enter
into this Agreement or in taking or not taking action hereunder.
ARTICLE IX
MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrower or any other Loan Party therefrom, shall be effective
unless the same shall be in writing and signed by the Majority Banks (or by the
Administrative Agent at the written request of the Majority Banks) and the Loan
Parties party thereto and acknowledged by the Administrative Agent, and then any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; PROVIDED, HOWEVER, that no such waiver,
amendment, or consent shall, unless in writing and signed by all the Banks and
the Loan Parties party thereto and acknowledged by the Administrative Agent, do
any of the following:
(a) increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to Section 7.2);
(b) postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest specified herein
on any Loan, or any fees or other amounts payable hereunder or under any other
Loan Document;
(d) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder;
(e) release any Guarantor from its obligations under any Guaranty; or
(f) amend this Section, or Section 2.16, or any provision herein
providing for consent or other action by all Banks;
and, PROVIDED FURTHER, that no amendment, waiver or consent shall, unless in
writing and signed by the Administrative Agent in addition to the Majority Banks
or all the Banks, as the case may be, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document.
48.
<PAGE>
9.2 NOTICES.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by any Loan Party by facsimile (i) shall be immediately confirmed by
a telephone call to the recipient at the number specified on SCHEDULE 9.2, and
(ii) shall be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on SCHEDULE 9.2; or, as directed to the Loan Parties or the
Administrative Agent, to such other address as shall be designated by such party
in a written notice to the other parties, and as directed to any other party, at
such other address as shall be designated by such party in a written notice to
the Loan Parties and the Administrative Agent.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the fourth Business Day after the date
deposited into the U.S. mail or the Canadian mail, as the case may be, or if
delivered, upon delivery; except that notices pursuant to Article II or VIII to
the Administrative Agent shall not be effective until actually received by the
Administrative Agent.
(c) Any agreement of the Administrative Agent and the Banks herein to
receive certain notices by telephone or facsimile is solely for the convenience
and at the request of the Borrower. The Administrative Agent and the Banks
shall be entitled to rely on the authority of any Person purporting to be a
Person authorized by any of the Loan Parties to give such notice and the
Administrative Agent and the Banks shall not have any liability to any of the
Loan Parties or other Person on account of any action taken or not taken by the
Administrative Agent or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Borrower to repay the Loans shall not be affected
in any way or to any extent by any failure by the Administrative Agent and the
Banks to receive written confirmation of any telephonic or facsimile notice or
the receipt by the Administrative Agent and the Banks of a confirmation which is
at variance with the terms understood by the Administrative Agent and the Banks
to be contained in the telephonic or facsimile notice.
9.3 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of the Administrative Agent or any Bank, 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 any
other right, remedy, power or privilege.
9.4 COSTS AND EXPENSES. The Borrower shall:
(a) whether or not the transactions hereby are consummated, pay or
reimburse BofA (including in its capacity as Administrative Agent) and the
Arranger within five Business Days after demand for all costs and expenses
incurred by BofA (including in its
49.
<PAGE>
capacity as Administrative Agent) or the Arranger in connection with the
development, preparation, delivery, administration, syndication and execution
of, and any amendment, supplement, waiver or modification to (in each case,
whether or not consummated), this Agreement, any Loan Document and any other
documents prepared in connection herewith or therewith, and the consummation
of the transactions contemplated hereby and thereby, including reasonable
Attorney Costs incurred by BofA (including in its capacity as Administrative
Agent) with respect thereto; and
(b) pay or reimburse the Administrative Agent, the Arranger and each
Bank within five Business Days after demand for all costs and expenses
(including Attorney Costs) incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies under this
Agreement or any other Loan Document during the existence of an Event of Default
or after acceleration of the Loans (including in connection with any "workout"
or restructuring regarding the Loans, and including in any Insolvency Proceeding
or appellate proceeding).
9.5 INDEMNITY.
(a) GENERAL INDEMNITY. Whether or not the transactions contemplated
hereby are consummated, the Loan Parties shall indemnify, defend and hold the
Agent-Related Persons, and each Bank and each of its respective officers,
directors, employees, counsel, agents and attorneys-in-fact (each, an
"INDEMNIFIED PERSON") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses and disbursements (including Attorney Costs) of any kind or
nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of the
Administrative Agent or replacement of any Bank) be imposed on, incurred by or
asserted against any such Person in any way relating to or arising out of this
Agreement or any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted by any such
Person under or in connection with any of the foregoing, including with respect
to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or the Loans or the use of the proceeds thereof, or related to any foreign
exchange transactions entered into in connection herewith, whether or not any
Indemnified Person is a party thereto (all the foregoing, collectively, the
"INDEMNIFIED LIABILITIES"); PROVIDED, that the Loan Parties shall have no
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities resulting solely from the gross negligence or willful misconduct of
such Indemnified Person. The agreements in this Section shall survive payment
of all other Obligations.
(b) ENVIRONMENTAL INDEMNITY.
(i) The Loan Parties hereby agree to indemnify, defend and
hold harmless each Indemnified Person, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, charges, expenses or disbursements (including Attorney Costs
and the allocated cost of internal
50.
<PAGE>
environmental audit or review services), which may be incurred by or
asserted against such Indemnified Person in connection with or arising
out of any pending or threatened investigation, litigation or
proceeding, or any action taken by any Person, with respect to any
Environmental Claim arising out of or related to any property of any of
the Loan Parties or any of their respective Subsidiaries. No action
taken by legal counsel chosen by the Administrative Agent or any Bank in
defending against any such investigation, litigation or proceeding or
requested remedial, removal or response action shall vitiate or any way
impair the Loan Parties' obligation and duty hereunder to indemnify and
hold harmless the Administrative Agent and each Bank.
(ii) In no event shall any site visit, observation, or
testing by the Administrative Agent or any Bank be deemed a representation
or warranty that Hazardous Materials are or are not present in, on, or
under the site, or that there has been or shall be compliance with any
Environmental Law. Neither the Loan Parties nor any other Person is
entitled to rely on any site visit, observation, or testing by the
Administrative Agent or any Bank. Neither the Administrative Agent nor any
Bank owes any duty of care to protect the Loan Parties or any other Person
against, or to inform the Loan Parties or any other party of, any Hazardous
Materials or any other adverse condition affecting any site or property.
Neither the Administrative Agent nor any Bank shall be obligated to
disclose to the Loan Parties or any other Person any report or findings
made as a result of, or in connection with, any site visit, observation, or
testing by the Administrative Agent or any Bank.
(c) SURVIVAL; DEFENSE. The obligations in this Section 9.5 shall
survive payment of all other Obligations. At the election of any Indemnified
Person, each of the Loan Parties shall defend such Indemnified Person using
legal counsel satisfactory to such Indemnified Person in such Person's sole
discretion, at the sole cost and expense of the Loan Parties.
(d) EXISTING INDEMNIFICATION RIGHTS. All rights of the
Administrative Agent and the Banks in respect of any indemnification and
otherwise for reimbursement or payment of any losses, costs, charges, expenses
or disbursements (including Attorney Costs) under or in respect of the Existing
Facility shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby.
9.6 PAYMENTS SET ASIDE. To the extent that any of the Loan Parties makes
a payment to the Administrative Agent or the Banks, or the Administrative Agent
or the Banks exercise their right of set-off, and such payment or the proceeds
of such set-off or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required (including pursuant to any
settlement entered into by the Administrative Agent or such Bank in its
discretion) to be repaid to a trustee, receiver or any other party, in
connection with any Insolvency Proceeding or otherwise, then (a) to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such set-off had not occurred, and (b) each Bank
severally agrees to pay to the Administrative Agent upon
51.
<PAGE>
demand its pro rata share of any amount so recovered from or repaid by the
Administrative Agent.
9.7 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that none of the Loan Parties may assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of the Administrative Agent and each Bank.
9.8 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) Any Bank may, with the written consent of the Administrative
Agent and with the written consent of the Borrower at all times other than
during the existence of an Event of Default, which consent of the Borrower, if
required, and the Administrative Agent shall not be unreasonably withheld, at
any time assign and delegate to one or more Eligible Assignees (each an
"ASSIGNEE") all, or any ratable part of all, of the Loans, the Commitment and
the other rights and obligations of such Bank hereunder, in a minimum amount of
$10,000,000 (or the remaining amount of their Commitment, if lower); PROVIDED,
HOWEVER, that (i) such Bank also assigns and delegates to such Assignee(s) a
ratable portion of its "Loans" and "Revolving Commitment" under the Mail-Well I
Credit Agreement, and (ii) the Borrower and the Administrative Agent may
continue to deal solely and directly with such Bank in connection with the
interest so assigned to an Assignee until (A) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Borrower and the
Administrative Agent by such Bank and the Assignee; (B) such Bank and its
Assignee shall have delivered to the Borrower and the Administrative Agent an
Assignment and Acceptance in the form of EXHIBIT D ("ASSIGNMENT AND ACCEPTANCE")
together with any Note or Notes subject to such assignment and (C) the assignor
Bank or Assignee has paid to the Administrative Agent a processing fee in the
amount of $3,500. If the consent of the Administrative Agent and of the
Borrower shall be required for any such assignment, the Bank proposing to make
such assignment shall give the Administrative Agent and the Borrower no less
than 20 calendar days' notice of such requested consent.
(b) From and after the date that the Administrative Agent notifies
the assignor Bank that it has received (and provided its consent with respect
to) an executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.
(c) Within five Business Days after its receipt of notice by the
Administrative Agent that it has received an executed Assignment and Acceptance
and
52.
<PAGE>
payment of the processing fee and requesting new Notes (and provided that it
consents to such assignment in accordance with Section 9.8(a)), the Borrower
shall execute and deliver to the Administrative Agent, new Notes evidencing such
Assignee's assigned Loans and Commitment and, if the assignor Bank has retained
a portion of its Loans and its Commitment, replacement Notes in the principal
amount of the Loans retained by the assignor Bank (such Notes to be in exchange
for, but not in payment of, the Notes held by such Bank). Immediately upon each
Assignee's making its processing fee payment under the Assignment and
Acceptance, this Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee and the
resulting adjustment of the Commitments arising therefrom. The Commitment
allocated to each Assignee shall reduce the Commitment of the assigning Bank PRO
TANTO.
(d) Any Bank may, with the written consent of the Borrower at all
times other than during the existence of an Event of Default, which consent of
the Borrower, if required, shall not be unreasonably withheld, at any time sell
to one or more commercial banks or other Persons not Affiliates of the Borrower
(a "PARTICIPANT") participating interests in any Loans, the Commitment of that
Bank and the other interests of that Bank (the "originating Bank") hereunder and
under the other Loan Documents; PROVIDED, HOWEVER, that (i) the originating
Bank's obligations under this Agreement shall remain unchanged, (ii) the
originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Borrower and the Administrative Agent shall continue to
deal solely and directly with the originating Bank in connection with the
originating Bank's rights and obligations under this Agreement and the other
Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as pursuant to subsections (a), (b) or (c) of the
FIRST PROVISO to Section 9.1, in which event such Participant shall (if agreed
by the originating Bank) be entitled to vote with respect to such amendment,
consent or waiver. In the case of any such participation, the Participant shall
be entitled to the benefit of Sections 3.1, 3.3 and 9.5 as though it were also a
Bank hereunder, and if amounts outstanding under this Agreement are due and
unpaid, or shall have been declared or shall have become due and payable upon
the occurrence of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Bank (as the case may be) under this
Agreement. If the consent of the Borrower shall be required for any such
participation, the Bank proposing to make such participation shall give the
Administrative Agent and the Borrower no less than 20 calendar days' notice of
such requested consent.
(e) Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and the Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
53.
<PAGE>
9.9 CONFIDENTIALITY. Each Bank agrees to take and to cause its
Affiliates to take normal and reasonable precautions and exercise due care to
maintain the confidentiality of all information, identified as "confidential" or
"secret" by the Borrower and provided to it by any of the Loan Parties or any of
their respective Subsidiaries, or by the Administrative Agent on such Loan
Party's or such Subsidiary's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents or in connection with other business now or
hereafter existing or contemplated with any of the Loan Parties or any of their
respective Subsidiaries; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Bank, or (ii) was or becomes available on a nonconfidential basis from a
source other than the Loan Parties, provided that such source is not bound by a
confidentiality agreement with the Loan Parties known to the Bank; PROVIDED,
HOWEVER, that any Bank may disclose such information (A) at the request or
pursuant to any requirement of any Governmental Authority to which the Bank is
subject or in connection with an examination of such Bank by any such authority;
(B) pursuant to subpoena or other court process, provided that the Bank shall
use reasonable, good faith efforts to provide prior written notice to the
Borrower (unless the Bank is prohibited from doing so by any applicable
Requirement of Law); (C) when required to do so in accordance with the
provisions of any applicable Requirement of Law; (D) to the extent reasonably
required in connection with any litigation or proceeding to which the
Administrative Agent, any Bank or their respective Affiliates may be party,
provided that the Bank shall use reasonable, good faith efforts to provide prior
written notice to the Borrower (unless the Bank is prohibited from doing so by
any applicable Requirement of Law); (E) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (F) to such Bank's independent auditors and other professional
advisors; (G) to any Participant or Assignee, actual or potential, provided that
such Person agrees in writing to keep such information confidential to the same
extent required of the Banks hereunder; (H) as to any Bank or its Affiliate, as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which any of the Loan Parties or any of their respective
Subsidiaries is party to or is deemed party to with such Bank or such Affiliate;
and (I) to its Affiliates.
9.10 SET-OFF. In addition to any rights and remedies of the Banks provided
by law, if an Event of Default exists or the Loans have been accelerated, each
Bank is authorized at any time and from time to time, without prior notice to
the Loan Parties, any such notice being waived by the Loan Parties 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 by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Loan Parties against any and all Obligations owing to such
Bank, now or hereafter existing, irrespective of whether or not the
Administrative Agent or such Bank shall have made demand under this Agreement or
any Loan Document and although such Obligations may be contingent or unmatured.
Each Bank agrees promptly to notify the Loan Parties and the Administrative
Agent after any such set-off and application made by such Bank; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity of
such set-off and application.
54.
<PAGE>
9.11 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall
notify the Administrative Agent in writing of any changes in the address to
which notices to the Bank should be directed, of addresses of any Lending
Office, of payment instructions in respect of all payments to be made to it
hereunder and of such other administrative information as the Administrative
Agent shall reasonably request.
9.12 COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.
9.13 SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.
9.14 NO THIRD PARTIES BENEFITTED. This Agreement is made and entered into
for the sole protection and legal benefit of the Loan Parties, the Banks, the
Administrative Agent, the Indemnified Persons and the Agent-Related Persons, and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
9.15 GOVERNING LAW AND JURISDICTION.
(a) THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA; PROVIDED THAT THE
ADMINISTRATIVE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL
LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA
OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE
ADMINISTRATIVE AGENT AND THE BANKS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE LOAN
PARTIES, THE ADMINISTRATIVE AGENT, AND THE BANKS IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO. THE LOAN PARTIES, THE ADMINISTRATIVE
AGENT, AND THE BANKS EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY CALIFORNIA LAW.
55.
<PAGE>
9.16 WAIVER OF JURY TRIAL. THE LOAN PARTIES, THE BANKS AND THE
ADMINISTRATIVE AGENT EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY
ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON,
PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE LOAN PARTIES, THE BANKS, AND THE ADMINISTRATIVE AGENT EACH
AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.
9.17 GUARANTY.
(a) GUARANTY. Each of the Parent and the Subsidiary Guarantors,
unconditionally and irrevocably, jointly and severally guarantees to the
Administrative Agent and the Banks, and their respective successors, endorsers,
transferees and assigns, the full and prompt payment when due (whether at stated
maturity, by required prepayment, declaration, acceleration, demand or
otherwise) and performance of the Obligations of the Borrower to the
Administrative Agent and the Banks (the "Guaranteed Obligations"). The
Guaranteed Obligations include interest which, but for an Insolvency Proceeding,
would have accrued on such Guaranteed Obligations, whether or not a claim is
allowed against the Borrower for such interest in any such Insolvency
Proceeding.
(b) SEPARATE OBLIGATION. Each Guarantor acknowledges and agrees (i)
that the Guaranteed Obligations are separate and distinct from any indebtedness,
obligations or liabilities arising under or in connection with any other
agreement, instrument or guaranty, including under any provision of this
Agreement other than this Section 9.17, executed at any time by such Guarantor
in favor of the Administrative Agent or any of the Banks, and (ii) such
Guarantor shall pay and perform all of the Guaranteed Obligations as required
under this Section 9.17, and the Administrative Agent and the Banks may enforce
any and all of their rights and remedies hereunder, without regard to any other
agreement, instrument or guaranty, including any provision of this Agreement
other than this Section 9.17, at any time executed by such Guarantor in favor of
the Administrative Agent or any of the Banks, regardless of whether or not any
such other agreement, instrument or guaranty, or any provision thereof or
hereof, shall for any reason become unenforceable or any of the indebtedness,
obligations or liabilities thereunder shall have been discharged, whether by
56.
<PAGE>
performance, avoidance or otherwise. Each Guarantor acknowledges that in
providing benefits to the Borrower and such Guarantor, the Administrative Agent
and the Banks are relying upon the enforceability of this Section 9.17 and the
Guaranteed Obligations as separate and distinct indebtedness, obligations and
liabilities of such Guarantor, and each Guarantor agrees that the Administrative
Agent and the Banks would be denied the full benefit of their bargain if at any
time this Section 9.17 or the Guaranteed Obligations were treated any
differently. The fact that the Guaranty of each Guarantor is set forth in this
Agreement rather than in a separate guaranty document is for the convenience of
the Borrower and the Guarantors and shall in no way impair or adversely affect
the rights or benefits of the Banks or the Administrative Agent under this
Section 9.17. Each Guarantor agrees to execute and deliver a separate
agreement, immediately upon request at any time of the Administrative Agent or
any Bank, evidencing such Guarantor's obligations under this Section 9.17. Upon
the occurrence of any Event of Default, a separate action or actions may be
brought against each Guarantor, whether or not the Borrower or any other
guarantor or Person is joined therein or a separate action or actions are
brought against the Borrower or any such other guarantor or Person.
(c) LIMITATION OF GUARANTY. To the extent that any court of
competent jurisdiction shall impose by final judgment under applicable law
(including the California Uniform Fraudulent Transfer Act and Sections 544 and
548 of the Bankruptcy Code) any limitations on the amount of any Guarantor's
liability with respect to the Guaranteed Obligations which the Administrative
Agent or the Banks can enforce under this Section 9.17, the Administrative Agent
and the Banks by their acceptance hereof accept such limitation on the amount of
such Guarantor's liability hereunder to the extent needed to make this Section
9.17 fully enforceable and nonavoidable.
(d) LIABILITY OF GUARANTOR. The liability of each Guarantor under
this Section 9.17 shall be irrevocable, absolute, independent and unconditional,
and shall not be affected by any circumstance which might constitute a discharge
of a surety or guarantor other than the indefeasible payment and performance in
full of all Guaranteed Obligations. In furtherance of the foregoing and without
limiting the generality thereof, each Guarantor agrees as follows:
(i) such Guarantor's liability hereunder shall be the
immediate, direct, and primary obligation of such Guarantor and shall not
be contingent upon the Administrative Agent's or any Bank's exercise or
enforcement of any remedy it may have against the Borrower or any other
Person, or against any collateral or other security for any Guaranteed
Obligations;
(ii) this Guaranty is a guaranty of payment when due and not
merely of collectibility;
(iii) the Administrative Agent and the Banks may enforce
this Section 9.17 upon the occurrence of an Event of Default
notwithstanding the existence
57.
<PAGE>
of any dispute among the Administrative Agent and the Banks and the
Borrower with respect to the existence of such Event of Default;
(iv) such Guarantor's payment of a portion, but not all, of
the Guaranteed Obligations shall in no way limit, affect, modify or abridge
such Guarantor's liability for any portion of the Guaranteed Obligations
remaining unsatisfied; and
(v) such Guarantor's liability with respect to the
Guaranteed Obligations shall remain in full force and effect without regard
to, and shall not be impaired or affected by, nor shall such Guarantor be
exonerated or discharged by, any of the following events:
(A) any Insolvency Proceeding;
(B) any limitation, discharge, or cessation of the
liability of the Borrower or any other guarantor or Person for any
Guaranteed Obligations due to any statute, regulation or rule of law,
or any invalidity or unenforceability in whole or in part of any of
the Guaranteed Obligations or the Loan Documents;
(C) any merger, acquisition, consolidation or change in
structure of the Borrower or any other guarantor or Person, or any
sale, lease, transfer or other disposition of any or all of the assets
or shares of the Borrower or any other guarantor or other Person;
(D) any assignment or other transfer, in whole or in part,
of the Administrative Agent's or any Bank's interests in and rights
under this Guaranty or the other Loan Documents;
(E) any claim, defense, counterclaim or set-off, other than
that of prior performance, that the Borrower, such Guarantor, any
other guarantor or other Person may have or assert, including any
defense of incapacity or lack of corporate or other authority to
execute any of the Loan Documents;
(F) the Administrative Agent's or any Bank's amendment,
modification, renewal, extension, cancellation or surrender of any
Loan Document or any Guaranteed Obligations;
(G) the Administrative Agent's or any Bank's exercise or
nonexercise of any power, right or remedy with respect to any
Guaranteed Obligations or any collateral;
(H) the Administrative Agent's or any Bank's vote, claim,
distribution, election, acceptance, action or inaction in any
Insolvency Proceeding;
58.
<PAGE>
(I) any other guaranty, whether by any Guarantor or any
other Person, of all or any part of the Guaranteed Obligations or any
other indebtedness, obligations or liabilities of the Borrower to the
Administrative Agent or the Banks.
(e) CONSENTS OF GUARANTOR. Each Guarantor hereby unconditionally
consents and agrees that, without notice to or further assent from such
Guarantor:
(i) the principal amount of the Guaranteed Obligations may
be increased or decreased and additional indebtedness or obligations of the
Borrower under the Loan Documents may be incurred and the time, manner,
place or terms of any payment under any Loan Document be extended or
changed, by one or more amendments, modifications, renewals or extensions
of any Loan Document or otherwise;
(ii) the time for the Borrower's (or any other Person's)
performance of or compliance with any term, covenant or agreement on its
part to be performed or observed under any Loan Document may be extended,
or such performance or compliance waived, or failure in or departure from
such performance or compliance consented to, all in such manner and upon
such terms as the Administrative Agent and the Banks (or the Majority
Banks, as the case may be) may deem proper;
(iii) the Administrative Agent and the Banks may request
and accept other guaranties and may take and hold other security as
collateral for the Guaranteed Obligations, and may, from time to time, in
whole or in part, exchange, sell, surrender, release, subordinate, modify,
waive, rescind, compromise or extend such other guaranties or security and
may permit or consent to any such action or the result of any such action,
and may apply such security and direct the order or manner of sale thereof;
(iv) the Administrative Agent and the Banks may exercise, or
waive or otherwise refrain from exercising, any other right, remedy, power
or privilege even if the exercise thereof affects or eliminates any right
of subrogation or any other right of such Guarantor against the Borrower;
(f) GUARANTOR'S WAIVERS. Each Guarantor waives and agrees not to
assert:
(i) any right to require the Administrative Agent or any
Bank to proceed against the Borrower, any other guarantor or any other
Person, or to pursue any other right, remedy, power or privilege of the
Administrative Agent or any Bank whatsoever;
(ii) the defense of the statute of limitations in any action
hereunder or for the collection or performance of the Guaranteed
Obligations;
59.
<PAGE>
(iii) any defense arising by reason of any lack of
corporate or other authority or any other defense of the Borrower, such
Guarantor or any other Person;
(iv) any defense based upon the Administrative Agent's or
any Bank's errors or omissions in the administration of the Guaranteed
Obligations;
(v) any rights to set-offs and counterclaims;
(vi) without limiting the generality of the foregoing, to
the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by applicable law limiting the liability of or
exonerating guarantors or sureties, or which may conflict with the terms of
this Section 9.17, including any and all benefits that otherwise might be
available to such Guarantor under California Civil Code Sections 1432,
2809, 2810, 2815, 2819, 2839, 2845, 2848, 2849, 2850, 2899 and 3433 and
California Code of Civil Procedure Sections 580a, 580b, 580d and 726; and
(vii) any and all notice of the acceptance of this
Guaranty, and any and all notice of the creation, renewal, modification,
extension or accrual of the Guaranteed Obligations, or the reliance by the
Administrative Agent and the Banks upon this Guaranty, or the exercise of
any right, power or privilege hereunder. The Guaranteed Obligations shall
conclusively be deemed to have been created, contracted, incurred and
permitted to exist in reliance upon this Guaranty. Each Guarantor waives
promptness, diligence, presentment, protest, demand for payment, notice of
default, dishonor or nonpayment and all other notices to or upon the
Borrower, such Guarantor or any other Person with respect to the Guaranteed
Obligations.
(g) FINANCIAL CONDITION OF BORROWER. No Guarantor shall have any
right to require the Administrative Agent or the Banks to obtain or disclose any
information with respect to: the financial condition or character of the
Borrower or the ability of the Borrower to pay and perform the Guaranteed
Obligations; the Guaranteed Obligations; any collateral or other security for
any or all of the Guaranteed Obligations; the existence or nonexistence of any
other guarantees of all or any part of the Guaranteed Obligations; any action or
inaction on the part of the Administrative Agent or the Banks or any other
Person; or any other matter, fact or occurrence whatsoever. Each Guarantor
hereby acknowledges that it has undertaken its own independent investigation of
the financial condition of the Borrower and all other matters pertaining to this
Guaranty and further acknowledges that it is not relying in any manner upon any
representation or statement of the Administrative Agent or any Bank with respect
thereto.
(h) SUBROGATION. Until the Guaranteed Obligations shall be satisfied
in full and the Commitments shall be terminated, each Guarantor shall not have,
and shall not directly or indirectly exercise, (i) any rights that it may
acquire by way of subrogation under this Section 9.17, by any payment hereunder
or otherwise, (ii) any rights of contribution, indemnification, reimbursement or
similar suretyship claims arising out of this Section 9.17 or (iii) any other
right which it might otherwise have or acquire (in any way whatsoever) which
60.
<PAGE>
could entitle it at any time to share or participate in any right, remedy or
security of the Banks or the Administrative Agent as against the Borrower or
other guarantors, whether in connection with this Section 9.17, any of the other
Loan Documents or otherwise. If any amount shall be paid to any Guarantor on
account of the foregoing rights at any time when all the Guaranteed Obligations
shall not have been paid in full, such amount shall be held in trust for the
benefit of the Administrative Agent and the Banks and shall forthwith be paid to
the Administrative Agent to be credited and applied to the Guaranteed
Obligations, whether matured or unmatured, in accordance with the terms of the
Loan Documents.
(i) SUBORDINATION. All payments on account of all indebtedness,
liabilities and other obligations of the Borrower to any Guarantor, whether now
existing or hereafter arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined (the
"Subordinated Debt") shall be subject, subordinate and junior in right of
payment and exercise of remedies, to the extent and in the manner set forth
herein, to the prior payment in full in cash or cash equivalents of the
Guaranteed Obligations. As long as any of the Guaranteed Obligations shall
remain outstanding and unpaid, each Guarantor shall not accept or receive any
payment or distribution by or on behalf of the Borrower, directly or indirectly,
or assets of the Borrower, of any kind or character, whether in cash, property
or securities, including on account of the purchase, redemption or other
acquisition of Subordinated Debt, as a result of any collection, sale or other
disposition of collateral, or by setoff, exchange or in any other manner, for or
on account of the Subordinated Debt ("Subordinated Debt Payments"), except that
prior to the occurrence of any Default, such Guarantor shall be entitled to
accept and receive regularly scheduled payments on the Subordinated Debt, in
accordance with past business practices of such Guarantor and the Borrower and
not in contravention of the terms of the Loan Documents.
In the event that any Subordinated Debt Payments shall be received in
contravention of this Section, such Subordinated Debt Payments shall be held in
trust for the benefit of the Administrative Agent and the Banks and shall be
paid over or delivered to the Administrative Agent for application to the
payment in full in cash or cash equivalents of all Guaranteed Obligations
remaining unpaid to the extent necessary to give effect to this Section after
giving effect to any concurrent payments or distributions to the Administrative
Agent and the Banks in respect of the Guaranteed Obligations.
(j) CONTINUING GUARANTY. This Guaranty is a continuing guaranty and
agreement of subordination and shall continue in effect and be binding upon each
Guarantor until termination of the Commitments and payment and performance in
full of the Guaranteed Obligations, including Guaranteed Obligations which may
exist continuously or which may arise from time to time under successive
transactions, and each Guarantor expressly acknowledges that this Guaranty shall
remain in full force and effect notwithstanding that there may be periods in
which no Guaranteed Obligations exist. This Guaranty shall continue in effect
and be binding upon each Guarantor until actual receipt by the Administrative
Agent of written notice from such Guarantor of its intention to discontinue its
Guaranty as to future transactions (which notice shall not be effective until
noon on the day five Business Days following such receipt); PROVIDED that no
revocation or termination of this Guaranty in respect
61.
<PAGE>
of any Guarantor shall affect in any way any rights of the Administrative
Agent and the Banks hereunder with respect to any Guaranteed Obligations
arising or outstanding on the date of receipt of such notice, including any
subsequent continuation, extension, or renewal thereof, or change in the
terms or conditions thereof, or any Guaranteed Obligations made or created
after such date to the extent made or created pursuant to a legally binding
commitment of any of the Banks in existence as of the date of such revocation
(collectively, "Existing Guaranteed Obligations"), and the sole effect of
such notice shall be to exclude from this Guaranty in respect of such
Guarantor Guaranteed Obligations thereafter arising which are unconnected to
any Existing Guaranteed Obligations.
(k) REINSTATEMENT. This Guaranty shall continue to be effective or
shall be reinstated and revived, as the case may be, if, for any reason, any
payment of the Guaranteed Obligations by or on behalf of the Borrower (or
receipt of any proceeds of collateral) shall be rescinded, invalidated, declared
to be fraudulent or preferential, set aside, voided or otherwise required to be
repaid to the Borrower, its estate, trustee, receiver or any other Person
(including under the Bankruptcy Code or other state or federal law), or must
otherwise be restored by the Administrative Agent or any Bank, whether as a
result of Insolvency Proceedings or otherwise. All losses, damages, costs and
expenses that the Administrative Agent or the Banks may suffer or incur as a
result of any voided or otherwise set aside payments shall be specifically
covered by the indemnity in favor of the Banks and the Administrative Agent
contained in Section 9.5.
(l) SUBSTANTIAL BENEFITS. The funds that have been borrowed from the
Banks by the Borrower have been and are to be contemporaneously used for the
direct or indirect benefit of the Borrower and each Guarantor. It is the
position, intent and expectation of the parties that the Borrower and each
Guarantor have derived and will derive significant and substantial direct or
indirect benefits from the accommodations that have been made by the Banks under
the Loan Documents. Each Guarantor has received at least "reasonably equivalent
value" (as such phrase is used in Section 548 of the Bankruptcy Code, in Section
3439.04 of the California Uniform Fraudulent Transfer Act and in comparable
provisions of other applicable law) and more than sufficient consideration to
support its obligations hereunder in respect of the Guaranteed Obligations and
under any of the Loan Documents to which it is a party. Immediately prior to
and after and giving effect to the incurrence of each Guarantor's obligations
under this Guaranty, such Guarantor will be solvent.
(m) KNOWING AND EXPLICIT WAIVERS. EACH GUARANTOR ACKNOWLEDGES THAT
IT EITHER HAS OBTAINED THE ADVICE OF LEGAL COUNSEL OR HAS HAD THE OPPORTUNITY TO
OBTAIN SUCH ADVICE IN CONNECTION WITH THE TERMS AND PROVISIONS OF THIS SECTION
9.17. EACH GUARANTOR ACKNOWLEDGES AND AGREES THAT EACH OF THE WAIVERS AND
CONSENTS SET FORTH HEREIN ARE MADE WITH FULL KNOWLEDGE OF THEIR SIGNIFICANCE AND
CONSEQUENCES, AND THAT ALL SUCH WAIVERS AND CONSENTS HEREIN ARE EXPLICIT AND
KNOWING AND WHICH EACH GUARANTOR EXPECTS TO BE FULLY ENFORCEABLE.
62.
<PAGE>
If, while any Subordinated Debt is outstanding, any Insolvency Proceeding is
commenced by or against the Borrower or its property, the Administrative Agent,
when so instructed by the Majority Banks, is hereby irrevocably authorized and
empowered (in the name of the Banks or in the name of the applicable Guarantor
or otherwise), but shall have no obligation, to demand, sue for, collect and
receive every payment or distribution in respect of the Subordinated Debt and
give acquittance therefor and to file claims and proofs of claim and take such
other action (including voting the Subordinated Debt) as it may deem necessary
or advisable for the exercise or enforcement of any of the rights or interests
of the Administrative Agent and the Banks; and each Guarantor shall promptly
take such action as the Administrative Agent (on instruction from the Majority
Banks) may reasonably request (A) to collect the Subordinated Debt for the
account of the Banks and to file appropriate claims or proofs of claim in
respect of the Subordinated Debt, (B) to execute and deliver to the
Administrative Agent such powers of attorney, assignments and other instruments
as it may request to enable it to enforce any and all claims with respect to the
Subordinated Debt, and (C) to collect and receive any and all Subordinated Debt
Payments.
9.18 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Loan
Parties, the Banks and the Administrative Agent, and supersedes all prior or
contemporaneous agreements and understandings of such Persons, verbal or
written, relating to the subject matter hereof and thereof.
9.19 CERTAIN POST-CLOSING MATTERS. The Borrower shall deliver to the
Administrative Agent, not later than 10 days following the Closing Date, the
items listed on SCHEDULE 9.19.
[SIGNATURE PAGES FOLLOW]
63.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered in San Francisco, California by their properly and
duly authorized officers as of the day and year first above written.
SUPREMEX, INC.
By: /s/ Kevin R. Howley
------------------------------
Kenin R. Howley
Title: Vice President - Treasurer
---------------------------
<PAGE>
MAIL-WELL, INC., a Delaware
Corporation, as a Guarantor
By: /s/ Kevin R. Howley
------------------------------
Kenin R. Howley
Title: Vice President - Treasurer
---------------------------
MAIL-WELL I CORPORATION, a
Delaware Corporation, as a
Guarantor
By: /s/ Kevin R. Howley
------------------------------
Kenin R. Howley
Title: Vice President - Treasurer
---------------------------
<PAGE>
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as
Administrative Agent and a
Bank
By: /s/
---------------------------------
Title: Vice President
------------------------------
<PAGE>
BANK OF NEW YORK, as
Co-Agent and a Bank
By: /s/ Robert Louk
-------------------------------
Robert Louk
Title: Vice President
----------------------------
<PAGE>
CREDIT LYONNAIS NEW YORK
BRANCH, as Co-Agent and a Bank
By: /s/ Robert Ivosevich
---------------------------------
Robert Ivosevich
Title: Senior Vice President
------------------------------
<PAGE>
FLEET NATIONAL BANK, as
Co-Agent and a Bank
By: /s/ Jeffrey C. Lynch
--------------------------------
Jeffrey C. Lynch
Title: Vice President
-----------------------------
<PAGE>
NATIONSBANK OF TEXAS, N.A., as
Co-Agent and a Bank
By: /s/ Kimerley A. Knop
----------------------------
Kimerley A. Knop
Title: Vice President
------------------------
<PAGE>
THE BANK OF NOVA SCOTIA
By: /s/ F.C.H. Ashby
------------------------
F.C.H. Ashby
Title: Senior Management
Loan Operations
---------------------
67.
<PAGE>
THE CHASE MANHATTAN BANK
By: /s/ Mary Elisabeth Swerz
----------------------------
Mary Elisabeth Swerz
Title: Vice President
-------------------------
<PAGE>
COLORADO NATIONAL BANK
By: /s/ Wesley G. Zeplin
--------------------------------
Wesley G. Zeplin
Title: Vice President
-----------------------------
<PAGE>
HARRIS TRUST AND SAVINGS BANK
By: /s/
-----------------------------
Title: Vice President
--------------------------
<PAGE>
KEYBANK NATIONAL ASSOCIATION
By: /s/
----------------------------
Title: Vice President
-------------------------
<PAGE>
NORWEST BANK COLORADO,
NATIONAL ASSOCIATION
By: /s/ Catherine M. Jones
-------------------------
Title: Vice President
----------------------
<PAGE>
UNION BANK OF CALIFORNIA, N.A.,
By: /s/ David W. Kinkela
-----------------------------
David W. Kinkela
Title: Assistant Vice President
--------------------------
<PAGE>
CONFORMED COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
PARTICIPATION AGREEMENT
Dated as of December 15, 1997
Re:
MW 1997-1 TRUST
Synthetic Lease of Envelope and Commercial Printing Equipment
to
Mail-Well I Corporation
Among
Mail-Well I Corporation
Lessee
KEYBANK NATIONAL ASSOCIATION
KEY CORPORATE CAPITAL INC.
