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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 September 30, 1999
Commission file number 1-12551
MAIL-WELL, INC.
ADDITIONAL AFFILIATE ISSUERS AND/OR GUARANTORS LISTED ON SCHEDULE
ATTACHED HERETO
(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, Suite 160, 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 November 8, 1999, the Registrant had 49,194,236 shares
of Common Stock, $0.01 par value, outstanding.
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1
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<TABLE>
SCHEDULE OF ADDITIONAL AFFILIATE ISSUERS AND/OR GUARANTORS
<CAPTION>
Exact Name of Guarantor Primary Standard I.R.S. Employer
Registrants as Specified in State of Industrial Identification
Their Respective Charters Formation Classification Number Number
------------------------- --------- --------------------- ------
<S> <C> <C> <C>
Mail-Well I Corporation Delaware 2677 84-1250534
Graphics Arts Center, Inc. Delaware 2752 93-1008554
Mail-Well Commercial Printing, Inc. Delaware 2752 84-1461875
Mail-Well Canada Holdings, Inc. Delaware 6719 84-1313090
Mail-Well Label Holdings, Inc. Colorado 6719 84-1449291
Mail-Well Label USA, Inc. Colorado 2752 84-1449292
Mail-Well West, Inc. Delaware 2677 84-1313079
Mail-Well I Corporation Colorado 2677 84-1250533
Murray Envelope Holdings, Inc. Colorado 6719 84-1421627
Murray Envelope Corporation Mississippi 2677 64-0271038
N-M Envelope, Inc. Mississippi 2677 64-0840384
National Graphics Company Colorado 2761 84-0692676
Poser Business Forms, Inc. Delaware 2761 75-2195786
Wisco II, L.L.C. Delaware 2677 84-1313080
</TABLE>
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<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
- ------------------------------------------------------------------------------------
<CAPTION>
PAGE
----
<S> <C>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 23
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 29
Part II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 29
Signature Page 32
</TABLE>
3
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
CURRENT ASSETS (UNAUDITED)
<S> <C> <C>
Cash and cash equivalents $ 5,147 $ 1,375
Receivables, net 91,328 130,523
Investment in accounts receivable securitization 92,891 47,069
Accounts receivable -- other 15,442 12,686
Income tax receivable - 10,715
Inventories, net 139,771 114,131
Other current assets 23,120 19,351
---------- ----------
Total current assets 367,699 335,850
PROPERTY, PLANT AND EQUIPMENT, NET 522,448 437,732
GOODWILL, NET 443,978 322,149
OTHER ASSETS, NET 26,137 32,225
---------- ----------
TOTAL $1,360,262 $1,127,956
========== ==========
CURRENT LIABILITIES
Accounts payable $ 134,486 $ 87,023
Accrued compensation and vacation 53,151 41,401
Other current liabilities 61,852 47,192
Current portion of long-term debt and capital leases 9,954 8,036
---------- ----------
Total current liabilities 259,443 183,652
LONG-TERM DEBT AND CAPITAL LEASES 672,558 583,427
DEFERRED INCOME TAXES 58,688 47,534
OTHER LONG-TERM LIABILITIES 11,491 10,468
---------- ----------
Total liabilities 1,002,180 825,081
MINORITY INTEREST IN NON VOTING STOCK OF SUBSIDIARY 3,500 3,500
SHAREHOLDERS' 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,
48,978,543 and 48,846,904 shares issued and outstanding,
respectively 490 488
Paid-in capital 217,851 217,218
Retained earnings 137,997 90,740
Accumulated other comprehensive income (loss) (1,756) (9,071)
---------- ----------
Total shareholders' equity 354,582 299,375
---------- ----------
TOTAL $1,360,262 $1,127,956
========== ==========
See notes to unaudited consolidated financial statements.
</TABLE>
4
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<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(IN THOUSANDS, EXCEPT EARNINGS PER SHARE AMOUNTS)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 492,787 $ 404,143 $ 1,372,250 $ 1,072,936
COST OF SALES 379,773 318,521 1,052,229 847,840
---------- ---------- ----------- -----------
GROSS PROFIT 113,014 85,622 320,021 225,096
OTHER OPERATING COSTS
Selling, administrative and other 68,557 53,175 199,019 141,234
Merger costs - 284 - 3,286
---------- ---------- ----------- -----------
Total other operating costs 68,557 53,459 199,019 144,520
---------- ---------- ----------- -----------
OPERATING INCOME 44,457 32,163 121,002 80,576
OTHER (INCOME) EXPENSE
Interest expense 14,729 10,979 41,545 26,132
Other (income) expense 64 (49) (640) (1,134)
---------- ---------- ----------- -----------
INCOME BEFORE INCOME TAXES 29,664 21,233 80,097 55,578
PROVISION FOR INCOME TAXES 12,163 8,510 32,840 22,023
---------- ---------- ----------- -----------
NET INCOME $ 17,501 $ 12,723 $ 47,257 $ 33,555
========== ========== =========== ===========
EARNINGS PER SHARE - BASIC $ 0.36 $ 0.27 $ 0.97 $ 0.73
EARNINGS PER SHARE - DILUTED $ 0.32 $ 0.25 $ 0.88 $ 0.67
WEIGHTED AVERAGE SHARES - BASIC 48,972 47,004 48,923 45,722
WEIGHTED AVERAGE SHARES - DILUTED 58,401 56,804 58,323 55,797
See notes to unaudited consolidated financial statements.
</TABLE>
5
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<TABLE>
MAIL-WELL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30,
--------------
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 47,257 $ 33,555
Adjustments to reconcile net income to cash provided by operations
Depreciation and amortization 42,769 29,279
Deferred income taxes 9,195 8,882
Other (967) 138
Changes in operating assets and liabilities, net of effects
of acquired businesses:
Receivables (42,028) (24,395)
Inventories (11,417) 2,202
Accounts payable 17,392 3,835
All other assets and other liabilities 25,703 (6,787)
--------- ---------
Net cash provided by operating activities 87,904 46,709
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition costs, net of cash acquired (193,372) (313,431)
Capital expenditures (62,850) (49,421)
Other investing activities 2,854 586
--------- ---------
Net cash used in investing activities (253,368) (362,266)
CASH FLOWS FROM FINANCING ACTIVITIES
Changes in accounts receivable securitization, net 77,400 4,800
Net proceeds from common stock issuance 672 92,476
Proceeds from long-term debt 322,040 372,770
Repayments of long-term debt and capital leases (229,550) (187,015)
Other financing activities (1,433) (3,746)
--------- ---------
Net cash provided by financing activities 169,129 279,285
EFFECT OF EXCHANGE RATE CHANGES ON CASH 107 (1,612)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,772 (37,884)
BALANCE AT BEGINNING OF PERIOD 1,375 40,911
--------- ---------
BALANCE AT END OF PERIOD $ 5,147 $ 3,027
========= =========
See notes to unaudited consolidated financial statements.
</TABLE>
6
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MAIL-WELL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS -- Mail-Well, Inc. and subsidiaries
(collectively referred to as the "Company") is one of the largest
printers in North America. The Company is a leading commercial printer
in the United States and manufactures and prints envelopes in the United
States and Canada. The Company is also a printer of custom business
documents for the distributor market and a printer of labels for the
food and beverage industry.
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 (ticker: MWL). These
financial statements include the accounts of the Company and its
majority owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
INTERIM FINANCIAL INFORMATION -- The interim financial information
contained herein is unaudited and includes all normal and recurring
adjustments which, in the opinion of management, are necessary to
present fairly the information set forth. The consolidated financial
statements should be read in conjunction with the Notes to the
Consolidated Financial Statements, which are included in the Company's
Form 10-K. The results for interim periods are not necessarily
indicative of results to be expected for the Company's fiscal year
ending December 31, 1999.
INVENTORIES -- Detail of inventories, in thousands:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
Raw materials $ 56,858 $ 45,720
Work in process 27,031 22,089
Finished goods 60,804 49,256
Reserve for obsolescence, loss and other (4,922) (2,934)
-------- --------
$139,771 $114,131
======== ========
</TABLE>
SHAREHOLDERS' EQUITY -- The change in Common Stock and Paid-in
Capital is caused by the exercise of stock options. The change in
Retained Earnings is net income. See "Other Comprehensive Income" for
an explanation of the change in those accounts.
OTHER COMPREHENSIVE INCOME -- Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income", was adopted January
1, 1998. This statement requires reporting of changes in shareholders'
equity that do not result directly from transactions with shareholders.
A summary of comprehensive income follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
------------------ -----------------
SEPTEMBER 30, 1999 SEPTEMBER 30, 1998 SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
------------------ ------------------ ------------------ ------------------
(in thousands)
<S> <C> <C> <C> <C>
Net income $17,501 $12,723 $47,257 $33,555
Currency translation adjustments, net (312) (4,129) 6,919 (5,871)
Unrealized loss on investments, net 178 (723) 396 (686)
------- ------- ------- -------
Comprehensive income $17,367 $ 7,871 $54,572 $26,998
======= ======= ======= =======
</TABLE>
EARNINGS PER SHARE -- In June 1998 the Company's common stock
split 2:1; all share and per share information has been retroactively
restated to reflect these splits. The unallocated shares issued under
the Employee Stock Ownership Plan are excluded from both the basic and
diluted earnings per share calculations.
7
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<TABLE>
<CAPTION>
INCOME SHARES PER-SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
----------- ------------- ------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999
EARNINGS PER SHARE - BASIC
Income available to common shareholders $ 17,501 48,972 $ 0.36
======
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,206
Convertible Subordinated Notes 1,314 8,003
Other - 220
-------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $ 18,815 58,401 $ 0.32
======== ====== ======
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
EARNINGS PER SHARE - BASIC
Income available to common shareholders $ 12,723 47,004 $ 0.27
======
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,452
Convertible Subordinated Notes 1,773 8,003
Other - 345
-------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $ 14,496 56,804 $ 0.25
======== ====== ======
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
EARNINGS PER SHARE - BASIC
Income available to common shareholders $ 47,257 48,923 $ 0.97
======
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,177
Convertible Subordinated Notes 3,940 8,003
Other - 220
-------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $ 51,197 58,323 $ 0.88
======== ====== ======
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
EARNINGS PER SHARE - BASIC
Income available to common shareholders $ 33,555 45,772 $ 0.73
======
EFFECT OF DILUTIVE SECURITIES
Stock options - 1,702
Convertible Subordinated Notes 3,940 8,003
Other - 320
-------- ------
EARNINGS PER SHARE - DILUTED
Income available to common shareholders including
assumed conversions $ 37,495 55,797 $ 0.67
======== ====== ======
</TABLE>
8
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NEW ACCOUNTING PRONOUNCEMENTS -- In June 1998, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (the "Statement"). The Statement, which will be effective
beginning in the year 2001, requires derivative instruments to be
recorded in the balance sheet at their fair value with changes in fair
value being recognized in earnings unless specific hedging accounting
criteria are met. The Company has minimal hedging and derivative
activity, but it has not determined the impact of this statement on its
operations and financial position.
In March 1998, the Accounting Standards Executive Committee of the
AICPA issued Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The SOP,
which has been adopted prospectively as of January 1, 1999, requires the
capitalization of certain costs incurred in connection with developing
or obtaining internal use software. Prior to the adoption of the SOP,
the Company expensed all internal costs as incurred. The effect of
adopting the SOP was immaterial to the three and nine months ended
September 30, 1999 and is not expected to have a material impact on
earnings going forward.
RECLASSIFICATION -- Certain amounts in the 1998 financial
statements have been reclassified to conform to the 1999 presentation.
2. MERGERS WITH COMMERCIAL PRINTING COMPANIES
Effective May 30, 1998, the Company completed its mergers with
seven commercial printing companies through the exchange of common
stock, which had a market value of $21.965 per share, as shown in the
table below:
<TABLE>
<CAPTION>
SHARES OF MAIL-WELL
OPERATING COMPANY NAME COMMON STOCK EXCHANGED
---------------------- ----------------------
<S> <C>
Color Art, Inc. ("Color Art") 2,351,951
Accu-color, Inc. ("Accu-color") 622,391
Industrial Printing Company ("Industrial Printing") 570,161
IPC Graphics, Inc. ("IPC Graphics") 325,973
United Lithograph, Inc. ("United Lithograph") 519,568
French Bray, Inc. ("French Bray") 538,040
Clarke Printing, Co. ("Clarke Printing") 437,984
</TABLE>
The consolidated financial statements give retroactive effect to
the mergers, which have been accounted for using the pooling of
interests method and, as a result, the financial position, results of
operations and cash flows are presented as if the combining companies
had been consolidated for all periods presented. The consolidated
balance sheets reflect the accounts of the Company as if the additional
common stock had been issued during all periods presented.
The companies listed above are hereafter collectively referred to
as the Pooled Companies.
Each of the mergers was negotiated and consummated as separate
transactions and the separate mergers were not contingent upon each
other. Except for French Bray and Clarke Printing, all of the above
entities had elected Subchapter S corporation treatment for U.S. federal
income tax purposes and, accordingly, did not pay U.S. federal income
taxes. Subsequent to May 30, 1998, these companies were included in
Mail-Well's consolidated U.S. federal income tax return. In connection
with the mergers, the Company also issued common stock to acquire the
net assets (including the assumption of the debt associated with such
assets) of certain related real estate ventures owned by shareholders of
the commercial printing companies. The shares of the Company's common
stock exchanged for real estate assets are included with the shares
exchanged for the respective operating company in the table above.
The results of operations and financial conditions of the real
estate assets are reflected in the restated consolidated financial
statements with significant intercompany transactions and balances
eliminated. The mergers with the real
9
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estate entities have been accounted for as taxable business combinations
and the recognizable tax benefits attributable to the increase in tax
basis were allocated to additional paid-in capital.
Each of the above transactions has been accounted for individually
as a pooling of interests and, accordingly, the consolidated financial
statements for the periods subsequent to February 24, 1994 (inception)
have been restated to include the accounts of the Pooled Companies.
Prior to the mergers, Industrial Printing's and IPC Graphics' fiscal
year ended on September 30, United Lithograph's fiscal year ended on
June 30 and French Bray's fiscal year ended on July 31. Accordingly,
the accompanying financial statements include those financial statements
of entities with different fiscal years restated on a calendar year
basis. Additionally, the accompanying consolidated financial statements
reflect certain minor adjustments to conform the accounting policies of
the Pooled Companies to the Company's.
Net sales and net income of the separate companies for the periods
preceding the mergers were as follows:
<TABLE>
<CAPTION>
UNAUDITED
UNAUDITED PRO FORMA
NET PRO FORMA DILUTED
NET INCOME NET INCOME EARNINGS
SALES (LOSS) <F1> (LOSS) <F2> PER SHARE
----- ----------- ----------- ---------
(THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C>
QUARTER ENDED MARCH 31, 1998
Mail-Well, Inc. as previously reported $ 274,705 $ 9,510 $ 9,510
Color Art 18,199 (173) (481)
Accu-Color 3,036 215 47
Industrial Printing 5,690 219 63
IPC Graphics 2,960 45 (19)
United Lithograph 5,532 (91) (170)
French Bray 5,756 (258) (258)
Clarke Printing 2,856 66 66
--------- ------- -------
Pooled entities 44,029 23 (752)
--------- ------- -------
$ 318,734 $ 9,533 $ 8,758 $ 0.18
========= ======= ======= ======
<FN>
<F1> Income (loss) includes aggregate merger expenses of the Pooled
Companies totaling $2.2 million in the first quarter of 1998.
These costs consist primarily of investment banking, legal and
accounting fees.
<F2> Unaudited pro forma net income reflects adjustments to net income
to record an estimated provision for income taxes for each period
presented assuming Color Art, Accu-color, Industrial Printing, IPC
Graphics and United Lithograph were tax paying entities.
</TABLE>
3. ACQUISITIONS
On February 2, 1999, the Company acquired Colorhouse, Inc., a pre-
press company located in Minneapolis, Minnesota, with approximate annual
sales of $20.7 million. On February 4, 1999, the Company acquired Hill
Graphics, a sheetfed commercial printer located in Houston, Texas, with
approximate annual sales of $20.5 million. On May 29, 1999, the Company
acquired Forman Lithograph, Inc., a commercial printer located in San
Francisco, California, with approximate annual sales of $6.5 million.
On June 1, 1999, the Company acquired Avon Behren Printing Company, a
commercial printer located in San Antonio, Texas, with approximate
annual sales of $4.5 million. On June 1, 1999, the Company also
acquired Design Manufacturing, Inc., a pressure sensitive label company
located in Wareham, Massachusetts, with approximate annual sales of $13
million.
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<PAGE>
On August 2, 1999, the Company acquired Enterprise Press, a
commercial printer located in New York, with approximate annual sales of
$23 million. On August 6, 1999, the Company acquired Direct Graphics,
Inc., specializing in direct mail printing and services, with reported
annual sales of $21 million.
On March 17, 1999, the Company commenced a formal tender offer to
purchase all of the shares of Porter Chadburn plc, a label manufacturing
company based in England with a substantial portion of its operations in
the United States, for a price of approximately $.63 per share (38.5
pence) in cash. The total purchase price, including the assumption of
debt and transaction costs was approximately $101.5 million. Porter
Chadburn earned $7.3 million (pre-tax) on sales of $125.5 million for
its fiscal year ended March 27, 1999. (All U.S. dollar amounts are based
upon an exchange rate for British pounds of $1.642). As of April 8,
1999, the Company gained control of Porter Chadburn through acceptances
of its offers. Therefore, beginning with that date, the operations of
Porter Chadburn have been consolidated in the operations of the Company.
These acquisitions have been accounted for as purchases and,
accordingly, the net purchase price of each acquisition was allocated to
the various assets and liabilities according to their estimated fair
values as of the date of the respective purchase. The results of
operations of each of the acquisitions have been included in the
accompanying consolidated statements of operations from the date of the
acquisition.
Certain purchase agreements require the payment of additional
consideration in the form of cash payments if specific operating
performance criteria are met. Any subsequent payment will be allocated
to goodwill. In addition, the purchase price allocation to inventory,
property, plant and equipment and restructuring charges for closing
certain plants for certain acquisitions have not been finalized.
Therefore, the amount of goodwill could be adjusted within one year of
the purchase.