Trust Certificate Purchasers
KEYBANK NATIONAL ASSOCIATION,
not in its individual capacity, except as expressly
provided herein, but solely as trustee under
MW 1997-1 Trust
Lessor Trustee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C>
Parties...................................................................... 1
Recitals..................................................................... 1
SECTION 1. COMMITMENTS OF THE TRUST CERTIFICATE PURCHASERS............ 1
Section 1.1. Advances by Trust Certificate Purchasers................. 1
Section 1.2. The Closing Date......................................... 2
Section 1.3. Expiration of Commitments................................ 2
Section 1.4. Several Commitments...................................... 2
Section 1.5. Acquisition of Equipment by the Lessor Trustee........... 2
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES....................... 2
Section 2.1. Interest Rate............................................ 2
Section 2.2. Computation of Interest.................................. 3
Section 2.3. Adverse Determination.................................... 3
Section 2.4. Invoicing of Periodic Rent............................... 3
SECTION 3. REPRESENTATIONS AND WARRANTIES............................. 3
Section 3.1. Warranties and Representations of KeyBank National
Association and the Lessor Trustee....................... 3
Section 3.2. Warranties and Representations of the Lessee............. 6
Section 3.3. Private Offering......................................... 9
Section 3.4. Representations of the Trust Certificate Purchasers;
Transfer of Trust Certificates; Participations........... 9
SECTION 4. CLOSING CONDITIONS......................................... 12
Section 4.1. Conditions Precedent to Investment on the Closing Date... 12
Section 4.2. Conditions Subsequent to Investment on the Closing Date.. 14
SECTION 5. SPECIAL RIGHTS OF TRUST CERTIFICATE PURCHASERS............. 15
SECTION 6. LESSEE'S INDEMNITIES....................................... 15
Section 6.1. General Indemnification.................................. 15
Section 6.2. Proceedings in Respect of Claims......................... 17
Section 6.3. General Tax Indemnity.................................... 18
Section 6.4. Indemnity Payments in Addition to Lease Obligations...... 21
Section 6.5. Increased Costs, etc..................................... 21
Section 6.6. Funding Losses........................................... 22
-i-
<PAGE>
SECTION 7. INDEMNITIES OF THE LESSOR TRUSTEE AND THE TRUST CERTIFICATE
PURCHASERS................................................. 23
SECTION 8. CERTAIN INTENTIONS OF THE PARTIES.......................... 23
Section 8.1. Nature of Transaction.................................... 23
Section 8.2. Amounts Due Under the Lease.............................. 24
SECTION 9. [INTENTIONALLY OMITTED].................................. 25
SECTION 10. MISCELLANEOUS............................................ 25
Section 10.1. Amendments............................................... 25
Section 10.2. Notices.................................................. 25
Section 10.3. Survival................................................. 25
Section 10.4. Successors and Assigns................................... 25
Section 10.5. Governing Law............................................ 25
Section 10.6. Counterparts............................................. 25
Section 10.7. Headings and Table of Contents........................... 26
Section 10.8. Limitations of Liability................................. 26
Section 10.9. Transactional Expenses................................... 27
Signatures................................................................... 28
</TABLE>
-ii-
<PAGE>
ATTACHMENTS TO THE PARTICIPATION AGREEMENT:
Schedule I -- Schedule of Trust Certificate Purchasers;
Commitments; Applicable Percentages
Schedule II -- Description of the Account
Schedule III -- Subsidiaries of the Lessee and Ownership of
Subsidiary Stock
Annex I -- Definitions
Annex II -- Forms of Opinions of Counsel
Exhibit A -- Lessor Trust Agreement
Exhibit B -- Equipment Lease
Exhibit C -- Guaranty Agreement
Exhibit D -- Form of Notice of Closing
-iii-
<PAGE>
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of December 15, 1997 is among
MAIL-WELL I CORPORATION, a Delaware corporation (the "LESSEE"), KEYBANK
NATIONAL ASSOCIATION and KEY CORPORATE CAPITAL INC. (the "TRUST CERTIFICATE
PURCHASERS"), and KEYBANK NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as trustee (the "LESSOR TRUSTEE") under MW 1997-1 Trust
created under the Lessor Trust Agreement referred to below.
RECITALS:
A. The capitalized terms used in this Participation Agreement shall
have the respective meanings specified in Annex I attached hereto, unless
otherwise herein defined or the context hereof shall otherwise require.
B. The Lessor Trustee and the Trust Certificate Purchasers have
entered into a Lessor Trust Agreement dated as of December 15, 1997
substantially in the form attached hereto as Exhibit A and pursuant to the
authorities and directions contained in the said Lessor Trust Agreement, the
Lessor Trustee has entered into or proposes to enter into an Equipment Lease
substantially in the form attached hereto as Exhibit B between the Lessor
Trustee, as lessor, and the Lessee, as lessee, providing for the lease of
envelope and commercial printing equipment acquired by the Lessor Trustee
under the Operative Agreements.
C. Concurrently with the execution and delivery of this Agreement, the
Guarantors and the Lessee will enter into a Guaranty Agreement substantially
in the form attached hereto as Exhibit C.
SECTION 1. COMMITMENTS OF THE TRUST CERTIFICATE PURCHASERS.
SECTION 1.1. ADVANCES BY TRUST CERTIFICATE PURCHASERS. (a) ADVANCES.
Subject to the terms and conditions hereof and on the basis of the
representations and warranties hereinafter set forth, each Trust Certificate
Purchaser agrees to advance to the Lessor Trustee, on the Closing Date, an
amount (an "ADVANCE") equal to the lesser of (i) its Applicable Percentage of
the Equipment Cost (set forth opposite such Trust Certificate Purchaser's
name on Schedule I hereto) of the Equipment to be funded on the Closing Date
and (ii) its Commitment, against delivery by the Lessor Trustee of Trust
Certificates in the aggregate principal amount of such Advance and of the
series to be purchased by such Trust Certificate Purchaser (set forth
opposite such Trust Certificate Purchaser's name on Schedule I hereto). The
Trust Certificates delivered to each Trust Certificate Purchaser on the
Closing Date will, unless otherwise requested by a Trust Certificate
Purchaser, be in the form of a single Trust Certificate registered in the
manner set forth on Schedule I hereto.
(b) FAILURE TO ADVANCE, ETC. If on the Closing Date any Trust
Certificate Purchaser shall fail to make the Advance to be made by such Trust
Certificate Purchaser on such
<PAGE>
MW 1997-1 Trust Participation Agreement
Closing Date pursuant to Section 1.1(a) or if the conditions to the
obligation of any Trust Certificate Purchaser specified in Section 4 have not
been fulfilled, the Trust Certificate Purchasers may thereupon elect to be
relieved of all further obligations under this Agreement. Nothing in this
Section shall operate to relieve the Lessee from its obligations hereunder or
to waive any of the Trust Certificate Purchasers' rights against the Lessee.
SECTION 1.2. THE CLOSING DATE. The Advances to be made by the Trust
Certificate Purchasers hereunder shall be made on one date (the "CLOSING
DATE"), not later than the expiration of the commitment of the Trust
Certificate Purchasers as set forth in Section 1.3, which date shall be the
date designated by the Lessee for delivery and acceptance of the Equipment to
be funded on such Closing Date under the Lease. The Lessee shall designate
the date on which the Equipment is to be delivered and accepted by the Lessee
under the Lease by not less than 3 Business Days' prior written notice to
each Trust Certificate Purchaser and the Lessor Trustee, which notice shall
be substantially in the form attached hereto as Exhibit D and shall specify
the amount of the Advance to be made by each Trust Certificate Purchaser.
Each Trust Certificate Purchaser's Advance shall be made available to the
Lessor Trustee (Account No. 470589990154) no later than 12:00 Noon, Seattle,
Washington time on the Closing Date in Federal Reserve or otherwise
immediately available funds current in Seattle, Washington.
SECTION 1.3. EXPIRATION OF COMMITMENTS. The commitment of each Trust
Certificate Purchaser under Section 1.1(a) shall expire on December 31, 1997.
SECTION 1.4. SEVERAL COMMITMENTS. The obligations hereunder of the Trust
Certificate Purchasers shall be several and not joint and no Trust
Certificate Purchaser shall be liable or responsible for the acts or defaults
of any other Trust Certificate Purchaser.
SECTION 1.5. ACQUISITION OF EQUIPMENT BY THE LESSOR TRUSTEE. Subject to
the terms and conditions hereof and on the basis of the representations and
warranties hereinafter set forth and set forth in the other Operative
Agreements, the Lessor Trustee agrees to acquire the Equipment to be settled
for on the Closing Date at a price equal to the Equipment Cost therefor.
SECTION 2. INTEREST AND CHANGE IN CIRCUMSTANCES.
SECTION 2.1. INTEREST RATE. Each Trust Certificate shall bear interest on
the Outstanding Certificate Balance for Interest Calculations set forth on
Schedule 1-A or Schedule 1-B, as the case may be, to the Trust Agreement for
each Interest Period at a rate per annum determined by adding the Applicable
Margin for such Interest Period to the Adjusted LIBOR for such Interest
Period, provided that if the principal of or interest on any Trust
Certificate is not paid when due (whether by lapse of time, acceleration or
otherwise) such overdue principal and (to the extent permitted by Applicable
Law) overdue interest shall bear interest, whether before or after judgment,
until payment in full thereof at the Overdue Rate. Interest on the Trust
Certificates shall be due and payable on the last day of each Interest Period
applicable thereto, PROVIDED that any payment of interest which is due on a
date which is not a Business Day shall be payable on the next succeeding
Business Day,
-2-
<PAGE>
MW 1997-1 Trust Participation Agreement
unless the result of such extension would be that such payment would be made
in another calendar month in which event such payment shall be made on the
immediately preceding Business Day, and interest on overdue principal and (to
the extent permitted by Applicable Law) interest shall be due and payable
upon demand.
SECTION 2.2. COMPUTATION OF INTEREST. All interest on the Trust
Certificates shall be computed on the basis of a year of 360 days for the
actual number of days elapsed.
SECTION 2.3. ADVERSE DETERMINATION. Notwithstanding any other provisions
of this Agreement or of the Trust Certificates or any other Operative
Agreement, if at any time any Trust Certificate Purchaser or Certificate
Holder shall in good faith make an Adverse Determination, such Trust
Certificate Purchaser or Certificate Holder shall promptly so notify the
Lessor Trustee and the Lessee and from and after the date specified in such
notice the Trust Certificates held by such Trust Certificate Purchaser or
Certificate Holder shall bear interest at the Alternate Rate. Any
determination made by a Trust Certificate Purchaser or Certificate Holder
shall, absent manifest error, be final and conclusive and binding upon all
parties.
SECTION 2.4. INVOICING OF PERIODIC RENT. Prior to each Interest Period,
the Lessor Trustee shall calculate the interest due on the Trust Certificates
for such Interest Period and shall promptly give notice to the Lessee and
(with respect to the Trust Certificates held by any Certificate Holder) the
Certificate Holders as to the amount so calculated. In addition, the Lessor
Trustee shall, at least three Business Days prior to the payment date for any
installment of Periodic Rent, give notice to the Lessee and the Lessor
Trustee of the amount of such installment. The calculations and notices to
be made by the Lessor Trustee pursuant to this Section 2.4 are for the
convenience only of the parties hereto; and, any error made by the Lessor
Trustee in the calculation of interest due on the Trust Certificates or in
the amount of any installment of Periodic Rent or any failure by the Lessor
Trustee to give any notice required by this Section 2.4, shall not affect the
amount of interest due on the Trust Certificates, the obligation of the
Lessee to make the payments of Periodic Rent payable under the Lease or the
amount of any such payments of Periodic Rent.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
SECTION 3.1. WARRANTIES AND REPRESENTATIONS OF KEYBANK NATIONAL ASSOCIATION
AND THE LESSOR TRUSTEE. The Lessor Trustee warrants and represents to the
Lessee and the Trust Certificate Purchasers in its individual capacity,
notwithstanding the provisions of Section 10.8 hereof or any similar
provision of any other Operative Agreement, that:
(a) KeyBank National Association
(i) is a national banking association duly organized, validly
existing and in good standing under the laws of the United States; and
(ii) has the corporate power and authority to enter into and perform
its obligations under the Trust Agreement.
-3-
<PAGE>
MW 1997-1 Trust Participation Agreement
(b) There are no proceedings pending, or to the knowledge of KeyBank
National Association threatened, and to the knowledge of KeyBank National
Association there is no existing basis for any such proceedings, against or
affecting KeyBank National Association in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, might materially and adversely affect the Lessor Trust Estate
or would call into question the right, power and authority of KeyBank
National Association or the Lessor Trustee to enter into or perform the
Lessor Trustee Agreements.
(c) The Lessor Trust Estate is free and clear of any Lessor Liens
attributable to KeyBank National Association. Except as contemplated by
the Operative Agreements, neither KeyBank National Association nor the
Lessor Trustee has by affirmative act conveyed any interest in the Lessor
Trust Estate to any Person.
(d) Neither the nature of the Lessor Trust Estate, nor any
relationship between KeyBank National Association and any other Person, nor
any circumstance in connection with the offer, issue, sale or delivery of
Trust Certificates or the execution and delivery of the Lessor Trustee
Agreements is such as to require a consent, approval or authorization of,
or filing, registration or qualification on the part of KeyBank National
Association with, any Federal governmental authority governing the banking
and trust powers of KeyBank National Association or any Washington
governmental authority in connection with the execution, delivery and
performance of the Lessor Trustee Agreements or the offer, issue, sale or
delivery of the Trust Certificates.
(e) This Agreement and the Trust Agreement have been duly authorized
by all necessary corporate action on the part of KeyBank National
Association, have been duly executed and delivered by KeyBank National
Association and constitute the valid and binding obligations of KeyBank
National Association, enforceable against KeyBank National Association in
accordance with their terms, except as such terms may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors generally and except as equitable remedies such as
specific performance may be in the discretion of the courts.
(f) The execution and delivery of this Agreement (to the extent
entered into in its individual capacity) and the Trust Agreement and
compliance by KeyBank National Association, in its individual capacity,
with all of the provisions thereof do not and will not contravene any law
of the United States or the State of Ohio affecting the banking or trust
powers of KeyBank National Association or any order of any court or
governmental authority or agency applicable to or binding on the banking
and trust powers of KeyBank National Association, or its charter documents
or its By-laws, or any indenture, mortgage, contract or other agreement or
instrument to which KeyBank National Association is a party or by which it
or any of its Property may be bound or affected.
-4-
<PAGE>
MW 1997-1 Trust Participation Agreement
The Lessor Trustee, in its fiduciary capacity, warrants and represents to
the Trust Certificate Purchasers that:
(a) The Lessor Trustee, as trustee under the Trust Agreement,
assuming due authorization, execution and delivery of the Trust Agreement
by the Trust Certificate Purchasers, has full right, power and authority
under the Trust Agreement to enter into and perform its obligations, as
Lessor Trustee, under the Lessor Trustee Agreements other than the Trust
Agreement.
(b) There are no proceedings pending, or to the knowledge of the
Lessor Trustee threatened, and to the knowledge of the Lessor Trustee there
is no existing basis for any such proceedings, against or affecting the
Lessor Trustee or the Lessor Trust in any court or before any governmental
authority or arbitration board or tribunal which, if adversely determined,
might materially and adversely affect the Lessor Trust Estate or would call
into question the right, power and authority of the Lessor Trustee to enter
into or perform the Lessor Trustee Agreements.
(c) Except as contemplated by the Operative Agreements, the Lessor
Trustee has not by affirmative act conveyed any interest in the Lessor
Trust Estate to any Person.
(d) The Lessor Trustee is not in violation of any term of any of the
Lessor Trustee Agreements.
(e) Neither the nature of the Lessor Trust Estate, nor any
relationship between the Lessor Trustee or the Lessor Trust and any other
Person, nor any circumstance in connection with the offer, issue, sale or
delivery of the Trust Certificates or the execution and delivery of the
Lessor Trustee Agreements is such as to require a consent, approval or
authorization of, or filing, registration or qualification on the part of
the Lessor Trustee or the Lessor Trust with, any United States or
Washington governmental authority governing the banking or trust powers of
the Lessor Trustee in connection with the execution, delivery and
performance of the Lessor Trustee Agreements or the offer, issue, sale or
delivery of the Trust Certificates.
(f) The Lessor Trustee Agreements (other than the Trust Agreement)
are duly authorized by the Trust Agreement, have been (or, in the case of
the Lease Supplement and the Trust Certificates to be delivered on the
Closing Date, will on the Closing Date have been) duly executed and
delivered by the Lessor Trustee and constitute (or, in the case of the
Lease Supplement and the Trust Certificates to be delivered on the Closing
Date, will on the Closing Date constitute) the valid and binding
obligations of the Lessor Trustee, enforceable against the Lessor Trustee
in accordance with their terms, except as such terms may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting the
rights of creditors generally and except as equitable remedies such as
specific performance may be in the discretion of the courts.
-5-
<PAGE>
MW 1997-1 Trust Participation Agreement
(g) The execution and delivery of the Lessor Trustee Agreements and
compliance by the Lessor Trustee with all of the provisions thereof do not
and will not contravene any law or any order of any court or governmental
authority or agency applicable to or binding on the banking and trust
powers of the Lessor Trustee, or any indenture, mortgage, contract or other
agreement or instrument to which the Lessor Trustee is a party or by which
it or any of its Property may be bound or affected.
SECTION 3.2. WARRANTIES AND REPRESENTATIONS OF THE LESSEE. The Lessee
warrants and represents that:
(a) The Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation,
is duly qualified to do business as a foreign corporation and is in good
standing in all jurisdictions in which failure to be so qualified would
have a materially adverse effect on its business or the performance of its
obligations under the Lessee Agreements, and has full corporate power and
authority and all necessary licenses and permits to carry on its present
business and operations, to own or lease its Properties and to enter into
and perform its obligations under the Lessee Agreements.
(b) The Lessee Agreements have been duly authorized, executed and
delivered (or, in the case of the Lease Supplement to be delivered on the
Closing Date, will on the Closing Date have been duly executed and
delivered) by the Lessee and constitute (or, in the case of the Lease
Supplement to be delivered on the Closing Date, will on the Closing Date
constitute, as the case may be) legal, valid and binding obligations of the
Lessee enforceable against the Lessee in accordance with the respective
terms thereof.
(c) The execution and delivery of the Lessee Agreements and
compliance by the Lessee with all of the provisions thereof do not and will
not contravene any law, governmental rule or regulation or any order of any
court or governmental authority or agency applicable to or binding on the
Lessee or contravene the provisions of, or constitute a default under, or
result in the creation (except as contemplated by the Operative Agreements)
of any Lien upon the Property of the Lessee under, its Certificate of
Incorporation or By-laws or any indenture, mortgage, contract or other
agreement or instrument to which the Lessee is a party or by which it or
any of its Properties may be bound or affected.
(d) There are no proceedings pending or, to the knowledge of the
Lessee, threatened, and to the knowledge of the Lessee there is no existing
basis for any such proceedings, against or affecting the Lessee in any
court or before any governmental authority or arbitration board or tribunal
which, if adversely determined, might individually or in the aggregate
materially and adversely affect the Properties, business, profits or
condition (financial or otherwise) of the Lessee or impair the ability of
the Lessee to perform its obligations under the Lessee Agreements. The
Lessee is not in default with respect to any order of any court or
governmental authority or arbitration board or tribunal.
-6-
<PAGE>
MW 1997-1 Trust Participation Agreement
(e) Neither the nature of the Lessee, or of any of its businesses or
Properties, nor any relationship between the Lessee and any other Person,
nor any circumstance in connection with the execution and delivery of the
Lessee Agreements, nor the consummation of any of the transactions by the
Lessee contemplated by the Lessee Agreements, is such as to require a
consent, approval or authorization of, or filing, registration or
qualification with, any governmental authority on the part of the Lessee in
connection with the execution, delivery and performance of the Lessee
Agreements.
(f) The Lessor Trustee will on the Closing Date have good title to
the Equipment, free and clear of all Liens other than Permitted Liens.
(g) None of the transactions contemplated by the Operative Agreements
(including, without limitation, the making by the Trust Certificate
Purchasers of the Advances) will result in a violation of Section 7 of the
Securities Exchange Act of 1934, as amended, or any regulations issued
pursuant thereto, including, without limitation, Regulations G, T, U and X
of the Board of Governors of the Federal Reserve System, 12 C.F.R.,
Chapter II. The Lessee does not own or intend to carry or purchase any
"margin security" within the meaning of said Regulation G, including margin
securities originally issued by it. None of the proceeds from the sale of
the Trust Certificates will be used to purchase or carry (or refinance any
borrowing the proceeds of which were used to purchase or carry) any
"security" within the meaning of the Exchange Act.
(h) On the Closing Date, all filings necessary or desirable to
establish and perfect the Lessor Trustee's title to and interest in the
Equipment as against the Lessee and any third parties and to perfect the
lien and security interest of the Lessor Trustee under the Lease in the
Equipment as against creditors of and purchasers from the Lessee will have
been duly made, and the Lease will on the Closing Date create a valid and
perfected first priority lien and security interest in the Equipment,
effective as against creditors of and purchasers from the Lessee, securing
the payment of all obligations of the Lessee under the Lessee Agreements.
(i) On the Closing Date, the Equipment will be covered by the
insurance required by Section 13 of the Lease.
(j) No Default or Event of Default has occurred and is continuing.
The Lessee is not and, but for the passage of time, will not be in
violation in any material respect of any term of any charter instrument,
by-law or other material agreement or instrument to which it is a party or
by which it may be bound. The Lessee is in compliance with all laws,
ordinances, governmental rules and regulations to which it is subject, the
failure to comply with which would have a material and adverse effect on
its operations or condition, financial or otherwise, or would impair the
ability of the Lessee to perform its obligations under the Lessee
Agreements, and has obtained all licenses, permits, franchises and other
governmental authorizations material to the conduct of its business.
-7-
<PAGE>
MW 1997-1 Trust Participation Agreement
(k) The execution and delivery of this Participation Agreement and
the creation of the Lessor Trust and the issuance and sale of the Trust
Certificates under the Operative Agreements will not involve any
transaction which is subject to the prohibitions of Section 406 of ERISA or
in connection with which a tax could be imposed pursuant to Section 4975 of
the Code. The representation by the Lessee in the preceding sentence is
made in reliance upon and subject to the accuracy of the representations of
the Trust Certificate Purchasers in Section 3.4(b).
(l) On the Closing Date, all sales, use or transfer taxes payable
upon the acquisition by the Lessor Trustee of the Equipment and on the
lease of such Equipment to the Lessee will have been paid or such
transactions will then be exempt from any such taxes.
(m) On the Closing Date, no taxes, fees or other charges in
connection with the execution and delivery of the Operative Agreements or
the issuance and sale of the Trust Certificates are payable.
(n) Schedule III is (except as noted therein) a complete and correct
list of the Lessee's Subsidiaries, showing, as to each Subsidiary, the
correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar equity
interests outstanding owned by the Lessee and each other Subsidiary.
(o) The Lessee's chief executive office and principal place of
business, and the place where its records concerning the Equipment and all
documents relating thereto are kept, is at 23 Inverness Way East,
Englewood, Arapahoe County, Colorado.
(p) On the Closing Date, the description of the Equipment set forth
on Schedule 1 to the Lease Supplement delivered on the Closing Date will be
true and correct in all material respects and the legal description of any
Site attached to the Uniform Commercial Code fixture filings filed on the
Closing Date will be true and correct in all material respects.
(q) The Trust Certificates are not of the same class (within the
meaning of Rule 144A under the Act) as securities which are listed on a
national securities exchange registered under Section 6 of the Exchange Act
or quoted in a U.S. automated inter-dealer quotation system.
(r) Neither the Lessee nor any person acting on its behalf has
offered or sold the Trust Certificates by means of any general solicitation
or general advertising within the meaning of Rule 502(c) under the Act; and
the Lessee shall not take any action to cause the resale of the Trust
Certificates by the Trust Certificate Purchasers to violate Section 5 of
the Act.
-8-
<PAGE>
MW 1997-1 Trust Participation Agreement
(s) The Lessee has not offered, sold, contracted to sell or otherwise
disposed of any securities (as defined in the Act) that are or will be
integrated with the sale of the Trust Certificates in a manner that would
require registration of the Trust Certificates under the Act.
SECTION 3.3. PRIVATE OFFERING. (a) The Lessee warrants and represents to the
Lessor Trustee and the Trust Certificate Purchasers that neither any Guarantor,
the Lessee nor Key Global Finance Ltd. (the only Person authorized or employed
by the Lessee or the Guarantors as agent, broker, dealer or otherwise in
connection with the offering of the Equipment or the offering or sale of the
Trust Certificates or any similar Security) has offered any of the Equipment or
the Trust Certificates or any similar Security for sale to, or solicited offers
to buy any thereof from, or otherwise approached or negotiated with respect
thereto with, any prospective purchaser, other than the Trust Certificate
Purchasers, each of which was offered a portion of the Trust Certificates at
private sale for investment and each of which the Lessee or such agent had
reasonable grounds to believe and did believe, and as to the Trust Certificate
Purchasers after reasonable inquiry does believe, has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of investment in the Trust Certificates.
(b) Each of the Lessor Trustee and the Lessee agrees as to itself that
neither it nor anyone acting on the behalf of it will offer the Equipment or the
Trust Certificates or any part thereof or any similar Security for issue or sale
to, or solicit any offer to acquire the Equipment or any of the Trust
Certificates from, anyone so as to bring the offering of the Equipment or the
issuance and sale of the Trust Certificates within the provisions of Section 5
of the Act.
SECTION 3.4. REPRESENTATIONS OF THE TRUST CERTIFICATE PURCHASERS; TRANSFER OF
TRUST CERTIFICATES; PARTICIPATIONS.
(a) PURCHASE FOR INVESTMENT. Each Trust Certificate Purchaser represents
to each other Trust Certificate Purchaser, the Lessor Trustee and the Lessee
that either:
(i) such Trust Certificate Purchaser is purchasing the Trust
Certificates to be purchased by it on the Closing Date for the account of
such Trust Certificate Purchaser, for investment and with no present
intention of distributing or reselling such Trust Certificates or any part
thereof, but without prejudice, however, to the right of such Trust
Certificate Purchaser at all times to sell or otherwise dispose of all or
any part of such Trust Certificates under a registration under the Act, or
under an exemption from such registration available under such Act;
PROVIDED that the disposition of such Trust Certificates shall at all times
be within its control; or
(ii) such Trust Certificate Purchaser proposes to offer the Trust
Certificates for resale upon the terms set forth herein and hereby
represents and warrants to, and agrees with, the Lessee and the other Trust
Certificate Purchasers, as to itself, that:
-9-
<PAGE>
MW 1997-1 Trust Participation Agreement
(A) Such Trust Certificate Purchaser will offer or sell the Trust
Certificates only to (1) persons who it reasonably believes are "qualified
institutional buyers" within the meaning of Rule 144A under the Act in
transactions meeting the requirements of such Rule 144A and (2) persons who
such Trust Certificate Purchaser reasonably believes are institutional
"accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Act.
(B) Such Trust Certificate Purchaser will not offer or sell any of
the Trust Certificates in any jurisdiction except under circumstances that
will result in compliance with the Applicable Laws thereof, and that such
Trust Certificate Purchaser will take whatever action is required to permit
its resale of the Trust Certificates. Trust Certificate Purchaser
understands that no action has been taken to permit a public offering in
any jurisdiction where action would be required for such purpose.
(C) Such Trust Certificate Purchaser has not offered or sold and will
not offer or sell the Trust Certificates by any form of general
solicitation or general advertising, including but not limited to, the
methods described in Rule 502(c) under the Act.
(b) SOURCE OF FUNDS. Each Trust Certificate Purchaser represents to each
other Trust Certificate Purchaser, the Lessor Trustee and the Lessee that at
least one of the following statements is an accurate representation as to the
source of funds (the "SOURCE") to be used by such Trust Certificate Purchaser to
make its Advances:
(i) if such Trust Certificate Purchaser is an insurance company, the
Source does not include assets allocated to any separate account maintained
by it in which any employee benefit plan (or its related trust) has any
interest, other than a separate account that is maintained solely in
connection with its fixed contractual obligations under which the amounts
payable, or credited, to such plan and to any participant or beneficiary of
such plan (including any annuitant) are not affected in any manner by the
investment performance of the separate account; or
(ii) the Source is either (1) an insurance company pooled separate
account, within the meaning of Prohibited Transaction Exemption ("PTE")
90-1 (issued January 29, 1990), or (2) a bank collective investment fund,
within the meaning of the PTE 91-38 (issued July 12, 1991) and no employee
benefit plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(iii) the Source is an "investment fund" managed by a "qualified
professional asset manager" or "QPAM" (as defined in Part V of PTE 84-14,
issued March 13, 1984), provided that the Lessee and no "affiliate" of the
Lessee (as defined in Section V(c) of PTE 84-14) has at this time, or
during the immediately preceding one year has exercised, the authority to
appoint or terminate said QPAM as manager of the
-10-
<PAGE>
MW 1997-1 Trust Participation Agreement
assets of any plan whose assets are included in such investment fund or
to negotiate the terms of said QPAM's management agreement on behalf of
any such plan; or
(iv) the Source is a governmental plan; or
(v) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
(c) REAFFIRMATION ON THE CLOSING DATE. The advance of funds by each Trust
Certificate Purchaser on the Closing Date shall constitute a reaffirmation by
such Trust Certificate Purchaser of its representations set forth in this
Section 3.4 as of the Closing Date.
(d) TRANSFER OF TRUST CERTIFICATES. Upon the transfer by any Certificate
Holder of any Trust Certificate or a participation therein, the transferee shall
be deemed by its acceptance of such Trust Certificate to have made the same
representation to the Lessor Trustee, the other Certificate Holders and the
Lessee regarding the purchase of such Trust Certificate as the original Trust
Certificate Purchasers made pursuant to Section 3.4(b):
(e) PARTICIPATIONS. Each Trust Certificate Purchaser may sell, transfer,
grant or assign participations in all or any part of such Trust Certificate
Purchaser's interests and obligations hereunder; PROVIDED that (i) such selling
Trust Certificate Purchaser shall remain a "TRUST CERTIFICATE PURCHASER" or
"CERTIFICATE HOLDER", as the case may be, for all purposes under the Operative
Agreements (such selling Trust Certificate Purchaser's obligations under the
Operative Agreements remaining unchanged) and the participant shall not
constitute a Trust Certificate Purchaser or a Certificate Holder, as the case
may be, hereunder, (ii) no such participant shall have, or be granted, rights to
approve any amendment or waiver relating to the Operative Agreements except to
the extent any such amendment or waiver would (A) reduce the principal of or
rate of interest on the Trust Certificates in which the participant is
participating, (B) postpone the date fixed for any payment of principal of or
interest on the Trust Certificates in which the participant is participating or
date fixed for payment of the closing fee payable pursuant to Section 1.3 to the
extent the participant is participating therein, or (C) release, in whole or in
part, the Liens of the Lessor Trustee in the Equipment (except as expressly
provided in the Operative Agreements) or terminate, in whole or in part, the
Guaranty Agreement or modify the obligations guaranteed thereunder, or the
unconditional nature of the guaranty thereof, to the extent the participant is
participating therein, (iii) sub-participations by the participant (except to an
Affiliate, parent company or Affiliate of a parent company of the participant)
shall be prohibited and (iv) written notice of each such participation is given
to the Lessee. In the case of any such participation, the participant shall not
have any rights under the Operative Agreements (the participant's rights against
the selling Trust Certificate Purchaser in respect of such participation to be
those set forth in the participation agreement with such Trust Certificate
Purchaser creating such participation) and all amounts payable by the Lessee
hereunder shall be determined as if such Trust Certificate Purchaser had not
sold such participation; PROVIDED, HOWEVER, that such participant shall be
entitled to receive additional amounts under Section 6 on the same basis as if
it were a Trust Certificate
-11-
<PAGE>
MW 1997-1 Trust Participation Agreement
Purchaser (but only to the extent that such Trust Certificate Purchaser would
have been entitled to receive such additional amounts with respect to the
interest participated had it not sold such participation). The Lessee shall
not be responsible for any costs or expenses incurred by any Trust
Certificate Purchaser in connection with a sale, transfer, grant or
assignment of participations pursuant to this clause (e) of Section 3.4.
Section 4. CLOSING CONDITIONS.
SECTION 4.1. CONDITIONS PRECEDENT TO INVESTMENT ON THE CLOSING DATE. The
obligations of each Trust Certificate Purchaser to make its Advance pursuant
hereto on the Closing Date and of the Lessor Trustee to acquire and lease the
Equipment shall be subject to the following conditions:
(a) EXECUTION OF OPERATIVE AGREEMENTS. On or before the Closing Date,
the following documents shall have been duly executed and delivered by the
parties thereto (and copies thereof shall have been provided to the Trust
Certificate Purchasers) and shall be in full force and effect, and no default
shall exist in the performance by any party thereto (other than such Trust
Certificate Purchaser) of any of its obligations thereunder:
(1) the Lease;
(2) the Lease Supplement covering the Equipment and dated the Closing
Date;
(3) the Trust Agreement;
(4) the Guaranty Agreement; and
(5) a warranty bill of sale, executed by the Seller, dated the
Closing Date (a "BILL OF SALE"), in favor of the Lessor Trustee, covering
the Equipment.
(b) TITLE. On the Closing Date, (i) the Lessor Trustee shall have good
title to the Equipment, free and clear of liens, encumbrances and rights of
others except Permitted Liens; and (ii) the Lessor Trustee and such Trust
Certificate Purchaser shall have received evidence satisfactory to it with
respect to the matters covered by this Section 4.1(b).
(c) FILINGS. On or before the Closing Date, all filings and other actions
shall have been made and taken as are deemed necessary or appropriate by such
Trust Certificate Purchaser in order to (i) perfect the Lessor Trustee's title
to and interest in the Equipment as against the Lessee and any third parties,
and (ii) perfect the lien and security interest of the Lessor Trustee under the
Lease in the Equipment as against creditors of and purchasers from the Lessee
will have been duly made.
(d) CLOSING CERTIFICATE OF LESSOR TRUSTEE. On the Closing Date, such
Trust Certificate Purchaser shall have received an Officer's Certificate of the
Lessor Trustee dated the Closing Date, the truth and accuracy of which shall be
a condition to the obligation of such Trust Certificate Purchaser to make its
Advance on the Closing Date, to the effect that
-12-
<PAGE>
MW 1997-1 Trust Participation Agreement
the warranties and representations of the Lessor Trustee set forth in Section
3.1 are true on the Closing Date with the same effect as though made on and
as of that date and that, to the knowledge of the Lessor Trustee, no Default
or Event of Default has occurred and is continuing.
(e) CLOSING CERTIFICATE OF LESSEE AND GUARANTORS. On the Closing Date,
such Trust Certificate Purchaser shall have received an Officer's Certificate
of (i) the Lessee dated the Closing Date, the truth and accuracy of which
shall be a condition to the obligation of such Trust Certificate Purchaser to
make its Advance on the Closing Date, to the effect that the warranties and
representations of the Lessee set forth in Sections 3.2 and 3.3(a) are true
on the Closing Date with the same effect as though made on and as of that
date, and (ii) the Guarantors dated the Closing Date, the truth and accuracy
of which shall be a condition to the obligation of such Trust Certificate
Purchaser to make its Advance on the Closing Date, to the effect that the
warranties and representations of the Guarantors contained in Section 5 of
the Guaranty Agreement are true on the Closing Date with the same effect as
though made on and as of that date.
(f) CONSENTS UNDER OTHER OBLIGATIONS. All approvals and consents of
any trustee or holders of any indebtedness or obligations of the Lessee which
in the opinion of such Trust Certificate Purchaser are required in connection
with any of the transactions contemplated by this Agreement, shall have been
duly obtained, and copies thereof, in form and substance satisfactory to such
special counsel, certified by the Secretary or an Assistant Secretary of the
Lessee, shall have been delivered to the Lessor Trustee.
(g) OPINIONS OF COUNSEL. On the Closing Date, such Trust Certificate
Purchaser shall have received the favorable written opinions of Rothgerber,
Appel, Powers & Johnson, counsel for the Lessee and the Guarantors and
Chapman and Cutler, special counsel for the Trust Certificate Purchasers,
substantially in the respective forms set forth in Annex II hereto.
(h) INSURANCE CERTIFICATE. On or before the Closing Date, such Trust
Certificate Purchaser shall have received the report of the Lessee's
insurance broker and certificates of insurance required pursuant to Section
13.3 of the Lease and such other evidence of the maintenance of the insurance
required pursuant to Section 13 of the Lease as such Trust Certificate
Purchaser shall request.
(i) RELATED TRANSACTIONS. Each of the other Trust Certificate
Purchasers shall make the Advance to be made by it on the Closing Date.
(j) TRUST CERTIFICATES. The Lessor Trustee shall have issued to such
Trust Certificate Purchaser the Trust Certificate evidencing the Advance made
by such Trust Certificate Purchaser on the Closing Date.
(k) NOTICE OF CLOSING. Each Trust Certificate Purchaser shall have
received, at least three (3) Business Days prior to the Closing Date, a
notice covering the Equipment to be
-13-
<PAGE>
MW 1997-1 Trust Participation Agreement
funded on the Closing Date. The Equipment Cost set forth in such notice of
each Item of Equipment shall not exceed the value of such Item of Equipment
set forth in the Appraisal.
(l) APPRAISAL. At least five (5) Business Days prior to the Closing
Date, the Lessor Trustee and the Trust Certificate Purchasers shall have
received an Appraisal of the Equipment, in form and substance satisfactory to
the Lessor Trustee and the Trust Certificate Purchasers, which Appraisal
shall show the current fair market value of such Equipment and the estimated
future fair market value of such Equipment at the end of the Lease Term.
(m) GOVERNMENTAL APPROVALS. All necessary approvals of any
Governmental Authority required by any Requirement of Law for the purpose of
authorizing the Lessor Trustee to acquire the Equipment shall have been
obtained or made and be in full force and effect.
(n) LEGAL INVESTMENT. The Trust Certificates Purchaser shall on the
Closing Date qualify as a legal investment for such Trust Certificate
Purchaser under any laws regulating investments to which it may be subject.
(o) PAYMENT OF CLOSING FEE. Key Global Finance Ltd. shall have
received from the Lessee its structuring fee payable by the Lessee pursuant
to the Off Balance Sheet Debt Proposal dated December 10, 1997 between Lessee
and Key Global Finance Ltd.
(p) UCC SEARCHES. On or before the Closing Date, the Lessor Trustee
shall have received such Uniform Commercial Code searches with respect to the
Equipment as it shall reasonably request.
(q) PROCEEDINGS SATISFACTORY. All proceedings taken in connection with
the transactions contemplated hereby and all documents and papers relating
thereto shall be satisfactory to such Trust Certificate Purchaser, and such
Trust Certificate Purchaser shall have received copies of such documents and
papers as such Trust Certificate Purchaser may reasonably request in
connection therewith, all in form and substance satisfactory to such Trust
Certificate Purchaser.
SECTION 4.2. CONDITIONS SUBSEQUENT TO INVESTMENT ON THE CLOSING DATE. On
or prior to January 31, 1998, the Lessee shall deliver or cause to be
delivered to the Lessor Trustee the following:
(a) an original Landlord Waiver executed by each owner (other than
the Lessee) of each Site on which the Equipment is located; and
(b) original Uniform Commercial Code termination statements, in form
and substance satisfactory to the Lessor Trustee, executed by each secured
party of record of each Uniform Commercial Code financing statement (other
than any such financing statements filed pursuant hereto) filed with
respect to the Equipment and reflected in
-14-
<PAGE>
MW 1997-1 Trust Participation Agreement
the Uniform Commercial Code searches received by the Lessor Trustee in
accordance with Section 4.1(p).
Section 5. SPECIAL RIGHTS OF TRUST CERTIFICATE PURCHASERS.
Notwithstanding any provision to the contrary in this Agreement, the Trust
Agreement or any Trust Certificate relating to the manner and place of payment,
all amounts payable to each Trust Certificate Purchaser with respect to any
Trust Certificate held by such Trust Certificate Purchaser or a nominee for such
Trust Certificate Purchaser shall be paid by the Lessor Trustee to such Trust
Certificate Purchaser (without any presentment thereof and without any notation
of such payment being made thereon) by check, duly mailed, by first class mail,
postage prepaid, or delivered to such Trust Certificate Purchaser at the address
for payments for such Trust Certificate Purchaser appearing on Schedule I hereto
or, if wire transfer to a bank account is designated for such Trust Certificate
Purchaser on Schedule I hereto or in a written notice from such Trust
Certificate Purchaser to the Lessor Trustee, by wire transfer of immediately
available Federal Reserve funds to the bank so designated for credit to the
account and marked for attention as so designated, provided that such bank has
facilities for the receipt of a wire transfer, or in such other manner or to
such other address in the United States as may be designated by such Trust
Certificate Purchaser in a written notice from such Trust Certificate Purchaser
to the Lessor Trustee. In the case of any wire transfer, the Lessor Trustee
will transfer or cause to be transferred not later than 12:00 noon, Seattle,
Washington time, on each date any payment or prepayment of principal or interest
on the Trust Certificate is due, provided funds therefor have been received by
the Lessor Trustee in cash or in solvent credits acceptable to it by 10:00 A.M.,
Seattle, Washington time, on such date or if not so received promptly upon
receipt. Each Trust Certificate Purchaser agrees that if such Trust Certificate
Purchaser shall sell or transfer any Trust Certificate, such Trust Certificate
Purchaser will notify the Lessee and the Lessor Trustee of the name and address
of the transferee and such Trust Certificate Purchaser will, prior to the
delivery of such Trust Certificate, make a notation on such Trust Certificate of
the date to which interest has been paid thereon and of the amount of any
payments or prepayments made on account of the principal thereof.
Section 6. LESSEE'S INDEMNITIES.
SECTION 6.1. 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 Indemnified
Party, on an After Tax Basis, from and against any and all Claims that may be
imposed on, incurred by or asserted against such Indemnified Party (whether
because of action or omission by such Indemnified Party or otherwise), whether
or not such Indemnified Party 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
Closing Date or after the Expiration Date, in any way relating to or arising out
of:
(a) any of the Operative Agreements or any of the transactions
contemplated thereby, and any amendment, modification or waiver in respect
thereof;
-15-
<PAGE>
MW 1997-1 Trust Participation Agreement
(b) the Equipment or any part thereof or interest therein;
(c) the purchase, design, construction, preparation, installation,
inspection, delivery, nondelivery, 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(f) of the Lease or any sale pursuant to
Section 18 of the 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 (on the basis of 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 matter affecting title to the Equipment, (4) the making of any
Alterations in violation of any standards imposed by any insurance policies
required to be maintained by Lessee pursuant to the 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 Lessee or any Guarantor of any covenant,
representation or warranty made by it or deemed made by it in any Operative
Agreement or any certificate required to be delivered by any Operative
Agreement;
(e) the retaining or employment of any broker, finder or financial
advisor by Lessee to act on its behalf in connection with this
Participation Agreement or any other Operative Agreement;
(f) the existence of any Lien on or with respect to the Equipment,
any Periodic Rent or Supplemental Rent, title thereto, or any interest
therein including any Liens which arise out of the possession, use or
repair of the Equipment, except Lessor Liens; or
(g) subject to the accuracy of any Trust Certificate Purchaser's
representation set forth in Section 3.4, as to such Trust Certificate
Purchaser, the transactions contemplated by the Lease or by any other
Operative Agreement, 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, that the Lessee shall not be required to indemnify any
Indemnified Party under this Section 6.1 for any of the following: (1) any
Claim to the extent resulting from the willful misconduct or gross negligence of
such Indemnified Party (it being understood that the Lessee shall be required to
indemnify an Indemnified Party even if the ordinary (but not gross) negligence
of such Indemnified Party caused or contributed to such Claim) or the breach of
any representation, warranty or covenant of such Indemnified Party set forth in
any Operative Agreement, (2) any Claim resulting from Lessor's Liens which the
Lessor Trustee or any Certificate Holder is responsible for discharging under
the Operative
-16-
<PAGE>
MW 1997-1 Trust Participation Agreement
Agreements, (3) any Claim arising from a breach or alleged breach by the
Certificate Holders of any agreement entered into in connection with the
assignment or participation of any Trust Certificate, (4) any Claim resulting
from the failure of the Lessee to satisfy the conditions set forth in Section
4.1, PROVIDED that nothing in this clause (4) shall limit the Lessee's
liability for any amounts payable pursuant to the Off Balance Sheet Debt
Proposal dated December 10, 1997 between the Lessee and Key Global Finance
Ltd. and (5) any Claim arising in respect to the Equipment in the period
after the Lessee ceases to lease the Equipment from the Lessor Trustee under
the Lease, PROVIDED that the facts supporting such Claim occur after such
period. 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 Lease or any other
Operative Agreement. Without limiting the express rights of any Indemnified
Party under this Section 6.1, this Section 6.1 shall be construed as an
indemnity only and not a guaranty of residual value of the Equipment or as a
guaranty of the Trust Certificates.
SECTION 6.2. PROCEEDINGS IN RESPECT OF CLAIMS. In case any action, suit or
proceeding shall be brought against any Indemnified Party, such Indemnified
Party shall notify the Lessee of the commencement thereof, and the Lessee
shall be entitled, at the Lessee's 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 Indemnified Party in respect of such
action, suit or proceeding, and the Lessee shall keep such Indemnified Party
fully apprised of the status of such action, suit or proceeding and shall
provide such Indemnified Party with all information with respect to such
action, suit or proceeding as such Indemnified Party 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, (A) in the reasonable opinion of such Indemnified Party,
(x) such action, suit or proceeding involves any risk of imposition of
criminal liability or will involve a material risk of the sale, forfeiture or
loss of, or the creation of any Lien (other than a Permitted 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 Indemnified Parties in respect to such risk or (y) the control of
such action, suit or proceeding would involve an actual or potential conflict
of interest, (B) such proceeding involves Claims not fully indemnified by the
Lessee which the Lessee and the Indemnified Party have been unable to sever
from the indemnified claim(s), or (C) an Event of Default has occurred and is
continuing. The Indemnified Party will join in the Lessee's efforts to sever
such action. The Indemnified Party may participate 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 6.1 without prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld in the case of a money
settlement not involving an admission of liability of such Indemnified Party.
No Indemnified Party shall enter into any settlement or other compromise
with respect to any Claim to which is entitled to be indemnified under
Section 6.1 without the prior written consent of the Lessee, which consent
shall not be unreasonably withheld, unless
-17-
<PAGE>
MW 1997-1 Trust Participation Agreement
such Indemnified Party waives its right to be indemnified under Section 6.1
with respect to such Claim.
Each Indemnified Party 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 6.1.
Upon payment in full of any Claim by the Lessee pursuant to Section 6.1
to or on behalf of an Indemnified Party, the Lessee, without any further
action, shall be subrogated to any and all claims that such Indemnified Party
may have relating thereto (other than claims in respect of insurance policies
maintained by such Indemnified Party at its own expense), and such
Indemnified Party 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.
Any amount payable to an Indemnified Party pursuant to Section 6.1 shall
be paid to such Indemnified Party promptly upon receipt of a written demand
therefor from such Indemnified Party, accompanied by a written statement
describing in reasonable detail the basis for such indemnity and the
computation of the amount so payable.
SECTION 6.3. GENERAL TAX INDEMNITY. (a) INDEMNIFICATION. The Lessee shall
pay and assume liability for, and does hereby agree to indemnify, protect and
defend the Equipment and all Indemnified Parties from, and hold them harmless
against, all Impositions on an After Tax Basis.
(b) CONTESTS. If any claim shall be made against any Indemnified Party
or if any proceeding shall be commenced against any Indemnified Party
(including a written notice of such proceeding) for any Imposition as to
which the Lessee may have an indemnity obligation pursuant to this Section
6.3, or if any Indemnified Party shall determine that any Imposition with
respect to which the Lessee may have an indemnity obligation pursuant to this
Section 6.3 may be payable, such Indemnified Party shall promptly notify the
Lessee in writing (PROVIDED that failure to so notify the Lessee shall not
alter such Indemnified Party's rights under this Section 6.3 except to the
extent such failure effectively precludes or materially adversely affects the
ability to conduct a contest of any Impositions) and shall not take any
action with respect to such claim, proceeding or Imposition without the
written consent of the Lessee (such consent not to be unreasonably withheld
or unreasonably delayed) for 30 days after the receipt of such notice by the
Lessee; PROVIDED, HOWEVER, that in the case of any such claim or proceeding,
if such Indemnified Party shall be required by law or regulation to take
action prior to the end of such 30-day period, such Indemnified Party shall
in such notice to the Lessee, so inform the Lessee and such Indemnified Party
shall not take any action with respect to such claim, proceeding or
Imposition without the consent of the Lessee (such consent not to be
unreasonably withheld or unreasonably delayed) for 10 days after the receipt
of such notice by the Lessee unless such Indemnified
-18-
<PAGE>
MW 1997-1 Trust Participation Agreement
Party shall be required by law or regulation to take action prior to the end
of such 10-day period.
The Lessee shall be entitled for a period of 30 days from receipt of
such notice from such Indemnified Party (or such shorter period as such
Indemnified Party has notified the Lessee is required by law or regulation
for such Indemnified Party to commence such contest), to request in writing
that such Indemnified Party contest in good faith the imposition of such Tax,
at the Lessee's expense. If (x) such contest can be pursued in the name of
the Lessee and independently from any other proceeding involving a Tax
liability of such Indemnified Party for which the Lessee has not agreed to
indemnify such Indemnified Party, (y) such contest must be pursued in the
name of such Indemnified Party, but can be pursued independently from any
other proceeding involving a Tax liability of such Indemnified Party for
which the Lessee has not agreed to indemnify such Indemnified Party or (z)
such Indemnified Party so requests, then the Lessee shall be permitted to
control the contest of such claim, PROVIDED that in the case of a contest
described in clause (y), if such Indemnified Party determines reasonably and
in good faith that such contest by the Lessee could have a material adverse
impact on the business or operations of such Indemnified Party and provides a
written explanation to the Lessee of such determination, such Indemnified
Party may elect to control or reassert control of the contest, and PROVIDED
that by taking control of the contest, the Lessee acknowledges that it is
responsible for the Imposition ultimately determined to be due by reason of
such claim, and PROVIDED, FURTHER, that in determining the application of
clauses (x) and (y) above, each Indemnified Party shall take any and all
reasonable steps to segregate claims for any Taxes for which the Lessee
indemnifies hereunder from Taxes for which the Lessee is not obligated to
indemnify hereunder, so that the Lessee can control the contest of the
former. In all other claims requested to be contested by the Lessee, such
Indemnified Party shall control the contest of such claim, acting through
counsel reasonably acceptable to the Lessee. In no event shall the Lessee be
permitted to contest (or such Indemnified Party be required to contest) any
claim, (A) if such Indemnified Party provides the Lessee with a legal opinion
of counsel reasonably acceptable to the Lessee that such action, suit or
proceeding involves a risk of imposition of criminal liability or will
involve a material risk of the sale, forfeiture or loss of, or the creation
of any Lien (other than a Permitted Lien) on the Equipment or any part
thereof unless the Lessee shall have posted and maintained a bond or other
security satisfactory to the relevant Indemnified Party in respect to such
risk, (B) if an Event of Default has occurred and is continuing, (C) unless
the Lessee shall have agreed to pay and shall pay, to such Indemnified Party
on demand all reasonable out-of-pocket costs, losses and expenses that such
Indemnified Party actually incurs in connection with contesting such
Imposition including all reasonable legal, accounting and investigatory fees
and disbursements, or (D) if such contest shall involve the payment of the
Tax prior to the contest, unless the Lessee shall provide to such Indemnified
Party an interest-free advance in an amount equal to the Imposition that the
Indemnified Party is required to pay (with no additional net after-tax costs
to such Indemnified Party). In addition for Indemnified Party controlled
contests and claims contested in the name of such Indemnified Party in a
public forum, no contest shall be required: (A) unless the amount of the
potential indemnity (taking into account all similar or logically related
claims that have been or could be raised in any audit involving any or all
such Indemnified Parties with respect to any period for which the Lessee may
be liable to
-19-
<PAGE>
MW 1997-1 Trust Participation Agreement
pay an indemnity under this Section 6.3(b)) exceeds $250,000 and
(B) unless, if requested by such Indemnified Party, the Lessee shall have
provided to such Indemnified Party an opinion of counsel selected by the
Lessee (which may be in-house counsel) (except, in the case of income Taxes
indemnified hereunder, in which case such opinion shall be an opinion of
independent tax counsel selected by such Indemnified Party and reasonably
acceptable to the Lessee) that a reasonable basis exists to contest such
claim (or, in the case of an appeal of any adverse determination, an opinion
of such counsel to the effect that the position asserted in such appeal will
more likely than not prevail). In no event shall an Indemnified Party be
required to appeal an adverse judicial determination to the United States
Supreme Court.
The party controlling the contest shall consult in good faith with the
other party and its counsel with respect to the contest of such claim for
Taxes (or claim for refund) but the decisions regarding what actions are to
be taken shall be made by the controlling party in its sole judgment,
PROVIDED, HOWEVER, that if such Indemnified Party is the controlling party
and the Lessee recommends the acceptance of a settlement offer made by the
relevant Governmental Authority and such Indemnified Party rejects such
settlement offer then the amount for which the Lessee will be required to
indemnify such Indemnified Party with respect to the Taxes subject to such
offer shall not exceed the amount which it would have owed if such settlement
offer had been accepted. In addition, the controlling party shall keep the
non-controlling party reasonably informed as to the progress of the contest,
and shall provide the non-controlling party with a copy of (or appropriate
excerpts from) and reports or claims issued by the relevant auditing agents
or taxing authority to the controlling party thereof, in connection with such
claim or the contest thereof.
Each Indemnified Party shall, at the Lessee's expense, 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 this Section 6.3(b). Notwithstanding
anything in this Section 6.3(b) to the contrary, no Indemnified Party shall
enter into any settlement or other compromise or fail to appeal an adverse
ruling with respect to any claim for which it may be entitled to be
indemnified under this Section 6.3 (and with respect to which contest is
required under this Section 6.3(b)) without the prior written consent of the
Lessee, unless such Indemnified Party waives its right to be indemnified
under this Section 6.3 with respect to such claim.
Notwithstanding anything contained herein to the contrary, an
Indemnified Party will not be required to contest (and the Lessee shall not
be permitted to contest) a claim with respect to the imposition of any Tax if
such Indemnified Party shall waive its right to indemnification under this
Section 6.3 with respect to such claim (and any claim with respect to such
year or any other taxable year the contest of which is materially adversely
affected as a result of such waiver).
(c) [Intentionally omitted]
(d) PAYMENTS. Any Imposition indemnifiable under this Section 6.3
shall be paid directly when due to the applicable taxing authority if direct
payment is practicable and permitted. If direct payment to the applicable
taxing authority is not permitted or is
-20-
<PAGE>
MW 1997-1 Trust Participation Agreement
otherwise not made, any amount payable to an Indemnified Party pursuant to
this Section 6.3 shall be paid within thirty (30) days after receipt of a
written demand therefor from such Indemnified Party accompanied by a written
statement describing in reasonable detail the amount so payable, but not
before two (2) Business Days prior to the date that the relevant Taxes are
due. Any payments made pursuant to this Section 6.3 shall be made directly
to such Indemnified Party entitled thereto or the Lessee, as the case may be,
in immediately available funds at such bank or to such account as specified
by the payee in written directions to the payor, or, if no such direction
shall have been given, by check of the payor payable to the order of the
payee by certified mail, postage prepaid at its address as set forth in
Schedule I hereto or beneath its signature below, as the case may be. Upon
the request of any Indemnified Party with respect to a Tax that the Lessee is
required to pay, the Lessee shall furnish to such Indemnified Party the
original or a certified copy of a receipt for the Lessee's payment of such
Tax or such other evidence of payment as is reasonably acceptable to such
Indemnified Party.
(e) REPORTS. In the case of any report, return or statement required
to be filed with respect to any Taxes that are subject to indemnification
under this Section 6.3 and of which the Lessee has knowledge, the Lessee
shall promptly notify such Indemnified Party of such requirement and, at the
Lessee's expense (i) if the Lessee is permitted (unless otherwise required by
such Indemnified Party) by Applicable Law, timely file such report, return or
statement in its own name or (ii) if such report, return or statement is
required to be in the name of or filed by such Indemnified Party or such
Indemnified Party otherwise requests that such report, return or statement be
filed in its name (if allowed under Applicable Law), prepare and finish such
statement for filing by such Indemnified Party in such manner as shall be
satisfactory to such Indemnified Party and send the same to such Indemnified
Party for filing no later than 15 days prior to the due date therefor. In
any case in which such Indemnified Party will file any such report, return or
statement, the Lessee shall, upon written request of such Indemnified Party,
provide such Indemnified Party with such information as is reasonably
necessary to allow such Indemnified Party to file such report, return or
statement.
(f) TAX OWNERSHIP. Each Indemnified Party represents and warrants that
it will not, prior to the termination of the Lease, claim ownership of (or
any tax benefits, including depreciation, with respect to) the Equipment for
any income tax purposes (unless required to do so by a Governmental
Authority), it being understood that it is the intention of all parties to
this transaction that the Lessee is and will remain the owner of the
Equipment for such income tax purposes until the termination of the Lease.
SECTION 6.4. INDEMNITY PAYMENTS IN ADDITION TO LEASE OBLIGATIONS. The
Lessee acknowledges and agrees that the Lessee's obligations to make
indemnity payments under this Section 6 are separate from, in addition to,
and do not reduce, the Lessee's obligation to pay any amounts owing from time
to time under the Lease.
SECTION 6.5. INCREASED COSTS, ETC. If the adoption of or any change in a
Requirement of Law or in the interpretation or application thereof applicable
to any Certificate Holder, or compliance by any Certificate Holder with any
request or directive (whether or not having
-21-
<PAGE>
MW 1997-1 Trust Participation Agreement
the force of law) from any central bank or other Governmental Authority, in
each case made subsequent to the Closing Date (or, if later, the date on
which such Certificate Holder becomes a Certificate Holder):
(i) shall subject such Certificate Holder or the Trust Certificates
to any tax of any kind whatsoever with respect to any Advance made,
continued or maintained by it or its obligation to make, continue or
maintain Advances, or shall change the basis of taxation of payments to
such Certificate Holder in respect thereof (except for any changes in taxes
measured by or imposed upon the overall gross or net income, franchise or
other taxes (imposed in lieu of such net income tax), of such Certificate
Holder or its applicable lending office or branch); or
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, Trust Certificates,
loans or other extensions of credit by, or any other acquisition of funds
by, any office of such Certificate Holder which is not otherwise already
included in the determination hereunder of the interest rate applicable to
the Trust Certificates held by such Certificate Holder; or
(iii) shall change the basis of taxation of payments of principal
and interest due from the Lessee to such Certificate Holder hereunder or
under the Trust Certificates (other than by a change in taxation of the
overall gross or net income of such Certificate Holder); or
(iv) shall impose on such Certificate Holder any other condition
(excluding any Tax of any kind) affecting its Advances or its obligation to
make Advances;
and the result of any of the foregoing is to increase the cost to such
Certificate Holder of making, continuing or maintaining any Advance hereunder
or to reduce any amount receivable by such Certificate Holder in respect
thereof, then, in any such case, upon notice to the Lessee from such
Certificate Holder, through the Lessor Trustee, in accordance herewith, the
Lessee shall pay such Certificate Holder any additional amounts necessary to
compensate such Certificate Holder for such increased cost or reduced amount
receivable. All payments required by this Section 6.5 shall be made by the
Lessee within fifteen (15) Business Days after demand by the affected
Certificate Holder. If any Certificate Holder makes a claim for
compensation, it shall provide to the Lessee a certificate setting forth the
computation of the increased cost or reduced amount as a result of any event
mentioned herein in reasonable detail and such certificate shall be
conclusive if reasonably determined. This covenant shall survive the
termination of this Participation Agreement and the payment of the Trust
Certificates and all other amounts payable hereunder.
SECTION 6.6. FUNDING LOSSES. The Lessee agrees to indemnify each
Indemnified Party and to hold each Indemnified Party harmless from any loss
or expense which such Indemnified Party may sustain or incur (other than
through such Person's own gross negligence or willful misconduct) as a
consequence of (a) failure of the Closing Date to occur as scheduled or the
Lease to be renewed pursuant to Section 18.2 of the Lease after
-22-
<PAGE>
MW 1997-1 Trust Participation Agreement
Lessee has given a notice requesting the same in accordance with the
provisions of this Participation Agreement or the Lease, as the case may be,
(b) default by the Lessee in making any payment of Rent after the Lessee has
given a notice of a termination of the Lease in accordance with the
provisions of the Lease, or (c) the making of a payment or prepayment of
Trust Certificates on a day which is not the last day of an Interest Period
with respect thereto. This covenant shall survive the termination of this
Participation Agreement or any other Operative Agreement and the payment of
the Trust Certificates and all other amounts payable under the Operative
Agreements.
SECTION 7. INDEMNITIES OF THE LESSOR TRUSTEE AND THE TRUST CERTIFICATE
PURCHASERS.
Each of KeyBank National Association and each Trust Certificate Purchaser
(referred to in this Section as the "INDEMNITORS") hereby severally agrees for
the benefit of each other Indemnitor (referred to in this Section as the
"INDEMNITEES") that at all times the Lessor Trust Estate shall be free of any
Lessor's Liens attributable to such Indemnitor and that such Indemnitor will at
its own cost and expense promptly take such action as may be necessary duly to
discharge any such Lessor's Lien, provided that no such Lessor's Lien need be
discharged so long as it is being contested by a Permitted Contest. Each
Indemnitor further agrees to indemnify and hold harmless the Indemnitees from
and against any costs or expenses (including reasonable legal fees and expenses)
incurred, in each case, as a result of the imposition or enforcement of any such
Lessor's Lien.
Each Indemnitor hereby severally agrees for the benefit of the Lessee
that at all times the Equipment shall be free of any Lessor's Lien
attributable to such Indemnitor which impairs the right, title or interest of
the Lessee under the Lease and that such Indemnitor will at its own cost and
expense promptly take such action as may be necessary duly to discharge any
such Lessor's Lien, provided that no such Lessor's Lien need be discharged so
long as it is being contested by a Permitted Contest; and such Indemnitor
further agrees to indemnify and hold harmless the Lessee from and against any
costs or expenses (including reasonable legal fees and expenses) incurred, in
each case, as a result of the imposition or enforcement of any such Lessor's
Lien which impairs the right, title or interest of the Lessee under the Lease.
The agreements of KeyBank National Association in this Section 7 are
made in its individual capacity and not as Lessor Trustee.
SECTION 8. CERTAIN INTENTIONS OF THE PARTIES.
SECTION 8.1. NATURE OF TRANSACTION. (a) The parties hereto intend that (i)
for financial accounting purposes with respect to the Lessee, the Lessor
Trust will be treated as the owner and the lessor of the Property and the
Lessee will be treated as the lessee of the Property and (ii) for all other
purposes, including federal and all state and local income tax purposes,
state real estate and commercial law and bankruptcy purposes,
-23-
<PAGE>
MW 1997-1 Trust Participation Agreement
(A) the Lease will be treated as a financing arrangement,
(B) the Certificate Holders will be deemed lenders making loans to
the Lessee in an amount equal to the principal amount of the Trust
Certificates from time to time outstanding, which amounts are secured by
the Equipment, and
(C) 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 Trust
Certificate Purchasers nor any of the Certificate Holders has made any
representations or warranties to the Lessee concerning the tax, accounting or
legal characteristics of the Operative Agreements and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Agreements as it has deemed appropriate.
(b) Specifically, without limiting the generality of clause (a) of this
Section 8.1, 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, any Guarantor, the Lessor Trust, the Lessor Trustee or the
Certificate Holders or any collection actions, the transactions evidenced by
the Operative Agreements shall be regarded as loans made by the Certificate
Holders as unrelated third party lenders of the Lessee.
SECTION 8.2. AMOUNTS DUE UNDER THE LEASE. Anything herein or elsewhere in
the Operative Agreements to the contrary notwithstanding, it is the intention
of the Lessee and the Trust Certificate Purchasers that except for
unindemnified taxes: (i) the amount and timing of installments of Periodic
Rent due and payable from time to time from the Lessee under the Lease shall
be equal to the aggregate payments due and payable as mandatory prepayments
pursuant to Section 6.2(b) of the Trust Agreement and as interest on the
Trust Certificates on each Scheduled Payment Date; (ii) if the Lessee becomes
obligated to purchase the Equipment under the Lease (including, but not
limited to, Section 18.1 thereof), the unpaid principal of and interest on
the Trust Certificates and all other obligations of the Lessee owing to the
Trust Certificate Purchasers, the Lessor Trustee and the Certificate Holders
shall be due and payable in full by the Lessee on the date set forth in the
Lease (iii) if the Lessee shall sell the Equipment pursuant to Section 18.3
of the Lease, the Lessee shall only be required to pay to the Lessor Trustee
the proceeds of the sale of the Equipment, and any other amounts due under
Section 18.4 of the Lease (which aggregate amounts may be less than the Lease
Balance, with any amount in excess of the Lease Balance being payable to the
Lessee); and (iv) upon an Event of Default resulting in an acceleration of
the Lessee's obligation to purchase the Equipment under the Lease, the
amounts then due and payable by the Lessee under the Lease shall include all
amounts necessary to pay in full the Lease Balance, plus all other amounts
then due from the Lessee to the Lessor Trustee and the Trust Certificate
Purchasers under the Operative Agreements.
-24-
<PAGE>
MW 1997-1 Trust Participation Agreement
SECTION 9. [INTENTIONALLY OMITTED]
SECTION 10. MISCELLANEOUS.
SECTION 10.1. AMENDMENTS. This Agreement may, from time to time and at any
time, be amended or supplemented, by an instrument or instruments in writing
executed by the parties hereto.
SECTION 10.2. NOTICES. All notices and other communications provided for
herein (unless otherwise provided for by the specific provisions hereof)
shall be in writing. Notices and other communications shall be deemed to
have been given (unless otherwise required by the specific provisions hereof
in respect of any matter) when delivered personally or otherwise actually
received or five days after being deposited in the United States mail,
registered, postage prepaid, or when sent by facsimile (with receipt of such
facsimile confirmed by telephone and a copy of such notice or communication
sent by a prepaid courier having a national reputation for reliability (e.g.,
Federal Express)) to the parties hereto at their addresses set forth on
Schedule I hereto in the case of the Trust Certificate Purchasers, and
beneath their respective signatures below, in the case of the other parties
hereto, or at such other place as any such party may designate by notice duly
given in accordance with this Section to the other parties.
SECTION 10.3. SURVIVAL. All warranties, representations and covenants made
by any party herein or in any certificate or other instrument delivered by
any party to any other party under this Agreement shall be considered to have
been relied upon by such other party and shall survive the consummation of
the transactions contemplated hereby on the Closing Date regardless of any
investigation made by such other party or on behalf of such other party. All
statements in any such certificate or other instrument by the Lessor Trustee
or the Lessee, or on behalf of the Lessor Trustee or the Lessee, under this
Agreement shall constitute warranties and representations by the Lessor
Trustee or, as the case may be, the Lessee hereunder.
SECTION 10.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and assigns including each successive
holder of any Trust Certificate issued and delivered pursuant to this
Agreement and the Trust Agreement whether or not an express assignment to any
such holder of rights under this Agreement has been made.
SECTION 10.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (excluding
choice-of-law principles of the law of such State that would require the
application of the laws of a jurisdiction other than such State).
SECTION 10.6. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Agreement.
-25-
<PAGE>
MW 1997-1 Trust Participation Agreement
SECTION 10.7. HEADINGS AND TABLE OF CONTENTS. The headings of the Sections
of this Agreement and the Table of Contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof and any reference to numbered
Sections, unless otherwise indicated, are to Sections of this Agreement.
SECTION 10.8. LIMITATIONS OF LIABILITY.
(a) LIABILITIES OF THE TRUST CERTIFICATE PURCHASERS. No Trust
Certificate Purchaser shall have any obligation or duty to the Lessee, to any
other Trust Certificate Purchaser or to others with respect to the
transactions contemplated hereby except those obligations or duties of such
Trust Certificate Purchaser expressly set forth in this Agreement and the
other Operative Agreements and no Trust Certificate Purchaser shall be liable
for performance by any other party hereto of such other party's obligations
or duties hereunder. Without limitation of the generality of the foregoing,
under no circumstances whatsoever shall any Trust Certificate Purchaser be
liable to the Lessee, nor shall any Trust Certificate Purchaser be liable to
any other Trust Certificate Purchaser, for any action or inaction on the part
of the Lessor Trustee in connection with the transactions contemplated
herein, whether or not such action or inaction is caused by willful
misconduct or gross negligence of the Lessor Trustee.
(b) NO RECOURSE TO KEYBANK NATIONAL ASSOCIATION. It is expressly
understood and agreed by and between the Lessor Trustee, the Lessee and the
Trust Certificate Purchasers and any Certificate Holder and their respective
successors and assigns that, subject to the proviso to this paragraph, this
Agreement is (except as otherwise expressly provided herein) executed by
KeyBank National Association, not individually or personally but solely as
trustee under the Trust Agreement in the exercise of the power and authority
conferred and vested in it as such trustee, that each and all of the
representations, warranties, undertakings and agreements herein made on the
part of the Lessor Trustee are made and intended not as personal
representations, warranties, undertakings and agreements by KeyBank National
Association or for the purpose or with the intention of binding KeyBank
National Association personally, but are made and intended for the purpose of
binding only the Lessor Trust Estate, that this Agreement is executed and
delivered by KeyBank National Association solely in the exercise of the
powers expressly conferred upon KeyBank National Association as trustee under
the Trust Agreement, that actions to be taken by the Lessor Trustee pursuant
to its obligations hereunder may be taken by the Lessor Trustee only upon
specific authority of the Certificate Holders, that nothing herein contained
shall be construed as creating any liability of KeyBank National Association,
individually or personally, or any incorporator or any past, present or
future subscriber to the capital stock of, or stockholder, officer or
director of KeyBank National Association, to perform any covenant either
express or implied contained herein, all such liability, if any, being
expressly waived by the Lessee, each Trust Certificate Purchaser and any
Certificate Holder and any person claiming by, through or under such persons,
and that so far as KeyBank National Association, individually or personally
is concerned, subject to the proviso to this paragraph, the Lessee, each
Trust Certificate Purchaser and any Certificate Holder and any person
claiming by, through or under such persons shall look solely to the Lessor
Trust Estate for the
-26-
<PAGE>
MW 1997-1 Trust Participation Agreement
performance of any obligation of KeyBank National Association under this
Agreement; PROVIDED, HOWEVER, that nothing in this Section 10.8 shall be
construed (i) to limit in scope or substance those representations,
warranties, undertakings and agreements of KeyBank National Association made
expressly in its individual capacity set forth in Section 3.1 or the
indemnities of KeyBank National Association in its individual capacity set
forth in Section 7, or (ii) to relieve KeyBank National Association from
liability for its own willful misconduct or gross negligence. The term
"LESSOR TRUSTEE" as used in this Participation Agreement shall include any
trustee succeeding KeyBank National Association as trustee under the Trust
Agreement. Nothing contained in this Agreement shall restrict the operation
of the provisions of the Trust Agreement, including, without limitation, the
resignation or removal of the Lessor Trustee thereunder.
SECTION 10.9. TRANSACTIONAL EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, the Lessee will pay all
expenses relating to the transactions contemplated by this Agreement. If the
transactions contemplated by this Agreement are consummated, the Lessee shall
in any event pay: (i) the fees and expenses of counsel for the Lessee; (ii)
the fees and expenses of Chapman and Cutler, special counsel for the Trust
Certificate Purchasers; (iii) the cost of delivering to or from the home
office of each Trust Certificate Purchaser from or to the Lessor Trustee,
insured to the satisfaction of such Trust Certificate Purchaser, the Trust
Certificates issued to such Trust Certificate Purchaser on the Closing Date
and any Trust Certificates surrendered pursuant to the Trust Agreement and
the Trust Certificates issued in substitution or replacement for the
surrendered Trust Certificates; (iv) all stamp, transfer and other similar
taxes, fees and excise, if any, including any interest and penalties, which
are payable in connection with the transactions contemplated by this
Agreement, the Trust Certificates and the other Operative Agreements; (v) the
expenses of the Lessor Trustee and the Trust Certificate Purchasers,
including fees and expenses of their counsel, in connection with any
amendments, waivers or consents requested by any party in connection with any
of the Operative Agreements and all recording and filing fees, stamp taxes
and other recording or filing taxes in connection with the recordation or
filing of any such amendments, waivers and consents and in connection with
any continuation statements or other documents filed to maintain and protect
the rights of the parties under the Operative Agreements; (vi) the initial
and ongoing fees and expenses of the Lessor Trustee under the Trust
Agreement, including fees and expenses incurred in connection with the
enforcement of the obligations of the Lessee and the Guarantors under the
Operative Agreements; (vii) the fees of Key Global Finance Ltd., as arranger,
in connection with the transactions contemplated hereby as specified in
Section 4.1(o); and (viii) the fees and expenses relating to the Appraisal
delivered on the Closing Date.
-27-
<PAGE>
MW 1997-1 Trust Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered, all as of the date first above
written.