4. LONG-TERM DEBT AND CAPITAL LEASES
Long-term debt consists of the following (in thousands):
<TABLE>
<CAPTION>
INTEREST RATE AT
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ ------------------ -----------------
<S> <C> <C> <C>
Bank Borrowings:
Unsecured loan, due June 9, 2003 6.88 % $ 22,832 $ 25,461
Unsecured revolving loan facility, due
March 31, 2003 6.00 % 189,000 93,000
Senior Subordinated Notes, due 2008 8.75 % 300,000 300,000
Convertible Subordinated Notes, due 2002 5.00 % 152,050 152,050
Other Various 18,630 20,952
--------- ---------
682,512 591,463
Less current maturities (9,954) (8,036)
--------- ---------
Long-term debt and capital leases $ 672,558 $ 583,427
========= =========
</TABLE>
5. RESTRUCTURING CHARGES
In November 1998, the Company committed to implement a
restructuring program affecting the Envelopes and Commercial Printing
segments and recorded a pre-tax provision of $15,961,000, of which
$11,699,000 represents non-cash charges for asset write-offs and
impairments, primarily machinery and equipment. Impairment losses were
calculated based on the excess of the carrying amount of the assets over
the assets' fair values. The fair value of an asset is generally
determined based on recent comparable sales and independent quotes from
the used equipment market. The remaining $4,262,000 is for severance,
other termination benefits and property exit costs, including
noncancelable operating leases. These charges are a result of the
regionalization of the Company's U.S. Envelopes operations and
reorganization of the Company's Commercial Printing operations,
primarily in the Northwest.
11
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<PAGE>
The Company also incurred $173,000 and $1,171,000 in expenses for
the three and nine months ended September 30, 1999, respectively,
relating to the relocation of personnel, equipment and inventory which
under generally accepted accounting principles could not be accrued for
as part of the Company's restructuring initiative. These costs are
included in "Selling, administrative and other" in the consolidated
statements of operations. Severance costs for the 616 personnel
included in the restructuring provision resulted from regionalizing
special manufacturing operations (490 personnel) and administrative
functions (126 personnel) in various locations of the Company's U.S.
operations. Approximately 433 personnel had been terminated as of
September 30, 1999 and the remaining terminations are expected to be
completed by March 31, 2000.
The following table summarizes the costs associated with the
restructuring program (in thousands):
<TABLE>
<CAPTION>
ASSET SEVERANCE & PROPERTY
WRITE-DOWNS RELATED COSTS EXIT COSTS TOTAL
----------- ------------- ---------- -----
<S> <C> <C> <C> <C>
Initial reserve $ 11,699 $ 2,907 $ 1,355 $ 15,961
Utilized in 1998 11,699 515 81 12,295
-------- ------- ------- --------
Balance 12/31/98 - 2,392 1,274 3,666
Utilized in 1999 - 1,135 683 1,818
-------- ------- ------- --------
Balance 6/30/99 $ - $ 1,257 $ 591 $ 1,848
======== ======= ======= ========
</TABLE>
6. COMMITMENT AND CONTINGENCIES
In July 1999, the Company and certain of its subsidiaries
("Originators") entered into an agreement to sell, on a revolving basis,
trade receivables to a wholly-owned subsidiary, Mail-Well Trade
Receivables Corp. ("MTRC"). MTRC was capitalized by the Company as a
bankruptcy-remote special purpose entity that is subject to certain
covenants and restrictions, including a restriction from engaging in any
business or activity unrelated to acquiring and selling interests in
receivables. New receivables, except those failing certain eligibility
criteria, are sold to MTRC on a daily basis as previously sold accounts
receivables are collected. MTRC, in turn, sells an undivided variable
percentage interest in the pool of receivables, up to a maximum of
$150,000,000, to a multi-seller receivables securitization company, for
which there are no repurchase agreements. The Company maintains a
subordinated interest in the portion of the pooled receivables, which
are not transferred to the securitization company.
The Company's securitization is accounted for as a sale in
accordance with FASB Statement No. 125, Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities.
Therefore, the Company's accounts receivable have been reduced by the
amount of receivables sold to MTRC and the retained interest in the pool
of receivables has been reported as an investment available for sale,
recorded at its estimated fair value. An allowance for doubtful
accounts is also maintained for both receivables not included in the
pool and for its retained interest in the pool. As of September 30,
1999, the Company had sold $223.6 million of accounts receivable to MTRC
and MTRC had sold beneficial interests totaling $130.0 million to the
securitization company.
The Company is involved in various lawsuits incidental to its
businesses. In management's opinion, it is not probable that an adverse
determination against the Company relating to these suits would occur
that would be material to the consolidated financial statements. In the
case of administrative proceedings related to environmental matters
involving governmental authorities, management does not believe that any
imposition of monetary sanctions would be material to the Company's
results of operations and financial position.
12
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7. SEGMENT INFORMATION
Operating segments are components of an enterprise about which
separate financial information is available that is evaluated regularly
by the chief operating decision maker in deciding how to allocate
resources and in assessing performance. Generally, financial
information is required to be reported on the basis that is used
internally for evaluating segment performance and deciding how to
allocate resources to segments. Additionally, segment information for
all periods has been restated to reflect the mergers of the Pooled
Companies as discussed in Note 2.
The Company's operating segments prepare separate financial
information that is evaluated regularly by the Chief Operating Officer
in assessing performance and deciding how to allocate resources.
Corporate expenses include the costs of maintaining a corporate office.
The Company does not allocate corporate overhead, interest (income)
expense, amortization expense, gains and losses on disposal of assets or
income taxes by segment in assessing performance.
Operating segments of the Company are defined primarily by product
line and consist of Commercial Printing, Envelopes, Printing for
Distributors and Labels. The latter two segments were added via
acquisitions in the first quarter of 1998. The Commercial Printing
segment specializes in printing advertising literature, high-end
catalogs, annual reports, calendars and other materials and provides a
broad range of printing and graphic arts services primarily to the
advertising industry. The Envelopes segment prints and manufactures
envelopes designed to customer specifications. The Printing for
Distributors segment prints a diverse line of custom products addressing
the business documents needs of small and medium-sized end users. The
Labels segment is a leading supplier of labels to the North American
food and beverage markets and has operations in the United Kingdom.
Early in 1999, the Company combined the High Impact Color Printing
segment with the Commercial Printing segment under one organization, now
called the Commercial Printing segment. In addition, Mail-Well Graphics
was reclassified from Envelopes to Commercial Printing since the 1998
Form 10-K. Segment information for all periods has been restated to
reflect these changes. Segment information as of and for the three and
nine months ended September 30, 1999 and 1998 is presented below:
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine months Ended September 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES:
Commercial Printing $ 217,800 $ 163,172 $ 567,459 $ 378,350
Envelopes 180,478 189,260 560,347 564,386
Printing for Distributors 38,483 28,728 110,425 81,887
Labels 56,026 22,983 134,019 48,313
--------- --------- ----------- -----------
Total $ 492,787 $ 404,143 $ 1,372,250 $ 1,072,936
========= ========= =========== ===========
OPERATING INCOME (LOSS):
Commercial Printing $ 19,693 $ 13,430 $ 46,927 $ 23,959
Envelopes 22,550 20,665 71,286 62,018
Printing for Distributors 3,297 2,098 9,846 6,307
Labels 4,623 1,686 10,245 3,610
Corporate (5,706) (5,432) (17,302) (12,032)
Merger Expenses $ - $ (284) $ (3,286)
--------- --------- ----------- -----------
Total $ 44,457 $ 32,163 $ 121,002 $ 80,576
========= ========= =========== ===========
</TABLE>
13
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
DEPRECIATION AND AMORTIZATION:
Commercial Printing $ 5,783 $ 4,227 $ 16,375 $ 12,241
Envelopes 3,837 3,613 11,587 10,631
Printing for Distributors 680 426 1,876 1,277
Labels 2,145 1,004 5,004 2,137
Corporate 2,428 1,159 6,323 2,557
----------- ----------- -------- --------
Total $ 14,873 $ 10,429 $ 41,165 $ 28,843
=========== =========== ======== ========
<CAPTION>
September 30, December 31,
1999 1998
---- ----
<S> <C> <C>
IDENTIFIABLE ASSETS:
Commercial Printing $ 635,867 $ 495,918
Envelopes 530,511 500,355
Printing for Distributors 121,538 98,610
Labels 220,859 93,188
Corporate (148,513) (60,115)
----------- -----------
Total assets $ 1,360,262 $ 1,127,956
=========== ===========
</TABLE>
8. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
In December 1998, Mail-Well I Corporation ("Issuer" or "MWI"), the
Company's wholly-owned subsidiary, and the only direct subsidiary of the
Company, issued $300.0 million aggregate principal amount of 8 3/4%
Senior Subordinated Notes ("Senior Notes") due in 2008 (see Note 4). The
Senior Notes are guaranteed by all of the U.S. subsidiaries (the
"Guarantor Subsidiaries") of MWI, all of which are wholly owned, and by
Mail-Well, Inc. ("Parent Guarantor"). The guarantees are joint and
several, full, complete and unconditional. There are no material
restrictions on the ability of the Guarantor Subsidiaries to transfer
funds to MWI in the form of cash dividends, loans or advances, other
than ordinary legal restrictions under corporate law, fraudulent
transfer and bankruptcy laws.
The following condensed consolidating financial information
illustrates the composition of the Parent Guarantor, Issuer, Guarantor
Subsidiaries and non-guarantor subsidiaries. The Issuer, the Guarantor
subsidiaries and the non-guarantor subsidiaries comprise all of the
direct and indirect subsidiaries of the Parent Guarantor. Management
has determined that separate complete financial statements would not
provide additional material information that would be useful in
assessing the financial composition of the Guarantor Subsidiaries.
Investments in subsidiaries are accounted for under the equity
method, wherein the investor company's share of earnings and income
taxes applicable to the assumed distribution of such earnings are
included in net income. In addition, investments increase in the amount
of permanent contributions to subsidiaries and decrease in the amount of
distributions from subsidiaries. The elimination entries eliminate the
equity method investment in subsidiaries and the equity in earnings of
subsidiaries, intercompany payables and receivables and other
transactions between subsidiaries.
14
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Quarter Ended September 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $ 84,971 $ 325,848 $ 81,968 $ - $ 492,787
COST OF SALES - 68,251 251,392 60,130 - 379,773
-------- -------- --------- -------- -------- ---------
GROSS PROFIT - 16,720 74,456 21,838 - 113,014
OTHER OPERATING COSTS 42 14,735 41,377 12,403 - 68,557
-------- -------- --------- -------- -------- ---------
OPERATING INCOME (LOSS) (42) 1,985 33,079 9,435 - 44,457
OTHER (INCOME) EXPENSE
Interest expense 2,136 13,202 1,097 506 (2,212) 14,729
Other (income) expense (2,212) 103 109 (148) 2,212 64
-------- -------- --------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES 34 (11,320) 31,873 9,077 - 29,664
PROVISION (BENEFIT) FOR
INCOME TAXES - (4,640) 14,486 2,317 - 12,163
-------- -------- --------- -------- -------- ---------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 34 (6,680) 17,387 6,760 - 17,501
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 17,467 24,147 4,613 - (46,227) -
-------- -------- --------- -------- -------- ---------
NET INCOME $ 17,501 $ 17,467 $ 22,000 $ 6,760 $(46,227) $ 17,501
======== ======== ========= ======== ======== =========
</TABLE>
15
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Quarter Ended September 30, 1998
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $ 108,463 $ 256,502 $ 39,178 $ - $ 404,143
COST OF SALES - 86,407 203,915 28,199 - 318,521
-------- --------- --------- -------- -------- ---------
GROSS PROFIT - 22,056 52,587 10,979 - 85,622
OTHER OPERATING COSTS
Selling, administrative
and other 283 18,064 30,004 4,824 - 53,175
Merger costs - - 284 - - 284
-------- --------- --------- -------- -------- ---------
Total Other Operating
Costs 283 18,064 30,288 4,824 - 53,459
-------- --------- --------- -------- -------- ---------
OPERATING INCOME (LOSS) (283) 3,992 22,299 6,155 - 32,163
OTHER (INCOME) EXPENSE
Interest expense 1,896 9,167 411 1,717 (2,212) 10,979
Other (income) expense (2,212) (362) 452 (139) 2,212 (49)
-------- --------- --------- -------- -------- ---------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES 33 (4,813) 21,436 4,577 - 21,233
PROVISION FOR
INCOME TAXES - (1,929) 8,726 1,713 - 8,510
-------- --------- --------- -------- -------- ---------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 33 (2,884) 12,710 2,864 - 12,723
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 12,690 15,574 2,864 - (31,128) -
-------- --------- --------- -------- -------- ---------
NET INCOME $ 12,723 $ 12,690 $ 15,574 $ 2,864 $(31,128) $ 12,723
======== ========= ========= ======== ======== =========
</TABLE>
16
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Nine-months Ended September 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $ 274,246 $ 887,706 $ 210,298 $ - $ 1,372,250
COST OF SALES - 214,717 685,873 151,639 - 1,052,229
-------- --------- --------- --------- --------- -----------
GROSS PROFIT - 59,529 201,833 58,659 - 320,021
OTHER OPERATING COSTS 153 47,291 118,752 32,823 - 199,019
-------- --------- --------- --------- --------- -----------
OPERATING INCOME (LOSS) (153) 12,238 83,081 25,836 - 121,002
OTHER (INCOME) EXPENSE
Interest expense 6,407 35,479 2,101 4,194 (6,636) 41,545
Other (income) expense (6,635) (341) (430) 130 6,636 (640)
-------- --------- --------- --------- --------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES 75 (22,900) 81,410 21,512 - 80,097
PROVISION FOR
INCOME TAXES - (9,387) 35,949 6,278 - 32,840
-------- --------- --------- --------- --------- -----------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 75 (13,513) 45,461 15,234 - 47,257
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 47,182 60,695 13,087 - (120,964) -
-------- --------- --------- --------- --------- -----------
NET INCOME $ 47,257 $ 47,182 $ 58,548 $ 15,234 $(120,964) $ 47,257
======== ========= ========= ========= ========= ===========
</TABLE>
17
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF OPERATIONS
Nine-months Ended September 30, 1998
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
NET SALES $ - $ 310,752 $ 654,299 $ 107,885 $ - $ 1,072,936
COST OF SALES - 248,558 521,677 77,605 - 847,840
-------- --------- --------- --------- -------- -----------
GROSS PROFIT - 62,194 132,622 30,280 - 225,096
OTHER OPERATING COSTS
Selling, administrative
and other 849 48,937 77,583 13,865 - 141,234
Merger costs - - 3,286 - - 3,286
-------- --------- --------- --------- -------- -----------
Total Other Operating
Costs 849 48,937 80,869 13,865 - 144,520
-------- --------- --------- --------- -------- -----------
OPERATING INCOME (LOSS) (849) 13,257 51,753 16,415 - 80,576
OTHER (INCOME) EXPENSE
Interest expense 5,919 18,240 4,844 3,765 (6,636) 26,132
Other (income) expense (6,642) (444) (493) (191) 6,636 (1,134)
-------- --------- --------- --------- -------- -----------
INCOME (LOSS) BEFORE INCOME
TAXES AND EQUITY IN
UNDISTRIBUTED EARNINGS OF
SUBSIDIARIES (126) (4,539) 47,402 12,841 - 55,578
PROVISION FOR
INCOME TAXES - (1,754) 18,899 4,878 - 22,023
-------- --------- --------- --------- -------- -----------
INCOME (LOSS) BEFORE EQUITY
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES (126) (2,785) 28,503 7,963 - 33,555
EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 33,681 36,466 7,963 - (78,110) -
-------- --------- --------- --------- -------- -----------
NET INCOME $ 33,555 $ 33,681 $ 36,466 $ 7,963 $(78,110) $ 33,555
======== ========= ========= ========= ======== ===========
</TABLE>
18
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF FINANCIAL POSITION
September 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ 16,722 $ (12,920) $ 1,345 $ - $ 5,147
Receivables, net - 3,100 34,989 53,239 - 91,328
Investment in accounts
receivable Securitization - - - 92,891 - 92,891
Accounts receivable - other - 6,058 6,877 2,507 - 15,442
Income tax receivable - 13,537 - 233 (13,770) -
Inventories, net - 35,649 78,261 25,861 - 139,771
Note receivable from Issuer 147,436 - - - (147,436) -
Other current assets 243 8,968 10,676 3,233 - 23,120
--------- ----------- --------- --------- ----------- -----------
Total current assets 147,679 84,034 117,883 179,309 (161,206) 367,699
INVESTMENT IN SUBSIDIARIES 356,577 883,389 93,648 - (1,333,614) -
PROPERTY, PLANT AND
EQUIPMENT, NET - 104,904 314,659 102,885 - 522,448
GOODWILL, NET - 46,908 270,126 126,944 - 443,978
OTHER ASSETS, NET 3,183 34,350 6,393 3,314 (21,103) 26,137
--------- ----------- --------- --------- ----------- -----------
TOTAL $ 507,439 $ 1,153,585 $ 802,709 $ 412,452 $(1,515,923) $ 1,360,262
========= =========== ========= ========= =========== ===========
CURRENT LIABILITIES
Accounts payable $ - $ 19,199 $ 90,604 $ 24,683 $ - $ 134,486
Accrued compensation and
vacation - 11,359 33,494 8,298 - 53,151
Other current liabilities 807 103,438 (139,300) 110,677 (13,770) 61,852
Note payable to Parent - 147,436 - - (147,436) -
Current portion of long-
term debt and capital
leases - 439 4,177 5,338 - 9,954
--------- ----------- --------- --------- ----------- -----------
Total current liabilities 807 281,871 (11,025) 148,996 (161,206) 259,443
LONG-TERM DEBT AND
CAPITAL LEASES 152,050 489,180 7,837 23,491 - 672,558
DEFERRED INCOME TAXES - 19,527 28,991 10,170 - 58,688
OTHER LONG-TERM
LIABILITIES - 2,930 26,326 3,338 (21,103) 11,491
--------- ----------- --------- --------- ----------- -----------