LESSEE MAIL-WELL I CORPORATION
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
23 Inverness Way East
Suite 160
Englewood, Colorado 80112
Attention: General Counsel
Telecopy: 303-397-7400
LESSOR TRUSTEE
KEYBANK NATIONAL ASSOCIATION, as
trustee under MW 1997-1 Trust and to the
extent expressly provided above individually
By /s/ Mark Sunderland
-----------------------------------
Its Vice President
700 Fifth Avenue
Seattle, Washington 98111-0090
Attention: Large Corporate Group
Telecopy: (206) 684-6035
TRUST CERTIFICATE PURCHASER KEYBANK NATIONAL ASSOCIATION
- - SERIES A
By /s/ Mark Sunderland
-----------------------------------
Its Vice President
<PAGE>
MW 1997-1 Trust Participation Agreement
TRUST CERTIFICATE PURCHASER KEY CORPORATE CAPITAL INC.
- - SERIES B
By /s/ Paul M. Sciandra
-----------------------------------
Its Vice President
<PAGE>
Draft Dated December 26, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Equipment Lease
Dated as of December 15, 1997
between
KEYBANK NATIONAL ASSOCIATION,
as trustee under MW 1997-1 Trust,
as the Lessor
and
MAIL-WELL I CORPORATION
as the Lessee
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
Table of Contents
<TABLE>
<CAPTION>
PAGE
------
<S> <C> <C>
SECTION 1. DEFINITIONS.................................................. 1
Section 1.1. Definitions; Interpretation............................... 1
SECTION 2. LEASE........................................................ 1
Section 2.1. Acceptance and Lease of Equipment......................... 1
Section 2.2. Lease Supplement.......................................... 2
Section 2.3. Lease Term................................................ 2
Section 2.4. Title..................................................... 2
SECTION 3. PAYMENT OF RENT.............................................. 2
Section 3.1. Rent...................................................... 2
Section 3.2. Payment of Rent........................................... 3
Section 3.3. Supplemental Rent......................................... 3
Section 3.4. Method of Payment......................................... 3
SECTION 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS........ 3
Section 4.1. Quiet Enjoyment............................................ 3
Section 4.2. Right to Inspect........................................... 3
Section 4.3. Change in the Nature of Business........................... 4
SECTION 5. NET LEASE, ETC............................................... 4
Section 5.1. Net Lease.................................................. 4
Section 5.2. No Termination or Abatement................................ 5
SECTION 6. LESSEE ACKNOWLEDGMENTS....................................... 6
Section 6.1. Condition of the Equipment................................. 6
Section 6.2. Risk of Loss............................................... 6
SECTION 7. MARKING...................................................... 6
Section 7.1. Marking of Equipment....................................... 6
SECTION 8. POSSESSION AND USE OF THE EQUIPMENT, ETC..................... 6
-2-
<PAGE>
Section 8.1. Use of the Equipment....................................... 6
Section 8.2. Possession of the Equipment................................ 7
Section 8.3. Landlord Waivers........................................... 7
SECTION 9. MAINTENANCE AND REPAIR....................................... 7
Section 9.1. Repairs and Maintenance.................................... 7
Section 9.2. Maintenance Costs and Warranties........................... 8
Section 9.3. Lessor Trustee Not Obligated to Maintain or Repair......... 8
Section 9.4. Return..................................................... 8
SECTION 10. MODIFICATIONS, ETC........................................... 12
Section 10.1. Replacement of Parts....................................... 12
Section 10.2. Required Alterations....................................... 12
Section 10.3. Optional Alterations....................................... 12
Section 10.4. Title to Parts............................................. 12
SECTION 11. WARRANTY OF TITLE............................................ 13
Section 11.1. Warranty of Title.......................................... 13
SECTION 12. PERMITTED CONTESTS........................................... 13
Section 12.1. Permitted Contests in Respect of Applicable Law............ 13
SECTION 13. INSURANCE.................................................... 14
Section 13.1. Required Insurance Coverages and Limits.................... 14
Section 13.2. Adjustment and Payment of Losses........................... 15
Section 13.3. Evidence of Insurance...................................... 15
Section 13.4. Application of Insurance Proceeds.......................... 15
Section 13.5. Deductibles and Self-Insurance............................. 16
Section 13.6. Insurance for Own Account.................................. 16
SECTION 14. CASUALTY OCCURRENCE.......................................... 17
Section 14.1. Casualty Occurrence........................................ 17
Section 14.2. Conveyance of Replacement Equipment........................ 18
Section 14.3. Application of Payments.................................... 19
Section 14.4. Certain Government Requisitions............................ 20
Section 14.5. Application of Payments from Governmental Authorities for
Requisition of Title....................................... 20
-3-
<PAGE>
Section 14.6. Application of Payments During Existence of Default........ 20
SECTION 15. SUBSTITUTION OF EQUIPMENT.................................... 21
Section 15.1. Substitution of Equipment.................................. 21
SECTION 16. EVENTS OF DEFAULT............................................ 21
Section 16.1. Events of Default.......................................... 21
Section 16.2. Remedies................................................... 24
Section 16.3. Waiver of Certain Rights................................... 27
SECTION 17. LESSOR TRUSTEE'S RIGHT TO CURE............................... 27
Section 17.1. The Lessor Trustee's Right to Cure the Lessee's Defaults... 27
SECTION 18. OPTIONS TO RENEW, PURCHASE AND SELL.......................... 27
Section 18.1. Purchase of the Equipment.................................. 27
Section 18.2. Option to Renew............................................ 28
Section 18.3. Option to Sell the Equipment............................... 28
Section 18.4. End of Term Adjustment..................................... 29
SECTION 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT................. 30
Section 19.1. Provisions Relating to the Purchase of Equipment; Conveyance
upon Certain Other Events.................................. 30
SECTION 20. ADDITIONAL GUARANTORS........................................ 30
Section 20.1. Additional Guarantors...................................... 30
SECTION 21. [INTENTIONALLY OMITTED]...................................... 31
SECTION 22. NO MERGER OF TITLE........................................... 31
Section 22.1. No Merger of Title......................................... 31
SECTION 23. INTENT OF THE PARTIES........................................ 31
Section 23.1. Nature of Transaction...................................... 31
Section 23.2. Liens and Security Interests............................... 32
-4-
<PAGE>
SECTION 24. MISCELLANEOUS................................................ 34
Section 24.1. Severability............................................... 34
Section 24.2. Amendments and Modifications............................... 34
Section 24.3. No Waiver.................................................. 34
Section 24.4. Notices.................................................... 34
Section 24.5. Successors and Assigns..................................... 35
Section 24.6. Headings and Table of Contents............................. 35
Section 24.7. Counterparts............................................... 35
Section 24.8. Governing Law.............................................. 35
Section 24.9. Time of Essence............................................ 35
Signatures ................................................................. 36
</TABLE>
-5-
<PAGE>
ATTACHMENTS TO EQUIPMENT LEASE:
Schedule I -- Periodic Rent Factors
Schedule II -- Purchase Option Percentages and
Maximum Lessee Risk Percentages
Exhibit A -- Form of Lease Supplement
Exhibit B -- Form of Landlord Waiver
-6-
<PAGE>
EQUIPMENT LEASE
THIS EQUIPMENT LEASE (this "LEASE"), dated as of December 15, 1997 between
KEYBANK NATIONAL ASSOCIATION, a national banking association, as trustee (the
"LESSOR TRUSTEE") under MW 1997-1 Trust, as Lessor and whose principal offices
are located at 127 Public Square, Cleveland, Ohio 44114, and MAIL-WELL I
CORPORATION, a Delaware corporation, as Lessee (the "LESSEE") and whose
principal offices are located at 23 Inverness Way East, Suite 160, Englewood,
Colorado 80112.
WITNESSETH:
WHEREAS, pursuant to a Participation Agreement dated as of the date
hereof (as amended, modified, restated or supplemented from time to time, the
"PARTICIPATION AGREEMENT"), among the Lessee, the Lessor Trustee and the
Trust Certificate Purchasers named therein, such Trust Certificate Purchasers
have agreed to finance the acquisition of the Equipment;
WHEREAS, on the Closing Date, the Lessor Trustee will purchase certain
Equipment from the Seller thereof;
WHEREAS, the Lessor Trustee desires to lease to the Lessee, and the
Lessee desires to lease from the Lessor Trustee, such Equipment, subject to
the terms of this Lease;
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:
SECTION 1. DEFINITIONS
SECTION 1.1. DEFINITIONS; INTERPRETATION. Capitalized terms used but not
otherwise defined in this Lease have the respective meanings specified in
Annex I to the Participation Agreement; and the rules of interpretation set
forth in Annex I to the Participation Agreement shall apply to this Lease.
SECTION 2. LEASE
SECTION 2.1. ACCEPTANCE AND LEASE OF EQUIPMENT. Subject to the conditions
set forth in the Participation Agreement, including without limitation the
satisfaction or waiver of the conditions set forth in Section 4 thereof, the
Lessor Trustee hereby agrees to accept, pursuant to the terms
<PAGE>
MW 1997-1 Trust Equipment Lease
of the Participation Agreement, delivery of the Equipment on the Closing Date
therefor and simultaneously to lease such Equipment to the Lessee hereunder
for the Lease Term and the Lessee hereby agrees to simultaneously lease from
the Lessor Trustee for the Lease Term the interest of the Lessor Trustee in
the Equipment, such leasing to be evidenced by the execution by the Lessor
Trustee and the Lessee of a Lease Supplement covering the Items of Equipment
delivered on the Closing Date.
SECTION 2.2. LEASE SUPPLEMENT. On the Closing Date, the Lessee agrees that
it will enter into a Lease Supplement substantially in the form attached
hereto as Exhibit A with the Lessor Trustee, which Lease Supplement shall
describe the Items of Equipment settled for on the Closing Date and shall set
forth the Equipment Cost therefor. The Lessee's execution and delivery of a
Lease Supplement with respect to an Item of Equipment shall conclusively
establish as between the Lessor Trustee and the Lessee that such Item is
acceptable to and accepted by the Lessee under this Lease, notwithstanding
any defect with respect to design, manufacture, condition or in any other
respect, and that such Item is in good order and condition and appears to
conform to the specifications applicable thereto and to all governmental
standards and requirements applicable thereto.
SECTION 2.3. LEASE TERM. The Basic Term for each Item of Equipment shall
commence on (and include) the Closing Date and, unless sooner terminated
pursuant to this Lease, end on (but exclude) the last day of the Basic Term
thereof. If not sooner terminated pursuant to the provisions hereof, the
Lease Term for each Item of Equipment shall end on the last day of the Basic
Term thereof, or if this Lease is renewed pursuant to Section 18.2, on the
last day of the last Renewal Term thereof.
SECTION 2.4. TITLE. The Equipment is leased to the Lessee without any
representation or warranty, express or implied, by the Lessor Trustee or any
Certificate Holder and subject to the rights of parties in possession, the
existing state of title (including, without limitation, all Liens other than
Lessor's Liens) and all applicable Requirements of Law. The Lessee shall in
no event have any recourse against the Lessor Trustee or any Certificate
Holder for any defect in or exception to title to the Equipment or leasehold
interest therein other than resulting from Lessor's Liens attributable to the
Lessor Trustee or such Certificate Holder.
SECTION 3. PAYMENT OF RENT
SECTION 3.1. RENT. (a) During the Lease Term, the Lessee shall pay
Periodic Rent for all Equipment subject to the Lease to the Lessor Trustee on
each Scheduled Payment Date and on any date on which this Lease shall
terminate, PROVIDED that any payment of Periodic Rent which is due on a date
which is not a Business Day shall be payable on the next succeeding Business
Day, unless the result of such extension would be that such payment would be
made in another
-8-
<PAGE>
MW 1997-1 Trust Equipment Lease
calendar month in which event such payment shall be made on the immediately
preceding Business Day.
(b) Neither the Lessee's inability or failure to take possession of all
or any portion of the Equipment when delivered by the Lessor Trustee, nor the
inability or failure of the Lessor Trustee to deliver all or any portion of
the Equipment to the Lessee on or before the Closing Date, whether or not
attributable to any act or omission of the Lessee or any act or omission of
the Lessor Trustee or any Certificate Holder, 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 Lease.
SECTION 3.2. PAYMENT OF RENT. Rent shall be paid absolutely net to each
Person entitled thereto, so that this Lease shall yield to such Person the
full amount thereof, without setoff, deduction or reduction.
SECTION 3.3. SUPPLEMENTAL RENT. The Lessee shall pay to the Lessor Trustee
or any other 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 Trustee and such other Persons shall have all
rights, powers and remedies provided for herein or by law or equity or
otherwise in the case of nonpayment of Periodic Rent. The Lessee shall pay
to the Lessor Trustee, as Supplemental Rent, among other things, on demand,
to the extent permitted by applicable Requirements of Law, interest at the
applicable Overdue Rate on any installment of Periodic 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 Trustee 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 Periodic Rent hereunder shall not limit or modify
the obligations of the Lessee with respect to Supplemental Rent. Unless
expressly provided otherwise in this Lease, in the event of any failure on
the part of the Lessee to pay and discharge any 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 against the Lessor Trustee by
a third party for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.
SECTION 3.4. METHOD OF PAYMENT. Each payment of Rent payable by the Lessee
to the Lessor Trustee under this Lease or any other Operative Agreement shall
be made by the Lessee to the Lessor Trustee prior to 10:00 a.m., (Seattle,
Washington time) to the Account by wire transfer of Federal or other
immediately available funds consisting of lawful currency of the United
States of America on the date when such payment shall be due.
SECTION 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS
-9-
<PAGE>
MW 1997-1 Trust Equipment Lease
SECTION 4.1. QUIET ENJOYMENT. Subject to the terms of each of the
Operative Agreements, the Lessee shall peaceably and quietly have, hold and
enjoy each Item of Equipment for the Lease Term, free of any claim or other
action by the Lessor Trustee or the Certificate Holders or anyone claiming
by, through or under the Lessor Trustee or the Certificate Holders (other
than the Lessee) with respect to any matters arising from and after the
Closing Date. Such right of quiet enjoyment is independent of, and shall not
affect the rights of the Lessor Trustee or the Certificate Holders (or anyone
claiming by, through or under the Lessor Trustee or the Certificate Holders)
otherwise to initiate legal action to enforce, the obligations of the Lessee
under this Lease.
SECTION 4.2. RIGHT TO INSPECT. During the Lease Term, the Lessee shall
upon reasonable notice, and from time to time, permit the Lessor Trustee, any
Certificate Holder, and their respective authorized representatives to
inspect the Equipment, to examine the records or books of account of the
Lessee relating to the Equipment and to discuss the affairs, finances and
accounts of the Lessee with appropriate officers, during normal business
hours, PROVIDED that if an Event of Default shall have occurred and be
continuing, no notice shall be required and any inspection shall be at the
Lessee's expense.
SECTION 4.3. CHANGE IN THE NATURE OF BUSINESS. The Lessee shall not engage
in any business or activity if as a result the general nature of the business
of the Lessee would be changed in any material respect from the general
nature of the business engaged in by the Lessee on the date of this Lease.
SECTION 5. NET LEASE, ETC.
SECTION 5.1. NET LEASE. (a) This Lease shall constitute a net lease, and
it is intended that the Lessee shall pay all costs and expenses of every
character, whether seen or unforeseen, ordinary or extraordinary or
structural or non-structural, in connection with the installation, use,
possession, operation, maintenance, repair and return of the Equipment by the
Lessee, including the costs and expenses particularly set forth in this
Lease.
(b) Any present or future law to the contrary notwithstanding, this
Lease shall not terminate, nor shall the Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counterclaim, or defense with
respect to the Rent, nor shall the obligations of the Lessee hereunder be
affected (except as expressly permitted herein) by reason of: (i) any defect
in the condition, merchantability, design, construction, quality or fitness
for use of the Equipment or any part thereof, or the failure of the Equipment
to comply with all Requirements of Law, including any inability to use the
Equipment by reason of such non-compliance; (ii) any damage to, removal,
abandonment, salvage, loss, contamination of, scrapping or destruction of or
any requisition or taking of the Equipment or any part thereof; (iii) any
restriction, prevention or
-10-
<PAGE>
MW 1997-1 Trust Equipment Lease
curtailment of or interference with any use or possession of the Equipment or
any part thereof; (iv) any defect in title of or rights to the Equipment or
any Lien on such title or rights or on the Equipment; (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 Trustee or any Certificate
Holder; (vi) any bankruptcy, insolvency, reorganization, composition,
adjustment, dissolution, liquidation or other like proceedings relating to
the Lessee, any Guarantor, the Lessor Trustee, any Certificate Holder or any
other Person, or any action taken with respect to this Lease by any trustee
or receiver of the Lessee, any Guarantor, the Lessor Trustee, any Certificate
Holder 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 Trustee, any Certificate Holder or any vendor,
manufacturer, contractor of or for the Equipment; (viii) any failure on the
part of the Lessor Trustee or any other Person to perform or comply with any
of the terms of this Lease, of any other Operative Agreement or of any other
agreement or any breach of any representation or warranty of, or any act or
omission of the Lessee, any Guarantor, the Lessor Trustee or any Certificate
Holder under this Lease or any of the other Operative Agreements, or any
claims, rights or remedies occurring or arising as a result of any other
business dealings between or among the Lessee or any Guarantor and any of the
Lessor Trustee or any Certificate Holder; (ix) any invalidity or
unenforceability or illegality or disaffirmance of this Lease against or by
the Lessee or any provision hereof or any of the other Operative Agreements
or any provision of any thereof or any lack of right, power or authority of
the Lessee, any Guarantor, the Lessor Trustee or any Certificate Holder to
enter into any Operative Agreement or any of the transactions contemplated
thereby; (x) the impossibility or illegality of performance by the Lessee,
the Lessor Trustee or either of them; (xi) any action by any court,
administrative agency or other Governmental Authority; or (xii) 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 Trustee or
any Certificate Holder. 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 Trustee hereunder or under any
other Operative Agreements, and the obligations of the Lessee shall continue
unaffected unless the obligations shall have been modified or terminated in
accordance with an express provision of this Lease. Without affecting
Lessee's obligation to pay Rent hereunder, Lessee may seek damages for a
breach by the Lessor Trustee of any Certificate Holder of its respective
obligations under this Lease (including, without limitation, Section 4.1) or
any of the other Operative Agreements.
SECTION 5.2. NO TERMINATION OR ABATEMENT. The Lessee shall remain
obligated under this Lease in accordance with its terms and shall not take
any action to terminate, rescind or avoid this Lease (except as provided
herein), notwithstanding any action for bankruptcy, insolvency,
reorganization, liquidation, dissolution, or other proceeding affecting any
Certificate Holder, or
-11-
<PAGE>
MW 1997-1 Trust Equipment Lease
any action with respect to this Lease which may be taken by any trustee,
receiver or liquidator of any Certificate Holder or by any court with respect
to any Certificate Holder. The Lessee's obligations hereunder, including,
without limitation, its obligations to pay Periodic Rent for all Equipment
leased hereunder and to pay Supplemental Rent payable hereunder, shall be
unconditional and irrevocable under any and all circumstances and the Lessee
hereby waives, to the extent permitted by law, all right (i) to terminate or
surrender this Lease (except as provided herein) or (ii) to avail itself of
any abatement, suspension, deferment, reduction, setoff, counterclaim or
defense with respect to any Rent. Each Rent payment made pursuant to this
Lease by the Lessee shall be final and the Lessee will not seek to recover
all or any part of such payment from the Lessor Trustee or any Certificate
Holder for any reason whatsoever. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise
except as specifically provided herein or as otherwise agreed, the Lessee
nonetheless agrees to pay to the Lessor Trustee, or to whomsoever shall be
entitled thereto, an amount equal to each Rent payment at the time such
payment would have become due and payable in accordance with the terms hereof
had this Lease not been terminated in whole or in part. The obligation of
the Lessee in the immediately preceding sentence shall survive the expiration
or termination of this Lease other than in accordance with its terms. The
Lessee shall remain obligated under this Lease in accordance with its terms
and the Lessee hereby waives, to the extent permitted by law, any and all
rights now or hereafter conferred by statute or otherwise to modify or to
avoid strict compliance with its obligations under this Lease.
Notwithstanding any such statute or otherwise, the Lessee shall be bound by
all of the terms and conditions contained in this Lease.
SECTION 6. LESSEE ACKNOWLEDGMENTS
SECTION 6.1. CONDITION OF THE EQUIPMENT. THE LESSEE ACKNOWLEDGES AND
AGREES THAT IT IS LEASING EACH ITEM OF EQUIPMENT "AS IS" WITHOUT
REPRESENTATION, WARRANTY OR COVENANT (EXPRESS OR IMPLIED) BY THE LESSOR
TRUSTEE, OR ANY CERTIFICATE HOLDER AND IN EACH CASE SUBJECT TO (A) THE
EXISTING STATE OF TITLE (EXCLUDING LESSOR'S LIENS), (B) THE RIGHTS OF ANY
PARTIES IN POSSESSION THEREOF, (C) ANY STATE OF FACTS WHICH A PHYSICAL
INSPECTION MIGHT SHOW AND (D) VIOLATIONS OF REQUIREMENTS OF LAW WHICH MAY
EXIST ON THE DATE HEREOF OR ON THE CLOSING DATE. NEITHER THE LESSOR TRUSTEE,
NOR ANY CERTIFICATE HOLDER 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, VALUE, SUITABILITY, USE,
CONDITION, DESIGN, OPERATION, OR FITNESS FOR USE OF THE EQUIPMENT (OR ANY
PART THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE EQUIPMENT (OR ANY PART THEREOF) AND
NEITHER THE LESSOR TRUSTEE, NOR ANY CERTIFICATE HOLDER SHALL BE LIABLE FOR
ANY LATENT, HIDDEN, OR PATENT DEFECT THEREIN OR THE FAILURE OF THE EQUIPMENT,
OR ANY PART THEREOF, TO COMPLY WITH ANY REQUIREMENT OF LAW.
-12-
<PAGE>
MW 1997-1 Trust Equipment Lease
SECTION 6.2. 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 neither the Lessor
Trustee nor any Certificate Holder shall in any event be answerable or
accountable therefor.
SECTION 7. MARKING
SECTION 7.1. MARKING OF EQUIPMENT. The Lessee shall promptly cause each
Item of Equipment to be plainly, permanently and conspicuously marked by a
metal tag, plate or label affixed thereto, each setting forth the following
legend:
TITLE TO THIS EQUIPMENT IS HELD BY KEYBANK NATIONAL
ASSOCIATION, AS TRUSTEE UNDER MW 1997-1 TRUST SUBJECT TO A
LEASE BY SAID TRUSTEE TO MAIL-WELL I CORPORATION.
The Lessee covenants and agrees to replace any tag, plate or label which may
be removed or destroyed or become illegible and to indemnify each Indemnified
Party against any liability, loss or expense incurred by such Indemnified
Party as a result of the failure to maintain such markings.
SECTION 8. POSSESSION AND USE OF THE EQUIPMENT, ETC.
SECTION 8.1. USE OF THE EQUIPMENT. (a) The Lessee agrees that the
Equipment will be used solely in the conduct of its business and applying
standards of use no lower than the standards applied by the Lessee for other
comparable properties owned or leased by the Lessee. 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 Lease.
(b) Subject to the terms of Section 12 relating to permitted contests,
the Lessee warrants that (i) the Equipment will at all times be used and
operated under and in compliance with all Requirements of Law and Insurance
Requirements, including the use, operation, maintenance, repair and
restoration thereof, whether or not compliance therewith shall interfere with
the use and enjoyment of the Equipment, (ii) the Lessee shall procure,
maintain and comply with all licenses, permits, orders, approvals, consents
and other authorizations required by Applicable Laws or by any Governmental
Authority for the use, operation, maintenance, repair and restoration of the
Equipment, and (iii) all material used in the operation of the Equipment
shall be compatible with those recommended by the manufacturer's operation
manual.
-13-
<PAGE>
MW 1997-1 Trust Equipment Lease
(c) The Lessee agrees that it will not change the location of any Item
of Equipment, unless prior to or concurrently with such change the Lessee
shall have filed, or caused to be filed, Uniform Commercial Code financing
statements (including, without limitation, fixture filings) with respect to
such Item of Equipment in form and substance satisfactory to the Lessor
Trustee in the jurisdiction in which such Item of Equipment is located.
SECTION 8.2. POSSESSION OF THE EQUIPMENT. The Lessee will not, without the
prior written consent of the Lessor Trustee, which consent shall not be
unreasonably withheld, sublease, sub-sublease or otherwise in any manner
deliver, transfer or relinquish possession of any Item of Equipment; PROVIDED
that, so long as no Default or Event of Default hereunder shall have occurred
and be continuing, the Lessee may, at any time, without the prior consent of
the Lessor Trustee deliver possession of any Part or portion of any Item of
Equipment to the manufacturer, contractor or supplier designated by the
Lessee for purposes of realizing the benefits of any warranty or for testing
or other similar purposes or to any Person for service, repair, maintenance
or overhaul work on such Item of Equipment or any Part thereof or for
alterations or modifications in or additions to such Item of Equipment to the
extent required or permitted by the terms of Section 9 or Section 10.
SECTION 8.3. LANDLORD WAIVERS. If at any time an Item of Equipment is
located at a Site that is not owned by the Lessee, the Lessee shall promptly
deliver to the Lessor Trustee a Landlord Waiver executed by the owner of such
Site.
SECTION 9. MAINTENANCE AND REPAIR; RETURN
SECTION 9.1. REPAIRS AND MAINTENANCE. The Lessee, at the Lessee's own cost
and expense, shall (a) maintain, service and repair the Equipment in order to
keep the Equipment in as good repair, good operating condition and working
order as when it first became subject to this Lease and in compliance with
all of the manufacturer's specifications, (b) in such condition as the Lessee
would, in the prudent management of its own or leased properties, maintain,
service and repair similar property owned or leased by the Lessee and, in any
event, to the extent required to maintain the Equipment in good repair and in
compliance with all Requirements of Law and Insurance Requirements,
noncompliance with which might result in the imposition of a penalty on any
Indemnified Party or materially adversely affect the Equipment or the
operation thereof and (c) have in full force and effect during the Lease Term
a maintenance program to maintain, service and repair the Equipment so as to
keep the Equipment in as good operating condition and working order as it was
when it first become subject to this Lease and in compliance with
manufacturer's specifications.
SECTION 9.2. MAINTENANCE COSTS AND WARRANTIES. The Lessee agrees to pay
all costs, expenses, fees and charges incurred in connection with (i) the use
and operation of each Item of Equipment
-14-
<PAGE>
MW 1997-1 Trust Equipment Lease
by the Lessee during the Lease Term as to such Item of Equipment, including
but not limited to repairs, maintenance, storage and servicing as provided in
Section 10 and this Section 9 and (ii) the preserving and protecting of such
Item of Equipment, and the repairing, maintaining and servicing of the
Equipment as provided in Section 10 and this Section 9, during the period
after a termination of the Lessee's right of possession of such Item of
Equipment pursuant to Section 16.2 and prior to the interest of the Lessor
Trustee in such Item of Equipment being leased or sold to a third person by
the Lessor Trustee (other than one or more Certificate Holders or any
affiliate thereof). So long as no Event of Default has occurred and is
continuing, the Lessor Trustee hereby constitutes the Lessee the agent and
attorney-in-fact of the Lessor Trustee for the purpose of exercising and
enforcing, and with full right, power and authority to exercise and to
enforce, all of the right, title and interest of the Lessor Trustee in, under
and to the warranties and obligations of any supplier of goods or services in
respect of the Equipment and agrees to execute and deliver such further
instruments as may be necessary to enable the Lessee to obtain goods or
services furnished for the Equipment by said suppliers. The Lessor Trustee
shall have no other obligation or duty with respect to any of such matters.
Any proceeds obtained by the Lessee from the enforcement of the warranties
and obligations of any supplier of goods or services in respect of the
Equipment shall be held by the Lessee and applied from time to time to the
repair and maintenance of the Equipment, and any balance thereof remaining at
the expiration of the Lease Term and satisfaction of all of the Lessee's
obligations hereunder shall be paid over to the Lessee.
SECTION 9.3. LESSOR TRUSTEE NOT OBLIGATED TO MAINTAIN OR REPAIR. The
Lessor Trustee shall not under any circumstances be required to make any
repairs, replacements, Alterations or renewals of any nature or description
to the Equipment, make any expenditure whatsoever in connection with this
Lease or maintain the Equipment in any way. The Lessee waives any right to
(i) require the Lessor Trustee to maintain or repair all or any part of the
Equipment or (ii) make repairs at the expense of the Lessor Trustee pursuant
to any Requirement of Law, contract, agreement, or covenant, condition or
restriction in effect at any time during the Lease Term.
SECTION 9.4. RETURN. (a) Prior to the Lessee notifying the Lessor Trustee
of the Lessee's intent to return the Equipment or its election to exercise
its option to sell the Equipment pursuant to Section 18.3, the Lessee must
demonstrate that the Equipment can perform at its original performance
specifications under full test loads with regard to speed, register control,
utility and quality of printed matter. An outside printing expert selected
by the Lessor Trustee and paid for by the Lessee (the "PRINTING EXPERT")
shall perform an Equipment inspection to verify the physical condition of the
Equipment and shall supervise the demonstration. The Printing Expert shall
inspect printed material coming off the Equipment for its saleability. If it
is determined that improvements are needed to make the equipment perform
according to the manufacturer's original performance specifications, the
Lessee shall make those improvements under the supervision of the original
manufacturer.
-15-
<PAGE>
MW 1997-1 Trust Equipment Lease
(b) Upon the expiration or earlier termination of the Lease Term, the
Lessee, at its sole expense, shall de-install, crate and return the Equipment
to the Lessor Trustee by delivering such Equipment F.A.S. or F.O.B. to such
location or such carrier (packed for shipping) as the Lessor Trustee shall
specify. The Equipment shall be removed by a licensed erector/rigger
specializing in the crating, removal, transportation and reassembly of the
Equipment, and deinstallation shall be performed in a prescribed manner
including proper marking, and labeling of all electrical wires and
components. The Lessee agrees that the Equipment, when returned, shall be in
the condition required by Section 9.1 hereof. Accordingly, if, during the
Lease Term, the Equipment has not been given all scheduled maintenance and
overhauls and all repairs that are necessary to continue operating the
Equipment at normal commercial conditions in accordance with Section 9.1,
then the Lessee shall cause such restorative or repair work to be performed
on the Equipment as necessary to bring the Equipment into the condition that
the Equipment would have been in, had the Lessee complied with Section 9.1
throughout the Lease Term. All components of the Equipment shall have been
properly serviced, following the manufacturer's written operating and
servicing procedures, such that the Equipment is eligible for a
manufacturer's standard, full service maintenance contract without the Lessor
Trustee's incurring any expense to repair or rehabilitate the Equipment. If,
during the Lease Term, replacement of all parts and components has not been
made in accordance with Section 10.1 so that the loss in operating
efficiency, value, utility and remaining useful life of the Items of
Equipment is more than that expected from normal wear and tear or as
reflected in the initial Appraisal, then the Lessee, at its expense, shall
cause such repair and restorative work to be performed on the Items of
Equipment as is necessary to bring the Items of Equipment into the condition
that the Items of Equipment would have been in had such replacement of parts
and components been made. If, in the opinion of the Lessor Trustee, any Item
of Equipment fails to meet the standards set forth above, the Lessee agrees
to pay on demand all costs and expenses incurred in connection with repairing
such Item of Equipment and restoring it so as to meet such standards,
assembling and delivering such Item of Equipment. If the Lessee fails to
return any Item of Equipment as required hereunder, then, all of the Lessee's
obligations under this Lease (including, without limitation, the Lessee's
obligation to pay Rent for such Item of Equipment at the rental then
applicable under this Lease) shall continue in full force and effect until
such Item of Equipment shall have been returned in the condition required
hereunder.
(c) One hundred eighty (180) days prior to the Expiration Date, the
Lessee shall give the Lessor Trustee an inventory and listing of all the
Items of Equipment to include full description of such Items of Equipment,
including make, model, and serial number and any other identifying engine or
part classification and including the location of such Items of Equipment and
service records; also, from that notification date forward until the
Expiration Date the Lessee will be limited to 5,000,000 impressions per
printing press on all printing presses.
-16-
<PAGE>
MW 1997-1 Trust Equipment Lease
(d) Thirty (30) days after receipt of written notice from the Lessee of
its intent to return the Equipment or its election to exercise its option to
sell the Equipment pursuant to Section 18.3, the Lessee shall provide to the
Lessor Trustee the following documents in English: (i) one set per Item of
Equipment (or group of related Items of Equipment) of installation
instructions/manuals, service manuals, and operating manuals relating to such
Items of Equipment (including replacements and/or additions thereto, such
that all documentation is completely up to date) and (ii) one set per Item of
Equipment (or group of related Items of Equipment) of documents, detailing
equipment configuration, operating requirements and maintenance records of
such Item of Equipment, including, without limitation, all books, operating
data logs, inspection and maintenance logs, tools and spare parts and
modification and overhaul records which shall be kept with accurate records
of all maintenance (including without limitation, lubrication service, parts
removal/replacement, inspections etc.) and shall indicate the dates and times
of service and be signed by the appropriate authority.
(e) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall provide that all Items of Equipment are at half-time condition
between scheduled significant maintenance events and that half life remains
on every and all life limited or time cycle parts and components and will be
in such condition that such Items of Equipment may be immediately installed
and placed into use in an operating environment for a minimum of twelve
months of similar use to that under which they were originally designed and
used during the original and subsequent lease terms.
(f) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall properly remove all installed markings which are removable
without damage to the Items of Equipment and not necessary for the operation,
maintenance or repair of the Items.
(g) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall ensure all Items of Equipment shall have been repaired and
anything that falls outside the manufacturer specified operating limits of
the Item of Equipment and conform to all Environmental Protection Agency
regulations and Requirements of Laws and that all certificates are current or
require compliance within the next twelve months from the date of return and
have been complied with and that all Parts are manufactured to the approved
maintenance program and accepted industry standards for their type and use.
The Lessee will pay all recertification fees which are required.
(h) Upon sale of the Items of Equipment to a third party or return to
the Lessor Trustee, the Lessee shall provide transportation and assume all
costs to send to location(s) of new owner(s) and if required, store the Items
of Equipment for a period of up to 365 days at the Lessee's expense. During
the storage period, the Lessee will pay for all insurance coverages and
periodic testing as required.
-17-
<PAGE>
MW 1997-1 Trust Equipment Lease
(i) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall cause all Liens (other than Lessor's Liens) on the Items of
Equipment to be extinguished.
(j) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall cause there to be no subleases of the Items of Equipment.
(k) The Lessee shall ensure that any Equipment or Parts in storage
prior to the return be in a storage configuration, including preparation for
storage, in accordance to the manufacturer's direction, Environmental
Protection Agency requirements and other Requirements of Law and that no
storage environment has been incurred which will cause the value to diminish.
(l) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall ensure all Items of Equipment are free from contamination and
corrosion and have no untreated or uncorrected corrosion.
(m) Upon the expiration or earlier termination of the Lease Term, the
Lessee shall re-paint and clean all Items of Equipment to restore to an
as-new appearance.
(n) With respect to each Item of Equipment, the Lessee shall ensure
that, (i) within six (6) months prior to the expiration or earlier
termination of the Lease Term, the drive side (gear side) of each Item of
Equipment shall have been inspected and serviced to verify the existence of
undue wear, (ii) within six (6) months prior to the expiration or earlier
termination of the Lease Term, the sequence startup shall have been checked
and serviced to verify that the starting controller is working properly,
(iii) within twelve (12) months prior to the expiration or earlier
termination of the Lease Term, the rollers shall have been removed, serviced
and resurfaced, (iv) within one (1) month prior to the expiration or earlier
termination of the Lease Term, the blankets shall have been changed, and (v)
at least once every twelve (12) months each printing unit shall be broken
down, serviced and its oil changed.
(o) In addition to all other rights of the Lessor Trustee under the
Lease, the Lessor Trustee shall have the right to attempt to resell or
auction the Equipment from the Lessee's facility with the Lessee's full
cooperation and assistance, for a period of one hundred eighty (180) days
from the end of the Lease Term. The Lessee agrees to pay the reasonable
costs and expenses of such sale or auction, and agrees that the Equipment
shall remain capable of operation during this period. The Lessee shall
provide adequate electrical power, lighting, heat, water and compressed air
sufficient to allow for normal maintenance and for demonstrations of the
Equipment to any potential buyer.
-18-
<PAGE>
MW 1997-1 Trust Equipment Lease
If the Lessor Trustee shall, pursuant to this Lease or any other
Operative Agreement, rightfully demand possession of the Items of Equipment
and cessation of the Lessee's rights in such Items of Equipment pursuant to
this Lease, the Lessee, at its expense, shall forthwith comply with this
Section 9.4 with respect to all Items of Equipment, and deliver exclusive
possession of such Items of Equipment to the Lessor Trustee, subject to the
Lessee's obligations under Sections 9 and 10.
SECTION 10. MODIFICATIONS, ETC.
SECTION 10.1. REPLACEMENT OF PARTS. The Lessee, at its own cost and expense
and within a reasonable period of time, shall replace any part of any Item of
Equipment (herein for the purpose of this Section 10.1, a "PART") that
becomes worn out, lost, stolen, destroyed, or otherwise rendered permanently
unfit or unavailable for use (whether or not such replacement is covered by
the aforesaid maintenance agreement), with a replacement part of the same
manufacture, value, remaining useful life and utility as the replaced part
immediately preceding the replacement (assuming that such replaced part is in
the condition required by this Lease). Such replacement part shall be free
and clear of all Liens. Notwithstanding the foregoing, this paragraph shall
not apply to any Casualty with respect to any Item of Equipment.
Title to any Parts at any time removed from any Item of Equipment
continue to be held by the Lessor Trustee, no matter where such Parts are
located, until such time as such Parts shall be replaced by Parts which have
been incorporated or installed in or attached to such Item of Equipment and
which meet the requirements for replacement Parts specified above.
Immediately upon any such replacement Part becoming incorporated or installed
in or attached to any Item of Equipment as above provided, without further
act, title to the removed Part shall thereupon vest in the Lessee or such
person as shall be designated by the Lessee, free and clear of all rights of
the Lessor Trustee.
SECTION 10.2. REQUIRED ALTERATIONS. The Lessee, at its sole cost and
expense, shall, with reasonable promptness, make such alterations,
modifications and additions (herein for the purpose of this Section 10
collectively called "ALTERATIONS") to each Item of Equipment as may be
required from time to time to meet any Requirements of Law or of any Federal,
state or local governmental authority having jurisdiction.
SECTION 10.3. OPTIONAL ALTERATIONS. The Lessee at its own expense may from
time to time make such Alterations to any Item of Equipment as the Lessee may
deem desirable in the proper conduct of its business and which are not
inconsistent with the continuing operation of such Item of Equipment in
accordance with its original functional purpose; PROVIDED, that any such
Alteration made by the Lessee pursuant to this paragraph shall not diminish
the value or utility of any Item of Equipment to the Lessor Trustee below the
value and utility thereof to the Lessor
-19-
<PAGE>
MW 1997-1 Trust Equipment Lease
Trustee immediately prior to such Alteration. At the Lessor Trustee's
request, the Lessee will remove any readily removable Alterations prior to
the end of the Lease Term at the Lessee's sole cost and expense.
SECTION 10.4. TITLE TO PARTS. (a) Title to all Parts (including
Alterations) incorporated or installed in or attached to any Item of
Equipment shall without further act vest in the Lessor Trustee and shall be
deemed to constitute a part of such Item of Equipment and be subject to this
Lease in the following cases:
(i) such Part is in replacement of or in substitution for, and not in
addition to, any Part constituting a part of such Item of Equipment at the
time of the acceptance thereof hereunder or any such original part;
(ii) such Part is required to be incorporated or installed in or
attached to the Equipment pursuant to the terms of Section 9.1, 10.1 or
10.2; or
(iii) such Part cannot be readily removed from such Item of
Equipment without materially damaging such Item of Equipment or diminishing
or impairing the value or utility of such Item of Equipment.
(b) Any other Part that is not within the categories set forth in
clauses (i), (ii) or (iii) above, and that is not removed from any Item of
Equipment by the Lessee prior to the termination of this Lease as to such
Item of Equipment shall become the property of the Lessor Trustee.
SECTION 11. WARRANTY OF TITLE
SECTION 11.1. WARRANTY OF TITLE. (a) The Lessee agrees that except as
otherwise provided herein and subject to the terms of Section 12 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's Lien), defect, attachment, levy, title
retention agreement or claim upon the Equipment or any Lien, attachment, levy
or claim with respect to the Rent or with respect to any amounts held by the
Lessor Trustee or any Certificate Holder pursuant to the Operative
Agreements, other than Permitted Liens.
(b) Nothing contained in this Lease shall be construed as constituting
the consent or request of the Lessor Trustee or any Certificate Holder,
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 alteration, addition, repair or
demolition of or to the Equipment or any part thereof. NOTICE IS HEREBY
GIVEN THAT NEITHER THE LESSOR
-20-
<PAGE>
MW 1997-1 Trust Equipment Lease
TRUSTEE NOR ANY CERTIFICATE HOLDER 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 TRUSTEE, OR
ANY CERTIFICATE HOLDER IN AND TO THE EQUIPMENT.
SECTION 12. PERMITTED CONTESTS
SECTION 12.1. PERMITTED CONTESTS IN RESPECT OF APPLICABLE LAW. If, to the
extent and for so long as, a test, challenge, appeal or proceeding for review of
any Applicable Law relating to the Equipment shall be prosecuted diligently and
in good faith in appropriate proceedings by the Lessee, the Lessee shall not be
required to comply with such Applicable Law but only if and so long as any such
test, challenge, appeal or proceeding shall not, in the reasonable opinion of
the Lessor Trustee, involve (a) any risk of criminal liability being imposed on
the Lessor Trustee or any Certificate Holder or (b) any risk of (i) foreclosure,
forfeiture or loss of any Item of the Equipment, or any material part thereof,
or (ii) the nonpayment of Rent or (c) any substantial risk of (i) the sale of,
or the creation of, any Lien (other than a Permitted Lien) on any part of the
Equipment, (ii) civil liability being imposed on the Lessor Trustee, any
Certificate Holder, or the Equipment, or (iii) enjoinment of, or interference
with, the use, possession or disposition of the Equipment in any material
respect.
Neither the Lessor Trustee nor any Certificate Holder will 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
such party; and in that event such party will join in the proceedings or permit
them or any part thereof to be brought in its name if and so long as the Lessee
pays all related expenses and indemnifies such party with respect to such
proceedings.
SECTION 13. INSURANCE
SECTION 13.1. REQUIRED INSURANCE COVERAGES AND LIMITS. The Lessee agrees that
it will at its own cost and expense at all times during the Lease Term:
(a) keep each Item of Equipment insured against all risks of physical
loss or damage and against all such other risks as are insured against by
the Lessee with respect to property of a similar character owned or leased
by the Lessee on terms and in amounts that are no less favorable than
insurance covering other similar properties owned by the Lessee and that
are in accordance with normal industry practices, PROVIDED that such
insurance shall not be less than the Stipulated Loss Value of such Item of
Equipment as of the next preceding Scheduled Payment Date, and
-21-
<PAGE>
MW 1997-1 Trust Equipment Lease
(b) maintain comprehensive general public liability insurance with
respect to the Equipment including liability coverage for products
liability and contractual liability, which coverage shall be against damage
because of bodily injury, including death, or damage to property of others,
such insurance to be on terms and in amounts that are no less favorable
than insurance maintained by the Lessee with respect to similar properties
that it owns and that is in accordance with normal industry practice,
PROVIDED that such insurance shall not be less than $1,000,000 per
occurrence, $20,000,000 in the aggregate.
All insurance policies required hereunder shall (1) require 30 days prior
written notice of cancellation or material change in coverage to the Lessor
Trustee; (2) name the Lessor Trustee and the Certificate Holders as
additional insureds and, under the property insurance policies, and name the
Lessor Trustee as sole loss payee; (3) be considered primary insurance
without any right of contribution from other policies held by the Lessor
Trustee or the Certificate Holders; (4) waive any right of subrogation
against the Lessor Trustee and the Certificate Holders; (5) waive the right
of such insurers to any set-off, counterclaim or other deduction, whether by
attachment or otherwise, in respect of any liability of the Lessor Trustee
and the Certificate Holders; (6) specify that the Lessor Trustee and the
Certificate Holders shall not be liable for any premiums or deductibles with
respect to such insurance covered thereby; (7) be in full force and effect
throughout any geographical areas in which any Item of Equipment is located;
and (8) contain breach of warranty provisions providing that, in respect of
the interests of the Lessor Trustee and the Certificate Holders in such
policies, the insurance shall not be invalidated by any action or inaction of
any Person (other than the Lessor Trustee or the Certificate Holders, as the
case may be) and shall insure the Lessor Trustee and the Certificate Holders
regardless of any breach or violation of any warranty, declaration or
condition contained in such policies by any Person (other than the Lessor
Trustee and the Certificate Holders).
The Lessee agrees to effect all insurance provided for in this Section
13 with good and responsible insurance companies that are financially sound
and solvent and otherwise reasonably appropriate considering the amount and
type of insurance being provided by such companies. No such policy shall
contain a provision (i) under which the Lessee is a coinsurer, or (ii)
relieving the insurer thereunder of liability for any loss by reason of the
existence of other policies of insurance covering the Equipment against the
peril involved, whether collectible or not, or by reason of the breach or
violation by the Lessee of any warranties, declarations or conditions
contained in such policies. Any such insurance may be carried under blanket
policies maintained by the Lessee so long as such policies otherwise comply
with the provisions of this Section 13.1. If general public liability
insurance shall be carried under any blanket policy which is subject to
aggregate annual claim limitations, the Lessee shall keep the Lessor Trustee
advised from time to time of the amount of any such limitations and the
amounts of claims which reduce the available policy limits.
-22-
<PAGE>
MW 1997-1 Trust Equipment Lease
SECTION 13.2. ADJUSTMENT AND PAYMENT OF LOSSES. The loss, if any, under any
casualty insurance required to be carried by Section 13.1(a) shall be
adjusted with the insurance companies by the Lessee, or otherwise collected,
including the filing of proceedings deemed advisable by the Lessee, subject
to the approval of the Lessor Trustee if the loss exceeds $1,000,000. The
loss so adjusted shall be paid to the Lessor Trustee. All such policies
shall provide that the loss, if any, under such insurance shall be adjusted
and paid as provided in this Lease. Losses covered by liability insurance
shall be adjusted by and paid to the Person suffering such loss.
SECTION 13.3. EVIDENCE OF INSURANCE. On or prior to the Closing Date with
respect to each Item of Equipment, and thereafter not less than 15 days prior
to the expiration dates of the expiring policies, the Lessee shall deliver to
the Lessor Trustee and the Certificate Holders certificates of insurance for
the insurance maintained pursuant to this Section 13 together with a report
from the Lessee's insurance broker certifying that such insurance complies
with the terms hereof. Each such certificate or other evidence of insurance
shall identify the insurance carrier, the type of insurance, the coverage
limits, annual aggregate limits, if any, and the policy term.
SECTION 13.4. APPLICATION OF INSURANCE PROCEEDS. All insurance proceeds
from policies required to be maintained hereunder received by or payable to
the Lessor Trustee on account of any damage to or destruction of any Item of
Equipment or any part thereof (less the actual costs, fees and expenses
incurred in the collection thereof) shall be applied or dealt with as follows:
(i) All such proceeds actually received on account of any such damage
or destruction other than a Casualty with respect to an Item of Equipment
shall be paid over to the Lessee or as it may direct from time to time as
restoration, repair and replacement ("RESTORATION") of such Item of
Equipment progress to pay (or reimburse the Lessee for) the cost of
Restoration, if the amount of such proceeds received by the Lessor Trustee,
together with such additional amounts, if any, theretofore expended by the
Lessee out of its own funds for Restoration are sufficient to pay the
estimated cost of completing Restoration, but only upon a written
application of the Lessee accompanied by an Officer's Certificate of the
Lessee showing in reasonable detail the nature of Restoration, that such
Restoration is intended to restore such Item of Equipment to its value and
utility prior to such damage or destruction (assuming that such Item of
Equipment was of the value and utility and in the condition and repair
required by the terms of this Lease), the actual cash expenditures made to
date for Restoration, the estimated cost to complete Restoration and
stating that no Default or Event of Default has occurred and is continuing
under this Lease. Upon the written request of the Lessee, accompanied by
evidence satisfactory to the Lessor Trustee that Restoration has been
completed and the costs thereof paid in full, that such Item of Equipment
has been restored to its value and utility prior to such damage or
destruction (assuming that such Item of Equipment was of the value and
utility and in the condition and repair required by
-23-
<PAGE>
MW 1997-1 Trust Equipment Lease
the terms of this Lease) and that there are no mechanics' or similar liens
for labor or materials supplied in connection therewith, the balance, if
any, of such proceeds shall be paid over or assigned to the Lessee or as
it may direct.
(ii) All such proceeds received or payable on account of a Casualty
with respect to an Item of Equipment shall be paid over or assigned to the
Lessee or as it may direct upon termination of this Lease with respect to
such Item of Equipment and, if the Lessee elects to perform the option set
forth in Section 14.1(a), receipt by the Lessor Trustee of the Stipulated
Loss Value of such Item of Equipment and all other payments due hereunder.
SECTION 13.5. DEDUCTIBLES AND SELF-INSURANCE. So long as no Event of
Default shall have occurred and be continuing, the Lessee may from time to
time self-insure or maintain deductible provisions with respect to the risks
required to be insured against pursuant to clauses (a) and (b) of Section
13.1, in such reasonable amounts as are then applicable to similar equipment
owned or leased by the Lessee but in no case shall such self-insurance and
deductibles with respect to each of clause (a) and clause (b) exceed the
first $100,000 of the coverage specified therein.
SECTION 13.6. INSURANCE FOR OWN ACCOUNT. Nothing in this Section 13 shall
limit or prohibit the Lessor Trustee, any Certificate Holder or the Lessee
from obtaining additional insurance for its own account and any proceeds
payable thereunder shall be payable in accordance with the insurance policy
relating thereto, PROVIDED that no such insurance may be obtained which would
limit or otherwise adversely affect the coverage of any insurance required to
be maintained pursuant to this Section 13.
SECTION 14. CASUALTY OCCURRENCE
SECTION 14.1. CASUALTY OCCURRENCE. Upon the occurrence of a Casualty with
respect to an Item of Equipment during the Lease Term, the Lessee shall
forthwith (and in any event within 10 days after such occurrence) give the
Lessor Trustee written notice of such Casualty and within 20 days after such
occurrence shall give the Lessor Trustee written notice of its election,
subject to the terms hereof, to perform one of the following options (it
being agreed that if the Lessee shall not have given the Lessor Trustee
notice of such election within such time, the Lessee shall be deemed to have
elected to perform the option set forth in the following clause (a)),
PROVIDED that the Lessee shall not have the right to select the option set
forth in clause (b) if a Default or Event of Default shall have occurred and
be continuing:
(a) Except as otherwise provided in the immediately succeeding
sentence, on the next Scheduled Payment Date which is at least 30 days
after the occurrence of such Casualty (the "LOSS PAYMENT DATE"), during
which time the Lessee's obligation to pay
-24-
<PAGE>
MW 1997-1 Trust Equipment Lease
Rent shall continue, the Lessee shall pay to the Lessor Trustee in
immediately available funds an amount equal to the Stipulated Loss
Value of such Item of Equipment as of such Loss Payment Date together
with any Rent due and payable on or prior to the Loss Payment Date with
respect to such Item of Equipment. If a Loss Payment Date shall fall
on a day other than a Business Day, then the amount otherwise due
hereunder on such day shall be remitted on or before the Business Day
next preceding the Loss Payment Date.
(b) Within 30 days after the date of occurrence of such Event of
Loss, during which time the Lessee's obligation to pay Rent shall continue,
the Lessee shall convey or cause to be conveyed to the Lessor Trustee in
accordance with Section 14.2 hereof, to be leased by the Lessor Trustee to
the Lessee hereunder in replacement of such Item of Equipment, title to
Replacement Equipment, such Replacement Equipment to be free and clear of
all Liens other than Permitted Liens and to have a value, utility and
remaining economic useful life at least equal to, and to be in as good
operating condition as, the Item of Equipment so replaced (assuming such
Item of Equipment was of the value, remaining economic useful life and
utility and in the condition and repair required by the terms of this Lease
and had suffered no Casualty). The Lessee shall pay on the next Scheduled
Payment Date an amount computed in the manner specified in the first
sentence of clause (a) of this Section 14.1 if no such replacement occurs
by the end of the 30 day period referred to above.
Notwithstanding such Casualty, the Lessee's obligation to pay Rent hereunder
due and payable as to such Item of Equipment on or prior to such Loss Payment
Date shall continue.
In the event of a payment in full of the Stipulated Loss Value for an
Item of Equipment and other Rent payable on or prior to the Loss Payment Date
all as provided for in the immediately preceding clause (a), (x) this Lease
with respect to such Item of Equipment and the obligations of the Lessee with
respect to such Item of Equipment to pay Periodic Rent and Supplemental Rent
(except for Supplemental Rent obligations surviving pursuant to Section 6 of
the Participation Agreement or which have otherwise accrued but not been paid
as of the date of such payment) shall terminate; (y) any remaining insurance
proceeds (other than proceeds of policies maintained by the Lessor Trustee
for its own account), including any investment interest thereon, shall be
promptly paid over to the Lessee; and (z) the Lessor Trustee shall convey to
the Lessee, at the Lessee's cost and expense, all of the Lessor Trustee's
right, title and interest, as-is, where-is, without recourse or warranty,
express or implied except for a warranty against the Lessor's Liens in and to
such Item of Equipment, including all claims for damage to such Item of
Equipment against third persons arising from the subject Casualty (unless any
insurance carrier requires that such claims be assigned to it).
-25-
<PAGE>
MW 1997-1 Trust Equipment Lease
SECTION 14.2. CONVEYANCE OF REPLACEMENT EQUIPMENT. Prior to or at the time
of any conveyance of any Replacement Equipment pursuant to Section 14.1(b) or
Section 15.1, the Lessee, at its own expense, will furnish, or cause to be
furnished, the Lessor Trustee with the following documents which shall have
been duly authorized, executed and delivered by the respective parties
thereto and shall be in full force and effect on the date of such conveyance:
(i) a full warranty bill of sale, in form and substance satisfactory
to the Lessor Trustee, covering such Replacement Equipment and executed by
the owner thereof in favor of the Lessor Trustee;
(ii) a Lease Supplement covering the Replacement Equipment;
(iii) such evidence of compliance with the insurance provisions of
Section 13 with respect to such Replacement Equipment, as the Lessor
Trustee may reasonably request, including an independent insurance broker's
report (stating the opinion of such insurance broker that such insurance
complies with the terms of the Lease) with certificates of insurance;
(iv) an Officer's Certificate of the Lessee certifying that such
Replacement Equipment complies with this Section 14.2, that, upon such
conveyance, the Lessor Trustee will acquire good title to such Replacement
Equipment, free and clear of all Liens other than Permitted Liens, that
such Replacement Equipment will be leased hereunder to the same extent as
the Item of Equipment replaced thereby or the substituted Item of
Equipment, as the case may be, and that, upon consummation of such
replacement or substitution, no Default or Event of Default will exist
hereunder;
(v) an opinion of the Lessee's counsel (and such other opinions or
evidence of title as the Lessor Trustee or its counsel may reasonably
request), to the effect that, upon such conveyance, the Lessor Trustee will
acquire good title to such Replacement Equipment, free and clear of all
Liens other than Permitted Liens, and that such Replacement Equipment will
be leased hereunder to the same extent as the Item of Equipment replaced
thereby or the substituted Item of Equipment, as the case may be;
(vi) copies of filed Uniform Commercial Code financing statements
(including, without limitation, fixture filings) with respect to such
Replacement Equipment, which financing statements shall reflect the Lessee
as Debtor and the Lessor Trustee as Secured Party and shall have been filed
on or before the date of conveyance in the jurisdictions in which such
Replacement Equipment is located and in which the Lessee is located;
-26-
<PAGE>
MW 1997-1 Trust Equipment Lease
(vii) Landlord Waivers, if necessary, with respect to the Site or
Sites on which the Replacement Equipment is located; and
(viii) such documents, opinions and evidence with respect to the
Lessee as the Lessor Trustee, or its counsel, may reasonably request in
order to establish the consummation of the transactions contemplated by
this Section 14.2, the taking of all corporate proceedings in connection
with and compliance with the conditions set forth in this Section 14.2, in
each case in form and substance satisfactory to the Lessor Trustee.
The Lessee further agrees to take such further action as the Lessor Trustee
may reasonably request with respect to such Replacement Equipment including,
without limitation, any actions required to establish, perfect and protect the
interest of Lessor Trustee in such Replacement Equipment (including, without
limitation, the filing of additional Uniform Commercial Code financing
statements).
Upon full compliance by the Lessee with the terms of this Section 14.2, the
Lessor Trustee shall convey to the Lessee, at the Lessee's cost and expense, all
of the Lessor Trustee's right, title and interest, as-is, where-is, without
recourse or warranty, express or implied except for warranty against Lessor's
Liens, in and to such Item of Equipment with respect to which the subject
Casualty occurred, including all claims for damage to such Item of Equipment
against third persons arising from any Casualty (unless any insurance carrier
requires that such claims be assigned to it), or the substituted Item of
Equipment, as the case may be. No Casualty or substitution with respect to an
Item of Equipment under the circumstances contemplated by the terms of this
Section 14.2 shall result in any reduction in Rent or the Lessee's obligation to
pay Rent hereunder.
SECTION 14.3. APPLICATION OF PAYMENTS. Any payments on account of a Casualty
(other than insurance proceeds or other payments the application of which is
provided for in this Section 14 or elsewhere in this Lease, as the case may be)
received at any time by the Lessor Trustee or by the Lessee from any Person will
be applied as follows:
(A) if such payments are received with respect to an Item of
Equipment and the Lessee shall have elected (or be deemed to have elected)
the option set forth in Section 14.1(a), so much of such payments as shall
not exceed the Stipulated Loss Value required to be paid by the Lessee
pursuant to said Section 14.1(a) shall be applied in reduction of the
Lessee's obligation to pay such Stipulated Loss Value to the extent not
already paid by the Lessee, and, to the extent already paid by the Lessee
and if no Default or Event of Default exists, shall be applied to reimburse
the Lessee for its payment of such Stipulated Loss Value and the balance,
if any, of such payment remaining thereafter shall be paid to the Lessee;
and
-27-
<PAGE>
MW 1997-1 Trust Equipment Lease
(B) if such payments are received with respect to an Item of
Equipment and the Lessee shall have elected the option set forth in
Section 14.1(b), such payments shall be paid over to, or retained by, the
Lessor Trustee for payment to the Lessee at such time as the Lessee shall
have fully performed the terms of Section 14.2 with respect to the Casualty
for which such payments are made;
SECTION 14.4. CERTAIN GOVERNMENT REQUISITIONS. In the event that during the
Lease Term the use of any Item of Equipment is requisitioned or taken by any
Governmental Authority under the power of eminent domain or otherwise under
circumstances which do not constitute a Casualty in respect thereof, the
Lessee's duty to pay Periodic Rent and Supplemental Rent for such Item of
Equipment shall continue for the duration of such requisition or taking.
Unless a Default or Event of Default shall have occurred and be continuing,
the Lessee shall be entitled to receive and to retain for its own account all
sums payable for any such period by such Governmental Authority as
compensation for such requisition or taking of possession. If a Default or
Event of Default shall have occurred and be continuing, the Lessee shall be
deemed to the extent of any such compensation so received to be the agent of
the Lessor Trustee in collecting and receiving the same and shall segregate
and hold in trust and promptly remit any such compensation so received to the
Lessor Trustee for crediting against any sums then due and owing hereunder to
the Lessor Trustee, its successors and assigns.
SECTION 14.5. APPLICATION OF PAYMENTS FROM GOVERNMENTAL AUTHORITIES FOR
REQUISITION OF TITLE. The Lessor Trustee shall receive the entire amount
payable by any governmental authority or instrumentality or agency thereof
with respect to a Casualty resulting from the condemnation, confiscation or
seizure of, or requisition of title to or use of any Item of Equipment. Such
amount, after deducting all expenses, including attorneys' fees, incurred by
the Lessor Trustee in or as a result of such condemnation proceedings (the
"NET CONDEMNATION AWARD") shall be applied promptly as follows: so much of
such payments as shall not exceed the Stipulated Loss Value of such Item of
Equipment required to be paid by the Lessee pursuant to Section 14.1(a) shall
be applied in reduction of the Lessee's obligation to pay such Stipulated
Loss Value to the extent not already paid by the Lessee, and, to the extent
already paid by the Lessee and if no Default or Event of Default exists,
shall be applied to reimburse the Lessee for its payment of such Stipulated
Loss Value. The balance, if any, of such payments shall be paid over to the
Lessee.
SECTION 14.6. APPLICATION OF PAYMENTS DURING EXISTENCE OF DEFAULT. Any
amount referred to in this Section 14 or Section 13 hereof which is payable
to the Lessee shall not be paid to the Lessee, or, if it has been previously
paid directly to the Lessee, shall be held in trust by the Lessee and shall
be promptly paid over to the Lessor Trustee, if at the time of such payment a
Default or Event of Default shall have occurred and be continuing, and held
by the Lessor Trustee as security for the obligations of the Lessee under
this Lease and applied against the
-28-
<PAGE>
MW 1997-1 Trust Equipment Lease
Lessee's obligations hereunder as and when due. At such time as there shall
not be continuing any such Default or Event of Default such amount, to the
extent not theretofore so applied to the Lessee's obligations hereunder,
shall be paid over to the Lessee.
SECTION 15. SUBSTITUTION OF EQUIPMENT
SECTION 15.1. SUBSTITUTION OF EQUIPMENT. Subject to each of the provisions
of this Section 15.1, so long as no Default or Event of Default shall have
occurred and be continuing, on any Scheduled Payment Date, the Lessee may, at
its option, upon at least 30 days' advance written notice to the Lessor
Trustee, convey or cause to be conveyed to Lessor Trustee in accordance with
Section 14.2 hereof, to be leased by the Lessor Trustee to Lessee hereunder
in substitution for any Item of Equipment, title to Replacement Equipment,
such Replacement Equipment to be free and clear of all Liens other than
Permitted Liens, to have a value, utility and remaining economic useful life
at least equal to, and to be in as good operating condition as, the
substituted Item of Equipment (assuming such Item of Equipment was of the
value, remaining economic useful life and utility and in the condition and
repair required by the terms of this Lease and had suffered no Casualty).
SECTION 16. EVENTS OF DEFAULT
SECTION 16.1. 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 an
"EVENT OF DEFAULT":
(a) the Lessee shall fail to make payment of any Periodic Rent upon
the same becoming due and payable and such failure shall continue
unremedied for a period of five days; or the Lessee shall fail to make
payment upon the same becoming due and payable of any amounts due pursuant
to Section 18.4 hereof, the Lease Balance, the Purchase Price or the
Stipulated Loss Value, including, without limitation, amounts due pursuant
to Section 18.1 hereof; or
(b) the Lessee shall fail to make payment of any Supplemental Rent
(other than as specified in clause (a) above) due and payable within five
(5) days after receipt of notice thereof; or
(c) the Lessee shall fail to maintain insurance as required by
Section 13 of this Lease; or
-29-
<PAGE>
MW 1997-1 Trust Equipment Lease
(d) the Lessee shall fail to observe or perform any term, covenant or
condition applicable to it under Sections 5.13, 5.14 or 5.15 of the
Guaranty Agreement; or
(e) the Lessee or any Guarantor shall fail to observe or perform any
term, covenant or condition applicable to it under any Operative Agreement
to which it is party (other than those described in Section 16.1(a), (b),
(c) or (d) hereof) and, in each such case, such failure shall have
continued unremedied for thirty (30) days after written notice thereof has
been given to the Lessee or such Guarantor by the Lessor Trustee or any
Certificate Holder; or
(f) any representation or warranty made or deemed made by the Lessee
or any Guarantor in any Operative Agreement to which it is a party or which
is contained in any certificate, document or financial or other statement
furnished at any time under or in connection with any Operative Agreement
shall prove to have been incorrect, false or misleading in any material
respect on or as of the date made or deemed made; or
(g) (i) any Guarantor or the Lessee shall commence any case,
proceeding or other action (A) under any existing or future law of any
jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it or
its debts, or (B) seeking appointment of a receiver, trustee, custodian,
conservator or other similar official for it or for all or any substantial
part of its assets, or any Guarantor or the Lessee shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Guarantor or the Lessee any case, proceeding or other
action of a nature referred to in clause (i) above which (A) results in the
entry of an order for relief or any such adjudication or appointment or
(B) remains undismissed, undischarged or unbonded for a period of sixty
(60) days; or (iii) there shall be commenced against any Guarantor or the
Lessee any case, proceeding or other action seeking issuance of a warrant
of attachment, execution, restraint or similar process against all or any
substantial part of its assets which results in the entry of an order for
any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof; or
(iv) any Guarantor or the Lessee shall take any action in furtherance of,
or indicating its consent to, approval of, or acquiescence in, any of the
acts set forth in clauses (i), (ii) or (iii) above; or (v) any Guarantor or
the Lessee shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
-30-
<PAGE>
MW 1997-1 Trust Equipment Lease
(h) any Operative Agreement or any Lien granted under any Operative
Agreement shall, in whole or in part, terminate, cease to be effective
against, or (other than as expressly provided therein) cease to be the
respective legal, valid, binding and enforceable obligation of either the
Lessee or any Guarantor, as the case may be; or
(i) the Lessee or any Guarantor shall directly or indirectly contest
the effectiveness, validity, binding nature or enforceability of any
Operative Agreement or any Lien granted under any Operative Agreement; or
the Lessee or any Guarantor shall repudiate, or purport to discontinue or
terminate, the Guaranty Agreement, or the Guaranty Agreement shall cease to
be a legal, valid and binding obligation of the Lessee or any Guarantor or
cease to be in full force and effect; or
(j) (i) any Guarantor or the Lessee shall fail to make any payment in
respect of any of its obligations for Debt when due or, if later, within
any applicable grace period, or (ii) any event or condition shall occur
which results in the default after the expiration of any applicable grace
period under, or requires the early redemption or prepayment of, any of any
Guarantor's or the Lessee's obligations for Debt or any event or condition
shall occur and be continuing which enables (or, with the giving of notice
or lapse of time or both, would enable) the holders of any of any
Guarantor's or the Lessee's obligations under obligations for Debt of any
Guarantor or the Lessee or any Person acting on such holders' behalf to
accelerate the maturity, or require the early redemption or prepayment, of
any of any Guarantor's or the Lessee's obligations for Debt; or
(k) (i) any member of the ERISA Group shall fail to pay when due an
amount or amounts aggregating in excess of $1,000,000 which it shall have
become liable to pay under Title IV of ERISA; or (ii) notice of intent to
terminate a Material Plan shall be filed under Title IV of ERISA by any
member of the ERISA Group, any plan administrator or any combination of the
foregoing; or (iii) any member of the ERISA Group has been notified in
writing that the PBGC has instituted proceedings under Title IV of ERISA to
terminate, to impose liability (other than for premiums under Section 4007
of ERISA) in respect of, or to cause a trustee to be appointed to
administer any Material Plan; or (iv) a condition shall exist by reason of
which the PBGC would be entitled to obtain a decree adjudicating that any
Material Plan must be terminated; or (v) any of the events described in
clause (iii) above shall occur with respect to any Other Plan or Other
Plans (other than a multiemployer plan within the meaning of
Section 4001(a)(3) of ERISA) (A) that have aggregate Unfunded Current
Liabilities in excess of $1,000,000 and (B) with respect to which either
(1) one or more members of the ERISA Group have engaged in a transaction or
transactions described in Section 4069 of ERISA or (2) one or more members
of the ERISA Group is a member of the "controlled group" under
Section 412(c)(11) of the Code or Section 4001(a)(14)
-31-
<PAGE>
MW 1997-1 Trust Equipment Lease
of ERISA; or (vi) there shall occur a complete or partial withdrawal
from, or a default, within the meaning of Section 4219(c)(5) of ERISA,
with respect to, one or more (A) multiemployer plans, within the
meaning of Section 4001(a)(3) of ERISA (which plans are not
Multiemployer Plans), with respect to which a member of the ERISA Group
shall have engaged, within the previous five plan years, in a
transaction described in Section 4212(c) of ERISA, or (B) Multiemployer
Plans, which could reasonably be expected to result in the incurrence
by one or more members of the ERISA Group of a current payment
obligation in excess of $1,000,000; PROVIDED that no Event of Default
shall occur under clause (v) or (vi) if (A) the Unfunded Current
Liabilities of the Other Plans in respect of which events described in
clause (v) have occurred, together with the current payment obligations
that could reasonably be expected to result from complete or partial
withdrawals or defaults described in clause (vi), shall not exceed
$2,500,000 and (B) each member of the ERISA Group that could reasonably
be expected to be liable for such Unfunded Current Liabilities or
current payment obligations is diligently contesting, in good faith, by
appropriate proceedings, the imposition of such liabilities or
obligations; or
(l) (i) one or more judgments or orders for the payment, in the
aggregate, of money in excess of $1,000,000 shall be rendered against
any Guarantor or the Lessee and such judgments or orders shall continue
unsatisfied and unstayed for a period of 30 days or (ii) one or more
judgments or orders shall be rendered against any Guarantor or the
Lessee, which judgments or orders shall be stayed on condition that a
bond or collateral equal to or greater than, in the aggregate,
$1,000,000 be posted or provided, and such judgments or orders shall
not be overturned or lifted within a period of 10 days.
SECTION 16.2. REMEDIES. Upon the occurrence of any Event of Default and at
any time thereafter, the Lessor Trustee may, so long as such Event of Default
is continuing, do one or more of the following (and in such order) as the
Lessor Trustee in its sole discretion shall determine, without limiting any
other right or remedy the Lessor Trustee may have on account of such Event of
Default:
(a) The Lessor Trustee may (i) declare the entire outstanding
Lease Balance to be due and payable together with accrued unpaid Rent
and any other amounts payable under the Operative Agreements, and/or
(ii) make demand upon the Guarantors under the Guaranty Agreement;
(b) The Lessor Trustee may, by notice to the Lessee, rescind or
terminate this Lease as of the date specified in such notice; PROVIDED,
HOWEVER, (i) no reletting, reentry or taking of possession of the
Equipment (or any portion thereof) by the Lessor Trustee will be
construed as an election on the Lessor Trustee's part to terminate this
Lease
-32-
<PAGE>
MW 1997-1 Trust Equipment Lease
unless a written notice of such intention is given to the Lessee,
(ii) notwithstanding any reletting, reentry or taking of possession,
the Lessor Trustee may at any time thereafter elect to terminate this
Lease for a continuing Event of Default, and (iii) no act or thing done
by the Lessor Trustee 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 Lessor
Trustee;
(c) The Lessor Trustee may (i) demand that the Lessee, and the
Lessee shall upon the written demand of the Lessor Trustee, return the
Equipment promptly to the Lessor Trustee in the manner and condition
required by, and otherwise in accordance with all of the provisions of,
Sections 6 and 9 and Section 8.1(b) hereof as if the Equipment were
being returned at the end of the Lease Term, and neither the Lessor
Trustee nor any Certificate Holder shall 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 Lessor Trustee may have for possession of the
Equipment, and to the extent and in the manner permitted by Applicable
Law, enter upon the premises of the Lessee and any Site and take
immediate possession (to the exclusion of the Lessee) of the Equipment
or any part thereof and remove the Equipment, by summary proceedings or
otherwise, all without liability to the Lessor Trustee for or by reason
of such entry or taking of possession, whether for the restoration of
damage to property caused by such taking or otherwise and, in addition
to the other damages of the Lessor Trustee, the Lessee shall be
responsible for all costs and expenses incurred by the Lessor Trustee
and/or the Certificate Holders in connection with any reletting,
including, without limitation, reasonable brokers' fees and all costs
of any alterations or repairs made by any such party;
(d) The Lessor Trustee may, at its option, elect not to terminate
this Lease and continue to collect all Periodic Rent, Supplemental
Rent, and all other amounts due to the Lessor Trustee (together with
all costs of collection) and enforce the Lessee's obligations under
this Lease as and when the same become due, or are to be performed, and
at the option of the Lessor Trustee, upon any abandonment of the
Equipment by the Lessee or repossession of same by the Lessor Trustee,
the Lessor Trustee may, in its sole and absolute discretion, elect not
to terminate this Lease and may make the necessary repairs in order to
relet the 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 Lease) and at such rental or rentals and upon such
other terms and conditions as the Lessor Trustee in its reasonable
discretion may deem advisable; and upon each such reletting all rentals
actually received by the Lessor Trustee from such reletting shall be
applied to the Lessee's obligations hereunder and the other Operative
Agreements. If such rentals received from such reletting during any
period are less than the Rent with
-33-
<PAGE>
MW 1997-1 Trust Equipment Lease
respect to the Equipment to be paid during that period by the Lessee
hereunder, the Lessee shall pay any deficiency, as calculated by the
Lessor Trustee, to the Lessor Trustee on the next Scheduled Payment
Date;
(e) Unless the Equipment has been sold in its entirety, the
Lessor Trustee may, whether or not the Lessor Trustee shall have
exercised or shall thereafter at any time exercise any of its rights
under clause (c) or (d) of this Section 16.2 with respect to the
Equipment or any portion thereof, demand, by written notice to the
Lessee specifying a date not earlier than twenty (20) days after the
date of such notice, that the Lessee purchase, on the date specified in
such notice, the Equipment in accordance with the provisions of
Sections 18.1 and 19;
(f) The Lessor Trustee may sell the Equipment or any Item of
Equipment at public or private sale as the Lessor Trustee may
determine, free and clear of any rights of the Lessee, and without any
duty to account to the Lessee with respect to such sale or for the
proceeds thereof (PROVIDED that the application of the proceeds of any
such sale shall be subject to the final paragraph of this Section 16.2)
and the Lessee shall pay to the Lessor Trustee, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Periodic
Rent due for the Equipment or Item of Equipment so sold for any period
commencing after the date on which such sale occurs), the sum of (i)
all unpaid Periodic Rent payable for each Item of Equipment for all
periods preceding the Scheduled Payment Date coincident with or next
preceding the date of such sale, plus (ii) an amount equal to the
excess, if any, of (x) the Stipulated Loss Value of the Equipment or
Item of Equipment so sold, computed as of the Scheduled Payment Date
coincident with or next preceding the date of such sale, over (y) the
net proceeds of such sale, plus (iii) interest at the Overdue Rate on
the Stipulated Loss Value from the Scheduled Payment Date as of which
such Stipulated Loss Value is computed until the date of actual
payment, plus (iv) all unpaid Supplemental Rent due with respect to
each Item of Equipment so sold;
(g) The Lessor Trustee may exercise any other right or remedy
that may be available to it under Applicable Law, 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 Lessor Trustee's right to
collect any such damages for any subsequent period(s), or the Lessor
Trustee 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;
-34-
<PAGE>
MW 1997-1 Trust Equipment Lease
(h) The Lessor Trustee may retain and apply against the Lease
Balance all sums which the Lessor Trustee would, absent such Event of
Default, be required to pay to, or turn over to, the Lessee pursuant to
the terms of this Lease; or
(i) The Lessor Trustee, to the extent permitted by Applicable
Law, as a matter of right and with notice to the Lessee, shall have the
right to apply to any court having jurisdiction to appoint a receiver
or receivers of the Equipment, and the Lessee hereby irrevocably
consents to any such appointment. Any such receivers 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 Lessor Trustee in case of entry,
and shall continue as such and exercise such powers until the date of
confirmation of the sale of the Equipment unless such receivership is
sooner terminated.