Total liabilities 152,857 793,508 52,129 185,995 (182,309) 1,002,180
MINORITY INTEREST - 3,500 - - - 3,500
SHAREHOLDERS' EQUITY 354,582 356,577 750,580 226,457 (1,333,614) 354,582
--------- ----------- --------- --------- ----------- -----------
TOTAL $ 507,439 $ 1,153,585 $ 802,709 $ 412,452 $(1,515,923) $ 1,360,262
========= =========== ========= ========= =========== ===========
</TABLE>
19
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF FINANCIAL POSITION
December 31, 1998
(in thousands)
(Audited)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ - $ 6,952 $ (7,311) $ 1,734 $ - $ 1,375
Receivables, net - 13,607 91,148 25,768 - 130,523
Investment in accounts
receivable securitization - 6,114 40,955 - - 47,069
Accounts receivable - other - 3,981 7,593 1,112 - 12,686
Income tax receivable - 43,908 - - (33,193) 10,715
Inventories, net - 39,267 60,286 14,578 - 114,131
Note receivable from Issuer 147,436 - - - (147,436) -
Other current assets 116 8,515 7,935 2,785 - 19,351
--------- --------- --------- --------- ----------- -----------
Total current assets 147,552 122,344 200,606 45,977 (180,629) 335,850
INVESTMENT IN SUBSIDIARIES 301,447 609,661 76,104 - (987,212) -
PROPERTY, PLANT AND
EQUIPMENT, NET - 121,733 249,002 66,997 - 437,732
GOODWILL, NET - 59,900 210,067 52,182 - 322,149
OTHER ASSETS, NET 3,902 13,111 15,155 57 - 32,225
--------- --------- --------- --------- ----------- -----------
TOTAL $ 452,901 $ 926,749 $ 750,934 $ 165,213 $(1,167,841) $ 1,127,956
========= ========= ========= ========= =========== ===========
CURRENT LIABILITIES
Accounts payable $ - $ 18,171 $ 56,441 $ 12,411 $ - $ 87,023
Accrued compensation and
vacation - 12,320 23,926 5,155 - 41,401
Other current liabilities 1,476 26,759 16,953 35,197 (33,193) 47,192
Note payable to Parent - 147,436 - - (147,436) -
Current portion of long-
term debt and capital
leases - 5 2,796 5,235 - 8,036
--------- --------- --------- --------- ----------- -----------
Total current liabilities 1,476 204,691 100,116 57,998 (180,629) 183,652
LONG-TERM DEBT AND
CAPITAL LEASES 152,050 393,004 15,415 22,958 - 583,427
DEFERRED INCOME TAXES - 19,890 20,078 7,566 - 47,534
OTHER LONG-TERM
LIABILITIES - 4,217 5,664 587 - 10,468
--------- --------- --------- --------- ----------- -----------
Total liabilities 153,526 621,802 141,273 89,109 (180,629) 825,081
MINORITY INTEREST - 3,500 - - - 3,500
SHAREHOLDERS' EQUITY 299,375 301,447 609,661 76,104 (987,212) 299,375
--------- --------- --------- --------- ----------- -----------
TOTAL $ 452,901 $ 926,749 $ 750,934 $ 165,213 $(1,167,841) $ 1,127,956
========= ========= ========= ========= =========== ===========
20
<PAGE>
<PAGE>
</TABLE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
Nine-months ended September 30, 1999
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES $ 2,568 $ 100,735 ($20,392) $ (92,407) $ 97,400 $ 87,904
CASH FLOWS FROM
INVESTING ACTIVITIES
Acquisition costs, net of
cash acquired - - (77,925) (115,447) - (193,372)
Capital expenditures - (9,905) (44,149) (8,796) - (62,850)
Investment in subsidiaries - (219,680) (91,649) - 311,329 -
Other investing activities (3,240) 1 4,134 1,287 672 2,854
------- --------- --------- --------- --------- ---------
Net cash used in investing
activities (3,240) (229,584) (209,589) (122,956) 312,001 (253,368)
CASH FLOWS FROM FINANCING
ACTIVITIES
Changes due to accounts
receivable securitization,
net - 43,482 53,918 77,400 (97,400) 77,400
Net proceeds from common
stock issuance 672 - - - - 672
Proceeds from long-term debt - 312,235 - 9,805 - 322,040
Repayments of long-term debt
and capital lease
obligations - (216,337) (2,774) (10,439) - (229,550)
Investment by parent - 672 173,228 138,101 (312,001) -
Other financing activities - (1,433) - - - (1,433)
------- --------- --------- --------- --------- ---------
Net cash provided by
financing activities 672 138,619 224,372 214,867 (409,401) 169,129
EFFECT OF EXCHANGE RATE CHANGES
ON CASH - - - 107 - 107
------- --------- --------- --------- --------- ---------
NET CHANGE IN CASH AND CASH
EQUIVALENTS - 9,770 (5,609) (389) - 3,772
BALANCE AT BEGINNING OF YEAR - 6,952 (7,311) 1,734 - 1,375
------- --------- --------- --------- --------- ---------
BALANCE AT END OF YEAR $ - $ 16,722 $ (12,920) $ 1,345 $ - $ 5,147
======= ========= ========= ========= ========= =========
</TABLE>
21
<PAGE>
<PAGE>
<TABLE>
CONSOLIDATING CONDENSED STATEMENT OF CASH FLOWS
Nine-months ended September 30, 1998
(in thousands)
<CAPTION>
Combined Combined
Parent Guarantor Nonguarantor
Guarantor Issuer Subsidiaries Subsidiaries Elim. Consolidated
--------- ------ ------------ ------------ ----- ------------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES $ 3,235 $(28,507) $ 19,053 $ 52,928 $ - $ 46,709
CASH FLOWS FROM
INVESTING ACTIVITIES
Acquisition costs, net
of cash acquired (90) (10,044) (252,094) (51,203) - (313,431)
Capital expenditures - (12,995) (30,596) (5,830) - (49,421)
Investment in subsidiaries (92,476) (324,807) (30,000) - 447,283 -
Other investing activities (3,401) - 3,581 406 - 586
--------- -------- --------- --------- --------- ---------
Net cash used in
investing activities (95,967) (347,846) (309,109) (56,627) 447,283 (362,266)
CASH FLOWS FROM FINANCING
ACTIVITIES
Changes due to accounts
receivable securitization,
net - 443 4,357 - - 4,800
Net proceeds from common
stock issuance 92,476 - - - - 92,476
Proceeds from long-term debt - 242,000 - 130,770 - 372,770
Repayments of long-term debt
and capital lease
obligations - (49) (37,273) (149,693) - (187,015)
Investment by parent - 92,476 324,807 30,000 (447,283) -
Other financing activities - - (3,746) - - (3,746)
--------- -------- --------- --------- --------- ---------
Net cash provided by
financing activities 92,476 334,870 288,145 11,077 (447,283) 279,285
EFFECT OF EXCHANGE RATE
CHANGES ON CASH - - - (1,612) - (1,612)
--------- -------- --------- --------- --------- ---------
NET CHANGE IN CASH AND
CASH EQUIVALENTS (256) (41,483) (1,911) 5,766 - (37,884)
BALANCE AT BEGINNING OF YEAR 256 41,483 (920) 92 - 40,911
--------- -------- --------- --------- --------- ---------
BALANCE AT END OF YEAR $ - $ - $ (2,831) $ 5,858 $ - $ 3,027
========= ======== ========= ========= ========= =========
</TABLE>
22
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION.
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 the
following:
* availability of acquisition opportunities and their related costs
* ability to obtain productivity savings
* ability to achieve cost savings from integration of acquisitions
* ability to obtain additional financing
* interest and foreign currency exchange rates
* paper and other raw material costs and the ability to pass paper
costs on to customers
* postage rates and other changes in the direct mail industry
* general labor conditions
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, HISTORICAL FINANCIAL DATA BY SEGMENT (IN THOUSANDS)
The following table presents historical financial data by segment,
including acquisitions from their purchase dates. The Commercial
Printing results include those of the merged businesses described in
Note 2 to the Consolidated Financial Statements (accounted for under the
pooling of interests method), except that the results of IPC Graphics
have been included with the Printing for Distributors segment beginning
January 1, 1997. The results for 1998 have been restated to reflect the
combination of the High Impact Color Printing segment with the
Commercial Printing segment. In addition, amounts were reclassified
from Envelopes to Commercial Printing for transfers of a business unit.
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
--------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales
Commercial Printing $217,800 $163,172 $ 567,459 $ 378,350
Envelopes 180,478 189,260 560,347 564,386
Printing for Distributors 38,483 28,728 110,425 81,887
Labels 56,026 22,983 134,019 48,313
-------- -------- ---------- ----------
Total net sales $492,787 $404,143 $1,372,250 $1,072,936
======== ======== ========== ==========
Operating income
Commercial Printing $ 19,693 $ 13,430 $ 46,927 $ 23,959
Envelopes 22,550 20,665 71,286 62,018
Printing for Distributors 3,297 2,098 9,846 6,307
Labels 4,623 1,686 10,245 3,610
Corporate (5,706) (5,432) (17,302) (12,032)
Merger Expenses - (284) - (3,286)
-------- -------- ---------- ----------
Total operating income $ 44,457 $ 32,163 $ 121,002 $ 80,576
Interest expense (14,729) (10,979) (41,545) (26,132)
Other income (expense) (64) 49 640 1,134
Income tax expense (12,163) (8,510) (32,840) (22,023)
-------- -------- ---------- ----------
Net income $ 17,501 $ 12,723 $ 47,257 $ 33,555
======== ======== ========== ==========
</TABLE>
Net sales for the quarter ended September 30, 1999 increased 21.9% to
$492.8 million compared to net sales of $404.1 million for the quarter
ended September 30, 1998. This increase in net sales was attributable to
sales from
23
<PAGE>
<PAGE>
companies acquired during 1999, a full quarter of sales from companies
acquired during 1998 and internal growth in all but one segment. Gross
profit of $113.0 million for the quarter ended September 30, 1999
represents a 32.0% increase over the quarter ended September 30, 1998.
Expressed as a percent of net sales, gross profit increased by 170 basis
points (BP) to 22.9% for the quarter ended September 30, 1999 compared
to 21.2% for the quarter ended September 30, 1998 primarily due to the
Company's productivity improvements, the impact of purchasing programs
and benefits from restructuring initiatives. Expressed as a percent of
net sales, selling, administrative and other expense increased to 13.9%
for the quarter ended September 30, 1999 from 13.2% in quarter ended
September 30, 1998. The increase was mainly due to increased
amortization expense, the impact of acquisitions and an increase in
corporate administrative expense attributable to expanded treasury and
finance operations. Operating income increased 38.2% from the quarter
ended September 30, 1998.
Earnings for the quarter ended September 30, 1999 increased 37.6% to
$17.5 million from $12.7 million in the third quarter of the prior year.
Earnings per diluted share increased 28.0% to $0.32 in the quarter ended
September 30, 1999 from $0.25 in 1998.
Net sales for the nine-months ended September 30, 1999 increased
27.9% to $1,372.3 million compared to net sales of $1,072.9 million for
the nine-months ended September 30, 1998. This increase in net sales was
attributable to sales from companies acquired during 1999, a full nine-
months of sales from companies acquired during 1998 and internal growth
in each segment. Gross profit of $320.0 million for the nine-months
ended September 30, 1999 represents a 42.2% increase over the nine-
months ended September 30, 1998. Expressed as a percent of net sales,
gross profit increased by 230 BP to 23.3% for the nine-months ended
September 30, 1999 compared to 21.0% for the nine-months ended September
30, 1998 primarily due to the Company's productivity improvements, the
impact of purchasing programs and benefits from restructuring
initiatives. Expressed as a percent of net sales, selling,
administrative and other expense increased to 14.5% for the nine-months
ended September 30, 1999 from 13.5% in nine-months ended September 30,
1998. The increase was mainly due to increased amortization expense, the
impact of acquisitions and an increase in corporate administrative
expense attributable to expanded treasury and finance operations.
Operating income increased 50.2% from the nine-months ended September
30, 1998.
Earnings for the nine-months ended September 30, 1999 increased 40.8%
to $47.3 million from $33.6 million in the nine-month period of the
prior year. Earnings per diluted share increased 31.3% to $0.88 in the
nine-months ended September 30, 1999 from $0.67 in 1998.
RESTRUCTURING CHARGES - In November 1998 the Company committed to
implement a restructuring program affecting the Envelopes and Commercial
Printing segments and recorded a pre-tax provision of $16.0 million, of
which $11.7 million represents non-cash charges for asset write-offs and
impairments. The Company also incurred $0.2 and $1.2 million of costs in
the quarter and nine-months ended September 30, 1999, respectively,
relating to the relocation of equipment which under generally accepted
accounting principles could not be previously accrued for as part of the
Company's restructuring initiative. These costs are included in
"Selling, administrative and other" in the consolidated statements of
operations. For more information on these charges please refer to
Note 5 of the Notes to Consolidated Financial Statements included in
the Annual Report on Form 10-K for the year ended December 31, 1998 and
Note 5 of the Financial Statements included in this Form 10-Q.
RESULTS OF OPERATIONS FOR SIGNIFICANT BUSINESS SEGMENTS
Commercial Printing
QUARTER ENDED SEPTEMBER 30, 1999 COMPARED TO THE QUARTER ENDED
SEPTEMBER 30, 1998
NET SALES -- Net sales increased by $54.7 million (33.5%) for the
quarter ended September 30, 1999 compared to the quarter ended September
30, 1998, primarily due to acquisitions in 1998 and 1999. Without
acquisitions volume increased 5%.
OPERATING INCOME -- The majority of the increase in operating
income from $13.4 million to $19.7 million in the quarter ended
September 30, 1999 was due to acquisitions in 1998 and 1999 and
improvements in operating
24
<PAGE>
<PAGE>
expenses. Cost of sales includes materials (net of waste recovery
revenue), labor, depreciation and other manufacturing and distribution
costs. Total cost of sales, as a percent of sales, decreased from 77.9%
for the quarter ended September 30, 1998 to 77.7% for the quarter ended
September 30, 1999. This decline was primarily due to the impact of the
benefits from new acquisitions adopting our corporate purchasing
programs.
NINE-MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE-MONTHS ENDED
SEPTEMBER 30, 1998
NET SALES -- Net sales increased by $189.2 million (50.0%) for the
nine-months ended September 30, 1999 compared to the nine-months ended
September 30, 1998, primarily due to acquisitons in 1998 and 1999.
Without acquisitions and the loss of sales from businesses we planned to
exit, net sales were essentially unchanged as volume gains were offset
by declining paper prices.
OPERATING INCOME -- The majority of the increase in operating
income from $24.0 million to $46.9 million in the nine-months ended
September 30, 1999 was due to acquisitions in 1998 and 1999 and
improvements in gross margins. Cost of sales includes materials (net of
waste recovery revenue), labor, depreciation and other manufacturing and
distribution costs. Total cost of sales, as a percent of sales,
decreased from 79.5% for the nine-months ended September 30, 1998 to
77.8% for the nine-months ended September 30, 1999. This decline was
primarily due to the impact of the benefits from new acquisitions
adopting our corporate purchasing programs and continuous improvement
initiatives.
Envelopes
QUARTER ENDED SEPTEMBER 30, 1999 COMPARED TO THE QUARTER ENDED SEPTEMBER
30, 1998
NET SALES -- Net sales decreased by $8.8 million (4.6%) for the
quarter ended September 30, 1999 compared to the quarter ended September
30, 1998. Volume was impacted by a plant closure, our decision to
abandon low-margin business, and a slowdown in the sweepstakes market.
OPERATING INCOME -- The majority of the increase in operating
income from $20.7 million to $22.6 million in the quarter ended
September 30, 1999 was due to improvements in gross margins. Cost of
sales includes materials (net of waste recovery revenue), labor,
depreciation and other manufacturing and distributions costs. Total
cost of sales, as a percent of sales, decreased from 78.6% for the
quarter ended September 30, 1998 to 76.1% for the quarter ended
September 30, 1999. The decrease was due to the benefits of the
Company's restructuring plan and the impact of purchasing and
productivity programs.
NINE-MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE-MONTHS ENDED
SEPTEMBER 30, 1998
NET SALES -- Net sales decreased by $4.0 million (0.7%) for the
nine-months ended September 30, 1999 compared to the nine-months ended
September 30, 1998. Adjusting for increases of $12.1 million due to
acquisitions, volume decreased due to the following: a plant closure,
our decision to abandon low-margin business, a slowdown in the
Sweepstakes market in the third quarter and a decrease in paper prices.
Paper price changes (approximately 13% decrease in paper material costs)
were generally passed on to customers.
OPERATING INCOME -- The majority of the increase in operating
income from $62.0 to $71.3 in the nine months ended September 30, 1999
was due to improvements in gross margins. Cost of sales includes
materials (net of waste recovery revenue), labor, depreciation and other
manufacturing and distributions costs. Total cost of sales, as a
percent of sales, decreased from 78.0% for the nine-months ended
September 30, 1998 to 75.0% for the nine-months ended September 30,
1999. The decrease was due to the benefits of the Company's
restructuring plan and the impact of purchasing and productivity
programs.
25
<PAGE>
<PAGE>
Corporate
Certain major production equipment is accounted for as an
operating lease on a consolidated basis while treated as a purchase on a
segment level. The Company classifies the excess of the operating lease
expense over depreciation as a corporate expense in analyzing segment
operations. The Company does not include the amortization of intangibles
recorded in acquisitions in segment results but rather includes it on a
corporate basis. In addition, corporate expenses include corporate
administrative expense and loss (gain) on disposal of assets.
Corporate expenses for the quarter and nine-months ended September
30, 1999 increased $0.3 million and $5.3 million, respectively, compared
to 1998 as a result of increases in amortization expense and corporate
administrative expense. Amortization expense increased as a result of
the acquisitions made in the year ended December 31, 1998 and the nine-
months ended September 30, 1999.
MERGER COSTS - Effective May 30, 1998, the Company completed its
mergers with six commercial printing companies and one printing for
distributor company through the exchange of common stock. In connection
with the mergers, transaction costs incurred of $3.3 and $0.3 million
were expensed in the nine-months and quarter ended September 30, 1998,
respectively. These costs consist primarily of investment banking, legal
and accounting fees. For more information on these mergers please refer
to Note 2 of the Notes to Consolidated Financial Statements.
INTEREST EXPENSE - Interest expense, including accounts receivable
securitization discount, for the quarter ended September 30, 1999
increased $3.9 million compared to the quarter ended September 30, 1998.