The Lessor Trustee 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 Agreements 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 mortgage, security agreement,
pledge, lien, assignment or otherwise. Neither the acceptance of this
instrument nor its enforcement shall prejudice or in any manner affect the
Lessor Trustee's right to realize upon or enforce any other security now or
hereafter held by the Lessor Trustee, it being agreed that the Lessor Trustee
shall be entitled to enforce this instrument and any other security now or
hereafter held by the Lessor Trustee in such order and manner as the Lessor
Trustee may determine in its absolute discretion. No remedy herein conferred
upon or reserved to the Lessor Trustee 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 Agreements to the Lessor Trustee 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 Lessor Trustee.
If, pursuant to the exercise by the Lessor Trustee of its remedies
pursuant to this Section 16.2, the Lease Balance and all other amounts due
and owing from the Lessee under this Lease and the other Operative Agreements
have been paid in full, then the Lessor Trustee shall remit to the Lessee any
excess amounts received by the Lessor Trustee.
SECTION 16.3. WAIVER OF CERTAIN RIGHTS. (a) To the maximum extent permitted
by law, the Lessee hereby waives the benefit of any appraisement, valuation,
stay, extension, reinstatement and redemption laws now or hereafter in force
and all rights of marshalling in the event of any sale of the Equipment or
any interest therein, and (b) if this Lease shall be terminated pursuant to
-35-
<PAGE>
MW 1997-1 Trust Equipment Lease
Section 16.2, the Lessee waives, to the fullest extent permitted by law, (i)
any notice of entry on the premises of the Lessee or the institution of legal
proceedings to obtain possession; (ii) any right of redemption or
repossession; (iii) the benefit of any laws now or hereafter in force
exempting property from liability for rent or for debt or limiting the Lessor
Trustee with respect to the election of remedies; and (iv) any other rights
which might otherwise limit or modify any of the Lessor Trustee's rights or
remedies under this Section 16.
SECTION 17. LESSOR TRUSTEE'S RIGHT TO CURE
SECTION 17.1. THE LESSOR TRUSTEE'S RIGHT TO CURE THE LESSEE'S DEFAULTS. The
Lessor Trustee, without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) remedy any 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
Section 13, and may, to the fullest extent permitted by law, and
notwithstanding any right of quiet enjoyment in favor of the Lessee, take
possession of the Equipment for such purpose and take all such action thereon
as may be necessary or appropriate therefor. No such possession shall be
deemed a termination of the Lease. All reasonable out-of-pocket costs and
expenses so incurred (including fees and expenses of counsel), together with
interest thereon at the Overdue Rate from the date on which such sums or
expenses are paid by the Lessor Trustee, shall be paid by the Lessee to the
Lessor Trustee as Supplemental Rent.
SECTION 18. OPTIONS TO RENEW, PURCHASE AND SELL
SECTION 18.1. PURCHASE OF THE EQUIPMENT. Unless the Lessee has exercised
either its option to renew this Lease pursuant to Section 18.2 or its option
to sell the Equipment pursuant to Section 18.3, the Lessee shall purchase on
the Expiration Date all, but not less than all, of the Equipment at the
Purchase Price. Payment of the Purchase Price shall be made on the
Expiration Date at the place of payment specified in Section 3.4 hereof in
immediately available funds and transfer of title to the Equipment shall be
in accordance with the procedures set forth in Section 19.
SECTION 18.2. OPTION TO RENEW. So long as no Default or Event of Default
shall have occurred and be continuing, the Lessee shall have the right to
renew this Lease as to all, but not less than all, of the Equipment for up to
four Renewal Terms, the first three of which shall be for twelve (12) months
each and the fourth shall be for ten (10) months and 29 days. The first
Renewal Term will commence at the expiration of the Basic Term of the
Equipment and each succeeding Renewal Term will commence at the expiration of
the next preceding Renewal Term. All of the provisions of this Lease shall
be applicable during each Renewal Term. Periodic Rent during each such
Renewal Term shall be payable monthly in arrears for each Item of Equipment
on each Scheduled Payment Date during such Renewal Term. The Lessee shall
give to the Lessor
-36-
<PAGE>
MW 1997-1 Trust Equipment Lease
Trustee written notice at least 180 days prior to the end of the Basic Term
or the then current Renewal Term, as the case may be, for such Equipment of
its election to exercise the renewal option provided for in this Section for
a Renewal Term commencing upon the expiration of such Basic Term or such
Renewal Term, as the case may be.
SECTION 18.3. OPTION TO SELL THE EQUIPMENT. (a) So long as no Default or
Event of Default has occurred and is continuing, the Lessee shall have the
right on the Expiration Date to arrange for the sale of all, but not less
than all the Equipment. The Lessee shall give to the Lessor Trustee written
notice at least 180 days prior to the Expiration Date of its election to
exercise its option to sell the Equipment provided for in the preceding
sentence as to such Equipment and, after delivery of such notice, the Lessee
shall have the obligation during the remainder of the Basic Term or Renewal
Term, as the case may be, to use its best efforts to obtain bona fide bids
for such Equipment from prospective purchasers who are financially capable of
purchasing all of the Equipment for cash on an as-is, where-is basis, without
recourse or warranty. No such purchaser shall be the Lessee, the Guarantor
or any Affiliate thereof. The Lessee will be responsible for hiring
qualified brokers and making the Equipment available for inspection by
prospective purchasers. The Lessee shall promptly upon request permit
inspection of the Equipment and any maintenance records relating to the
Equipment by the Lessor Trustee, the Certificate Holders and any potential
purchasers, and the Lessee shall comply with the requirements set forth in
Section 9.4 and otherwise do all things necessary to sell and deliver
possession of the Equipment to any purchaser. All such marketing of the
Equipment shall be at the Lessee's sole expense. The Lessor Trustee and the
Certificate Holders 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.
(b) All bids received by the Lessee prior to the end of the Basic Term
or Renewal Term, as the case may be, shall be immediately certified and
provided to the Lessor Trustee in writing, setting forth the amount of such
bid and the name and address of the Person submitting such bid. No later
than the Expiration Date, the Lessee shall deliver the Equipment to the
bidder, if any, who shall have submitted such highest bid, and the Lessor
Trustee shall simultaneously therewith sell all of its right, title and
interest, as-is, where-is, without recourse or warranty express or implied
except for a warranty against Lessor's Liens in and to such Equipment. The
total selling price realized from the sale of the Lessor Trustee's interest
in the Equipment in excess of the Purchase Price shall be paid over to the
Lessee as provided in Section 18.4.
(c) In connection with any such sale of the Equipment, the Lessee will
provide to the purchaser all customary "seller's" indemnities and
representations and warranties regarding title, absence of Liens (except
Lessor's Liens) and the condition of the Equipment. The Lessee shall have
obtained, at its cost and expense, all required governmental and regulatory
consents,
-37-
<PAGE>
MW 1997-1 Trust Equipment Lease
recertifications, licenses and approvals and shall have made all filings as
required by Applicable Law in order to carry out and complete the transfer of
the Equipment.
(d) 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 Trustee or the Lessee, including, without limitation, the cost of all
transfer taxes, the reasonable attorneys' fees of the Lessor Trustee, the
Lessee's attorneys' fees, Lessor Trustee appraiser fees, commissions, filing
fees and all applicable documentary and other transfer taxes.
(e) If the Lessee exercises its option to sell the Equipment pursuant
to Section 18.3(a), the Lessee shall have completed all Alterations and
restoration of the Equipment pursuant to Sections 9.1, 10.1, 10.2 and 10.3
(as the case may be) and shall have fulfilled all of the conditions and
requirements in connection therewith pursuant to such Sections, in each case
at least 180 days prior to the Expiration Date regardless of whether the same
shall be within the Lessee's control. The Lessee shall have also paid the
cost of all Alterations commenced prior to the Expiration Date. The Lessee
shall not have been excused pursuant to Section 12.1 from complying with any
Applicable Law that involved the extension of the ultimate imposition of such
Applicable Law beyond the Expiration Date. Any Permitted Liens (other than
Lessor's Liens) on the Equipment that were contested by the Lessee shall have
been removed and the Lessor Trustee shall have received evidence satisfactory
to it that all Liens (other than Lessor's Liens and uncontested Permitted
Liens of the type described in clauses (i) and (v) of the definition thereof)
have been removed. The Equipment shall be in good operating condition.
SECTION 18.4. END OF TERM ADJUSTMENT. If the aggregate Net Proceeds of Sale
(hereinafter defined) of the Equipment sold pursuant to Section 18.3 is less
than the Purchase Price of such Equipment determined on the Expiration Date,
the Lessee shall, on the Expiration Date, pay to the Lessor Trustee, in
immediately available funds, an amount equal to such deficiency as an
adjustment to the Rent payable under this Lease for such Equipment; PROVIDED,
HOWEVER, that so long as no Default or Event of Default shall have occurred
and be continuing, such amount shall not be more than the Maximum Lessee Risk
Amount applicable to such Equipment. If the aggregate Net Proceeds of Sale
of the Equipment subject to this Lease on the Expiration Date is more than
the Purchase Price, the Lessor Trustee shall pay to the Lessee an amount
equal to such excess as an adjustment to the Rent payable under this Lease
for such Equipment, PROVIDED, that the Lessor Trustee shall have the right to
offset against such adjustment payable by the Lessor Trustee, any amounts
then due and payable from Lessee to the Lessor Trustee hereunder.
As used in this Section 18.4, the term "NET PROCEEDS OF SALE" means,
with respect to the Equipment sold by the Lessor Trustee to a third party
under Section 18.3, the net amount of the proceeds of sale of such Equipment
received by the Lessor Trustee on or prior to the Expiration Date for such
Equipment, after deducting from the gross proceeds of such sale (i) all sales
Taxes
-38-
<PAGE>
MW 1997-1 Trust Equipment Lease
and other Taxes as may be applicable to the sale or transfer of such
Equipment, (ii) all fees, costs and expenses of such sale incurred by the
Lessor Trustee and (iii) any other amounts for which, if not paid, the Lessor
Trustee would be liable or which, if not paid, would constitute a Lien on
such Equipment. The Lessor Trustee's obligation to sell its interest in the
Equipment to a third party under Section 18.3 is contingent upon the receipt
by the Lessor Trustee of the sum of (i) the amounts, if any, payable by the
Lessee with respect thereto pursuant to the first sentence of this Section
18.4 and pursuant to the last paragraph of this Section 18.4, (ii) all unpaid
Periodic Rent payable for such Equipment for all Scheduled Payment Dates
through the Expiration Date and (iii) all unpaid Supplemental Rent due with
respect to such Equipment as of the Expiration Date.
If the Lessee does not, with respect to any Equipment, purchase such
Equipment or exercise its option to renew this Lease, or if no bona fide bids
are received under Section 18.3 hereof with respect to the Equipment prior to
the Expiration Date thereof, then the Lessee and the Lessor Trustee agree
that in view of the uncertainties of market conditions and the parties'
inability to predict what the actual sale price of the Equipment would be,
the Net Proceeds of Sale for the Equipment shall be deemed to be zero solely
for purposes of the payment adjustment set forth in the first paragraph of
this Section 18.4, and the Lessee shall, on the Expiration Date, pay to the
Lessor Trustee in immediately available funds, an amount equal to the
Purchase Price, but so long as no Default or Event of Default has occurred
and is continuing hereunder, no more than the Maximum Lessee Risk Amount
applicable to such Equipment as an adjustment to the Rent payable under this
Lease for such Equipment, and the Lessee shall promptly return the Equipment
to the Lessor Trustee upon the Expiration Date thereof in accordance with the
provisions of Section 9.4 hereof. Any proceeds from the sale of the Equipment
subsequent to the return of the Equipment to the Lessor Trustee shall be
retained by the Lessor Trustee and distributed pursuant to the Trust
Agreement.
SECTION 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT
SECTION 19.1. PROVISIONS RELATING TO THE PURCHASE OF EQUIPMENT; CONVEYANCE
UPON CERTAIN OTHER EVENTS. In connection with the Lessee's purchase of the
Equipment in accordance with Section 18.1 or in connection with the Lessee's
obligations under Section 16.2(e), upon the date on which this Lease is to
terminate and upon tender by the Lessee of the amounts set forth in Sections
16.2(e) or 18.1, as applicable, to the Lessor Trustee, the Lessor Trustee
shall convey to the Lessee (or to the Lessee's designee) at the Lessee's cost
and expense all of the Lessor Trustee's right, title and interest, as-is,
where-is, without recourse or warranty, express or implied except for a
warranty against Lessor's Liens in and to such Equipment.
SECTION 20. ADDITIONAL GUARANTORS.
-39-
<PAGE>
MW 1997-1 Trust Equipment Lease
SECTION 20.1. ADDITIONAL GUARANTORS. The Lessee will cause each Person
which becomes a Material Subsidiary to promptly enter into a guarantee of the
Obligations and concurrently therewith shall deliver to the Lessor Trustee
and each of the Certificate Holders the following items:
(a) an executed counterpart of a Guaranty Agreement substantially
in the form of Exhibit C to the Participation Agreement or a joinder
agreement in respect of an Guaranty Agreement (in either case, a "NEW
GUARANTY AGREEMENT"), as approved by the Lessor Trustee;
(b) a certificate signed by the President, a Vice President or
another authorized Responsible Officer of such Material Subsidiary
making representations and warranties to the effect of those contained
in Sections 5 of the Guaranty Agreement, but with respect to such
Material Subsidiary and such New Guaranty Agreement;
(c) such documents and evidence with respect to such Material
Subsidiary as the Lessor Trustee may reasonably request in order to
establish the existence and good standing of such Material Subsidiary
and the authorization of the transactions contemplated by such New
Guaranty Agreement; and
(d) an opinion of counsel (which may be internal counsel to the
Lessee) satisfactory to the Lessor Trustee to the effect that such New
Guaranty Agreement has been duly authorized, executed and delivered and
constitutes the legal, valid and binding contract and agreement of such
Material Subsidiary enforceable in accordance with its terms, except as
such terms may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting the rights of creditors generally and
except as equitable remedies such as specific performance may be in the
discretion of the courts.
SECTION 21. [INTENTIONALLY OMITTED]
SECTION 22. NO MERGER OF TITLE
SECTION 22.1. NO MERGER OF TITLE. There shall be no merger of this 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 Lease or the leasehold estate created hereby or any interest in this
Lease or such leasehold estate, (b) the fee estate in the Equipment, except
as may expressly be stated in a written instrument duly executed and
delivered by the appropriate Person or (c) an ownership interest in the
Lessor Trust.
-40-
<PAGE>
SECTION 23. INTENT OF THE PARTIES
SECTION 23.1. NATURE OF TRANSACTION. (a) The parties hereto intend that (i)
for financial accounting purposes with respect to the Lessee, the Lessor
Trust 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 all other
purposes, including federal and all state and local income tax purposes,
state real estate and commercial law and bankruptcy purposes,
(A) this Lease will be treated as a financing arrangement,
(B) the Certificate Holders will be deemed lenders making loans
to the Lessee in an amount equal to the principal amount of the Trust
Certificates from time to time outstanding, which amounts are secured
by the Equipment, and
(C) 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 Trust
Certificate Purchasers nor any of the Certificate Holders has made any
representations or warranties to the Lessee concerning the tax, accounting or
legal characteristics of the Operative Agreements and that the Lessee has
obtained and relied upon such tax, accounting and legal advice concerning the
Operative Agreements as it has deemed appropriate.
(b) It is the intent of the parties hereto that this Lease grants a
security interest and mortgage, as the case may be, on the Equipment and all
proceeds thereof to the Lessor Trustee for the benefit of the Certificate
Holders to secure the Lessee's performance under and payment of all amounts
under the Lease and the other Operative Agreements.
SECTION 23.2. LIENS AND SECURITY INTERESTS. (a) Specifically, without
limiting the generality of Section 23.1, the Lessor Trustee and the Lessee
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, any Guarantor, the
Lessor Trust, the Lessor Trustee or the Certificate Holders or any collection
actions, the transactions evidenced by the Operative Agreements shall be
regarded as loans made by the Certificate Holders as unrelated third party
lenders to the Lessee secured by all of the Equipment (it being understood
that the Lessee has GRANTED, BARGAINED, SOLD, CONVEYED and CONFIRMED, and
hereby GRANTS, BARGAINS, SELLS, CONVEYS and CONFIRMS, and grants a security
interest in all of the Equipment to the Lessor
-41-
<PAGE>
MW 1997-1 Trust Equipment Lease
Trustee and its successors and assigns (for the benefit of the Certificate
Holders) to secure all such loans and the other Obligations).
(b) Specifically, but without limiting the generality of Section 23.1,
the Lessor Trustee and the Lessee further intend and agree that, for the
purpose of securing the obligation of the Lessee for the repayment of the
above-described loans from the Certificate Holders to the Lessee, (i) this
Lease shall also be deemed to be a security agreement and financing statement
within the meaning of Article 9 of the Uniform Commercial Code; (ii) the
conveyance provided for hereby and in Section 2 of this Lease shall be deemed
to be a grant by the Lessee to the Lessor Trustee and its successors and
assigns (for the benefit of the Certificate Holders) of a lien and security
interest in all of the right, title and interest of the Lessee in and to the
Equipment and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, investments, securities or other property (it being
understood that the Lessee hereby grants a security interest in the Equipment
and all proceeds thereof to the Lessor Trustee and its successors and assigns
(for the benefit of the Certificate Holders) to secure the loans described in
Section 23.2(a); (iii) the possession by the Lessor Trustee or any of its
agents of notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be
"POSSESSION BY THE SECURED PARTY" for purposes of perfecting the security
interest pursuant to Section 9-305 of the Uniform Commercial Code; and (iv)
notifications to Persons holding such property, and acknowledgments, receipts
or confirmations from financial intermediaries, bankers or agents (as
applicable) of the Lessee shall be deemed to have been given for the purpose
of perfecting such security interest under all Applicable Laws. The Lessor
Trustee and the Lessee shall, to the extent consistent with this Lease, take
such actions and execute, deliver, file and record such other documents and
financing statements as may be necessary to ensure that, if the Lease was
deemed to create a security interest in the Equipment in accordance with this
Section 23.2, such security interest would be deemed to be a perfected
security interest (subject only to Permitted Liens) and will be maintained as
such throughout the Lease Term.
(c) Specifically, but without limiting the foregoing or the generality
of Section 23.1, the Lessee hereby grants, bargains, sells, warrants,
conveys, aliens, remises, releases, assigns, sets over and confirms to the
Lessor Trustee and its successors and assigns a security interest in all of
the Lessee's right, title, and interest in and to the following
(collectively, the "ADDITIONAL COLLATERAL"): (i) all proceeds, both cash and
noncash of the Equipment; (ii) all right, title and interest of the Lessee in
all warranties, chattel paper, documents, accounts, general intangibles,
trade names, trademarks, servicemarks, logos (including any names or symbols
by which the Equipment is known) and goodwill related thereto, and all other
articles of personal property of every kind and nature whatsoever, tangible
or intangible, now, heretofore or hereafter acquired with any proceeds of the
Obligations and now, heretofore or hereafter (A) arising out of or related to
the ownership of the Equipment, or (B) located on the Equipment, or (C) used or
-42-
<PAGE>
MW 1997-1 Trust Equipment Lease
intended to be used with or in connection with the use, operation or
enjoyment of the Equipment; (iii) all right, title and interest of the Lessee
in any and all leases, rental agreements and arrangements of any sort now or
hereafter affecting the Equipment or any portion thereof and providing for or
resulting in the payment of money to the Lessee for the use of the Equipment
or any portion thereof, irrespective of whether such leases, rental
agreements and arrangements be oral or written, and including any and all
extensions, renewals and modifications thereof (the "SUBJECT LEASES") and
guaranties of the performance or obligations of any lessees thereunder,
together with all income, rents, issues, profits and revenues from the
Subject Leases (including all security deposits and all other deposits,
whether held by the Lessee or in a trust account, and all other deposits and
escrow funds relating to any Subject Leases), and all the estate, right,
title, interest, property, possession, claim and demand whatsoever at law, as
well as in equity, of the Lessee of, in and to the same; PROVIDED, HOWEVER,
that although this Lease contains (and it is hereby agreed that this Lease
contains) a present, current, unconditional and absolute assignment of all of
said income, rents, issues, profits and revenues, the Lessee shall collect
and apply such rental payments and revenues as provided in the Lease and the
other Operative Agreements; (iv) all right, title and interest of the Lessee
in, to and under all franchise agreements, management contracts, consents,
authorizations, certificates and other rights of every kind and character of
any Governmental Authority affecting the Equipment and all other contracts,
licenses and permits now or hereafter affecting the Equipment or any part
thereof and all guaranties and warranties with respect to any of the
foregoing (the "SUBJECT CONTRACTS"); (v) all right, title and interest of the
Lessee in any insurance policies or binders now or hereafter relating to the
Equipment, including any unearned premiums thereon, as further provided in
this Lease; (vi) all right, title and interest of the Lessee in any and all
awards, payments, proceeds and the right to receive the same, either before
or after any foreclosure hereunder, as a result of any temporary or permanent
injury or damage to, taking of or decrease in the value of the Equipment by
reason of casualty, condemnation or otherwise as further provided in this
Lease; (vii) all right, title and interest of the Lessee in all escrow and
all other deposits (and all letters of credit, certificates of deposit,
negotiable instruments and other rights and evidence of rights to cash) now
or hereafter relating to the Equipment or the purchase or operation thereof;
(viii) all claims and causes of action arising from or otherwise related to
any of the foregoing, and all rights and judgments related to any legal
actions in connection with such claims or causes of action; and (ix) all
Alterations, extensions, additions, improvements, betterments, renewals and
replacements, substitutions, or proceeds of any of the foregoing, and all
chattel paper, documents, instruments general intangibles and other property
of any nature constituting proceeds acquired with proceeds of any of the
property described hereinabove; all of which foregoing items are hereby
declared and shall be deemed to be a portion of the security for the
indebtedness and Obligations herein described.
SECTION 24. MISCELLANEOUS
-43-
<PAGE>
MW 1997-1 Trust Equipment Lease
SECTION 24.1. SEVERABILITY. If any term or provision of this Lease or any
application thereof shall be declared invalid or unenforceable, the remainder
of this Lease and any other application of such term or provision shall not
be affected thereby.
SECTION 24.2. AMENDMENTS AND MODIFICATIONS. Subject to the requirements,
restrictions and conditions set forth in the Participation Agreement, neither
this Lease nor any provision hereof may be amended, waived, discharged or
terminated except by an instrument in writing signed by the parties hereto.
SECTION 24.3. NO WAIVER. No failure by the Lessor Trustee or any
Certificate Holder 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 Lease, and this Lease shall continue in full force and
effect with respect to any other then existing or subsequent default.
SECTION 24.4. 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 10.2 of the Participation Agreement.
SECTION 24.5. SUCCESSORS AND ASSIGNS. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
SECTION 24.6. HEADINGS AND TABLE OF CONTENTS. The headings and table of
contents in this Lease are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
SECTION 24.7. COUNTERPARTS. This 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.
SECTION 24.8. GOVERNING LAW. This Lease shall be governed by and construed
in accordance with the laws of the State of New York (excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State).
SECTION 24.9. TIME OF ESSENCE. With respect to each of the Lessee's
obligations hereunder, time is of the essence, and each such party hereby
acknowledges and confirms the foregoing.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-44-
<PAGE>
MW 1997-1 Trust Equipment Lease
IN WITNESS WHEREOF, the parties have caused this Lease to be duly
executed and delivered as of the date first above written.
KEYBANK NATIONAL ASSOCIATION, a
national banking association, as
trustee under MW 1997-1 Trust, as
Lessor Trustee
By
Name:
Title:
MAIL-WELL I CORPORATION, a Delaware
corporation, as Lessee
By
Name:
Title:
-45-
<PAGE>
PERIODIC RENT FACTORS
SCHEDULE I A
(to Equipment Lease)
<PAGE>
Lease Supplement No. A_________
THIS LEASE SUPPLEMENT NO. _________ (this "LEASE SUPPLEMENT") dated
_______________, between KEYBANK NATIONAL ASSOCIATION, a national banking
association, as trustee (the "LESSOR TRUSTEE") under MW 1997-1 Trust, as
Lessor and whose principal offices are located at 127 Public Square,
Cleveland, Ohio 44114, and MAIL-WELL I CORPORATION, a Delaware corporation,
as Lessee (the "LESSEE") and whose principal offices are located at
__________________________________________________.
WITNESSETH:
The Lessor Trustee and the Lessee have heretofore entered into that
certain Equipment Lease, dated as of December 15, 1997 (the "LEASE"). The
capitalized terms not otherwise defined herein have the meanings specified in
the Lease.
The Lease provides for the execution and delivery of a Lease Supplement
in substantially the form hereof for the purpose of leasing the Equipment
under the Lease when delivered by the Lessor Trustee to the Lessee in
accordance with the terms thereof.
NOW THEREFORE, in consideration of the premises and other good and
sufficient consideration the Lessor Trustee and the Lessee hereby agree as
follows:
1. The Lessor Trustee hereby delivers and leases to the Lessee,
and the Lessee hereby accepts and leases from the Lessor Trustee, under
the Lease as herein supplemented, the Equipment described in Schedule 1
hereto.
2. The Closing Date of such Equipment is the date of this Lease
Supplement set forth in the opening paragraph hereof.
3. The total Equipment Cost for such Equipment is
$______________.
4. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent
as if fully set forth herein.
5. This Lease Supplement shall be governed by and construed in
accordance with the laws of the State of New York (excluding
choice-of-law principles of the law of such State that would require
the application of the laws of a jurisdiction other than such State).
EXHIBIT A
(to Lease Agreement)
<PAGE>
Any and all notices, requests, certificates and other instruments
executed and delivered after the execution and delivery of this Lease
Supplement may refer to the "Lease dated as of December 15, 1997" without
making specific reference to this Lease Supplement, but nevertheless all such
references shall be deemed to include this Lease Supplement unless the
context shall otherwise require.
This Lease Supplement shall be construed in connection with and as part
of the Lease, and all terms, conditions and covenants contained in the Lease,
except as herein modified, shall be and remain in full force and effect.
This Lease Supplement 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.
A-48
<PAGE>
IN WITNESS WHEREOF, the Lessor Trustee and the Lessee have each caused
this Lease Supplement to be duly executed by their authorized officers as of
the day and year first above written.
KEYBANK NATIONAL ASSOCIATION, a
national banking association, as
trustee under MW 1997-1 Trust, as
Lessor Trustee
By
Name:
Title:
MAIL-WELL I CORPORATION, a Delaware
corporation, as Lessee
By
Name:
Title:
A-49
<PAGE>
DESCRIPTION OF EQUIPMENT
EQUIPMENT EQUIPMENT COST
SCHEDULE 1
(to Lease Supplement)
<PAGE>
Draft Dated December 31, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
GUARANTY AGREEMENT
Dated as of December 15, 1997
Among
MAIL-WELL, INC.
GRAPHIC ARTS CENTER, INC.
GRIFFIN ENVELOPE INC.
MAIL-WELL WEST, INC.
MURRAY ENVELOPE CORPORATION
SHEPARD POORMAN COMMUNICATIONS CORPORATION
WISCO ENVELOPE CORP.
WISCO II, L.L.C.
WISCO III, L.L.C.
Guarantors
MAIL-WELL I CORPORATION
Lessee
KEYBANK NATIONAL ASSOCIATION
KEY CORPORATE CAPITAL INC.
Trust Certificate Purchasers
AND
KEYBANK NATIONAL ASSOCIATION,
individually and as trustee under a Lessor Trust Agreement
dated as of December 15, 1997, as Lessor Trustee,
in respect of
MAIL-WELL I CORPORATION
Equipment Lease
Dated as of December 15, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION HEADING PAGE
<S> <C> <C>
SECTION 1. GUARANTEE.................................................. 2
SECTION 2. GENERAL PROVISIONS RELATING TO THE GUARANTEE............... 2
SECTION 3. SUBROGATION................................................ 5
SECTION 4. AFFIRMATIVE COVENANTS OF GUARANTY PARTIES.................. 6
Section 4.1. Maintenance of Ownership of Lessee....................... 6
Section 4.2. Financial Statements..................................... 6
Section 4.3. Certificates; Other Information.......................... 7
Section 4.4. Notices.................................................. 7
Section 4.5. Preservation of Corporate and Partnership Existence, Etc. 9
Section 4.6. Maintenance of Property.................................. 9
Section 4.7. Insurance................................................ 9
Section 4.8. Payment of Obligations................................... 9
Section 4.9. Compliance with Laws..................................... 10
Section 4.10. Inspection of Property and Books and Records............. 10
Section 4.11. Environmental Laws....................................... 10
Section 4.12. Additional Guarantors.................................... 10
Section 4.13. Credit Facility Documents................................ 11
SECTION 5. NEGATIVE COVENANTS OF THE GUARANTY PARTIES................. 11
Section 5.1. Limitation on Liens...................................... 11
Section 5.2. Disposition of Assets.................................... 13
Section 5.3. Consolidations and Mergers............................... 13
Section 5.4. Loans and Investments.................................... 14
Section 5.5. Limitation on Indebtedness............................... 15
Section 5.6. Transactions with Affiliates............................. 16
Section 5.7. Use of Proceeds.......................................... 16
Section 5.8. Contingent Obligations................................... 16
Section 5.9. Restricted Payments...................................... 17
Section 5.10. ERISA.................................................... 17
Section 5.11. Change in Business....................................... 18
Section 5.12. Change in Fiscal Year.................................... 18
Section 5.13. Minimum Consolidated Net Worth........................... 18
Section 5.14. Maximum Leverage Ratio................................... 18
Section 5.15. Minimum Interest Coverage Ratio.......................... 18
Section 5.16. Limitation on Modifications of Senior Subordinated Notes. 19
Section 5.17. Limitation on Certain Restrictions on Subsidiaries....... 19
-i-
<PAGE>
SECTION 6. DEFINITIONS................................................ 19
Section 6.1. Definitions.............................................. 19
Section 6.2. Interpretation........................................... 26
Section 6.3. Accounting Principles.................................... 26
SECTION 7. REPRESENTATIONS AND WARRANTIES OF GUARANTORS............... 26
SECTION 8. MISCELLANEOUS.............................................. 28
Section 8.1. Actions and Proceedings.................................. 28
Section 8.2. Binding Effect........................................... 29
Section 8.3. Waivers; Cumulative Effect............................... 29
Section 8.4. Amendments; Waivers...................................... 29
Section 8.5. Section Headings......................................... 29
Section 8.6. Severability............................................. 29
Section 8.7. Survival of Representations and Warranties............... 29
Section 8.8. Notices.................................................. 30
Section 8.9. Counterparts............................................. 30
Section 8.10. Further Assurances....................................... 30
Section 8.11. Governing Law............................................ 30
Signatures................................................................ 31
</TABLE>
ATTACHMENTS TO GUARANTY AGREEMENT:
Schedule 5.1(a) -- Existing Liens
Schedule 5.5(b) -- Existing Indebtedness
EXHIBIT A -- Form of Acknowledgment to Guaranty Agreement
-ii-
<PAGE>
GUARANTY AGREEMENT
Guaranty Agreement dated as of December 15, 1997 among MAIL-WELL, INC.,
a Colorado corporation (together with any permitted assigns and any
corporation which succeeds thereto by merger or consolidation or which
acquires all or substantially all of the assets thereof, "MAIL-WELL"),
GRAPHIC ARTS CENTER, INC., a Delaware corporation, GRIFFIN ENVELOPE INC., a
Washington corporation, MAIL-WELL WEST, INC., a Delaware corporation, MURRAY
ENVELOPE CORPORATION, a Mississippi corporation, SHEPARD POORMAN
COMMUNICATIONS CORPORATION, an Indiana corporation, WISCO ENVELOPE CORP., a
Tennessee corporation, WISCO II, L.L.C., a Delaware limited liability
company, and WISCO III, L.L.C., a Delaware limited liability company
(together with any permitted assigns and any corporation which succeeds
thereto by merger or consolidation or which acquires all or substantially all
of the assets thereof, the "GUARANTORS"), MAIL-WELL I CORPORATION, a Delaware
corporation (together with any permitted assigns and any corporation which
succeeds thereto by merger or consolidation or which acquires all or
substantially all of the assets thereof, the "LESSEE"), KEYBANK NATIONAL
ASSOCIATION, and KEY CORPORATE CAPITAL INC. (the "ORIGINAL TRUST CERTIFICATE
PURCHASERS" and, together with the holders from time to time of the Trust
Certificates, herein called the "CERTIFICATE HOLDERS"; and KEYBANK NATIONAL
ASSOCIATION, a national banking association, in its individual capacity and
as trustee (in such capacity, together with its successors in trust
thereunder, the "LESSOR TRUSTEE") under the Lessor Trust Agreement dated as
of December 15, 1997 between it and the Original Trust Certificate Purchasers.
WHEREAS, the Lessee, a wholly-owned subsidiary of Mail-Well, has entered
into that certain Participation Agreement dated as of December 15, 1997 (said
Participation Agreement, as the same may be amended in accordance with its
terms from time to time, the "PARTICIPATION AGREEMENT") with the Lessor
Trustee and the Original Trust Certificate Purchasers, providing for the
synthetic lease financing of certain envelope and commercial printing
equipment;
WHEREAS, the Lessor Trustee, as lessor, and the Lessee, as lessee, have
entered into that certain Equipment Lease dated as of December 15, 1997 (said
Equipment Lease, as the same may be amended and supplemented in accordance
with its terms from time to time, the "LEASE");
WHEREAS, all capitalized terms used in this Agreement shall have the
respective meanings assigned thereto in the Lease, unless otherwise defined
herein;
WHEREAS, (a) the Lessee is a Wholly Owned Subsidiary of Mail-Well, (b)
Graphic Arts Center, Inc., Griffin Envelope Inc., Mail-Well West, Inc.,
Shepard Poorman Corporation, Wisco Envelope Corp., Wisco II, L.L.C. and Wisco
III, L.L.C. are all direct or indirect Wholly Owned Subsidiaries of the
Lessee and (c) the Lessee owns 100% of the Voting Stock of Murray Envelope
Corporation, and Mail-Well and such Subsidiaries of the Lessee will benefit
from the purchase by the Lessor Trustee of the Equipment and lease by the
Lessee of such Equipment pursuant to the Lease Agreement;
<PAGE>
MW 1997-1 Trust Guaranty Agreement
WHEREAS, it is a condition to the transactions contemplated by the
Participation Agreement that Guarantors jointly and severally guarantee,
among other things, the obligations of the Lessee under the Lessee Agreements
in favor of the Lessor Trustee, individually, as lessor under the Lease and
for the benefit of the Certificate Holders; and
WHEREAS, the Guarantors are entering into this Agreement for such
purpose and in order to induce each of the parties hereto to enter into and
to perform its obligations under the Participation Agreement and to enter
into and perform its obligations under the other Operative Agreements, if
any, to which it is a party;
NOW, THEREFORE, each of the Guarantors, jointly and severally, and the
Original Trust Certificate Purchasers and the Lessor Trustee hereby agree as
follows:
SECTION 1. GUARANTEE.