Interest expense for the nine-months ended September 30, 1999 increased
$15.5 million compared to the nine-months ended September 30, 1998.
Both increases occurred as a result of higher average bank debt
balances, primarily due to acquisitions, and a slight increase in the
weighted-average borrowing rate. The Company continued to participate in
its accounts receivable securitization agreement whereby it can sell, on
a revolving basis, an undivided percentage ownership interest in a
designated pool of accounts receivable up to a maximum of $150.0 million
until July 2004. At September 30, 1999 and 1998, $130.0 million and
$76.0 million, respectively, had been sold under this agreement. The
receivables were sold at a discount slightly above the prevailing
commercial paper rate, plus certain other fees.
INCOME TAX EXPENSE - The effective tax rate for all periods was
higher than the federal statutory rate due to state and provincial
income taxes and certain goodwill amortization that is not tax
deductible. See Notes 2 and 9 of the Notes to Consolidated Financial
Statements included in the Company's 1998 Form 10-K.
LIQUIDITY AND CAPITAL RESOURCES
HISTORICAL CASH FLOW -- Net cash flow provided by operating
activities was $87.9 million and $46.7 million for the nine-months ended
September 30, 1999 and 1998, respectively. Acquisitions required cash
payments of $193.4 million and $313.4 million for the nine-months ended
September 30, 1999 and 1998, respectively. Other investing activities,
including capital expenditures, were $60.0 million and $48.8 million for
the nine-months ended September 30, 1999 and 1998, respectively. Net
cash flow from financing activities was positively affected by the
increase in receivables sold under the securitization agreement through
September 30, 1999 and 1998 of $77.4 million and $4.8 million,
respectively.
At September 30, 1999, the Company had approximately $111.0 million
of available credit under the $300.0 million Bank of America credit
facility.
SECURITIES OFFERINGS -- The Company has an effective shelf
registration statement on Form S-3 that permits the Company to issue
debt securities, common stock, preferred stock or warrants. At September
30, 1999, there was availability remaining to issue approximately $52.0
million of securities under the shelf registration statement.
In December 1998 the Company's wholly-owned operating subsidiary,
Mail-Well I Corporation, issued $300.0 million in aggregate principal
amount of 8 3/4% Senior Subordinated Notes due 2008 (the "Senior Notes").
The
26
<PAGE>
<PAGE>
Senior Notes were sold to qualified institutional buyers pursuant to
Rule 144A under the Securities Act of 1933. In June 1999 Mail-Well I
completed an exchange offer whereby it exchanged $300 million in
aggregate principal amount of 8 3/4% Series B Senior Subordinated Notes
due 2008 for all of the outstanding Senior Notes in a transaction
registered under the Securities Act.
FOREIGN CURRENCY -- The Company's foreign currency exposure primarily
relates to its Canadian operations. Net sales provided by the Canadian
operations for the nine-months ended September 30, 1999 and 1998 was USD
$142.3 million and USD $107.9 million, respectively. The impact of the
change in Canadian Dollar exchange rates was minimal.
SEASONALITY AND ENVIRONMENT -- As the Company expands its operations
into more commercial printing and labels segments, it has become more
impacted by seasonality. Management expects the first and third quarter
to report higher sales for the Commercial Printing segment because of
annual report and car brochure business. In addition, the third quarter
is traditionally the strongest for the Labels segment.
The effects of environmental matters had no material financial impact
on the historical operations of the Company and are not expected to have
a material effect on the Company's liquidity and capital resources.
YEAR 2000
In 1997 the Company began to assess its existing computer systems,
including an assessment of Year 2000 compliance. In May 1998 the
Company instituted a Year 2000 Project whose goal was to develop and
execute a plan for Year 2000 compliance throughout the Company. The
Company has established an individual at every significant operating
entity to be responsible for coordination with the Year 2000 Project.
What is the Company's state of readiness? What are the costs?
The Company's Year 2000 Project is directed to four major areas: core
computer systems, networking and communications, ancillary systems
(including plant machinery) and verification with key suppliers. The
following summarizes our state of readiness and the costs to address the
Company's Year 2000 issues.
CORE COMPUTER SYSTEMS
The Company completed an assessment of its existing computer systems
in 1997 and expected to spend and capitalize approximately $9 to $11
million through 1999 to purchase and install new systems. The new
systems are Y2K compliant. These costs are being funded through
operating cash flows. Several computer systems were due to be replaced
but were accelerated because of the Year 2000 issue. Through September
30, 1999, approximately $11.3 million of the estimated $13 million has
been capitalized. The amount expected to be capitalized has been
increased due to acquisitions and other projects, which were
subsequently added.
Through October 1999, 99% of the core systems are compliant.
NETWORKING AND COMMUNICATIONS
The Company took actions required to minimize the risk that its
remaining business critical networking and communications systems will
be disrupted with respect to dating in the Year 2000. The Company has
completed the process of updating, replacing and testing certain of its
network operating systems and network equipment and firmware so as to
operate without disruption due to Year 2000 issues.
27
<PAGE>
<PAGE>
ANCILLARY SYSTEMS AND VERIFICATION WITH KEY SUPPLIERS
The Company has completed an inventory of Year 2000 sensitive
devices, plant machinery and desktop software. The Company has also
completed a listing of business critical suppliers, such as paper and
ink suppliers. All such suppliers have been identified and contacted for
information on their actions to mitigate Year 2000 disruptions. Results
of the supplier surveys, of both device and manufacturing suppliers, and
follow-up mailings are reflected in contingency planning at each
division. Based on the information received through September 30, 1999,
management does not believe costs to replace Year 2000 sensitive
devices, plant machinery and desktop software will exceed $1.2 million,
which management does not consider to be material to our financial
condition or cash flow.
What is the Company doing about contingency planning?
Every location of the Company is required to prepare a contingency
plan and to file it with the Mail-Well Y2K Office. As of October 31,
1999, 99% of the locations had completed their contingency plans. The
contingency plans address the following issues, among others:
Response to and recovery from Y2K related failures
* Raw materials inventory stocking levels and alternative sources
* Review of disaster recovery plans
* Comprehensive system backup procedures to preserve 1999 data at
year-end
* Availability of key staff on-site during the New Year's weekend
* Coordination of planning with other Mail-Well plants
What are the risks of the Company's Year 2000 issues?
The Company presently believes it has an effective plan in place to
anticipate and resolve any potential Year 2000 issues in a timely
manner. In the event, however, the Company does not properly identify
Year 2000 issues or the resolution is not timely conducted for those
Year 2000 issued identified, there can be no assurance that Year 2000
issues will not materially and adversely affect the Company's results of
operations or relationships with third parties. In addition,
disruptions in the economy generally resulting from Year 2000 issues
also could materially and adversely affect the Company. Management
believes the amount of potential liability and lost revenue that would
be reasonably likely to result from the failure by the Company and
certain key third parties to achieve Year 2000 compliance on a timely
basis will not have a material impact on our financial condition or cash
flow.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (the "Statement"). The
Statement, which will be effective for the Year 2001, requires
derivative instruments to be recorded in the balance sheet at their fair
value with changes in fair value being recognized in earnings unless
specific hedging accounting criteria are met. Although the Company
believes it has a minimal current level of hedging and derivative
activity, it has not determined the impact of this statement on its
operations and financial position.
In March 1998, the Accounting Standards Executive Committee of the
AICPA issued Statement of Position (SOP) 98-1, "Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use". The SOP,
which has been adopted prospectively as of January 1, 1999, requires the
capitalization of certain costs incurred in connection with developing
or obtaining internal use software. Prior to the adoption of the SOP,
the Company expensed all internal use software related internal costs as
incurred. The effect of adopting the SOP was immaterial to the quarter
and nine-months ended September 30, 1999 and is not expected to have a
material impact on earnings going forward.
28
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<PAGE>
ITEM 3.--QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to certain market risks, including foreign
currency and interest rate risks. The foreign currency risk for foreign
currency denominated debt obligations (US $22,832,000 at September 30,
1999) is not considered to be significant since the fair values and
carrying values are not material to the company's financial position.
The Company's cash flows from operations and earnings are affected by
changes in short-term interest rates since a large portion of its credit
agreements include rates variable with LIBOR. As of September 30, 1999,
$189 million of variable rate debt was outstanding. The fair value of
the Company's fixed rate long-term debt is affected by changes in long-
term interest rates. See Item 7A of the Company's 1998 Form 10-K for
quantitative and qualitative disclosures about market risk. No
significant changes in market risk have occurred since that filing.
The interest rate risk for the investment in accounts receivable
securitization will not have an impact on net income or cash flows.
PART II --OTHER INFORMATION
ITEM 6.--EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
3(i) Articles of Incorporation of the Company - incorporated by
reference from Exhibit 3(i) of the Company's Form 10-Q for
the quarter ended September 30, 1997.
3(ii) Bylaws of the Company - incorporated by reference from
Exhibit 3.4 of the Company's Registration Statement on
Form S-1 dated September 21, 1995.
4.1 Form of Certificate representing the Common Stock, par value
$0.01 per share, of the Company - incorporated by
reference from Exhibit 4.1 of the Company's Amendment No.
1 to Form S-3 dated October 29, 1997 (Reg. No. 333-35561).
4.2 Form of Indenture between the Company and The Bank of New
York, as Trustee, dated November 1997, relating to the
Company's $152,050,000 aggregate principal amount of 5%
Convertible Subordinated Notes due 2002--incorporated by
reference from Exhibit 4.2 to the Company's Amendment No.
2 to Form S-3 dated November 10, 1997 (Reg. No. 333-36337).
4.3 Form of Supplemental Indenture between the Company and The
Bank of New York, as Trustee, dated November 1997,
relating to the Company's $152,050,000 aggregate principal
amount of 5% Convertible Subordinated Notes due 2002 and
Form of Convertible Note--incorporated by reference from
Exhibit 4.5 to the Company's Amendment No. 2 to Form S-3
dated November 10, 1997 (Reg. No. 333-36337).
4.4 Indenture dated as of December 16, 1998 between Mail-Well I
Corporation ("MWI") and State Street Bank and Trust
Company, as Trustee, relating to MWI's $300,000,000
aggregate principal amount of 8 3/4% Senior Subordinated
Notes due 2008 - incorporated by reference from the
Company's Annual Report on Form 10-K for the year ended
December 31, 1998.
4.5 Form of Senior Subordinated Note. Incorporated by reference
from the company's Annual Report of Form 10-K for the year
ended December 31, 1998.
10.1 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.
10.2 Form of Indemnity Agreement between Mail-Well I Corporation
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.
29
<PAGE>
<PAGE>
10.3 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.
10.4 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.
10.5 Mail-Well, Inc. 1994 Stock Option Plan, as amended on May 7,
1997 - incorporated by reference from Exhibit 10.56 of the
Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997.
10.6 Form of 1994 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.
10.7 Form of the Company Nonqualified Stock Option Agreement -
incorporated by reference from Exhibit 10.23 of the
Company's Registration Statement on Form S-1 dated March
25, 1994.
10.8 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 Annual
Report on Form 10-K for the year ended December 31, 1996.
10.9 Mail-Well Receivables Master Trust 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, Trustee-incorporated by reference
from Exhibit 10.40 of the Company's Annual Report on Form
10-K for the year ended December 31, 1996.
10.10 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 Annual Report on Form 10-K for the year ended
December 31, 1996.
10.11 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 Annual Report on Form 10-K for the year ended
December 31, 1996.
10.12 Mail-Well, Inc. 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
10.13 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.
10.14 Mail-Well, Inc. 1998 Incentive Stock Option Plan --
incorporated by reference from Exhibit 10.58 to the
Company's Quarterly report on Form 10-Q for the quarter
ended March 31, 1998.
10.15 Form of 1998 Incentive Stock Option Agreement -- incorporated
by reference from Exhibit 10.59 to the Company's Quarterly
report on Form 10-Q for the quarter ended March 31, 1998.
10.16 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 Agreement --
incorporated by reference from Exhibit 10.60 to the
Company's Quarterly report on Form 10-Q for the quarter
ended March 31, 1998.
10.17 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 -- incorporated by reference
from Exhibit 10.61 to the Company's Quarterly report on
Form 10-Q for the quarter ended March 31, 1998.
10.18 Participation Agreement dated as of December 15, 1997 among
Mail-Well I Corporation, Keybank National Association, as
Trustee and other financial institutions party thereto--
incorporated by reference from Exhibit 10.62 to the
Company's Quarterly report on Form 10-Q for the quarter
ended March 31, 1998.
10.19 Equipment Lease dated as of December 15, 1997 among Mail-Well
I Corporation, Keybank National Association, as Trustee
and other financial institutions party thereto--incorporated
by reference from Exhibit 10.63 to the Company's Quarterly
report on Form 10-Q for the quarter ended March 31, 1998.
10.20 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
30
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<PAGE>
Association, as Trustee and other financial institutions
party thereto--incorporated by reference from Exhibit
10.64 to the Company's Quarterly report on Form 10-Q for
the quarter ended March 31, 1998.
10.21 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.
<F*>10.22 Receivables Purchase Agreement dated as of July 1, 1999 among
Mail-Well Trade Receivables Corporation, as Seller, Quincy
Capital Corporation, as Issuer, The Alternative Purchasers
from Time to Time Party thereto, Mail-Well I Corporation,
as Servicer and Bank of America National Trust and Savings
Association, as Administrator; and First Amendment
thereto.
<F*>10.23 Purchase and Sales Agreement between Mail-Well I Corporation
as initial Servicer and as Guarantor, The Originators from
Time to Time Party thereto and Mail-Well Trade Receivable
Corporation, as Purchaser dated as of July 1, 1999; and
First Amendment thereto.
<F*>10.24 Servicing Agreement dated as of July 1, 1999 by and among
Mail-Well I Corporation, as Servicer, Mail-Well Trade
Receivables Corporation, as Seller under the Receivables
Purchase Agreement and Bank of America National Trust and
Saving Association, as Administrator; and First Amendment
thereto.
10.25 Registration Rights Agreement dated December 16, 1998 by and
among MWI and Donaldson, Lufkin & Jenrette Securities
Corporation, Prudential Securities, Incorporated, Bear,
Stearns & Co., Inc. and Hanifen, Imhoff Inc., as Initial
Purchasers, relating to MWI's $300,000,000 aggregate
principal amount of 8 3/4% Senior subordinated Notes due
2008 -- incorporated by reference from Exhibit 10.27 of the
Company's Annual Report on form 10-K for the year ended
December 31, 1998.
27.1<F*> Financial Data Schedule for nine-months ended September 30,
1999
[FN]
- -------------------
<F*> Filed herewith.
(b) Reports on Form 8-K
A report on Form 8-K was filed on July 22, 1999, announcing
the financial results of the company for the quarter ending June 30,
1999.
31
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
MAIL-WELL, INC.
(Registrant)
By /s/ Gerald F. Mahoney
Date: November 12, 1999 ------------------------------
Gerald F. Mahoney
Chairman of the Board/
Chief Executive Officer
By /s/ Gary H. Ritondaro
Date: November 12, 1999 ------------------------------
Gary H. Ritondaro
Senior Vice President,
Chief Financial Officer
32
<PAGE>
RECEIVABLES PURCHASE AGREEMENT
DATED AS OF JULY 1, 1999
among
MAIL-WELL TRADE RECEIVABLES CORPORATION,
as Seller,
QUINCY CAPITAL CORPORATION,
as Issuer,
THE ALTERNATE PURCHASERS FROM
TIME TO TIME PARTY HERETO,
MAIL-WELL I CORPORATION,
as Servicer
and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Administrator
<PAGE>
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TABLE OF CONTENTS
Page
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ARTICLE I. AMOUNTS AND TERMS OF THE PURCHASES 1
Section 1.1. Purchase Facility 1
Section 1.2. Making Purchases 2
Section 1.3. Purchased Interest Computation 3
Section 1.4. Settlement Procedures 4
Section 1.5. Fees 8
Section 1.6. Payments and Computations, Etc. 8
Section 1.7. Increased Costs 8
Section 1.8. Additional Discount on Portions of Capital
Bearing a Eurodollar Rate 9
Section 1.9. Requirements of Law 10
Section 1.10. Inability to Determine Eurodollar Rate 10
ARTICLE II. REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS 11
Section 2.1. Representations and Warranties; Covenants 11
Section 2.2. Termination Events 11
ARTICLE III. INDEMNIFICATION 12
Section 3.1. Indemnities by the Seller 12
ARTICLE IV. MISCELLANEOUS 14
Section 4.1. Amendments, Etc. 14
Section 4.2. Notices, Etc. 14
Section 4.3. Assignability 14
Section 4.4. Taxes 17
Section 4.5. No Proceedings; Limitation on Payments 17
Section 4.6. Confidentiality 17
Section 4.7. GOVERNING LAW AND JURISDICTION 17
Section 4.8. Execution in Counterparts 18
Section 4.9. Survival of Termination 18
Section 4.10. WAIVER OF JURY TRIAL 18
Section 4.11. Entire Agreement 19
Section 4.12. Headings 19
Section 4.13. Issuer's Liabilities 19
Section 4.14. Servicing Agreement 19
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EXHIBIT I DEFINITIONS
EXHIBIT II CLOSING CONDITIONS
EXHIBIT III REPRESENTATIONS AND WARRANTIES
EXHIBIT IV COVENANTS
EXHIBIT V TERMINATION EVENTS
SCHEDULE I LOCK-BOX ACCOUNTS AND COLLECTION ACCOUNT
SCHEDULE II CONCENTRATION PERCENTAGES
SCHEDULE III LOCATION OF RECORDS
ANNEX A CREDIT AND COLLECTION POLICY
ANNEX B FORM OF LOCK-BOX AGREEMENT
ANNEX C FORM OF COLLECTION ACCOUNT AGREEMENT
ANNEX D ASSIGNMENT OF PURCHASE COMMITMENT
ANNEX E LIST OF FINANCING STATEMENTS
TO BE PARTIALLY RELEASED
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RECEIVABLES PURCHASE AGREEMENT
This RECEIVABLES PURCHASE AGREEMENT (this "Agreement") is
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entered into as of July 1, 1999 among MAIL-WELL TRADE RECEIVABLES
CORPORATION, a Colorado corporation, as seller (the "Seller"),
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MAIL-WELL I CORPORATION, a Delaware corporation, as initial Servicer (in
such capacity, together with its successors and permitted assigns in
such capacity, the "Servicer"), QUINCY CAPITAL CORPORATION, a Delaware
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corporation (together with its successors and permitted assigns, the
"Issuer"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a
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national banking association (in its individual capacity, "Bank of
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America" or such other name as it may be called subsequent to a merger)
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and each of the parties who has executed as an "Assignee" an Assignment
of Purchaser Commitment in the form of Annex D hereto (each, an
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"Assignment") (Bank of America and each such other party being
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referred to collectively as the "Alternate Purchasers" and
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individually as an "Alternate Purchaser"), and BANK OF AMERICA
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NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association,
as administrator (in such capacity, together with its successors and
assigns in such capacity, the "Administrator").
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PRELIMINARY STATEMENTS. Certain terms that are capitalized
and used throughout this Agreement are defined in Exhibit I to this
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Agreement. References in the Exhibits hereto to "the Agreement" refer
to this Agreement, as amended, modified or supplemented from time to
time.
The Seller desires to sell, transfer and assign an undivided
variable percentage interest in a pool of receivables, and the Issuer
may, from time to time, in its sole discretion, and the Alternate
Purchasers shall, from time to time, acquire such undivided variable
percentage interest, as such percentage interest shall be adjusted from
time to time based upon, in part, reinvestment payments which are made
by the Issuer and/or the Alternate Purchaser and additional incremental
payments made to the Seller.
In consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I.
AMOUNTS AND TERMS OF THE PURCHASES
Section 1.1. Purchase Facility. (a) On the terms and
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conditions hereinafter set forth, upon the request of the Seller the
Issuer may, in its sole discretion, and the Alternate Purchasers shall,
purchase and make reinvestments in the Purchased Interests from the
Seller from time to time during the period from the Effective Date to
the Facility Termination Date. Under no
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circumstances shall the Issuer or any Alternate Purchaser make any such
purchase or reinvestment if after giving effect to such purchase or
reinvestment (i) the aggregate outstanding Capital of all Purchasers
would exceed the Purchase Limit, (ii) the aggregate of the Purchased
Interests of all Purchasers (expressed as a percentage) would exceed
100% or (iii) the outstanding Capital of any Alternate Purchaser would
exceed such Alternate Purchaser's Commitment Percentage of the aggregate
outstanding Capital of all Alternate Purchasers. Nothing in this
Agreement shall be deemed to be or construed as a commitment by the
Issuer to purchase or reinvest in the Purchased Interests.
(b) The Seller may, upon at least sixty days notice to the
Administrator, terminate the purchase facility provided in this
Section 1.1 in whole or, from time to time, irrevocably reduce in part
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the unused portion of the Purchase Limit (which shall reduce each
Alternate Purchaser's Purchaser Commitment on a pro rata basis);
provided, however, that (a) each partial reduction shall be in the
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amount of at least $5,000,000 or an integral multiple of $1,000,000 in
excess thereof and (b) in the event of any such partial reduction, the
remaining Purchase Limit will not be less than $100,000,000.
Section 1.2. Making Purchases. (a) Each purchase (but not
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reinvestment) of undivided ownership interests with regard to the
Purchased Interests hereunder shall be made upon the Seller's
irrevocable written notice delivered to the Administrator in accordance
with Section 4.2 (which notice must be received by the Administrator
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prior to 11:00 a.m., New York City time (i) in the case of a purchase to
be funded at the Alternate Rate and based on the Eurodollar Rate, three
Business Days, (ii) in the case of a purchase to be funded at the
Alternate Rate and based on the Base Rate, one Business Day, and (iii)
in the case of a purchase to be funded at the CP Rate, two Business
Days, prior to the requested purchase date) which notice shall specify
(A) the amount, which shall not be less than $1,000,000 and in integral
multiples of $100,000 in excess thereof, requested to be paid to the
Seller; provided, however, that such amount shall not be less than
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the amount necessary to cause aggregate outstanding Capital of all
Purchasers to equal at least $50,000,000, (B) the date of such purchase
and (C) whether such funding is requested of the Issuer or the Alternate
Purchasers and the desired funding basis for such purchase (which, with
respect to the Issuer, shall be the CP Rate or, with respect to the
Alternate Purchasers, the Alternate Rate. If such funding is requested
of the Issuer, the Administrator shall promptly thereafter notify the
Seller whether such terms are acceptable to the Issuer and whether the
Issuer is willing to make such a purchase; provided, however, if
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such purchase is not acceptable to the Issuer, then if acceptable to the
Seller, the Alternate Purchasers shall make such purchase. No purchase
or reinvestment shall be funded at the CP Rate on or after the Facility
Termination Date.
(b) On the date of each purchase (but not reinvestment) of
undivided ownership interests with regard to the Purchased Interests
hereunder, the Issuer, if willing to make such purchase or the Alternate
Purchasers, if requested to make such purchase, shall, upon satisfaction
of the applicable conditions set forth in Exhibit II hereto, make
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available to the Administrator in same day funds, for distribution on
such day to the Seller at the account specified by the Seller to
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the Administrator, an amount equal to (i) with respect to the Issuer,
the amount of such purchase requested or (ii) with respect to each
Alternate Purchaser, such Alternate Purchaser's Commitment Percentage of
the amount of such requested purchase.
(c) Effective on the date of each purchase pursuant to this
Section 1.2 and each reinvestment pursuant to Section 1.4, the
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Seller hereby sells and assigns to the Administrator, for the benefit of
the applicable Purchasers, an undivided percentage ownership interest in
(i) each Pool Receivable then existing, (ii) all Related Security with
respect to such Pool Receivables, and (iii) Collections with respect to,
and other proceeds of, such Pool Receivables and Related Security.
(d) To secure all of the Seller's Obligations under this
Agreement and the other Transaction Documents to which it is a party,
whether now or hereafter existing or arising, due or to become due,
direct or indirect, absolute or contingent, the Seller hereby grants to
the Administrator, for the benefit of the Securitization Parties, a
first priority security interest in all of the Seller's right, title and
interest (including, without limitation, any undivided interest of the
Seller) in, to and under all of the following, whether now or hereafter
owned, existing or arising: (A) all Pool Receivables, (B) all Related
Security with respect to each such Pool Receivable, (C) all Collections
with respect to each such Pool Receivable, (D) the Lock-Box Accounts and
Collection Account and all Collections on deposit therein and all
certificates and instruments, if any, from time to time evidencing such
Lock-Box Accounts or Collection Account, and the Collections on deposit
therein, all investments made with such funds, all claims thereunder or
in connection therewith, and all interest, dividends, moneys,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of the foregoing, (E) all of Seller's rights, remedies, powers
and privileges under, or in respect of, the Purchase and Sale Agreement
(whether arising pursuant to the terms of the Purchase and Sale
Agreement or otherwise available to the Seller at law or in equity) and
(F) all proceeds of, and all amounts received or receivable under any or
all of, the foregoing. The Administrator shall have, with respect to
the property described in this Section 1.2(d), and in addition to all
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the other rights and remedies available to the Securitization Parties,
all the rights and remedies of a secured party under any applicable UCC
or other applicable law. If, following the occurrence of a Termination
Event, the Administrator elects to exercise its right to take control of
any Lock-Box Account or the Collection Account in accordance with the
related Lock-Box Agreement or Collection Account Agreement, as the case
may be, the Administrator agrees to return, or to instruct the Lock-Box
Bank or the Collection Account Bank, as the case may be, to return, to
the applicable Originator or its designee any amounts in the Lock-Box
Account or the Collection Account, as the case may be, which are not
Collections as promptly as practicable following the Administrator's
receipt of evidence satisfactory thereto that such amounts are not
Collections.
Section 1.3. Purchased Interest Computation. The Purchased
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Interests shall be initially computed on the date of the initial
purchase hereunder. Thereafter until the Termination Date, the
Purchased Interests shall be automatically recomputed (or deemed to be
recomputed) on each
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Business Day other than a Termination Day. The Purchased Interests, as
computed (or deemed recomputed) as of the day immediately preceding the
Termination Date, shall thereafter remain constant. The Purchased
Interests shall become zero when the aggregate outstanding Capital of
all Purchasers and Discount thereon shall have been paid in full, all
the amounts owed by the Seller hereunder to the Securitization Parties
and any other Indemnified Party or Affected Person, are paid in full and
the Servicer shall have received the accrued Servicing Fee thereon.
Section 1.4. Settlement Procedures. (a) Collection of the
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Receivables shall be administered by the Servicer in accordance with the
terms of this Agreement and the Servicing Agreement. The Seller shall
provide to the Servicer on a timely basis all information and written
direction needed and written direction for such administration,
including notice of the occurrence of any Termination Day and current
computations of the aggregate of the Purchased Interests of all
Purchasers. All Collections of Pool Receivables shall be removed from
each Lock-Box Account and within two Business Days of deposit thereof
remitted to the Collection Account and all other collections shall be
removed from each Lock-Box Account or the Collection Account within two
Business Days of deposit thereof and remitted to the applicable
Originator or its designee.
(b) The Servicer shall, on each day on which Collections of Pool
Receivables are received (or deemed received) by the Seller or Servicer:
(i) set aside and hold in trust in the Collection Account
an amount equal to the accrued and unpaid Discount, Servicing Fee,
Administration Fee, Program Fee and Liquidity Fee (to the extent
not previously so set aside); and
(ii) set aside and hold in trust in the Collection Account
the remainder of Collections for distribution in accordance with
Section 1.4(c) or 1.4(f)(iii); provided, however, that if
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such day is not a Termination Day and to the extent the Seller has
not requested a reduction of Capital pursuant to
Section 1.4(f)(iii), the Servicer shall remit such remainder of
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Collections to the Seller; it being understood, that prior to
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remitting to the Seller such remainder of Collections, the
Servicer shall have calculated the aggregate of the Purchased
Interests of all Purchasers (expressed as a percentage) on such
day, and to the extent such percentage shall exceed 100% after
giving effect to such distribution to the Seller, such Collections
shall not be remitted to the Seller. Any such distribution to the
Seller, to the extent it would have been a return of Capital upon
remittance to any Purchaser, shall be deemed to be a reinvestment
by such Purchaser in the Pool Receivables, and in the Related
Security and Collections and other proceeds with respect thereto,
of the percentage of Collections remitted to the Seller
represented by the Purchased Interest of such Purchaser and such
Purchased Interest shall be automatically recomputed pursuant to
Section 1.3.
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(c) On each Settlement Date, the Servicer shall deposit:
(i) from amounts set aside thereby pursuant to
Section 1.4(b)(i) during the related Fixed Period:
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(A) first, to the Servicer (if the Servicer is not
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Mail-Well I Corporation or an Affiliate thereof), any
accrued and unpaid Servicing Fee for the related Fixed
Period;
(B) second, to the Administration Account (or such
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other account designated by the Administrator), any accrued
and unpaid Discount (on each Portion of Capital),
Administration Fee, Program Fee and Liquidity Fee for the
related Fixed Period; and
(C) third, any remaining amounts in accordance with
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Section 1.4(c)(ii) below.
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(ii) from amounts set aside thereby pursuant to
Section 1.4(b)(ii) or available pursuant to Section 1.4(c)(i)(C)
------------------ --------------------
above:
(A) first, to the extent funds are available
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therefor, if such day is a Termination Day or the Seller
has requested a reduction of Capital pursuant to
Section 1.4(f)(iii), to the Administration Account (or
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such other account designated by the Administrator), the
aggregate outstanding Capital of all Purchasers (or, in the
case of a reduction of Capital pursuant to Section 1.4(f)(iii),
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the aggregate amount of such reduction);
(B) second, to pay any amount in Sections 1.4(c)(i)(A)
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or 1.4(c)(i)(B) (in that order of priority) not otherwise
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paid in full in accordance therewith; and
(C) third, to pay any other Obligations payable
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by the Seller hereunder or under any other Transaction
Document;
(D) fourth, to the Servicer (if the Servicer is
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Mail-Well I Corporation or an Affiliate thereof), any
accrued and unpaid Servicing Fee for the related Fixed
Period; and
(E) fifth, if (i) such Settlement Date is not a
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Termination Day and to the extent the applicable conditions
set forth in Exhibit II hereto have been satisfied, to the
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Seller as a reinvestment in Receivables to the extent the
aggregate of the Purchased Interests of all Purchasers
(expressed as a percentage) would not exceed 100% after
giving effect to such distribution to the Seller, with any
excess amounts remaining in the Collection Account for
distribution in accordance with
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this Section 1.4(c)(ii) on the next Settlement Date or
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(ii) the Final Payout Date has occurred, to the Seller.
If such Settlement Date is not a Termination Day, to the extent it would
have been a return of Capital upon remittance to each Purchaser, such
Purchaser shall be deemed to have reinvested the percentage of
Collections represented by the Purchased Interest of such Purchaser not
distributed to such Purchaser and such Purchased Interest shall be
automatically recomputed pursuant to Section 1.3. To the extent there
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are not sufficient funds available to distribute all amounts within a
given level of priority, such available funds will be distributed within
such level of priority on a pro rata basis based on the amount then due
and unpaid.
(d) Upon receipt of funds deposited into the Administration
Account pursuant to Section 1.4(c) or 1.4(f)(iii), the Administrator
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shall cause such funds to be distributed as follows:
(i) if such distribution occurs on a day that is not a
Termination Day, first, to the applicable Purchasers in payment
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in full of all accrued Discount (on each Portion of Capital),
second, to the applicable Securitization Parties in payment of
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any accrued and unpaid Administration Fee, Program Fee and
Liquidity Fee, and third, to the applicable Purchasers as a
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reduction of Capital of such Purchasers pursuant to
Section 1.4(f), if applicable; and
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(ii) if such distribution occurs on a Termination Day,
first, to the applicable Purchasers in payment in full of all
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accrued Discount (on each Portion of Capital), second, to the
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applicable Securitization Parties in payment in full of any
accrued and unpaid Administration Fee, Program Fee and Liquidity
Fee, third, to the applicable Purchasers in payment in full of
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all Capital of such Purchasers, and fourth, if the Capital and
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accrued Discount of all Purchasers has been reduced to zero, to
the Securitization Party and any other Indemnified Party or
Affected Person in payment in full of any other amounts owed
thereto by the Seller hereunder.
After the aggregate outstanding Capital of all Purchasers and Discount
(on each Portion of Capital) of all Purchasers and any Administration
Fee, Program Fee, Liquidity Fee and Servicing Fee, and any other amounts
payable by the Seller to the Securitization Parties or any other
Indemnified Party, Affected Person or any other Person hereunder, have
been paid in full, all additional Collections shall be paid to the
Seller for its own account. To the extent there are not sufficient
funds available to distribute to all Purchasers all amounts within a
given level of priority, such available funds will be distributed by the
Administrator within such level of priority on a pro rata basis based on
the amount then due and unpaid to such Purchasers.
(e) For the purposes of this Section 1.4:
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(i) if on any day the Outstanding Balance of any Pool
Receivable is reduced or adjusted as a result of any defective,
rejected, returned, goods or services, or
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any discount or other adjustment made by the Seller or the
Servicer or any setoff or dispute between the Seller, the Servicer
or any other Person and an Obligor ("Dilution"), the Seller
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shall be deemed to have received on such day a Collection of such
Pool Receivable in the amount of such Dilution and the Seller
shall immediately deposit such amount into the Collection Account
for distribution in accordance with this Section 1.4;
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provided, however, that to the extent such amount would be
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immediately remitted to the Seller pursuant to the proviso in
Section 1.4(b)(ii), such deposit and remittance may be made by
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book-entry only;
(ii) if on any day any of the representations or warranties
in paragraphs (h) or (n) of Exhibit III is not true with
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respect to any Pool Receivable (except as a result of a Receivable
becoming a Defaulted Receivable after the date such representation
or warranty was made), the Seller shall be deemed to have received
on such day a Collection of such Pool Receivable in full and the
Seller shall immediately deposit such amount into the Collection
Account for distribution in accordance with this Section 1.4;
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provided, however, that to the extent such amount would be
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immediately remitted to the Seller pursuant to the proviso in
Section 1.4(b)(ii), such deposit and remittance may be made by
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book-entry only; and
(iii) if and to the extent any Securitization Party shall be
required for any reason to pay over to an Obligor (or any trustee,
receiver, custodian or similar official in any Insolvency
Proceeding) any amount received by it hereunder, such amount shall
be deemed not to have been so received but rather to have been
retained by the Seller and, accordingly, such Securitization Party
shall have a claim against the Seller for such amount, payable
when and to the extent that any distribution from or on behalf of
such Obligor is made in respect thereof.
(f) If at any time the Seller shall wish to cause the reduction
of the aggregate outstanding Capital of all Purchasers (but not to
commence the liquidation, or reduction to zero, of the entire Capital of
all Purchasers), the Seller may do so as follows:
(i) the Servicer shall set aside Collections and
hold them in trust for the Purchasers under
Section 1.4(b)(ii) until the amount so set aside shall
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equal the desired amount of reduction;
(ii) the Seller shall give the Administrator written
notice of the amount of such proposed reduction and the date
on which such reduction will occur by no later than the
Required Notice Days prior to the date on which such
reduction will occur;
(iii) on the date of such reduction, the Servicer
shall deposit such Collections from amounts set aside and
held in trust pursuant to Section 1.4(b)(ii) on such date
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into the Administration Account for distribution in
accordance with
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Section 1.4(d) (it being understood that no Capital of any
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Purchaser shall be deemed reduced by any amount set aside
or held pursuant to this Section 1.4(f) unless and until,
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and then only to the extent that, such amount is finally
paid to such Purchaser as a reduction of Capital);
provided that,
(A) the amount of any such reduction shall be not less than
$1,000,000 and shall be an integral multiple of $500,000, and the
applicable Portion of Capital after giving effect to such
reduction shall be zero or not less than $1,000,000 and shall be
in an integral multiple of $100,000; and
(B) if more than one Portion of Capital shall be
outstanding at the time of any proposed reduction, such proposed
reduction shall be applied, unless the Seller shall otherwise
specify in the notice given pursuant to Section 1.4(f)(ii), to
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the Portion of Capital with the shortest remaining Fixed Period.