Each Guarantor, jointly and severally, does hereby unconditionally and
irrevocably guarantee, as primary obligor and not merely as surety, the
following:
(i) to the Person entitled to the payment thereof under the terms
of the respective Operative Agreements, the full and prompt payment when
due of each and every payment due from the Lessee to such Person
pursuant to the Operative Agreements, including, but not limited to,
amounts due pursuant to Section 18.4 of the Lease, Periodic Rent,
Stipulated Loss Value, Lease Balance, Purchase Price and all other
amounts of Supplemental Rent payable under the Lease;
(ii) to the Person entitled thereto under the terms of the
respective Operative Agreements, the full and prompt performance and
observance by the Lessee of each and all other covenants and agreements
not described in clause (i) above required to be performed or observed
by the Lessee under the terms of the Operative Agreements; and
(iii) the payment in Dollars, upon demand by the Lessor Trustee or
any Certificate Holder of all costs and expenses (including reasonable
attorneys' fees), as shall have been reasonably expended or incurred in
the seizure, rental or sale of the Equipment, or any part thereof, as a
result of an Event of Default or in the protection or enforcement of any
right, privilege or liability of the Lessor Trustee or any Certificate
Holder under the Operative Agreements or action in connection therewith.
SECTION 2. GENERAL PROVISIONS RELATING TO THE GUARANTEE.
(a) Each and every default in any payment or performance of any
obligation of the Lessee under the Operative Agreements shall give rise to a
separate claim and cause of action hereunder, and separate claims or suits
may be made and brought, as the case may be, hereunder as each such default
occurs.
-2-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(b) This Agreement shall be a continuing, absolute and unconditional
guaranty of payment and performance as aforesaid and not of collection and
shall remain in full force and effect until each and all of the obligations
of the Lessee guaranteed hereunder shall have been fully and satisfactorily
discharged in accordance with the terms and provisions of the Operative
Agreements, and each Guarantor shall have fully and satisfactorily discharged
all of its obligations under this Agreement.
(c) This Agreement and the liability of each Guarantor hereunder shall
remain in full force and effect irrespective of:
(i) the legality, validity, regularity or enforceability of the
Operative Agreements, or any of them, or of any assignment, amendment,
modification, or termination of the Operative Agreements, or any of
them, or any subleasing or further subleasing of the Equipment, and
shall in no way be affected or impaired by (and no notice to any
Guarantor shall be required in respect of) any compromise, waiver,
settlement, release, renewal, extension, indulgence, amendment,
addition, deletion, change in, modification of, or release of any
security for, any of the obligations and liabilities of the Lessee under
the Operative Agreements, or any of them, or any redelivery,
repossession, sale, transfer or other disposition, surrender or
destruction of the Equipment, in whole or part; or
(ii) the transfer, assignment, subletting or mortgaging or the
purported transfer, assignment, subletting or mortgaging of all or any
part of the interest of the Lessor Trustee, any Certificate Holder or
the Lessee in the Equipment; or
(iii) any failure of title with respect to the Lessor Trustee's, any
Certificate Holder's or the Lessee's interest in the Equipment; or
(iv) any failure, neglect or omission on the part of the Lessor
Trustee, any Certificate Holder or any other Person to give any
Guarantor notice of the occurrence of any default or event of default by
the Lessee under the Operative Agreements, or any of them, or to realize
upon any obligations or liabilities of the Lessee, or to provide for any
insurance on the Equipment, or to establish or maintain the priority or
perfection of any interest in the Equipment or any other Property
included in the Lessor Trust Estate; or
(v) any defect in the compliance with specifications, condition,
design, operation or fitness for use of, or any damage to or loss or
destruction of, or any interruption or cessation in the use of the
Equipment or any portion thereof by the Lessee or any other Person for
any reason whatsoever (including, without limitation, any governmental
prohibition or restriction, condemnation, requisition, seizure or any
other act on the part of any governmental or military authority, or any
act of God or of the public enemy) regardless of the duration thereof
(even though such duration would otherwise constitute a frustration of
the Lease), whether or not without fault on the part of the Lessee, the
Lessor Trustee, any Certificate Holder or any other Person; or
-3-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(vi) any merger or consolidation of the Lessee or any Guarantor
into or with any other Person or any sale, lease or transfer of any of
the assets of the Lessee or any Guarantor to any other Person; or
(vii) any change in the ownership of any shares of capital stock of
any Guarantor or the Lessee; or
(viii) any other occurrence or circumstance whatsoever, whether
similar or dissimilar to the foregoing and any other circumstance that
might otherwise constitute a legal or equitable defense or discharge of
the liabilities of a guarantor or surety or that might otherwise limit
recourse against any Guarantor.
(d) The obligation and liability of each Guarantor hereunder shall not
be impaired, diminished, abated or otherwise affected (i) by any setoff or
counterclaim that the Lessee or such Guarantor or any other Person may have
or claim to have, at any time or from time to time, (ii) by any defense that
such Guarantor or any other Person may have or claim to have, at any time or
from time to time that is not available to the Lessee, PROVIDED that in no
event may a Guarantor assert any defense (A) arising from the bankruptcy or
insolvency of the Lessee, (B) based on the corporate status of the Lessee,
(C) based on the power, authority and capacity of the Lessee to enter into
and perform any of the Operative Agreements to which it is a party, (D) based
on the legal, valid and binding nature of the Lessee's obligations under the
Operative Agreements to which it is a party, or (E) expressly waived
hereunder, or (iii) by the commencement by or against the Lessee or such
Guarantor or any other Person of any proceedings under any bankruptcy or
insolvency law or laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, arrangements, compositions or extension or
other similar laws.
(e) It is the intent and purpose hereof that no Guarantor shall be
entitled to and each Guarantor does hereby waive, to the fullest extent
permitted by Applicable Law, any and all defenses available to guarantors,
sureties and other secondary parties at law or in equity. Without limiting
the generality of the foregoing, each Guarantor hereby waives notice of
acceptance of this Agreement and of the nonperformance by the Lessee,
diligence, presentment, protest, dishonor, demand for payment from the Lessee
or any other Person and notice of nonpayment or failure to perform on the
part of the Lessee and all other notices whatsoever. The guarantee hereunder
is a guarantee of payment, performance and compliance and not of
collectibility. In order to hold any Guarantor liable hereunder, there shall
be no obligation on the part of the Lessor Trustee or any Certificate Holder
at any time to demand or resort for payment or performance to the Lessee, to
any other Guarantor or to any other Person, its properties or assets or to
any security, property or other rights or remedies whatsoever, nor shall
there be any requirement that the Lessee or any other Person be joined as
parties to any proceeding for the enforcement of any provision of this
Agreement, and the Lessor Trustee, each Certificate Holder, and each other
Person entitled to receive payments or the benefit of performance guaranteed
hereunder shall have the right to enforce this Agreement irrespective of
whether or not legal proceedings or other enforcement efforts against the
Lessee are pending, seeking resort to or realization upon or from any of the
foregoing. Without limiting the foregoing, it is understood that repeated
-4-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
and successive demands may be made and recoveries may be had hereunder as and
when, from time to time, the Lessee shall default under the terms of the
Operative Agreements, and that, notwithstanding recovery hereunder for or in
respect of any such default, this Agreement shall remain in force and effect
and shall apply to each and every subsequent default. Each Guarantor further
agrees that, without limiting the generality of this Agreement, if any Event
of Default shall have occurred and be continuing and the Lessor Trustee (or
any assignee thereof) is prevented by Applicable Law from exercising its
remedies under Section 16.2 of the Lease, the Lessor Trustee (or any assignee
thereof) shall be entitled to receive hereunder from such Guarantor, upon
demand therefor, the sums which would have otherwise been due from the Lessee
had such remedies been exercised. So long as the Lessee shall not have fully
paid, performed or discharged all of its obligations under the Operative
Agreements, any claim which any Guarantor shall have against the Lessee or
any other Person by reason of any payment to the Lessor Trustee, any
Certificate Holder or any other Person pursuant to this Agreement shall not
be asserted or enforced or collected as against (or to the detriment of) the
Lessee (including without limitation, any liquidator, trustee in bankruptcy,
assignee for the benefit of creditors or receiver of property or assets of
the Lessee), the Lessor Trustee, any Certificate Holder or such Person in any
action, suit or proceeding.
(f) No act or omission of any kind or at any time on the part of the
Lessor Trustee, any Certificate Holder or any other Person in respect of any
matter whatsoever including, without limitation, any omission in performance
of their respective obligations under the Operative Agreements, shall in any
way affect or impair the guarantee hereunder, save for an express written
waiver or variation of its terms, which shall be effective only with respect
to the Person granting the same and its successors and assigns.
(g) The guarantee hereunder shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the obligations hereunder or under the Operative Agreements is
rescinded or must otherwise be restored or returned by the Lessor Trustee or
any Certificate Holder upon the insolvency, bankruptcy or reorganization of
the Lessee, or otherwise, all as though such payment had not been made.
(h) If any Guarantor fails to pay any amount hereunder when due, such
Guarantor shall pay interest, on demand, on such amount at the Late Rate, to
the Person entitled thereto. Each Guarantor, jointly and severally, further
agrees to pay to any party hereto any and all reasonable out-of-pocket costs
and expenses, including legal fees, incurred by such party in connection with
enforcing its rights under this Agreement.
SECTION 3. SUBROGATION.
Each Guarantor hereby acknowledges and agrees that any rights of such
Guarantor hereunder, whether by way of subrogation or otherwise, may not be
enforced until all amounts due from the Lessee under the Operative Agreements
shall have been paid in full to the parties entitled thereto. Each Guarantor
agrees (i) not to take any action to hinder or delay the exercise of any
right or remedy granted under the Operative Agreements or any Applicable Law
to the Lessor Trustee in respect of the Equipment or any other Property
-5-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
included in the Lessor Trust Estate or the guarantee hereunder or to the
Lessor Trustee or any Certificate Holder under the Operative Agreements or
the guarantee hereunder, and (ii) not to exercise or pursue any rights,
remedies, powers, privileges or benefits of any kind hereunder (whether
available to such Guarantor hereunder or at law or in equity) until such time
as all obligations owing from the Lessee under the Operative Agreements have
been paid in full to the parties entitled thereto.
SECTION 4. AFFIRMATIVE COVENANTS OF GUARANTY PARTIES.
Each Guaranty Party hereby covenants and agrees that:
SECTION 4.1. MAINTENANCE OF OWNERSHIP OF LESSEE. Unless otherwise
consented to in writing by the Lessor Trustee, Mail-Well will be and remain,
directly or indirectly, the owner of 100% of the shares of each and every
issued and outstanding class of voting capital stock of each of the Lessee or
any of its successors not prohibited under this Agreement or the Operative
Agreements (other than any shares held by Lloyd E. Rhian, Jr. upon conversion
pursuant to a Plan of Reorganization and Stock Purchase Agreement dated June
20, 1997 by and among Mail-Well, the Lessee, Murray Envelope Holdings, Inc.,
Murray Envelope Corporation and the former shareholders of Murray Envelope
Corporation of shares he holds of Murray Envelope Corporation, provided that
such shares shall not exceed 20% of the shares of each such class of voting
capital stock of the Lessee or any such successors, and Mail-Well will keep
itself informed with respect to, and apprised of, the operations and
financial condition of the Lessee.
SECTION 4.2. FINANCIAL STATEMENTS. Mail-Well shall deliver to each
Certificate Holder, in form and detail satisfactory to such Certificate
Holder:
(a) as soon as available and in any event within 90 days after the
end of each fiscal year of Mail-Well, a copy of the audited consolidated
and consolidating balance sheets of Mail-Well and its Subsidiaries as at
the end of such year and the related consolidated and consolidating
statements of income or operations, shareholders' equity and cash flows
for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, and accompanied by the opinion of
a nationally recognized independent public accounting firm ("INDEPENDENT
AUDITOR") which report shall state that such consolidated and
consolidating financial statements present fairly the financial position
for the periods indicated in conformity with GAAP applied on a basis
consistent with prior years, and together with SEC Form 10Ks for each
Subsidiary of Mail-Well required to file such form with the SEC. The
Independent Auditor's opinion shall not be qualified or limited because
of a restricted or limited examination by the Independent Auditor of any
material portion of Mail-Well's or any such Subsidiary's records; and
(b) as soon as available and in any event within 45 days after the
end of each fiscal quarter of Mail-Well, a copy for the immediately
preceding fiscal quarter of the unaudited consolidated balance sheets of
Mail-Well and its Subsidiaries as of the end of such quarter and the
related consolidated statements of income, shareholders' equity
-6-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
and cash flows for the period commencing on the first day and ending on
the last day of such quarter, and certified by a Responsible Officer as
fairly presenting, in accordance with GAAP (subject to ordinary, good
faith year-end audit adjustments), the financial position and the
results of operations of Mail-Well and its Subsidiaries, together with
SEC Form 10Qs for each Subsidiary of Mail-Well required to file such
form with the SEC.
SECTION 4.3. CERTIFICATES; OTHER INFORMATION. Mail-Well shall furnish
to each Certificate Holder:
(a) concurrently with the delivery of the financial statements
referred to in Sections 4.2(a) and (b), a Compliance Certificate
executed by a Responsible Officer of Mail-Well;
(b) except for SEC Forms 10K and 10Q to be delivered pursuant to
Sections 4.2(a) and (b), promptly, and in any event no later than 10
days after the same is made available to Mail-Well's or any of its
Subsidiaries' shareholders or is filed with the SEC, copies of all
financial statements and reports that Mail-Well or any Subsidiary of
Mail-Well sends to its shareholders, and copies of all financial
statements and regular, periodical or special reports that Mail-Well or
any Subsidiary of Mail-Well may make to, or file with, the SEC;
(c) upon the request from time to time of the Lessor Trustee, the
Swap Termination Values, together with a description of the method by
which such values were determined, relating to any then-outstanding Swap
Contracts to which Mail-Well or any of its Subsidiaries is party;
(d) at any time when the Lessee is not subject to Section 13 or
15(d) of the Exchange Act and is not exempt from reporting pursuant to
Rule 12g3-2(b) under the Exchange Act, upon the request of a Certificate
Holder, the Lessee shall promptly furnish or cause to be furnished Rule
144A Information to such Certificate Holder, to a prospective purchaser
of such Trust Certificate designated by such Certificate Holder or to
the Lessor Trustee for delivery to such Certificate Holder or a
prospective purchaser designated by such Certificate Holder, as the case
may be, in order to permit compliance by such Certificate Holder with
Rule 144A under the Securities Act in connection with the resale of such
Trust Certificate by such Certificate Holder; and
(e) promptly, such additional information regarding the business,
operations, assets, properties or financial or corporate affairs of
Mail-Well, the Lessee or any Subsidiary or relating to the ability of
Mail-Well, the Lessee or any of its Subsidiaries to perform their
respective obligations under the Operative Agreements as any Certificate
Holder, may from time to time reasonably request.
SECTION 4.4. NOTICES. The Guaranty Parties shall promptly notify the
Lessor Trustee and each Certificate Holder of:
-7-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(a) the occurrence of any Default or Event of Default, and of the
occurrence or existence of any event or circumstance that foreseeably
will become a Default or Event of Default;
(b) any matter that has resulted or could reasonably result in a
Material Adverse Effect on Mail-Well and its Subsidiaries, including:
(i) breach or non-performance of, or any default under, a Contractual
Obligation of any Guaranty Party or any Subsidiary of a Guaranty Party;
(ii) any dispute, litigation, investigation, proceeding or suspension
between any Guaranty Party or any Subsidiary of a Guaranty Party and any
Governmental Authority; (iii) the commencement of, or any material
development in, any litigation or proceeding affecting any Guaranty
Party or any Subsidiary of a Guaranty Party, including pursuant to any
applicable Environmental Laws; or (iv) the imposition of any fine or
penalty by any Governmental Authority against or with respect to any
facility or plants of any Guaranty Party or any Subsidiary of a Guaranty
Party;
(c) the occurrence of any of the following events affecting any
Guaranty Party or any ERISA Affiliate (but in no event more than 10 days
after such event), and deliver to the Lessor Trustee and each
Certificate Holder a copy of any notice with respect to such event that
is filed with a Governmental Authority and any notice delivered by a
Governmental Authority to any Guaranty Party or any ERISA Affiliate with
respect to such event:
(i) an ERISA Event;
(ii) an increase in the Unfunded Pension Liability of any Pension
Plan, including as a result of the adoption of any amendment to a Plan
subject to Section 412 of the Code, that could reasonably be likely to
cause or result in an Event of Default under Section 16.1(k) of the Lease;
or
(iii) the adoption of, or the commencement of contributions to,
any Plan subject to Section 412 of the Code by any Guaranty Party or any
ERISA Affiliate other than any such Plan in effect and receiving
contributions as of the Closing Date.
(d) any Acquisition, or incurrence of any Contractual Obligations
with respect to any Acquisition, by the Lessee or any Subsidiary of the
Lessee, if the aggregate cash and noncash consideration (including
assumption of liabilities and including all Contingent Obligations) in
connection with such Acquisition is (or could reasonably be expected to
become) $10,000,000 or more; and
(e) any Change in Control or any event or circumstance that is
reasonably likely to result in any Change in Control; and
Each notice under this Section shall be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating
-8-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
what action any Guarantor, the Lessee or any affected Subsidiary of any
Guaranty Party proposes to take with respect thereto and at what time. Each
notice under Section 4.4(a) shall describe with particularity any and all
clauses or provisions of this Agreement or other Operative Agreement that
have been (or foreseeably will be) breached or violated.
SECTION 4.5. PRESERVATION OF CORPORATE AND PARTNERSHIP EXISTENCE, ETC.
Each Guaranty Party (other than Mail-Well) shall, and shall cause each of its
Subsidiaries to:
(a)(i) preserve and maintain in full force and effect (A) its
corporate or partnership existence, as the case may be, and good
standing under the laws of its state or jurisdiction of incorporation or
organization, and (B) all governmental rights, privileges,
qualifications, permits, licenses and franchises necessary or desirable
in the normal conduct of its business; and (ii) use reasonable efforts,
in the ordinary course of business, to preserve its business
organization and goodwill; PROVIDED HOWEVER, that the foregoing shall
not prevent any transaction permitted by Section 5.2 or 5.3, or the
termination of the existence of any Subsidiary of Mail-Well (other than
the Lessee) if, in the opinion of the Board of Directors of Mail-Well,
such termination is in the best interest of the Lessee and is not
otherwise prohibited by this Agreement; and
(b) preserve or renew and maintain all of its registered patents,
trademarks, trade names and service marks and other intellectual
property assets, the nonpreservation or nonmaintenance of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 4.6. MAINTENANCE OF PROPERTY. Each Guaranty Party (other than
Mail-Well) shall maintain, and shall cause each of its Subsidiaries to
maintain and preserve all its property which is used or useful in its
business in good working order and condition, ordinary wear and tear excepted
and make all necessary repairs thereto and renewals and replacements thereof
except where the failure to do so could not reasonably be expected to have a
Material Adverse Effect. Each Guaranty Party (other than Mail-Well) shall
use the standard of care typical in the industry in the operation and
maintenance of its facilities.
SECTION 4.7. INSURANCE. Each Guaranty Party shall maintain, and shall
cause each of its Subsidiaries to maintain, with financially sound and
reputable independent insurers, insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
Persons engaged in the same or similar business of such types and in such
amounts as are customarily carried under similar circumstances by such other
Persons.
SECTION 4.8. PAYMENT OF OBLIGATIONS. Each Guaranty Party (other than
Mail-Well) shall, and shall cause each of its Subsidiaries to, pay and
discharge as the same shall become due and payable, all their respective
material obligations and liabilities, including:
(a) all material tax liabilities, assessments and governmental
charges or levies upon it or its properties or assets, unless the same
are being contested in good faith by
-9-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by such Guaranty Party or such Subsidiary;
(b) all lawful material claims which, if unpaid, would by law
become a Lien upon its property; and
(c) all Indebtedness, as and when due and payable (but subject to
any subordination provisions contained in any instrument or agreement
evidencing such Indebtedness), unless contested in good faith by
appropriate proceedings and adequate reserves in accordance with GAAP
are being maintained by such Guaranty Party or such Subsidiary, except
to the extent that the nonpayment thereof would not result in or
reasonably be expected to result in a Material Adverse Effect.
SECTION 4.9. COMPLIANCE WITH LAWS. Each of the Guaranty Parties shall
comply, and shall cause each of its Subsidiaries to comply, in all respects
with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business or properties (including the Federal
Fair Labor Standards Act), unless such noncompliance is being contested in
good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by such Guaranty Party or such Subsidiary with
respect thereto, except to the extent any such noncompliance, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
SECTION 4.10. INSPECTION OF PROPERTY AND BOOKS AND RECORDS. Each of
the Guaranty Parties (other than Mail-Well) shall maintain and shall cause
each of its Subsidiaries to maintain proper books of record and account, in
which full, true and correct entries in conformity with GAAP shall be made of
all financial transactions and matters involving the assets and business of
such Guaranty Party and such Subsidiary. Each of the Guaranty Parties shall
permit, and shall cause each of its Subsidiaries to permit, representatives
and independent contractors of the Lessor Trustee or any Certificate Holder
to visit and to inspect any of their respective properties, to examine their
respective corporate, financial and operating records, and to make copies
thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and
independent public accountants at such reasonable times during normal
business hours and as often as may be reasonably desired, upon reasonable
advance notice to such Guaranty Parties; PROVIDED, HOWEVER, when an Event of
Default exists the Lessor Trustee or any Certificate Holder may do any of the
foregoing at the expense of such Guaranty Parties at any time during normal
business hours and without advance notice.
SECTION 4.11. ENVIRONMENTAL LAWS. Each Guaranty Party shall, and shall
cause each of its Subsidiaries to, conduct its operations and keep and
maintain its property in compliance with all Environmental Laws, if any
noncompliance, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect.
SECTION 4.12. ADDITIONAL GUARANTORS. It is contemplated that, pursuant
to Section 20.1 of the Lease, each Person which becomes a Material Subsidiary
shall promptly enter into this Guaranty Agreement and, to effect the same,
shall execute an acknowledgment in the form
-10-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
of Annex 1 attached hereto. Thereupon such Person shall be treated as a
Guarantor for all purposes of this Guaranty Agreement and shall be jointly
and severally liable for all Obligations guaranteed pursuant to the terms
hereof.
SECTION 4.13. CREDIT FACILITY DOCUMENTS. The Lessee agrees that, not
later than five Business Days following the execution and delivery of the
Credit Facility Documents, it shall deliver, or cause to be delivered, to the
Lessor Trustee and each Certificate Holder true and correct copies of each of
the Credit Facility Documents. If the Lessor Trustee determines that the
Credit Facility Documents contain covenants, defaults, remedies or other
terms that are more restrictive than the covenants, defaults, remedies and
other terms contained in the Operative Agreements, the Guaranty Parties agree
that, not later than 30 days following a request of the Lessor Trustee, they
shall amend the Operative Agreements so that the covenants, defaults,
remedies and other terms contained in the Operative Agreements are no less
restrictive than those contained in the Credit Facility Documents.
SECTION 5. NEGATIVE COVENANTS OF THE GUARANTY PARTIES.
Each Guarantor Party hereby covenants and agrees that:
SECTION 5.1. LIMITATION ON LIENS. The Guaranty Parties (other than
Mail-Well) shall not, and shall not suffer or permit any of their
Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property,
whether now owned or hereafter acquired, other than the following ("PERMITTED
LIENS"):
(a) any Lien existing on property of any of such Guaranty Party or
any of its respective Subsidiaries on the Closing Date securing
Indebtedness outstanding on the Closing Date and disclosed in
Schedule 5.1(a);
(b) any Lien created under any Operative Agreement, the Accounts
Receivable Securitization Facility Documents and the Equipment Lease
Facility Documents;
(c) Liens for taxes, fees, assessments or other governmental charges
which are not delinquent or remain payable without penalty, or to the
extent that nonpayment thereof is permitted by Section 4.8(a), PROVIDED
that no notice of lien has been filed or recorded under the Code;
(d) carriers', warehousemen's, mechanics', landlords', materialmen's,
repairmen's or other similar Liens arising in the ordinary course of
business which are not delinquent or remain payable without penalty or
which are being contested in good faith and by appropriate proceedings,
which proceedings have the effect of preventing the forfeiture or sale of
the property subject thereto;
-11-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(e) Liens (other than any Lien imposed by ERISA) consisting of
pledges or deposits required in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other
social security legislation;
(f) Liens on the property of any such Guaranty Party or its
Subsidiaries securing (i) the nondelinquent performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
(ii) contingent obligations on surety and appeal bonds, and (iii) other
nondelinquent obligations of a like nature; in each case, incurred in the
ordinary course of business;
(g) Liens consisting of judgment or judicial attachment liens,
PROVIDED that the enforcement of such Liens is effectively stayed and all
such liens in the aggregate at any time outstanding for the Guaranty
Parties and their respective Subsidiaries do not exceed $2,500,000;
(h) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount, and which do not in any case
materially detract from the value of the property subject thereto or
interfere with the ordinary conduct of the businesses of the Guaranty
Parties and their respective Subsidiaries;
(i) Liens on assets acquired after the date of this Agreement as
permitted by Section 5.4(e); PROVIDED, HOWEVER, that such Liens existed at
the time the respective assets were acquired and were not created in
anticipation thereof;
(j) purchase money security interests on any property acquired or
held by any of the Guaranty Parties or their respective Subsidiaries in the
ordinary course of business, securing Indebtedness incurred or assumed for
the purpose of financing all or any part of the cost of acquiring such
property; PROVIDED that (i) any such Lien attaches to such property
concurrently with or within 20 days after the acquisition thereof,
(ii) such Lien attaches solely to the property so acquired in such
transaction, (iii) the principal amount of the Indebtedness secured thereby
does not exceed 100% of the cost of such property, and (iv) the principal
amount of the Indebtedness secured by any and all such purpose money
security interests shall not at any time exceed, together with Indebtedness
permitted under Section 5.5(c), $15,000,000;
(k) Liens securing obligations in respect of Capital Leases on assets
subject to such leases, PROVIDED that such Capital Leases are otherwise
permitted hereunder;
(l) Liens arising solely by virtue of any statutory or common law
provision relating to banker's liens, rights of set-off or similar rights
and remedies as to deposit accounts or other funds maintained with a
creditor depository institution; PROVIDED that (i) such deposit account is
not a dedicated cash collateral account and is not
-12-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
subject to restrictions against access by any of the Guaranty Parties in
excess of those set forth by regulations promulgated by the FRB, and
(ii) such deposit account is not intended by any of the Guaranty Parties
or any of their respective Subsidiaries to provide collateral to the
depository institution; and
(m) Liens arising pursuant to Section 412(n) of the Code or
Section 4069(a) of ERISA if (i) the delinquent payments to which the Lien
relates are made within ten (10) days after any Guaranty Party or any
Subsidiary of any Guaranty Party learns of the failure to make payment or
(ii) the obligation to make such payments is being contested in good faith
and by appropriate proceedings if adequate reserves with respect thereto
are maintained on the books of the Guaranty Party in accordance with GAAP.
SECTION 5.2. DISPOSITION OF ASSETS. The Guaranty Parties (other than
Mail-Well) shall not, and shall not suffer or permit any of their
Subsidiaries to, directly or indirectly, sell, assign, lease, convey,
transfer or otherwise dispose of (whether in one or a series of transactions)
any property (including accounts and notes receivable, with or without
recourse) or enter into any agreement to do any of the foregoing, except:
(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
(b) the sale of equipment to the extent that such equipment is
exchanged for credit against the purchase price of similar replacement
equipment, or the proceeds of such sale are reasonably promptly applied to
the purchase price of such replacement equipment;
(c) sales or assignments of undivided percentage interests in certain
accounts receivable pursuant to the Accounts Receivable Securitization
Documents, so long as the aggregate financing amount payable from such
accounts receivable does not exceed $150,000,000; and
(d) dispositions not otherwise permitted hereunder which are made
for fair market value (including sales pursuant to sale-leaseback
transactions); PROVIDED that (i) at the time of any disposition, no
Default or Event of Default shall exist or shall result from such
disposition, (ii) the aggregate sales price from such disposition shall
be paid in cash, and (iii) the aggregate value of all assets so sold by
the Guaranty Parties and their respective Subsidiaries, together, shall
not exceed in any 12-month period ten percent (10%) of Consolidated
Total Assets as of the end of the immediately preceding fiscal year of
the Lessee.
SECTION 5.3. CONSOLIDATIONS AND MERGERS. The Guaranty Parties (other
than Mail-Well) shall not, and shall not suffer or permit any of their
Subsidiaries to, merge, consolidate with or into, or convey, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets (whether now owned or
hereafter acquired) to or in favor of any Person, except:
-13-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(a) any Subsidiary of the Lessee may merge with (i) the Lessee,
PROVIDED that the Lessee shall be the continuing or surviving corporation,
or (ii) any one or more Subsidiaries of the Lessee, PROVIDED that if any
transaction shall be between a Subsidiary of the Lessee and a Wholly Owned
Subsidiary of the Lessee, the Wholly Owned Subsidiary of the Lessee shall
be the continuing or surviving corporation; and
(b) any Subsidiary of the Lessee may merge with any other Person
(other than the Lessee or a Wholly Owned Subsidiary of the Lessee),
PROVIDED that (i) such Subsidiary shall be the continuing or surviving
corporation and (ii) immediately prior to and immediately after giving
effect to such transaction, no Default shall have occurred, whether as a
result of such consolidation or merger or otherwise; and
(c) any Subsidiary of the Lessee may sell all or substantially all of
its assets (upon voluntary liquidation or otherwise), to the Lessee.
SECTION 5.4. LOANS AND INVESTMENTS. The Guaranty Parties (other than
Mail-Well) shall not purchase or acquire, or suffer or permit any of their
Subsidiaries to purchase or acquire, or make any commitment therefor, any
capital stock, equity interest, or any obligations or other securities of, or
any interest in, any Person, or make or commit to make any Acquisitions, or
make or commit to make any advance, loan, extension of credit or capital
contribution to or any other investment in, or joint venture with, any Person
including any Affiliate of any of the Guaranty Parties (together,
"INVESTMENTS") except for:
(a) Investments held by a Guaranty Party or its Subsidiaries in the
form of cash equivalents or short term marketable securities;
(b) extensions of credit in the nature of accounts receivable or
notes receivable arising from the sale or lease of goods or services in the
ordinary course of business of a Guaranty Party or its Subsidiaries;
(c) Investments not otherwise prohibited by this Agreement or any of
the other Operative Agreements by a Guaranty Party or its Subsidiaries in a
Guaranty Party (other than Mail-Well) or its Subsidiaries;
(d) extensions of credit by a Guaranty Party or its Subsidiaries to
any of their respective Wholly Owned Subsidiaries, or by any of such Wholly
Owned Subsidiaries to another such Wholly Owned Subsidiary;
(e) Investments not otherwise permitted pursuant to subsections (a),
(b), (c) or (d) of this Section in, or acquisitions of, Persons or the
assets of Persons engaged in other lines of business substantially similar
or related to the lines of business of the Lessee or its Subsidiaries,
PROVIDED that at the time of any such Investment or acquisition and at the
time that the Lessee, or any Subsidiary incurs any Contractual Obligation
with respect to any such Investment or acquisition:
-14-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(i) no Default or Event of Default shall have occurred and be
continuing or result therefrom; and
(ii) recalculations are made by the Lessee (based on audited financial
statements (or unaudited financial statements in the case of acquired
entities which are divisions of public companies with audited consolidated
financial statements) from the acquired entities confirming the historical
results with adjustments to exclude certain non-recurring expenses (such as
owners' salaries) of the acquired company as determined by the Lessor
Trustee) of compliance with the covenants contained in Section 5.13, 5.14
and 5.15 for the calculation period on a pro forma basis as if the
respective acquisition had occurred on the first day of such calculation
period, and such recalculations shall show that all such covenants would
have been complied with throughout the calculation period if the
acquisition had occurred on the first day of such calculation period.
(f) Investments constituting Permitted Swap Obligations or payments
or advances under Swap Contracts relating to Permitted Swap Obligations;
and
(g) additional Investments after the Closing Date not to exceed, on
any date of determination, an amount equal to $40,000,000 plus 50% of the
increase in the Consolidated Net Worth of the Lessee and its Subsidiaries
from December 31, 1997 to the last day of the fiscal quarter of the Lessee
then ended for which financial statements have been delivered to the Lessor
Trustee; PROVIDED that no Default or Event of Default shall have occurred
and be continuing or result therefrom.
SECTION 5.5. LIMITATION ON INDEBTEDNESS. The Guaranty Parties (other
than Mail-Well) shall not, and shall not suffer or permit any Subsidiary to,
create, incur, assume, suffer to exist, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(a) Indebtedness incurred pursuant to the Operative Agreements;
(b) Indebtedness existing on the Closing Date and set forth in
Schedule 5.5(b) and any extensions and renewals of such Indebtedness on
terms otherwise permitted pursuant to this Agreement, so long as the
principal amount is not increased, additional collateral is not given and
unsecured Indebtedness is not made secured Indebtedness;
(c) Indebtedness secured by Liens permitted by Section 5.1(j) in an
aggregate amount outstanding not to exceed $15,000,000;
(d) Indebtedness owing by any Guaranty Party to any other Guaranty
Party (other than Mail-Well) (including Intercompany Subordinated Debt)
that is not otherwise prohibited by this Agreement or any of the other
Operative Agreements;
-15-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(e) Indebtedness arising as a consequence of Investments permitted
pursuant to Section 5.4(d);
(f) Indebtedness of the Lessee and its Subsidiaries owing under
the Senior Subordinated Note Documents;
(g) Indebtedness owing under the Accounts Receivable
Securitization Facility Documents and permitted under Section 5.2(c);
(h) Indebtedness incurred pursuant to the Credit Facility
Documents in an aggregate amount not to exceed $300,000,000; and
Indebtedness incurred pursuant to the Equipment Lease Facility
Documents, PROVIDED THAT the aggregate amount of all Indebtedness
incurred pursuant to the Equipment Lease Facility Documents and all
Indebtedness permitted under Section 5.6(a) does not exceed $60,000,000;
(i) liabilities of the Lessee in respect of unfunded vested
benefits under any Plan to the extent that the existence of such
liabilities will not constitute, cause or result in a Default or Event
of Default;
(j) Indebtedness owing under any seller financing arrangements to
the extent otherwise permitted under Sections 5.1 and 5.8; and
(k) additional unsecured Indebtedness, so long as no Default or
Event of Default exists or arises as a result of borrowing thereunder.
SECTION 5.6. TRANSACTIONS WITH AFFILIATES. The Guaranty Parties (other
than Mail-Well) shall not, and shall not suffer or permit any of their
Subsidiaries to, enter into any transaction with any Affiliate of such
Guaranty Party, except upon fair and reasonable terms no less favorable to
such Guaranty Party or such Subsidiary than would obtain in a comparable
arm's-length transaction with a Person not an Affiliate of such Guaranty
Party or such Subsidiary.
SECTION 5.7. USE OF PROCEEDS. The Lessee shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the Advances, directly
or indirectly, (i) to purchase or carry Margin Stock, (ii) to repay or
otherwise refinance indebtedness of the Lessee or any Subsidiary or others
incurred to purchase or carry Margin Stock, or (iii) to extend credit for the
purpose of purchasing or carrying any Margin Stock.
SECTION 5.8. CONTINGENT OBLIGATIONS. The Guaranty Parties (other than
Mail-Well) shall not, and shall not suffer or permit any Subsidiary of a
Guaranty Party to, create, incur, assume or suffer to exist any Contingent
Obligations except:
(a) endorsements for collection or deposit in the ordinary course
of business;
(b) Permitted Swap Obligations;
-16-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(c) Guaranty Obligations of the Guaranty Parties incurred with
respect to any Indebtedness of any other Guaranty Party or its
Subsidiaries, PROVIDED THAT such Guaranty Obligation is otherwise
permitted under Section 5.5;
(d) Contingent Obligations with respect to Surety Instruments
incurred in the ordinary course of business and which otherwise
constitute Indebtedness permitted pursuant to Section 5.5; and
(e) Guaranty Obligations incurred in the ordinary course of
business which otherwise constitute Indebtedness permitted pursuant to
Section 5.5 and which do not exceed in aggregate principal amount
$20,000,000.
SECTION 5.9. RESTRICTED PAYMENTS. The Lessee shall not declare or make
any dividend payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any class of
its capital stock, or purchase, redeem or otherwise acquire for value any
shares of its capital stock or any warrants, rights or options to acquire
such shares, now or hereafter outstanding; except that the Lessee may (as
long as the Lessee is in PRO FORMA compliance with this Agreement):
(a) declare and make dividend payments or other distributions
payable solely in its common stock;
(b) purchase, redeem or otherwise acquire shares of its common
stock or warrants or options to acquire any such shares with the
proceeds received from the substantially concurrent issue of new shares
of its common stock;
(c) declare or pay cash dividends to its stockholders and
purchase, redeem or otherwise acquire shares of its capital stock or
warrants, rights or options to acquire any such shares for cash,
PROVIDED that, immediately after giving effect to such proposed action,
no Default or Event of Default would exist; and
(d) declare or pay cash dividends to pay its operating expenses
incurred in the ordinary course of business and other corporate overhead
costs and expenses.