Section 1.5. Fees. The Seller shall pay to the Administrator
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certain fees in the amounts and on the dates set forth in a letter dated
as of the date hereof (the "Fee Letter") between the Seller and the
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Administrator, delivered pursuant to Section 1 of Exhibit II, as
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such letter agreement may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
Section 1.6. Payments and Computations, Etc. (a) All amounts
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to be paid or deposited by the Seller or the Servicer hereunder shall be
paid or deposited no later than 12:00 noon (New York City time) on the
day when due in same day funds to the Administration Account. All
amounts received after 12:00 noon (New York City time) will be deemed to
have been received on the immediately succeeding Business Day.
(b) The Seller shall, to the extent permitted by law, pay
interest on any amount not paid or deposited by the Seller or the
Servicer) when due hereunder, at an interest rate equal to 2.0% per
---
annum above the Base Rate, payable on demand.
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(c) All computations of Discount, interest, fees, and other
amounts under any Transaction Document shall be made on the basis of a
year of 360 days for the actual number of days elapsed. Whenever any
payment or deposit to be made hereunder shall be due on a day other than
a Business Day, such payment or deposit shall be made on the next
succeeding Business Day and such extension of time shall be included in
the computation of such payment or deposit.
Section 1.7. Increased Costs. (a) If any Securitization Party
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or any other Program Support Provider or any of their respective
Affiliates (each an "Affected Person") determines that the existence
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of or compliance with (i) any law or regulation or any change therein or
in the
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interpretation or application thereof, in each case adopted, issued or
occurring after the date hereof or (ii) any request, guideline or
directive from any central bank or other Governmental Authority (whether
or not having the force of law) issued or occurring after the date of
this Agreement affects or would affect the amount of capital required or
expected to be maintained by such Affected Person and such Affected
Person determines that the amount of such capital is increased by or
based upon the existence of any commitment to make purchases of or
otherwise to maintain the investment in Pool Receivables related to this
Agreement or any related liquidity facility or credit enhancement
facility and other commitments of the same type, then, upon demand by
such Affected Person (with a copy to the Administrator), the Seller
shall immediately pay to the Administrator, for the account of such
Affected Person, from time to time as specified by such Affected Person,
additional amounts sufficient to compensate such Affected Person for
such increase in capital in the light of such circumstances, to the
extent that such Affected Person reasonably determines such increase in
capital to be allocable to the existence of any of such commitments. A
certificate as to such amounts submitted to the Seller and the
Administrator by such Affected Person shall be conclusive and binding
for all purposes, absent manifest error.
(b) If, due to either (i) the introduction of or any change
(other than any change by way of imposition or increase of reserve
requirements referred to in Section 1.8) in or in the interpretation
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of any law or regulation or (ii) compliance with any guideline or
request from any central bank or other Governmental Authority (whether
or not having the force of law), there shall be any increase in the cost
to any Affected Person of agreeing to purchase or purchasing, or
maintaining the ownership of the Purchased Interest in respect of which
Discount is computed by reference to the Eurodollar Rate, then, upon
demand by such Affected Person, the Seller shall immediately pay to such
Affected Person, from time to time as specified, additional amounts
sufficient to compensate such Affected Person for such increased costs.
A certificate as to such amounts submitted to the Seller by such
Affected Person shall be conclusive and binding for all purposes, absent
manifest error.
Section 1.8. Additional Discount on Portions of Capital Bearing
---------------------------------------------------
a Eurodollar Rate. The Seller shall pay to the Administrator, for the
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account of any Affected Person, so long as such Affected Person shall be
required under regulations of the Board of Governors of the Federal
Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional
Discount on the unpaid Capital of the applicable Portion of Capital
during each Fixed Period in respect of which Discount is computed by
reference to the Eurodollar Rate, for such Fixed Period, at a rate per
annum equal at all times during such Fixed Period to the remainder
obtained by subtracting (i) the Eurodollar Rate for such Fixed Period
from (ii) the rate obtained by dividing such Eurodollar Rate referred to
in clause (i) above by that percentage equal to 100% minus the
Eurodollar Rate Reserve Percentage for such Fixed Period, payable on
each date on which Discount is payable on the applicable Portion of
Capital. Such additional Discount shall be determined by the Affected
Person and notified to the Seller through the Administrator within 30
days after any Discount payment is made with respect to which such
additional Discount is requested. A certificate as to such additional
Discount submitted to the
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Seller by the Affected Person shall be conclusive and binding for all
purposes, absent manifest error.
Section 1.9. Requirements of Law. In the event that any
-------------------
Affected Person determines that the existence of or compliance with (x)
any law or regulation or any change therein or in the interpretation or
application thereof, in each case adopted, issued or occurring after the
date hereof or (y) any request, guideline or directive from any central
bank or other Governmental Authority (whether or not having the force of
law) issued or occurring after the date of this Agreement:
(i) does or shall subject such Affected Person to any tax
of any kind whatsoever with respect to this Agreement, any
increase in the Purchased Interest relating to such Affected
Person or in the amount of Capital relating thereto, or does or
shall change the basis of taxation of payments to such Affected
Person on account of Collections, Discount or any other amounts
payable hereunder (excluding taxes imposed on the net income of
such Affected Person, and franchise taxes imposed on such Affected
Person, by the jurisdiction under the laws of which such Affected
Person is organized or qualified (or should be qualified) to do
business or a political subdivision thereof);
(ii) does or shall impose, modify or hold applicable any
reserve, special deposit, compulsory loan or similar requirement
against assets held by, or deposits or other liabilities in or for
the account of, purchases, advances or loans by, or other credit
extended by, or any other acquisition of funds by, any office of
such Affected Person which are not otherwise included in the
determination of the Eurodollar Rate or the Base Rate hereunder;
or
(iii) does or shall impose on such Affected Person any other
condition;
and the result of any of the foregoing is (x) to increase the cost to
such Affected Person of acting as Administrator, or of agreeing to
purchase or purchasing or maintaining the ownership of undivided
ownership interests with regard to the Purchased Interest (or interests
therein) or any Portion of Capital in respect of which Discount is
computed by reference to the Eurodollar Rate or the Base Rate or (y) to
reduce any amount due hereunder (whether directly or indirectly) funded
or maintained by reference to the Eurodollar Rate or the Base Rate,
then, in any such case, upon demand by such Affected Person the Seller
shall pay such Affected Person any additional amounts necessary to
compensate such Affected Person for such additional cost or reduced
amount due. All such amounts shall be payable as incurred. A
certificate from such Affected Person to the Seller certifying the
amount of such additional costs or reduced amount due shall be
conclusive in the absence of manifest error.
Section 1.10. Inability to Determine Eurodollar Rate. In the
--------------------------------------
event that the Administrator shall have determined prior to the first
day of any Fixed Period (which determination shall be conclusive and
binding upon the parties hereto) by reason of circumstances affecting
the interbank Eurodollar market, either (a) dollar deposits in the
relevant amounts and for the
10
<PAGE>
<PAGE>
relevant Fixed Period are not available, (b) adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such Fixed
Period or (c) the Eurodollar Rate determined pursuant hereto does not
accurately reflect the cost (as conclusively determined by the
Administrator) of maintaining any Portion of Capital during such Fixed
Period, the Administrator shall promptly give telephonic notice of such
determination, confirmed in writing, to the Seller prior to the first
day of such Fixed Period. Upon delivery of such notice (a) no Portion
of Capital shall be funded thereafter at the Alternate Rate determined
by reference to the Eurodollar Rate, unless and until the Administrator
shall have given notice to the Seller that the circumstances giving rise
to such determination no longer exist, and (b) with respect to any
outstanding Portions of Capital then funded at the Alternate Rate
determined by reference to the Eurodollar Rate, such Alternate Rate
shall automatically be converted to the Alternate Rate determined by
reference to the Base Rate at the respective last days of the then
current Fixed Periods relating to such Portions of Capital.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES; COVENANTS;
TERMINATION EVENTS
Section 2.1. Representations and Warranties; Covenants. The
-----------------------------------------
Seller hereby makes the representations and warranties, and hereby
agrees to perform and observe the covenants set forth in Exhibits III
------------
and IV, respectively, hereto.
--
Section 2.2. Termination Events. If any of the Termination
------------------
Events set forth in Exhibit V hereto shall occur, the Administrator
---------
may, or, at the direction of the Issuer or Majority Alternate
Purchasers, shall by notice to the Seller, declare the Facility
Termination Date and the Commitment Termination Date to have occurred
(in which case the Facility Termination Date and the Commitment
Termination Date shall be deemed to have occurred); provided,
--------
however, that, automatically upon the occurrence of any event (without
- -------
any requirement for the passage of time or the giving of notice)
described in subsection (g) of Exhibit V, the Facility Termination
-------------- ---------
Date and the Commitment Termination Date shall occur. Upon any such
declaration, occurrence or deemed occurrence of the Facility Termination
Date and the Commitment Termination Date, the Securitization Parties
shall have, in addition to the rights and remedies which they may have
under this Agreement, all other rights and remedies provided after
default under the UCC and under other applicable law, which rights and
remedies shall be cumulative.
11
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ARTICLE III.
INDEMNIFICATION
Section 3.1. Indemnities by the Seller. Without limiting any
-------------------------
other rights that the Securitization Parties or any of their respective
Affiliates, employees, agents, successors, transferees or assigns (each,
an "Indemnified Party") may have hereunder or under applicable law,
-----------------
the Seller hereby agrees to indemnify each Indemnified Party from and
against any and all claims, damages, expenses, losses and liabilities
(including Attorney Costs) (all of the foregoing being collectively
referred to as "Indemnified Amounts") arising out of or resulting from
-------------------
this Agreement or any other Transaction Document (whether directly or
indirectly) or the use of proceeds of purchases or reinvestments or the
ownership of the Purchased Interests, or any interest therein, or in
respect of any Receivable, excluding, however, (a) Indemnified Amounts
to the extent resulting from gross negligence or willful misconduct on
the part of such Indemnified Party or resulting from litigation between
two or more Indemnified Parties and not related to any action of
omission or alleged action or omission on the part of the Seller, the
Servicer, the Guarantor or any Originator, (b) recourse (except as
otherwise specifically provided in this Agreement) for uncollectible
Pool Receivables to be written off consistent with the Credit and
Collection Policy, or (c) any net income taxes or franchise taxes
imposed on such Indemnified Party by the jurisdiction under the laws of
which such Indemnified Party is organized or qualified (or should be
qualified) to do business or any political subdivision thereof. Without
limiting or being limited by the foregoing, and subject to the
exclusions set forth in the preceding sentence, the Seller shall pay on
demand to each Indemnified Party any and all amounts necessary to
indemnify such Indemnified Party from and against any and all
Indemnified Amounts relating to or resulting from any of the following:
(i) the failure of any Receivable included in the
calculation of the Net Receivables Pool Balance as an Eligible
Receivable to be an Eligible Receivable, the failure of any
information contained in a Seller Report to be true and correct,
or the failure of any other information provided to any
Securitization Party with respect to Receivables, Related
Security, Collections or this Agreement to be true and correct;
(ii) the failure of any representation or warranty or
statement made or deemed made by the Seller (or any of its
officers) or the Servicer under or in connection with this
Agreement or any other Transaction Document to have been true and
correct in all respects when made;
(iii) the failure by the Seller or the Servicer to comply
with the Credit and Collection Policy or any applicable law, rule
or regulation with respect to any Pool Receivable Related Security
or the related Contract Documents; or the failure of any Pool
Receivable Related Security or the related Contract Documents to
conform to any such applicable law, rule or regulation;
(iv) the failure to vest, and maintain vested, in the
Administrator, for the benefit of the Securitization Parties, a
valid and enforceable (A) perfected undivided percentage ownership
interest, to the extent of the Purchased Interests, in the
Receivables in, or purporting to be in, the Receivables Pool and
the Related Security and Collections
12
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<PAGE>
with respect thereto and (B) first priority perfected security
interest in the items described in Section 1.2(d), in each case,
--------------
free and clear of any Adverse Claim;
(v) Intentionally Omitted;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable in, or purporting to be in, the
Receivables Pool (including, without limitation, a defense based
on such Receivable or the related Contract Document not being a
legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim
resulting from the sale of the goods or services related to such
Receivable or the furnishing or failure to furnish such goods or
services or relating to collection activities with respect to such
Receivable (if such collection activities were performed by the
Seller or any of its Affiliates acting as Servicer or by any agent
or independent contractor retained by the Seller or any of its
Affiliates);
(vii) any failure of the Seller or the Servicer to perform
its duties or obligations in accordance with the provisions of
this Agreement or any other Transaction Document or to perform its
duties or obligations in connection with any Pool Receivable;
(viii) any claim (including, without limitation, any breach
of warranty, product liability or environmental claim),
investigation, litigation or proceeding arising out of or in
connection with any Pool Receivable or Related Security;
(ix) the commingling of Collections of Pool Receivables at
any time with other funds and any lost, mutilated, destroyed or
missing Contract Documents;
(x) any investigation, litigation or proceeding related to
this Agreement or any other Transaction Document (except if
unreasonably instituted by any Securitization Party) or the use of
proceeds of purchases or reinvestments or the ownership of the
Purchased Interest or in connection with any Pool Receivable or
Related Security;
(xi) any reduction in Capital as a result of the
distribution of Collections pursuant to Section 1.4(d), in the
--------------
event that all or a portion of such distributions shall thereafter
be rescinded or otherwise must be returned for any reason;
(xii) as at the date of any purchase or reinvestment the
aggregate of the Purchased Interests of all Purchasers exceeds
100% after giving effect to any purchase or reinvestment by any
Purchaser hereunder; or
(xiii) the enforcement of any Transaction Document against
the Seller, the Servicer, the Guarantor or any Originator by any
Securitization Party (except if unreasonably instituted by any
Securitization Party).
13
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<PAGE>
Indemnification under this Section 3.1 shall survive the termination
-----------
of this Agreement and shall include, without limitation, reasonable fees
and expenses of counsel and expenses of litigation.
ARTICLE IV.
MISCELLANEOUS
Section 4.1. Amendments, Etc. No amendment or waiver of any
---------------
provision of this Agreement or consent to any departure by the Seller or
Servicer therefrom shall be effective unless in a writing signed by the
Administrator, Issuer and Majority Alternate Purchasers, and, in the
case of any amendment, by the Seller and the Servicer and then such
amendment, waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided,
--------
however, that the consent of all Alternate Purchasers shall be
- -------
required in order to amend, modify or waive any provision of this
Agreement which would: (i) reduce the amount of Capital or Discount that
is payable on account of any Purchased Interest or delay any scheduled
date for payment thereof; (ii) increase the Purchase Limit; (iii) modify
the reserve requirements hereunder for uncollectible Receivables,
Discount or the Servicing Fee; or (iv) modify any yield protection or
indemnity provision which expressly inures to the benefit of the
Alternate Purchasers. No failure on the part of any Securitization
Party to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or
the exercise of any other right.
Section 4.2. Notices, Etc. All notices and other
-------------
communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication) and shall be sent
or delivered, to each party hereto, at its address set forth under its
name on the signature pages hereof or at such other address as shall be
designated by such party in a written notice to the other parties
hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and
notices and communications sent by other means shall be effective when
received.
Section 4.3. Assignability. (a) This Agreement and the
-------------
Issuer's rights and obligations herein (including ownership of the
Purchased Interest) shall be assignable, in whole or in part, by the
Issuer and its successors and assigns with, if a Termination Event has
not occurred and is continuing, the prior written consent of the Seller;
provided, however, that such consent shall not be unreasonably
- -------- -------
withheld (it being understood that withholding such consent shall not be
unreasonable if the Issuer wants to assign its rights and obligations
herein to an assignee which does not issue commercial paper); and
provided, further, that no such consent shall be required if the
- -------- -------
assignment is made to Bank of America, any Alternate Purchaser, any
Affiliate of Bank of America or any Alternate Purchaser (other than a
director or officer of Bank of America), any Liquidity Purchaser or
other Program Support Provider. Each assignor may, in connection with
such assignment or potential assignment, disclose to the applicable
assignee any information
14
<PAGE>
<PAGE>
relating to the Seller, Servicer or the Pool Receivables furnished to
such assignor by or on behalf of the Seller, Servicer, the Issuer or the
Administrator.
Without limiting the foregoing, the Issuer may, from time to time
in one transaction or a series of transactions, assign all or a portion
of the Purchased Interest of the Issuer and its rights and obligations
under this Agreement to an SPC Assignee. Upon and to the extent of such
assignment to an SPC Assignee, (i) the SPC Assignee shall be the owner
of the assigned portion of the Purchased Interest of the Issuer, (ii)
Bank of America (or an Affiliate thereof) will act as Administrator for
the SPC Assignee as well as for the Issuer, with all corresponding
rights and powers, express or implied, granted herein to the
Administrator, (iii) the SPC Assignee and its Program Support Providers
and other related parties shall have the benefit of all the rights and
protections provided to the Issuer and its Program Support Providers and
other related parties, respectively, herein and in the other Transaction
Documents (including, without limitation, any limitation on recourse
against the Issuer or related parties, any agreement not to file or join
in the filing of a petition to commence an Insolvency Proceeding against
the Issuer, and the right to assign to another SPC Assignee as provided
in this paragraph),(iv) the SPC Assignee shall assume all obligations,
if any, of the Issuer under and in connection with this Agreement, and
the Issuer shall be released from such obligations, in each case to the
extent of such assignment, and the obligations of the Issuer (if any)
and the SPC Assignee shall be several and not joint, (v) all distribu-
tions in respect of Capital of the Issuer or Discount thereon shall be
made to the Issuer and the SPC Assignee, on a pro rata basis according
to their respective interests (or in the case of Discount, the accrued
amounts thereof), (vi) the rate used to calculate such Discount with
respect to the portions of the Purchased Interest of the Issuer owned by
the SPC Assignee and funded with commercial paper notes issued by the
SPC Assignee from time to time shall be determined in the manner set
forth in the definition of "CP Rate" on the basis of the discount or
interest rates applicable to commercial paper issued by the SPC Assignee
(rather than the Issuer), (vii) the defined terms and other terms and
provisions of this Agreement and the other Transaction Documents shall
be interpreted in accordance with the foregoing, and (viii) if requested
by the Administrator, the parties will execute and deliver such further
agreements and documents and take such other actions as the
Administrator may reasonably request to evidence and give effect to the
foregoing.