SECTION 5.10. ERISA. The Guaranty Parties (other than Mail-Well) shall
not, and shall not suffer or permit any of its ERISA Affiliates to: (a)
engage in a prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan; (b) cause or permit any Plan
which is qualified under subsection 401(a) of the Code to lose such
qualification; or (c) fail to make all required contributions to any Plan
subject to subsection 412 of the Code; but only to the extent that any such
act or failure to act, separately or together with all other such acts or
failure to act, in any of the foregoing clauses (a), (b) or (c) has resulted
or could reasonably be expected to result in liability of the Guaranty
Parties in an aggregate amount in excess of $1,000,000; or (d) engage in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.
-17-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
SECTION 5.11. CHANGE IN BUSINESS. Except as permitted pursuant to
Section 5.4, the Lessee shall not, and shall not suffer or permit any of its
Subsidiaries to, engage in any material line of business substantially
different from those lines of business carried on by the Lessee and its
respective Subsidiaries on the date hereof, including as a consequence of any
Acquisition.
SECTION 5.12. CHANGE IN FISCAL YEAR. Mail-Well shall not change its
fiscal year or the fiscal year of any of its consolidated Subsidiaries.
SECTION 5.13. MINIMUM CONSOLIDATED NET WORTH. The Lessee shall not
permit, as of the last day of any fiscal quarter of the Lessee, Consolidated
Net Worth to be less than the sum of:
(a) 85% of Consolidated Net Worth as of September 30, 1997, PLUS
(b) 50% of Consolidated Net Income from September 30, 1997 through
the end of each fiscal quarter of the Lessee thereafter, determined
quarterly on a consolidated basis and not reduced by any Consolidated
Net Loss, PLUS
(c) 75% of the Net Securities Proceeds arising on or after
September 30, 1997 to the date of determination.
As used herein, "NET SECURITIES PROCEEDS" means, with respect to any sale or
issuance of equity securities (whether common or preferred, options, warrant
or capital appreciation rights, but excluding any sales or issuances of stock
pursuant to employee stock purchase plans, employee stock option plans or
other employee benefit plans), the excess of (A) the gross cash and, to the
extent acceptable to the Lessor Trustee and the Certificate Holders, noncash
proceeds received or receivable by the Lessee or any of its Subsidiaries from
such disposition MINUS (B) the sum of (i) all reasonable Attorney Costs and
underwriting and accounting fees and disbursements and government fees
actually paid (or reasonably expected to be paid during the fiscal year of
the Lessee in which such sale or issuance occurs) in connection with such
sale or issuance which are not payable to Lessee or to any Affiliate of
Lessee or any of its Subsidiaries; and (ii) all taxes actually paid in
connection with such sale or issuance.
SECTION 5.14. MAXIMUM LEVERAGE RATIO. The Lessee shall not permit, as
of the last day of any fiscal quarter of the Lessee, the Leverage Ratio to
exceed 3.75 to 1:00; PROVIDED, HOWEVER, the Leverage Ratio shall be reduced
to 3.25 to 1.00 on the earlier to occur of (a) the fourth anniversary of the
Closing Date or (b) the repayment of any portion of the principal on the
Intercompany Subordinated Debt or the making of any restricted payment
permitted pursuant to Section 5.9 (other than restricted payments pursuant to
clause (d) thereof).
SECTION 5.15. MINIMUM INTEREST COVERAGE RATIO. The Lessee shall not
permit, as of the last day of any fiscal quarter of the Lessee, the ratio of
(a) EBIT, measured for the period consisting of the four consecutive fiscal
quarters of the Lessee ending on such day, to
-18-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
(b) the sum of Interest Expense, measured for such period, which were
deductible in determining Consolidated Net Income or Consolidated Net Loss
for such period, to be less than 2.00 to 1.00. For purposes of calculating
compliance with this Section 5.15, amounts that would be included in either
EBIT or Interest Expense on account of any Acquisitions made by any of the
Lessee or its Subsidiaries after September 30, 1997 will be excluded unless
the Lesser Trustee and the Certificate Holders have been provided with
independent verification of such historical results.
SECTION 5.16. LIMITATION ON MODIFICATIONS OF SENIOR SUBORDINATED NOTES;
MODIFICATION OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN OTHER
AGREEMENTS; ETC. The Lessee shall not and shall not permit any of its
Subsidiaries to (i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value of,
or any prepayment or redemption as a result of any asset sale, change of
control or similar event of, any Senior Subordinated Notes (other than such
payments which are funded by equity contributions from Mail-Well) or amend or
modify, or permit the amendment or modification of, any provision of the
Senior Subordinated Notes or any agreement (including, without limitation,
any Senior Subordinated Note Document) relating thereto, (ii) amend, modify
or change the Equipment Lease Facility Documents, the Credit Facility
Documents or the Accounts Receivable Securitization Facility Documents or
(iii) amend, modify or change its Certificate of Incorporation (including
without limitation, by the filing or modification of any certificate of
designation) or By-Laws, other than any amendments, modifications or changes
pursuant to this clause (iii) which do not in any way adversely affect the
interest of the Certificate Holders.
SECTION 5.17. LIMITATION ON CERTAIN RESTRICTIONS ON SUBSIDIARIES. The
Lessee will not and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective
any encumbrance or restriction on the ability of any Subsidiary which is not
a Material Subsidiary to (a) pay dividends or make any other distributions on
its capital stock or any other interest or participation in its profits owned
by the Lessee or any of its Subsidiaries, or pay any Indebtedness owed to the
Lessee or any Subsidiary of the Lessee, (b) make loans or advances to the
Lessee for any Subsidiary of the Lessee or (c) transfer any of its properties
or assets to the Lessee, except for such encumbrances or restrictions
existing under or by reason of (i) Applicable Law, (ii) customary provisions
restricting subletting or assignment of any lease governing a leasehold
interest of the Lessee or a Subsidiary of the Lessee and (iii) customary
provisions restricting assignment of any licensing agreement entered into by
the Lessee or a Subsidiary of the Lessee in the ordinary course of business.
SECTION 6. DEFINITIONS.
SECTION 6.1. DEFINITIONS. For purposes of this Agreement the following
terms shall have the respective meanings assigned thereto:
"ACCOUNTS RECEIVABLE SECURITIZATION FACILITY DOCUMENTS" means that
certain (a) Pooling and Servicing Agreement dated as of November 15, 1996,
among MTRC, the Lessee and Norwest Bank Colorado, National Association
("NORWEST"), as Trustee, (b)
-19-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
Series 1996-1 Supplement to Pooling and Servicing Agreement dated as of
November 15, 1996, among MTRC, the Lessee and Norwest, 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, as Trustee, (d) Series 1996-1 Certificate Purchase Agreement dated
as of November 15, 1996, among MTRC, Corporate Receivables Corporation,
Norwest, as Trustee, and the Lessee, (e) Purchase and Contribution Agreement
dated as of November 15, 1996, between the Lessee, 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 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.
"ACQUISITION" means any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a)
the acquisition of all or substantially all of the assets of a Person, or of
any business or division of a Person, (b) the acquisition of in excess of 50%
of the capital stock, partnership interests, membership interests or equity
of any Person, or otherwise causing any Person to become a Subsidiary, (c)
the power to elect, appoint, or cause the election or appointment of at least
a majority of the members of the board of directors or similar governing body
of such Person, or (d) a merger or consolidation or any other combination
with another Person (other than a Person that is a Subsidiary) PROVIDED that
the Lessee or its Subsidiary is the surviving entity.
"ATTORNEY COSTS" means and includes all fees and disbursements of
any law firm or other external counsel, the allocated cost of internal legal
services and all disbursements of internal counsel.
"CHANGE OF CONTROL" means the occurrence of either of the
following: (a) any "person" or "group" (as such terms are used in
subsections 13(d) and 14(d) of the Exchange Act and the regulations
thereunder), is or becomes the "beneficial owner" (as such term is used in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 30% or more of the
then outstanding voting capital stock of the Lessee, (b) the Continuing
Directors shall cease to constitute at least a majority of the directors
constituting the board of directors of the Lessee.
"COMPLIANCE CERTIFICATE" means a certificate of Mail-Well setting
forth (i) the information (including detailed calculations) required in order
to establish whether the Lessee was in compliance with the requirements of
Section 5.3 through 5.15, exclusively during the quarterly or annual period
covered by the statements then being furnished (including with respect to
each such Section, where applicable, the calculations of the maximum or
minimum amount, ratio or percentage, as the case may be, permissible under
the terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and (ii) a statement that such officer has
reviewed the relevant terms of the Lease
-20-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
and has made, or caused to be made, under his or her supervision, a review of
the transactions and conditions of Mail-Well and its Subsidiaries from the
beginning of the quarterly or annual period covered by the statements then
being furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition
or event existed or exists, specifying the nature and period of existence
thereof and what action Mail-Well and its Subsidiaries shall have taken or
propose to take with respect thereto.
"CONSOLIDATED FUNDED DEBT" means, as of any date of determination,
all Funded Debt of the Lessee and its Subsidiaries, determined on a
consolidated basis eliminating intercompany items.
"CONSOLIDATED NET INCOME" and "CONSOLIDATED NET LOSS" mean,
respectively, for any period, the aggregate net income or loss for such
period of the Lessee and its Subsidiaries on a consolidated basis but without
giving effect to any extraordinary noncash items; PROVIDED that,
recalculations are made by the Lessee (based on audited financial statements
(or unaudited financial statements in the case of acquired entities which are
divisions of public companies with audited consolidated financial statements)
of acquired entities confirming the historical results for the net income or
loss of such entities with adjustments to exclude certain non-recurring
expenses (such as owner's salaries) of the acquired entity as determined by
the Lessor Trustee) of compliance with the covenants contained in Section
5.13, 5.14 and 5.15 for the calculation period on a PRO FORMA basis as if the
respective acquisition had occurred on the first day of such calculation
period.
"CONSOLIDATED NET WORTH" means, as of any date of determination,
Consolidated Total Assets MINUS Consolidated Total Liabilities.
"CONSOLIDATED TOTAL ASSETS" means, as of any date of determination,
the total assets of the Lessee and its Subsidiaries on a consolidated basis.
"CONSOLIDATED TOTAL LIABILITIES" means, as of any date of
determination, the total liabilities of the Lessee and its Subsidiaries on a
consolidated basis.
"CONTINGENT OBLIGATION" means, as to any Person, any direct or
indirect liability of that Person, whether or not contingent, with or without
recourse, (a) with respect to any Indebtedness, lease, dividend, letter of
credit or other obligation (the "PRIMARY OBLIGATIONS") of another Person (the
"PRIMARY OBLIGOR"), including any obligation of that Person (i) to purchase,
repurchase or otherwise acquire such primary obligations or any security
therefor, (ii) to advance or provide funds for the payment or discharge of
any such primary obligation, or to maintain working capital or equity capital
of the primary obligor or otherwise to maintain the net worth or solvency or
any balance sheet item, level of income or financial condition of the primary
obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation, or (iv)
otherwise to assure or hold harmless the holder of any such primary
obligation against loss
-21-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
in respect thereof (each, a "GUARANTY OBLIGATION"); (b) with respect to any
Surety Instrument issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings or payments; (c) to
purchase any materials, supplies or other property from, or to obtain the
services of, another Person if the relevant contract or other related
document or obligation requires that payment for such materials, supplies or
other property, or for such services, shall be made regardless of whether
delivery of such materials, supplies or other property is ever made or
tendered, or such services are ever performed or tendered; or (d) in respect
of any Swap Contract. The amount of any Contingent Obligation shall, in the
case of Guaranty Obligations, be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation
is made or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof, and in the case of other Contingent
Obligations other than in respect of Swap Contracts, shall be equal to the
maximum reasonably anticipated liability in respect thereof and, in the case
of Contingent Obligations in respect of Swap Contracts, shall be equal to the
Swap Termination Value.
"CONTINUING DIRECTORS" means, as of any date, the collective
reference to all members of the board of directors of the Lessee as of
December 31, 1997 and those members who assumed office after such date and
whose appointment or nomination for election by the Lessee's shareholders was
approved by a vote of at least 50% of the Continuing Directors in office
immediately prior to such appointment or nomination.
"CONTRACTUAL OBLIGATIONS" means, as to any Person, any provision of
any security issued by such Person or of any agreement, undertaking,
contract, indenture, mortgage, deed of trust or other instrument, document or
agreement to which such Person is a party or by which it or any of its
property is bound.
"CREDIT FACILITY DOCUMENTS" means (i) the Credit Agreement to be
entered into among the Guaranty Parties, Bank of America National Trust and
Savings Association, as Administrative Agent, the Documentation Agent and
Co-Agents specified therein, and the Banks (as defined therein), and (ii) the
other Loan Documents, as specified therein, pursuant to which such Banks
shall provide a revolving loan to the Lessee and certain letters of credit as
described therein.
"EBIT" means, for any period, Consolidated Net Income or
Consolidated Net Loss, as the case may be, for such period, PLUS the sum of
(a) Interest Expense, and (b) income tax expense, which were deductible in
determining Consolidated Net Income or Consolidated Net Loss of the Lessee
and its Subsidiaries on a consolidated basis for such period.
"EBITDA" means, for any period, EBIT for such period, PLUS the sum
of (a) depreciation expense, (b) amortization expense and (c) noncash items,
which were deductible in determining Consolidated Net Income or Consolidated
Net Loss of the Lessee and its Subsidiaries on a consolidated basis for such
period.
"ENVIRONMENTAL LAWS" means all federal, state, local or foreign
laws, statutes, common law duties, rules, regulations, ordinances and codes,
together with all administrative
-22-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
orders, directed duties, licenses, authorizations and permits of, and
agreements with, any Governmental Authorities, in each case relating to
environmental, health, safety and land use matters.
"EQUIPMENT LEASE FACILITY DOCUMENTS" means equipment lease
documents for additional equipment leases which are otherwise permitted
hereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Lessee or any Subsidiary of the
Lessee with the meaning of subsection 414(b) or (c) of the Code (and Sections
414(m) and (o) of the Code for purposes of provisions relating to Section 412
of the Code).
"ERISA EVENT" means (a) a Reportable Event with respect to a
Pension Plan; (b) a withdrawal by the Lessee or any Subsidiary of the Lessee
or any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA) or a cessation of operations which is treated as
such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Lessee or any Subsidiary of the Lessee or any ERISA
Affiliate from a Multiemployer Plan or notification that a Multiemployer Plan
is in reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension
Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Lessee or any Subsidiary of the Lessee or any
ERISA Affiliate.
"FRB" means the Board of Governors of the Federal Reserve System,
and any Governmental Authority succeeding to any of its principal functions.
"FUNDED DEBT" of any Person means, as of the end of each fiscal
quarter of such Person, (a) all Indebtedness of such Person for borrowed
money; (b) all noncontingent reimbursement or payment obligations of such
Person with respect to Surety Instruments; (c) all obligations with respect
to capital and off-balance sheet leases (including, without limitation, the
Lease Balance); (d) the current portion of all obligations of such Person
arising with respect to preferred stock that is mandatorily redeemable by
such Person; (e) all indebtedness referred to in clauses (a) through (d)
above secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien upon or
in property (including accounts and contracts rights) owned by such Person,
even though such Person has not assumed or become liable for the payment of
such Indebtedness; and (f) all Guaranty Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (d); and (g) all Indebtedness in excess of $100,000,000 in connection
with the Accounts Receivables Securitization Facility Documents.
-23-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
"GUARANTY OBLIGATION" has the meaning specified in the definition
of "Contingent Obligation."
"GUARANTY PARTY" means the Guarantors and the Lessee.
"INDEBTEDNESS" of any Person means, without duplication, (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables entered into in the ordinary course of business on ordinary
terms); (c) all noncontingent reimbursement or payment obligations with
respect to Surety Instruments; (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either
case with respect to property acquired by the Person (even though the rights
and remedies of the seller or bank under such agreement in the event of
default are limited to repossession or sale of such property); (f) all
obligations with respect to capital leases; (g) all indebtedness referred to
in clauses (a) through (f) above secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien upon or in property (including accounts and contracts rights)
owned by such Person, even though such Person has not assumed or become
liable for the payment of such Indebtedness; and (h) all Guaranty Obligations
in respect of indebtedness or obligations of others of the kinds referred to
in clauses (a) through (g) above.
For all purposes of this Agreement, the Indebtedness of any Person
shall include all recourse Indebtedness of any partnership or joint venture
or limited liability company in which such Person is a general partner or a
joint venturer or a member.
"INTERCOMPANY SUBORDINATED DEBT" means intercompany indebtedness of
the Lessee to Mail-Well in the amount of $150,000,000 on terms and conditions
satisfactory to the Lessee, the Lessor Trustee and the Certificate Holders.
"LEVERAGE RATIO" means, as of any date of determination, the ratio
of (a) Consolidated Funded Debt to (b) EBITDA for the period of four
consecutive fiscal quarters of the Lessee ending on such date.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation G, T, U or X of the FRB.
"MTRC" means Mail-Well Trade Receivables Corporation.
"PENSION PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) subject to Title IV of ERISA which the Lessee or any Subsidiary of the
Lessee or any ERISA Affiliate sponsors, maintains, or to which it makes, is
making, or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 406(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan
years.
-24-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
"PERMITTED SWAP OBLIGATIONS" means all obligations (contingent or
otherwise) of any Guaranty Party or any Subsidiary existing or arising under
Swap Contracts, PROVIDED that each of the following criteria is satisfied:
(a) such obligations are (or were) entered into by such Person in the
ordinary course of business for the purpose of directly mitigating risks
associated with liabilities, commitments or assets held or reasonably
anticipated by such Person, or changes in the value of securities issued by
such Person in conjunction with a securities repurchase program not otherwise
prohibited hereunder, and not for purposes of speculation or taking a "market
view"; and (b) such Swap Contracts do not contain (i) any provision
("walk-away" provision) exonerating the nondefaulting party from its
obligation to make payments on outstanding transactions to the defaulting
party, or (ii) any provision creating or permitting the declaration of an
event of default, termination event or similar event upon the occurrence of
an Event of Default hereunder (other than an Event of Default under Section
16.1(a)).
"REPORTABLE EVENT" means, any of the events set forth in Section
4043(c) of ERISA or the regulations thereunder, other than any such event of
which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"SEC" means the Securities and Exchange Commission, or any
Governmental Authority succeeding to any of its principal functions.
"SENIOR SUBORDINATED NOTE DOCUMENTS" means the Senior Subordinated
Notes, the Senior Subordinated Note Indenture and all other documents
executed and delivered with respect to the Senior Subordinated Notes or
Senior Subordinated Note Indenture.
"SENIOR SUBORDINATED NOTE INDENTURE" means the Indenture dated as
of February 24, 1994 between Mail-Well, Pavey Envelope and Tag Corp. and
Shawmut Bank, National Association.
"SENIOR SUBORDINATED NOTES" means Mail-Well's (i) 10 1/2% Senior
Subordinated Notes due 2004 and (ii) 10 1/2% Series B Senior Subordinated
Notes due 2004, issued pursuant to the Senior Subordinated Note Indenture.
"SURETY INSTRUMENTS" means all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds,
surety bonds and similar instruments.
"SWAP CONTRACT" means any agreement, whether or not in writing,
relating to any transaction that is a rate swap, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap or
option, bond, note or bill option, interest rate option, forward foreign
exchange transaction, cap, collar or floor transaction, currency swap,
cross-currency rate swap, swaption, currency option or any other, similar
transaction (including any option to enter into any of the foregoing) or any
combination of the foregoing, and, unless the context otherwise clearly
requires, any master agreement relating to or governing any or all of the
foregoing.
-25-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
"SWAP TERMINATION VALUE" means, in respect of any one or more Swap
Contracts, after taking into account the effect of any legally enforceable
netting agreement relating to such Swap Contracts, (a) for any date on or
after the date such Swap Contracts have been closed out and termination
value(s) determined in accordance therewith, such termination value(s), and
(b) for any date prior to the date referenced in clause (a) the amount(s)
determined as the mark-to-market value(s) for such Swap Contracts, as
determined based upon one or more mid-market or other readily available
quotations provided by any recognized dealer in such Swap Contracts (which
may include any Certificate Holder).
"UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the
applicable plan year.
"WHOLLY OWNED SUBSIDIARY" means any corporation in which (other
than directors' qualifying shares required by law) 100% of the capital stock
of each class having ordinary voting power, and 100% of the capital stock of
every other class, in each case, at the time as of which any determination is
being made, is owned, beneficially and of record, by the Lessee or any
Subsidiary of the Lessee, or by one or more of the other Wholly Owned
Subsidiaries, or both.
SECTION 6.2. INTERPRETATION. Unless the context otherwise requires,
(i) references to Agreements shall be deemed to mean and include such
Agreements as the same may be amended and supplemented from time to time, and
(ii) references to parties to Agreements shall be deemed to include the
successors and permitted assigns of such parties.
SECTION 6.3. ACCOUNTING PRINCIPLES. Unless the context otherwise
clearly requires, all accounting terms not expressly defined herein shall be
construed, and all financial computations required under this Agreement shall
be made, in accordance with GAAP; PROVIDED, THAT if any change in GAAP
results in a change in the operation or calculation of any of Sections 5.13,
5.14, or 5.15 or any of the defined terms used therein, the Lessee shall
promptly notify the Lessor Trustee thereof and, upon notice to the Lessee by
the Lessor Trustee on behalf of the Certificate Holders, compliance with any
such covenant shall be determined on the basis of GAAP in effect immediately
before the relevant change in GAAP became effective, until either such notice
is withdrawn upon instruction from the Certificate Holders or such covenant
is amended in a manner satisfactory to the Lessee and the Certificate Holders.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF GUARANTORS.
Each Guarantor hereby represents and warrants as follows:
(a) Such Guarantor and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation, is duly qualified to do business
as a foreign corporation and is in good standing in all jurisdictions in
which failure to be so qualified would have a
-26-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
materially adverse effect on such Guarantor's and Subsidiaries' business
or, in the case of such Guarantor, the performance of its obligations
under this Agreement, and has full corporate power and authority and all
necessary licenses and permits to carry on its present business and
operations, to own or lease its Properties and, in the case of such
Guarantor, to enter into and perform its obligations under this
Agreement.
(b) This Agreement has been duly authorized, executed and
delivered by such Guarantor and constitutes the legal, valid and binding
obligation of such Guarantor enforceable against such Guarantor in
accordance with its terms.
(c) The execution and delivery of this Agreement and compliance by
such Guarantor with all of the provisions thereof do not and will not
contravene any law, governmental rule or regulation or any order of any
court or governmental authority or agency applicable to or binding on
such Guarantor or contravene the provisions of, or constitute a default
under, or result in the creation of any Lien upon the Property of such
Guarantor under, its Articles of Incorporation or Certificate of
Incorporation, as the case may be, or By-laws or any indenture,
mortgage, contract or other agreement or instrument to which such
Guarantor is a party or by which it or any of its Properties may be
bound or affected.
(d) There are no proceedings pending or, to the knowledge of such
Guarantor, threatened, and to the knowledge of such Guarantor there is
no existing basis for any such proceedings, against or affecting such
Guarantor or any of its Subsidiaries in any court or before any
governmental authority or arbitration board or tribunal which, if
adversely determined, might individually or in the aggregate materially
and adversely affect the Properties, business, profits or condition
(financial or otherwise) of such Guarantor or its Subsidiaries or impair
the ability of such Guarantor to perform its obligations under this
Agreement. Such Guarantor is not in default with respect to any order
of any court or governmental authority or arbitration board or tribunal.
(e) Neither the nature of such Guarantor, or of any of its
businesses or Properties, nor any relationship between such Guarantor
and any other Person, nor any circumstance in connection with the
execution and delivery of this Agreement, nor the consummation of any of
the transactions by such Guarantor contemplated by this Agreement, is
such as to require a consent, approval or authorization of, or filing,
registration or qualification with, any governmental authority on the
part of such Guarantor in connection with the execution, delivery and
performance of this Agreement.
(f) Neither such Guarantor nor any of its Subsidiaries is or, but
for the passage of time, will be in violation in any material respect of
any term of any charter instrument, by-law or other material agreement
or instrument to which it is a party or by which it may be bound. Such
Guarantor and each of its Subsidiaries is in compliance with all laws,
ordinances, governmental rules and regulations to which it is subject,
the failure to comply with which would have a material and adverse
effect on
-27-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
its operations or condition, financial or otherwise, or would impair the
ability of such Guarantor to perform its obligations under this
Agreement, and has obtained all licenses, permits, franchises and other
governmental authorizations material to the conduct of its business.
(g) The consolidated financial statements provided to the Trust
Certificate Purchasers by Mail-Well, and the related consolidated
statements of income and retained earnings, were prepared in accordance
with GAAP and fairly present the consolidated financial condition of
Mail-Well with respect to its assets, liabilities, and operations.
Mail-Well has no contingent liabilities for Taxes, unusual forward or
long-term commitments, or unrealized or anticipated losses from any
unfavorable commitments which could have a Material Adverse Effect on it
or any of its Subsidiaries. No event has caused a Material Adverse
Effect on Mail-Well or any of its Subsidiaries since the date of the
audited financial statements last delivered to the Trust Certificate
Purchasers.
(h) The representations and warranties of the Lessee contained in
Section 3.2 of the Participation Agreement are true and correct.
SECTION 8. MISCELLANEOUS.
SECTION 8.1. ACTIONS AND PROCEEDINGS. Any legal action or proceeding
against any Guaranty Party with respect to this Agreement may be brought in
such of the courts of competent jurisdiction of the State of New York in the
City of New York or in the United States District Court for the Southern
District of New York as the Lessor Trustee, any Certificate Holder or their
respective successors and assigns, as the case may be, may elect, and by
execution and delivery of this Agreement each Guaranty Party irrevocably
submits to the nonexclusive jurisdiction of such courts for purposes of legal
actions and proceedings hereunder and, in the case of any such legal action
or proceeding brought in the above-named New York courts, hereby irrevocably
consents, during such time, to the service of process out of any of the
aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered mail, postage prepaid, to such Guaranty Party at
its address as provided in Section 8.8 hereof, or by any other means
permitted by Applicable Law. If it becomes necessary for the purpose of
service of process out of any such courts, each Guaranty Party shall take all
such action as may be required to authorize a special agent to receive, for
and on behalf of it, service of process in any such legal action or
proceeding, and shall take all such action as may be necessary to continue
said appointment in full force and effect so that such Guaranty Party will at
all times have an agent for service of process for the above-purposes in New
York, New York. To the extent permitted by law, final judgment (a certified
copy of which shall be conclusive evidence of the fact and of the amount of
any indebtedness of each Guaranty Party to the Lessor Trustee or any
Certificate Holder, as the case may be) against such Guaranty Party in any
such legal action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on an unsatisfied judgment. Each Guaranty Party
hereby irrevocably waives and agrees not to assert, by way of motion, as a
defense, or otherwise, in any legal action or proceeding brought hereunder in
any of the above-named courts, (i) that it or any of its property is
-28-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
immune from the above described legal process (whether through service or
notice, attachment prior to judgment, attachment in aid of execution, or
otherwise), (ii) that such action or proceeding is brought in an inconvenient
forum, that venue for the action or proceeding is improper or that this
Agreement or any other Operative Agreement may not be enforced in or by such
courts, or (iii) any defense that would hinder or delay the levy, execution
or collection of any amount to which any party hereto is entitled pursuant to
a final judgment of any court having jurisdiction. Nothing in these
provisions shall limit any right of the Lessor Trustee or any Certificate
Holder to bring actions, suits or proceedings in the courts of any other
jurisdiction.
SECTION 8.2. BINDING EFFECT. This Agreement and every part hereof
shall be binding upon each Guaranty Party and its successors and assigns, and
shall inure to the benefit of, and to the extent provided herein shall be
directly enforceable by, the Lessor Trustee and each Certificate Holder and
their respective successors and assigns.
SECTION 8.3. WAIVERS; CUMULATIVE EFFECT. A waiver by the Lessor
Trustee or any Certificate Holder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the
Lessor Trustee or such Certificate Holder would otherwise have had on any
future occasion with regard to any subsequent breach. No failure to exercise
nor any delay in exercising on the part of the Lessor Trustee or any
Certificate Holder any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies
herein provided are cumulative and may be exercised singlely or concurrently,
and are not exclusive of any rights and remedies provided by law.
SECTION 8.4. AMENDMENTS; WAIVERS. None of the terms or provisions of
this Agreement may be amended, waived, altered, modified or terminated except
by an instrument in writing signed by all parties hereto. The invalidity,
illegality or unenforceability of any provision of this Agreement shall not
affect the validity, legality or enforceability of any other provision of
this Agreement.
SECTION 8.5. SECTION HEADINGS. The section headings in this Agreement
are for convenience of reference only and shall neither be deemed to be a
part of this Agreement nor modify, define, expand or limit any of the terms
or provisions hereof. All references herein to numbered sections, unless
otherwise indicated, are to sections of this Agreement.
SECTION 8.6. SEVERABILITY. 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 or any
provision in any other Operative Agreement, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 8.7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
warranties, representations and covenants made by any Guaranty Party herein,
in the Lease or in any
-29-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
certificate or other instrument delivered on the Closing Date by it or on its
behalf under this Agreement or any of the other Operative Agreements shall be
considered to have been relied upon by the Lessor Trustee and each
Certificate Holder and shall survive the execution and delivery of this
Agreement, regardless of any investigation made by the Lessor Trustee or such
Certificate Holder or on their behalf. All statements in any such
certificate or other instrument shall constitute warranties and
representations by such Guaranty Party hereunder. Except for the warranties,
representations and covenants referred to above, no Guaranty Party has made
any further or other warranties, representations or covenants upon which any
of the parties has relied upon in entering into the transactions contemplated
by the Operative Agreements.
SECTION 8.8. NOTICES. All communications and notices required or
permitted hereunder shall be given in the manner specified in Section 10.2 of
the Participation Agreement and, if to any Guarantor, to such Guarantor at 23
Inverness Way East, Suite 160, Englewood, Colorado 80112, Attention:
President, Telecopy: 303-397-7400, or such other address as such Guarantor
may designate by notice to the other parties duly given in accordance with
this Section.
SECTION 8.9. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on 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.
SECTION 8.10. FURTHER ASSURANCES. Each Guaranty Party hereby agrees to
execute and deliver all such instruments and take all such action as the
Lessor Trustee or any Certificate Holder may from time to time reasonably
request in order to fulfill the purposes of this Agreement.
SECTION 8.11. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (EXCLUDING
CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE
APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE).
-30-
<PAGE>
MW 1997-1 Trust Guaranty Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year set forth below.
GUARANTORS MAIL-WELL, INC.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
GRAPHIC ARTS CENTER, INC.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
GRIFFIN ENVELOPE INC.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
MAIL-WELL WEST, INC.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
MURRAY ENVELOPE CORPORATION
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
<PAGE>
MW 1997-1 Trust Guaranty Agreement
SHEPARD POORMAN COMMUNICATIONS
CORPORATION
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
WISCO ENVELOPE CORP.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
WISCO II, L.L.C.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
WISCO III, L.L.C.
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
<PAGE>
MW 1997-1 Trust Guaranty Agreement
LESSEE MAIL-WELL I CORPORATION
By /s/ Kevin R. Howley
-----------------------------------
Its Vice President-Treasurer
ORIGINAL TRUST CERTIFICATE KEYBANK NATIONAL ASSOCIATION
PURCHASER - SERIES A
By /s/ Mark Sunderland
-----------------------------------
Its Vice President
ORIGINAL TRUST CERTIFICATE KEY CORPORATE CAPITAL INC.
PURCHASER - SERIES B
By /s/ Paul M. Sciandra
-----------------------------------
Its Vice President
LESSOR TRUSTEE KEYBANK NATIONAL ASSOCIATION,
individually and as trustee under a
Lessor Trust Agreement dated as of
December 15, 1997
By /s/ Mark Sunderland
-----------------------------------
Its Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,185
<SECURITIES> 22,319
<RECEIVABLES> 88,039
<ALLOWANCES> 0
<INVENTORY> 96,732
<CURRENT-ASSETS> 225,189
<PP&E> 319,409
<DEPRECIATION> (39,643)
<TOTAL-ASSETS> 743,466
<CURRENT-LIABILITIES> 122,832
<BONDS> 0
0
0
<COMMON> 428
<OTHER-SE> 248,536
<TOTAL-LIABILITY-AND-EQUITY> 743,466
<SALES> 274,705
<TOTAL-REVENUES> 274,705
<CGS> 216,194
<TOTAL-COSTS> 251,856
<OTHER-EXPENSES> 612
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,678
<INCOME-PRETAX> 16,559
<INCOME-TAX> 7,049
<INCOME-CONTINUING> 9,510
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,510
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.22
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MAIL-WELL,
INC.'S FINANCIAL STATEMENTS FOR QUARTERS 1, 2 AND 3 OF FISCAL YEAR 1997 AND FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1996 ADJUSTED FOR SFAS 128 AND STOCK SPLITS
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 3-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 APR-01-1997 JUL-01-1997 JAN-01-1996
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997 DEC-31-1996
<CASH> 10,851 12,523 12,074 9,656
<SECURITIES> 9,505 9,505 9,505 9,505
<RECEIVABLES> 44,620 46,062 52,349 40,532
<ALLOWANCES> 0 0 0 0
<INVENTORY> 71,308 73,001 77,891 68,275
<CURRENT-ASSETS> 135,490 141,254 169,748 135,532
<PP&E> 210,722 216,636 233,004 205,708
<DEPRECIATION> (25,598) (28,779) (32,238) (22,406)
<TOTAL-ASSETS> 473,306 479,632 544,253 470,866
<CURRENT-LIABILITIES> 110,981 112,109 121,944 113,487
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 390 376 376 388
<OTHER-SE> 126,770 134,489 142,932 120,770
<TOTAL-LIABILITY-AND-EQUITY> 473,306 479,632 544,253 470,866
<SALES> 212,032 207,482 233,496 778,524
<TOTAL-REVENUES> 212,032 207,482 233,496 778,524
<CGS> 165,398 161,201 183,085 611,591
<TOTAL-COSTS> 195,852 190,221 213,362 717,662
<OTHER-EXPENSES> (530) (354) 348 454
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 6,301 6,213 6,611 31,218
<INCOME-PRETAX> 10,409 11,402 13,175 29,190
<INCOME-TAX> 4,428 4,826 5,635 12,263
<INCOME-CONTINUING> 5,981 6,576 7,540 16,927
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 5,981 6,576 7,540 16,927
<EPS-PRIMARY> .17 .19 .21 .49
<EPS-DILUTED> .16 .18 .20 .48
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MAIL-WELL,
INC.'S FINANCIAL STATEMENTS FOR QUARTERS 1, 2 AND 3 OF FISCAL YEAR 1996 AND FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1995 ADJUSTED FOR SFAS 128 AND STOCK
SPLITS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 3-MOS 12-MOS
<FISCAL-YEAR-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 APR-01-1996 JUL-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1995
<CASH> 0 0 0 9,656
<SECURITIES> 0 0 0 0
<RECEIVABLES> 106,182 94,956 111,218 99,405
<ALLOWANCES> 0 0 0 0
<INVENTORY> 59,913 73,116 68,357 67,598
<CURRENT-ASSETS> 174,773 176,251 187,557 174,283
<PP&E> 219,299 232,716 220,432 218,769
<DEPRECIATION> (17,111) (20,946) (22,938) (13,673)
<TOTAL-ASSETS> 498,904 510,707 518,937 500,436
<CURRENT-LIABILITIES> 77,805 91,096 100,479 84,530
<BONDS> 0 0 0 0
0 0 0 0
0 0 0 0
<COMMON> 390 390 390 390
<OTHER-SE> 105,202 109,268 114,326 101,928
<TOTAL-LIABILITY-AND-EQUITY> 498,904 510,707 518,937 500,436
<SALES> 193,725 185,110 200,487 596,803
<TOTAL-REVENUES> 193,725 185,110 200,487 596,803
<CGS> 156,030 145,728 156,553 470,804
<TOTAL-COSTS> 181,028 170,959 183,407 549,209
<OTHER-EXPENSES> 55 19 1 668
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 7,813 7,812 8,351 29,334
<INCOME-PRETAX> 4,829 6,320 8,728 17,592
<INCOME-TAX> 2,062 2,708 3,682 7,219
<INCOME-CONTINUING> 2,767 3,612 5,046 10,373
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 2,412
<CHANGES> 0 0 0 0
<NET-INCOME> 2,767 3,612 5,046 7,961
<EPS-PRIMARY> .09 .11 .15 .36
<EPS-DILUTED> .08 .10 .14 .35
</TABLE>