(b) The Issuer may at any time grant to one or more banks or
other institutions (each a "Liquidity Purchaser") party to the
-------------------
Liquidity Asset Purchase Agreement or to any other Program Support
Provider participating interests in the Purchased Interests of the
Issuer. In the event of any such grant by the Issuer of a participating
interest to a Liquidity Purchaser or other Program Support Provider, the
Issuer shall remain responsible for the performance of its obligations
hereunder. The Seller agrees that each Liquidity Purchaser or other
Program Support Provider shall be entitled to the benefits of
Sections 1.7, 1.8 and 1.9 with respect to its participating
- ------------ --- ---
interest.
(c) This Agreement and the rights and obligations of the
Administrator hereunder shall be assignable, in whole or in part, by the
Administrator and its successors and assigns.
15
<PAGE>
<PAGE>
(d) Except as provided in the Servicing Agreement, neither the
Seller nor the Servicer may assign its rights or delegate its
obligations hereunder or any interest herein without the prior written
consent of the Administrator.
(e) Without limiting any other rights that may be available
under applicable law, the rights of any Securitization Party may be
enforced through it or by its agents.
(f) A Person (other than Bank of America) shall become a party
hereto and shall become an Alternate Purchaser hereunder upon
satisfaction of the conditions set forth in Section 4.3(g), acceptance
--------------
by the Administrator and recording of an Assignment by the Liquidity
Agent in the Register and the occurrence of the effective date of such
Alternate Purchaser's Purchaser Commitment (as set forth in such
Assignment) and subject to the approval of such Purchaser by the
Administrator and the Seller; provided, however, that the Seller's
-------- -------
approval shall not be unreasonably withheld.
(g) Subject to Section 4.3(f), each Alternate Purchaser may
--------------
assign to any Eligible Assignee (as defined in the Liquidity Asset
Purchase Agreement) all or a portion of its rights and obligations under
this Agreement; provided, however that:
-------- -------
(i) each such assignment shall be of a constant, and not a
varying, percentage of the aggregate rights and obligations of the
assigning Alternate Purchaser under this Agreement (including,
without limitation, its Purchaser Commitment and its Purchased
Interest, if any), and must be accompanied by a corresponding
assignment under the Liquidity Asset Purchase Agreement in
accordance with the terms thereof,
(ii) the amount of the assigning Alternate Purchaser's
Purchaser Commitment being assigned pursuant to such assignment to
any one Eligible Assignee shall in no event be less than
$5,000,000 and shall be in an integral multiple of $1,000,000,
and, unless such assigning Alternate Purchaser is assigning its
entire Purchaser Commitment, such assigning Alternate Purchaser's
retained Purchaser Commitment after giving effect to such
assignment shall in no event be less than $10,000,000,
(iii) the parties to each such assignment shall execute and
deliver an Assignment to the Administrator, for its acceptance by
the Administrator and recording by the Liquidity Agent in the
Register.
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in the Assignment, (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to this
Agreement, have the rights and obligations of an Alternate Purchaser
hereunder and (y) the Alternate Purchaser which is the assignor
thereunder shall, to the extent that rights and obligations hereunder
have been assigned by it pursuant to this Agreement, relinquish its
rights (other than the right to
16
<PAGE>
<PAGE>
receive payments from the Seller which accrued in favor of such
Alternate Purchaser prior to such assignment) and be released from its
obligations under this Agreement (and, if such Assignment provides for
an assignment of all such assigning Alternate Purchaser's Purchaser
Commitment, such Alternate Purchaser shall cease to be a party hereto).
(h) Upon receipt by the Administrator of an Assignment executed
by an assigning Alternate Purchaser and by an assignee who is an
Eligible Assignee (as defined in the Liquidity Asset Purchase Agreement)
and the satisfaction of the other conditions set forth in
Sections 4.3(f) and (g), the Administrator shall (i) accept such
- --------------- ---
Assignment, (ii) have the information contained therein recorded by the
Liquidity Agent in the Register and (iii) give prompt notice thereof to
the Issuer and the Servicer. The assigning Alternate Purchaser shall
pay to the Administrator an assigning fee equal to $2,500 for each
assignment hereunder.
(i) No Alternate Purchaser may sell any participations in any
portion of its rights and obligations under this Agreement, including,
without limitation, such Alternate Purchaser's Purchaser Commitment.
Section 4.4. Taxes. (a) In addition to the rights of
-----
indemnification granted under Section 3.1 hereof, the Seller shall pay
-----------
on demand any and all stamp and other taxes and fees payable in
connection with the execution, delivery, filing and recording of this
Agreement or the other documents or agreements to be delivered
hereunder, and agrees to save each Indemnified Party harmless from and
against any liabilities with respect to or resulting from any delay in
paying or omission to pay such taxes and fees.
Section 4.5. No Proceedings; Limitation on Payments. Each
--------------------------------------
party hereto hereby covenants and agrees that it will not institute
against, or join any other Person in instituting against, the Issuer or
any SPC Assignee any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceeding, or other proceeding under any federal or
state bankruptcy or similar law, for one year and one day after the
latest maturing Note issued by the Issuer or the SPC Assignee is paid in
full.
Section 4.6. Confidentiality. Unless otherwise required by
---------------
applicable law, the Seller and the Servicer agree to maintain the
confidentiality of this Agreement and the other Transaction Documents
(and all drafts thereof) in communications with third parties and
otherwise; provided, however, that this Agreement may be disclosed
-------- -------
(a) to third parties to the extent such disclosure is made pursuant to a
written agreement of confidentiality in form and substance reasonably
satisfactory to the Administrator, (b) to the Seller's legal counsel and
auditors if they agree to hold it confidential and (c) as required by
any law, rule or regulation.
Section 4.7. GOVERNING LAW AND JURISDICTION. (a) THIS
------------------------------
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS
17
<PAGE>
<PAGE>
PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS,
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH PARTY HERETO IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, 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 PARTIES HERETO EACH WAIVE PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY
ANY OTHER MEANS PERMITTED BY NEW YORK LAW.
Section 4.8. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement.
Section 4.9. Survival of Termination. The provisions of
-----------------------
Sections 1.7, 1.8, 1.9, 3.1, 4.2, 4.4, 4.5, 4.6, 4.7, 4.9, 4.10, 4.11
- ------------ --- --- --- --- --- --- --- --- --- ---- ----
and Exhibits I, III, IV and V shall survive any termination of this
---------- --- -- -
Agreement.
Section 4.10. WAIVER OF JURY TRIAL. THE PARTIES HERETO 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 OR
THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER
PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS,
OR OTHERWISE. THE PARTIES HERETO EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, EACH OF THE PARTIES HERETO FURTHER AGREES THAT
ITS 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 ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.
18
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<PAGE>
Section 4.11. Entire Agreement. This Agreement embodies the
----------------
entire agreement and understanding between the parties hereto, and
supersedes all prior or contemporaneous agreements and understandings of
such Persons, verbal or written, relating to the subject matter hereof
and thereof, except for any prior arrangements made with respect to the
payment by the Issuer of (or any indemnification for) any fees, costs or
expenses payable to or incurred (or to be incurred) by or on behalf of
the Seller, the Servicer and the Administrator.
Section 4.12. Headings. The captions and headings of this
--------
Agreement and in any Exhibit hereto are for convenience of reference
only and shall not affect the interpretation hereof or thereof.
Section 4.13. Issuer's Liabilities. The obligations of the
--------------------
Issuer under this Agreement are solely the corporate obligations of the
Issuer. No recourse shall be had for the payment of any amount owing by
the Issuer under this Agreement, or for the payment by the Issuer of any
other obligation or claim arising out of or based upon this Agreement
against any stockholder, employee, officer, director or incorporator of
the Issuer. The agreements provided in this Section 4.13 shall
------------
survive termination of this Agreement.
Section 4.14. Servicing Agreement. The Purchasers hereby
-------------------
authorizes the Administrator to execute, deliver, and take action under,
the Servicing Agreement on behalf of the Purchasers.
[SIGNATURES BEGIN ON THE FOLLOWING PAGE]
19
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of
the date first above written.
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Seller
By:_________________________________
Name: Robert Meyer
Title: Vice President,
Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
MAIL-WELL I CORPORATION, as Servicer
By:_________________________________
Name: Robert Meyer
Title: Vice President,
Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
20
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<PAGE>
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as Administrator
By: _____________________________
Name:
Title:
Global Asset Securitization Group
231 S. LaSalle Street, Suite 1611
Chicago, Illinois 60697
Attention: Conduit Management Team
Telephone No.: (312) 828-1841
Facsimile No.: (312) 974-8975
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, as an Alternate Purchaser
By: _____________________________
Name:
Title:
Global Asset Securitization Group
231 S. LaSalle Street, 14th Floor
Chicago, Illinois 60697
Attention: Marion Flynn
Telephone No.: (312) 828-6810
Facsimile No.: (312) 828-2480
with a copy to:
Bank of America National Trust
and Savings Association
Global Asset Securitization Group
231 S. LaSalle Street, Suite 1611
Chicago, Illinois 60697
Attention: Karen P. Louie
Telephone No.: (312) 828-8932
Facsimile No.: (312) 923-0273
Purchaser Commitment: $105,000,000
21
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<PAGE>
HARRIS TRUST AND SAVINGS BANK,
as an Alternate Purchaser
By: _____________________________
Name:
Title:
111 West Monroe Street
10th Floor Center
Chicago, Illinois 60603
Attention: James H. Colley
Telephone No.: (312) 461-6876
Facsimile No.: (312) 293-5041
Purchaser Commitment: $20,000,000
22
<PAGE>
<PAGE>
THE BANK OF NOVA SCOTIA,
as an Alternate Purchaser
By:_________________________________
Name:
Title:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: F.C.H. Ashby
Telephone: (404) 877-1500
Facsimile: (404) 888-8998
with a copy to:
The Bank of Nova Scotia
Houston Representative Office
1100 Louisiana, Suite 3000
Houston, Texas 77002
Attention: Gregory George
Telephone: (713) 759-3430
Facsimile: (713) 752-2425
Purchase Commitment: $20,000,000
23
<PAGE>
<PAGE>
QUINCY CAPITAL CORPORATION,
as Issuer
By: _______________________________
Name:
Title:
c/o AMACAR Group, L.L.C.
6525 Morrison Blvd, Suite 318
Charlotte, North Carolina 28211
Attention: Elizabeth Eldridge
Telephone No.: (704) 365-0569
Facsimile No.: (704) 365-1362
with a copy to:
Bank of America National Trust
and Savings Association
Global Asset Securitization Group
231 S. LaSalle Street, Suite 1611
Chicago, Illinois 60697
Attention: Conduit Management Team
Telephone No.: (312) 828-1841
Facsimile No.: (312) 974-8975
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EXHIBIT I
DEFINITIONS
As used in the Agreement (including its Exhibits), the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined).
Unless otherwise indicated, all Section, Annex, Exhibit and Schedule
references in this Exhibit are to Sections of and Annexes, Exhibits and
Schedules to the Agreement.
"Acquisition" means, for any Person, any transaction or
-----------
series of related transactions by such Person for the purpose of or
resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of another Person, or of any business or
division of another Person, (b) the acquisition of a majority of the
voting stock (as defined in the definition of Subsidiary) of another
Person, or otherwise causing another Person to become a Subsidiary of
such Person, (c) the power of such Person 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 by such Person of another
Person, or (d) a merger or consolidation or any other combination with
another Person (other than another Person that is a Subsidiary of such
Person) provided that such Person or its Subsidiary is the surviving
entity.
"Administration Account" means the special account (ABA
----------------------
#021001033, account #00-384-710, Reference: Bank of America as
Administrator, Attention: Stacy Coulon) of the Issuer maintained at
Bankers Trust Company, or such other account as may be so designated in
writing by the Administrator to the Seller and the Servicer.
"Administration Fee" has the meaning set forth in the Fee
------------------
Letter.
"Administrator" has the meaning set forth in the preamble
-------------
to the Agreement.
"Adverse Claim" means a lien, security interest, ownership
-------------
interest or other charge or encumbrance, or any other type of
preferential arrangement, it being understood that a lien, security
interest, ownership interest or other charge or encumbrance, or any
other type of preferential arrangement, in favor of the Issuer shall not
constitute an Adverse Claim.
"Affected Person" has the meaning set forth in
---------------
Section 1.7.
- -----------
"Affiliate" means, as to any Person, any other Person
---------
that, directly or indirectly, is in control of, is controlled by or is
under common control with such Person or is a director or officer of
such Person. For the purposes of this definition, "control", when used
with respect to any Person, means the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise, and the
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term "controlled" shall have meanings correlative to the foregoing.
Notwithstanding the foregoing, with respect to the Issuer, "Affiliate"
shall mean the holder(s) of its capital stock.
"Aggregate Reserve" means, on any date, the sum of (i) the
-----------------
Discount Reserve, plus (ii) the Loss Reserve, plus (iii) the Dilution
Reserve, plus (iv) the Servicing Fee Reserve, plus (v) the Commingling
Reserve, all as of such date; provided, however, that the Aggregate
-------- -------
Reserve shall not be less than the Minimum Reserve on such date.
"Agreement" has the meaning set forth in the preamble.
---------
"Alternate Purchaser" has the meaning set forth in the
-------------------
preamble.
"Alternate Rate" for any Fixed Period for any Portion of
--------------
Capital means an interest rate per annum equal to the Applicable Margin
per annum above the Eurodollar Rate for such Fixed Period; provided,
--------
however, that in the case of
- -------
(i) any Fixed Period on or prior to the first day of which
the Administrator shall have been notified by the Issuer, an
Alternate Purchaser or Program Support Provider that the
introduction of or any change in or in the interpretation of any
law or regulation makes it unlawful, or any central bank or other
Governmental Authority asserts that it is unlawful, for the
Issuer, such Alternate Purchaser or such Program Support Provider
to fund any Portion of Capital (based on the Eurodollar Rate) set
forth above (and the Issuer, such Alternate Purchaser or such
Program Support Provider shall not have subsequently notified the
Administrator that such circumstances no longer exist),
(ii) any Fixed Period of less than one calendar month,
(iii) any Fixed Period as to which the Administrator does
not receive notice (provided, that other than with respect to the
initial Fixed Period for any Portion of Capital, if such notice is
not received, the Seller shall be deemed to have given such a
notice specifying its desire to continue to fund such Portion of
Capital for the next Fixed Period on the same funding basis as the
maturing Fixed Period), by no later than 11:00 a.m. (New York City
time) on (x) the second Business Day preceding the first day of
such Fixed Period that the Seller desires that the related Portion
of Capital be funded at the CP Rate, (y) the third Business Day
preceding the first day of such Fixed Period that the Seller
desires that the related Portion of Capital be funded at the
Alternate Rate and based on the Eurodollar Rate, or (z) the Seller
has given (or has been deemed to have given) the notice
contemplated by clause (x) of this clause (iii) and the
------------
Administrator shall have notified the Seller that funding the
related Portion of Capital at the CP Rate is unacceptable to the
Issuer, or
(iv) any Fixed Period relating to a Portion of Capital
which is less than $1,000,000,
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the "Alternate Rate" for each such Fixed Period shall be an interest
--------------
rate per annum equal to the Base Rate in effect on each day of such
Fixed Period. Notwithstanding the foregoing, the "Alternate Rate" for
--------------
any Termination Day resulting from a Termination Event shall be an
interest rate equal to 2.00% per annum above the Base Rate in effect
--- -----
on such day.
"Applicable Margin" means the sum of (a) the greater of
-----------------
(i) 1.50% and (ii) the sum of (A) 0.50%, plus (B) the "Applicable
Margin" described in clause (ii) of the definition thereof in the Credit
Agreement, dated as of March 16, 1998 among the Servicer, the guarantors
that are party thereto, Bank of America as administrative agent, and the
co-agents and other financial institutions party thereto, as in effect
on the date hereof (or, if such amount is increased, on the date such
increase became effective); provided, however, that if such Credit
-------- -------
Agreement shall be terminated and another credit or borrowing facility
is executed by Mail-Well I Corporation to which Bank of America is a
party, then this clause (B) shall equal the excess of the interest rate
payable thereunder over the "LIBOR" or similar rate as defined therein
or, if not so defined, over LIBOR (as defined in the definition of
Eurodollar Rate), plus (b) on and after the earlier of the Commitment
Termination Date and the Facility Termination Date, 0.50%
"Assignment" has the meaning set forth in the preamble.
----------
"Attorney Costs" means and includes all reasonable fees
--------------
and disbursements of any law firm or other counsel.
"Average Default Ratio" means, for any day, the arithmetic
---------------------
mean of the Default Ratio for the three most recent Monthly Periods.
"Average Maturity" means, at any time, that period of days
----------------
equal to the average maturity of the Pool Receivables as calculated by
the Servicer in the then most recent Seller Report; provided,
--------
however, that if the Administrator shall disagree with any such
- -------
calculation, the Administrator may recalculate the Average Maturity.
"Bank of America" has the meaning set forth in the
---------------
preamble.
"Bankruptcy Code" means the United States Bankruptcy
---------------
Reform Act of 1978 (11 U.S.C. Section 101, et seq.), as amended from
------
time to time.
"Base Rate" means, for any day, a fluctuating interest
---------
rate per annum as shall be in effect from time to time, which rate shall
be at all times equal to the sum of the Applicable Margin plus the
higher of:
(a) the rate of interest in effect for such day as
publicly announced from time to time by Bank of America in San
Francisco, California, as its "reference rate," which is a rate
set by Bank of America based upon various factors including Bank
of America's costs and desired return, general economic conditions
and other factors, and is
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used as a reference point for pricing some loans, which may be
priced at, above, or below such announced rate; and
(b) 0.50% per annum above the latest Federal Funds Rate.
"Billing Date" means the date on which the invoice with
------------
respect to a Receivable was originally generated.
"Business Day" means any day that is not a Saturday,
------------
Sunday or other day on which (i) banks are not authorized or required by
law or executive order to close in Chicago, Illinois, Charlotte, North
Carolina, New York City, New York or San Francisco, California and (ii)
if this definition of "Business Day" is utilized in connection with the
Eurodollar Rate, dealings are carried out in the London interbank
market.
"Capital" means, at any time with respect to any
-------
Purchaser, the amount paid to the Seller in respect of the Purchased
Interest by such Purchaser pursuant to the Agreement, reduced from time
to time by Collections distributed to such Purchaser and applied on
account of such amount as a reduction of Capital pursuant to
Section 1.4(d); provided, that if such Capital shall have been
- -------------- --------
reduced by any distribution and thereafter all or a portion of such
distribution must be returned for any reason, such Capital shall be
increased by the amount of such returned distribution, as though it had
not been made; and provided, further, that for any assignee or
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transferee of an interest hereunder from a Purchaser, such assignee's or
transferee's "Capital" at the time of such assignment or transfer
-------
shall be equal to that portion of the Capital of its transferor or
assignor so transferred or assigned to such assignee or transferee.
"Change in Control" means (a) with respect to Mail-Well I
-----------------
Corporation, 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 Mail-
Well I Corporation, or the Continuing Directors shall cease to
constitute at least a majority of the directors constituting the board
of directors of Mail-Well I Corporation, (b) with respect to each
Originator (other than Mail-Well I Corporation), that Mail-Well I
Corporation shall fail to own and control, directly or indirectly, free
and clear of all Adverse Claims, 80% of the issued and outstanding
voting stock thereof on a fully diluted basis and (c) with respect to
the Seller, that Mail-Well I Corporation shall fail to own directly,
free and clear of any Adverse Claims, 100% of the shares of outstanding
voting stock thereof on a fully diluted basis.
"Collection Account" means that certain account numbered
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101-8170435 maintained at the Collection Account Bank, which shall be
identified as "Mail-Well Trade
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Receivables Corporation and Bank of America National Trust and Savings
Association, as Administrator for and on behalf of certain secured
parties."
"Collection Account Agreement" means a letter agreement,
----------------------------
in substantially the form of Annex C to the Agreement, among Seller,
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the Administrator and the Collection Account Bank, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with the Agreement.
"Collection Account Bank" means the bank holding the
-----------------------
Collection Account which, initially shall be Norwest Bank of Colorado.
"Collection Delay Period" means ten days or such other
-----------------------
number of days as the Administrator may select upon three Business Days'
notice to the Seller.
"Collections" means, with respect to any Pool Receivable,
-----------
(a) all funds which are received by the Seller, any Originator, the
Servicer or the Administrator in payment of any amounts owed in respect
of such Pool Receivable (including, without limitation, principal,
finance charges, interest and all other charges), or applied to amounts
owed in respect of such Pool Receivable (including, without limitation,
insurance proceeds and net proceeds of the sale or other disposition of
the Related Security with respect thereto or other collateral or
property of the related Obligor or any other Person directly or
indirectly liable for the payment of such Pool Receivable and available
to be applied thereon), (b) all Collections deemed to have been received
pursuant to Section 1.4(e) and (c) all other proceeds of such Pool
--------------
Receivable.
"Commingling Reserve" means, on any date, an amount
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computed as of the last day of each Monthly Period equal to the sum of
(a) the average of the Negative Monthly Amounts over the preceding
twelve Monthly Periods (or if such date occurs less than twelve Monthly
Periods following the date hereof, such fewer number of Monthly Periods
occurring prior to such date), plus (b) if a Trigger Event has occurred
and is continuing, 10%. For the purposes hereof:
"Negative Monthly Amount" means, for any Monthly Period, an
amount equal to the excess, if any, of the Average Weekly
Sales for such Monthly Period over the Average Weekly Cash
for such Monthly Period.
"Average Weekly Sales" means, an amount equal to the
quotient of the original Outstanding Principal Balance of
all Pool Receivables originated by the Originators during
such Monthly Period divided by four.
"Average Weekly Cash" means, for any Monthly Period an
amount equal to the quotient of the Collections received,
without duplication, in any Lock-Box Account, or the
Collection Account during such Monthly Period, divided by
four.
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"Commitment Percentage" means, with respect to any
---------------------
Alternate Purchaser at any time, the quotient of the Purchaser
Commitment of such Alternate Purchaser divided by the Purchase Limit.
"Commitment Termination Date" means the earliest to occur
---------------------------
of (a) June 28, 2000, (b) the date determined pursuant to Section 2.2,
-----------
(c) the date the Purchase Limit reduces to zero pursuant to
Section 1.1(b) and (d) the Purchase and Sale Termination Date (as
- --------------
defined in the Purchase and Sale Agreement).
"Concentration Percentage" means, for any Obligor, the
------------------------
"Concentration Percentage" determined pursuant to Schedule II for such
Obligor.
"Continuing Directors" means, as of any date, the
--------------------
collective reference to all members of the board of directors of Mail-
Well, Inc. who assumed office after such date and whose appointment or
nomination for election by Mail-Well, Inc.'s shareholders was approved
by a vote of at least 50% of the Continuing Directors in office
immediately prior to such appointment.
"Contract" means an agreement between an Originator and an
--------
Obligor pursuant to or under which such Obligor shall be obligated to
pay for merchandise or services from time to time.
"Contract Documents" means, with respect to any
------------------
Receivable, the related Contract and any agreement(s) modifying such
Receivable or Contract.
"CP Rate" means, for any Fixed Period for any Portion of
-------
Capital, to the extent the Issuer funds such Portion of Capital for such
Fixed Period by issuing Notes, the per annum rate equivalent to the
"weighted average cost" (as defined below) related to the issuance of
Notes that are allocated, in whole or in part, by the Issuer or the
Administrator to fund or maintain such Portion of Capital (and which may
also be allocated in part to the funding of other Portions of Capital
hereunder or of other assets of the Issuer); provided, however, that
-------- -------
if any component of such rate is a discount rate, in calculating the
"CP Rate" for such Portion of Capital for such Fixed Period, the
-------
Issuer shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent rate per annum. As
used in this definition, the Issuer's "weighted average cost" shall
---------------------
consist of (w) the actual interest rate (or discount) paid to purchasers
of the Issuer's Notes, together with the commissions of placement agents
and dealers in respect of such Notes, to the extent such commissions are
allocated, in whole or in part, to such Notes by the Issuer or the
Administrator, (x) certain documentation and transaction costs
associated with the issuance of such Notes, (y) any incremental carrying
costs incurred with respect to Notes maturing on dates other than those
on which corresponding funds are received by the Issuer, and (z) other
borrowings by the Issuer (other than under any Program Support
Agreement), including borrowings to fund small or odd dollar amounts
that are not easily accommodated in the commercial paper market.
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"Credit and Collection Policy" means those receivables
----------------------------
credit and collection policies and practices of the Seller and each
Originator in effect on the date of the Agreement and attached hereto as
Annex A, as modified in compliance with the Agreement.
"Debt" means, for any Person, indebtedness, obligations
----
and liabilities of such Person (a) for borrowed money, (b) evidenced by
promissory notes, bonds, debentures, notes or other similar instruments,
(c) to pay the deferred purchase price of property or services other
than trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than 90 days, (d) as
lessee under leases which have been or should be, in accordance with
generally accepted accounting principles, recorded as capital leases,
(e) secured by any lien or other charge upon property or assets owned by
such Person, even though such Person has not assumed or become liable
for the payment of such obligations, (f) under any swap, cap, collar or
other hedging agreement, (g) under reimbursement agreements or similar
agreements with respect to the issuance of letters of credit (other than
obligations in respect of letters of credit opened to provide for
payment of goods and services purchased in the ordinary course of
business), (h) under direct or indirect guaranties in respect of, and
obligations (contingent or otherwise) to purchase or otherwise acquire,
or otherwise to assure a creditor against loss in respect of,
indebtedness or obligations of others of the kinds referred to in
clauses (a) through (g) above and (i) in respect of unfunded vested
benefits under plans covered by Title IV of ERISA. For the purposes
hereof, the term "guarantee" shall include any agreement, whether such
agreement is on a contingency or otherwise, to purchase, repurchase or
otherwise acquire Indebtedness of any other Person, or to purchase, sell
or lease, as lessee or lessor, property or services, in any such case
primarily for the purpose of enabling another person to make payment of
Indebtedness, or to make any payment (whether as an advance, capital
contribution, purchase of an equity interest or otherwise) to assure a
minimum equity, asset base, working capital or other balance sheet or
financial condition, in connection with the Indebtedness of another
Person, or to supply funds to or in any manner invest in another Person
in connection with Indebtedness of such Person.
"Default Ratio" means the ratio (expressed as a percentage
-------------
and rounded upwards to the nearest 1/100 of 1%) computed as of the last
day of each Monthly Period by dividing (i) the sum of (a) the current
aggregate Outstanding Principal Balance of all Pool Receivables with any
portion thereof remaining unpaid for 121 to 150 days after the Billing
Date therefore on such day, plus (b) the aggregate Outstanding Principal
Balance of any other Pool Receivables that became Defaulted Receivables
during such Monthly Period by (ii) the aggregate original Outstanding
Principal Balance of all Pool Receivables originated by the Originators
during the Monthly Period five Monthly Periods prior to such day.
"Defaulted Receivable" means a Receivable:
--------------------
(i) (x) as to which any payment, or part thereof,
remains unpaid for at least 121 days from the original
Billing Date therefor;
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(ii) the Obligor of which, or any other Person
obligated thereon or owning any Related Security in respect
thereof, has taken any action or suffered any event to occur
of the type described in subsection (g) of Exhibit V
-------------- ---------
hereto or any other Insolvency Proceeding;
(iii) which has been extended, amended, rewritten or
otherwise modified, except in accordance with the Servicing
Agreement; or
(iv) which, consistent with the Credit and Collection
Policy, has been, or would be, written off the Seller's or
the Originator's, as applicable, books as uncollectible.
"Designated Obligor" means, at any time, each Obligor;
------------------
provided, however, that any Obligor shall cease to be a Designated
- -------- -------
Obligor upon three Business Days' notice by the Administrator to the
Seller that the Administrator has determined in its reasonable business
judgment that such Obligor is no longer acceptable; and provided,
--------
further, that any Person added as an Obligor after the date hereof
- -------
shall be judged to be acceptable or not acceptable in the sole
discretion of the Administrator.
"Dilution" shall have the meaning set forth in Section
-------- --------
1.4(e)(i).
- ---------
"Dilution Horizon Ratio" means, on any date, the ratio
----------------------
(expressed as a percentage and rounded upward to the nearest 1/100 of
1%) equal to the quotient of (i) the Outstanding Principal Balance of
all Pool Receivables originated by the Originators for the two Monthly
Periods preceding such day, divided by (ii) the Net Receivables Pool
Balance as of the last day of the most recent Monthly Period.
"Dilution Ratio" means the ratio (expressed as a
--------------
percentage and rounded upward to the nearest 1/100 of 1%), computed as
of the last day of each Monthly Period, equal to the quotient of (i) the
aggregate amount of all Dilution with respect to the Pool Receivables at
the end of the preceding Monthly Period, divided by (ii) the aggregate
original Outstanding Principal Balance of Pool Receivables originated by
the Originators during the second Monthly Period preceding such day.
"Dilution Reserve" means, on any date, the product of (i)
----------------
the sum of (a) the product of 2 multiplied by the Dilution Ratio, plus
(b) the Dilution Volatility Ratio, multiplied by (ii) the Dilution
Horizon Ratio, multiplied by (iii) the Net Receivables Pool Balance, all
as of such date.
"Dilution Volatility Ratio" means, on any date, the ratio
-------------------------
(expressed as a percentage and rounded upward to the nearest 1/100 of
1%) equal to the product of (i) the excess of (A) the highest Dilution
Ratio calculated during the previous twelve Monthly Periods (or if such
date occurs less than twelve Monthly Periods following the date hereof,
such fewer number
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of Monthly Periods occurring prior to such date), over (B) the average
Dilution Ratio calculated during such period, multiplied by (ii) the
quotient of the amount determined under clause (A) above, divided by the
amount determined under clause (B) above.
"Discount" means:
--------
(i) for any Portion of Capital for any Fixed Period
to the extent such Portion of Capital will be funded by the
Issuer on the first day of such Fixed Period through the
issuance of Notes,
CPR x C x ED + TF
--
AD
(ii) for any Portion of Capital for any Fixed Period
to the extent such Portion of Capital will not be funded by
the Issuer on the first day of such Fixed Period through the
issuance of Notes,
ED
--
AR x C x AD + TF
where:
AR = the Alternate Rate for such Portion of Capital
for such Fixed Period.
C = the weighted average of the Dollar amount of
such Portion of Capital during such Fixed
Period.
CPR = the CP Rate for such Portion of Capital for such
Fixed Period (as determined by the Administrator
on or prior to the fourth Business Day of the
calendar month next following such Fixed
Period).
ED = the actual number of days during such Fixed
Period.
TF = the Termination Fee, if any, for such Portion of
Capital for such Fixed Period.
AD = 360.
provided, however, that during the continuance of a Termination
- -------- -------
Event, the CP Rate shall not be available and Discount for each Portion
of Capital shall be determined using the Alternate Rate for the related
Fixed Period; provided, further, that no provision of the Agreement
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shall require
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the payment or permit the collection of Discount in excess of the
maximum permitted by applicable law; and provided, further, that
-------- -------
Discount for any Portion of Capital shall not be considered paid by any
distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.
"Discount Amount" means, on any date, the product of (i)
---------------
2, multiplied by (ii) the Average Maturity for the preceding Monthly
Period as shown on the books and records of the Servicer, multiplied by
(iii) the quotient of (A) the Eurodollar Rate plus 1.125%, divided by
(B) 360, multiplied by (iv) the aggregate outstanding Capital of all
Purchasers, all as of such date.
"Discount Reserve" means, on any date, the sum of (i) the
----------------
Discount Amount and (ii) the accrued and unpaid Fees, all as of such
date.
"Effective Date" means the first date on which all the
--------------
conditions precedent set forth in Section 1 of Exhibit II have been
--------- ----------
satisfied or waived by the Administrator.
"Dividends" means any dividend or distribution (in cash or
---------
obligations) on any shares of any class of Seller's capital stock or any
warrants, options or other rights with respect to shares of any class of
Seller's capital stock.
"Eligible Receivable" means, at any time, a Pool
-------------------
Receivable that satisfies each of the following criteria:
(i) such Receivable was originated in the United
States in the ordinary course of business by an Originator;
(ii) the Seller is the legal and beneficial owner of
such Receivable and Related Security free and clear of any
Adverse Claim, and as to which Receivable the Administrator,
for the benefit of the Securitization Parties, shall have a
valid and enforceable perfected undivided percentage
ownership interest, to the extent of the Purchased Interest,
free and clear of any Adverse Claim;
(iii) there is no right of rescission, offset, defense
or counterclaim to the obligation of the Obligor under such
Receivable to pay the Outstanding Principal Balance thereof,
or the interest, if any, due under such Receivable; the
exercise of any right thereunder will not render such
Receivable unenforceable in whole or in part or subject such
Receivable to any right of rescission, offset, defense or
counterclaim;
(iv) such Receivable, together with the Contract
related thereto, complies in all material respects with all
applicable state and federal laws (and regulations
thereunder), including, without limitation, to the extent
applicable, consumer protection, usury, equal credit
opportunity, fair credit billing, fair credit
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reporting, fair credit debt collection practices, truth-in-
lending or other similar laws, and the Federal Trade
Commission Act;
(v) such Receivable is the legal, valid and binding
obligation of the Obligor thereunder and is enforceable in
accordance with its terms, subject to bankruptcy,
insolvency, and other similar laws relating to the
enforcement of creditors' rights generally and to general
principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) as they relate to bankruptcy, insolvency or similar
proceedings involving the Obligor as debtor, and all parties
to such Receivable had full legal capacity to execute such
Receivable and all other documents related thereto; terms of
such Receivable have not been waived or modified in any
material respect, except in accordance with the Servicing
Agreement and by instruments that are part of the related
Contract Documents;
(vi) such Receivable, according to the Contract
related thereto, is required to be paid in full in
accordance with the Credit and Collection Policy but in any
event within 30 days of the Billing Date therefor;
(vii) the Seller has not taken any action with respect
to such Receivable, or the related Contract, which, or
failed to take any action the omission of which, would
impair the rights of the Administrator or the Purchasers
therein;
(viii) Such Receivable is not a Defaulted Receivable,
and there is no other default, breach, violation or event
(other than a payment default) permitting involuntary early
termination existing under such Receivable and no event
that, with notice or the expiration of any grace or cure
period (or both), would constitute such a default, breach,
violation or event permitting involuntary early termination
under such Receivable;
(ix) such Receivable represents an obligation to pay
for (A)finished goods that have been shipped or services
that have been performed; provided, however, that if
-------- -------
such Receivable relates to goods that have been shipped but
not yet invoiced, such goods will be invoiced by the Seller
within five Business Days of the date of such shipment, or
(B) finished goods that have been invoiced but not yet
shipped under a warehousing, post-production delivery or
other similar agreement with the relevant Obligor,
provided, however, that is such Receivable relates to
-------- -------
finished goods invoiced and held not subject to any such
agreement, upon shipment of such finished goods such
Receivable shall become an Eligible Receivable;
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(x) such Receivable is denominated and payable in
U.S. dollars in the United States;
(xi) the Obligor of such Receivable is (A) a United
States resident, (B) not an Affiliate of the Seller, the
Servicer, any Originator or Mail-Well, Inc., (C) a
Designated Obligor and (D) not the Obligor of any
Receivables which remain unpaid 121 days or more from the
Billing Date which in the aggregate constitute 10% or more
of the aggregate Outstanding Principal Balance of all
Receivables of such Obligor;
(xii) the Obligor of such Receivable is not subject to
any action of the type described in subsection (g) of
--------------
Exhibit V or any other Insolvency Proceeding;
---------
(xiii) such Receivable complies with (A) the
requirements of the Credit and Collection Policy (including,
without limitation, those requirements with respect to the
payment terms of such Receivable) and (B) such other
criteria and requirements (other than those relating to the
collectibility of such Receivable) as the Administrator may
from time to time specify to the Seller upon 30 days'
notice;
(xiv) the Administrator has not provided notice to the
Seller that such Receivable (or class of Receivables) is not
acceptable for inclusion as an "Eligible Receivable";
(xv) such Receivable (A) does not prohibit (or
require the Obligor thereunder to consent to) the transfer,
sale or assignment of the rights and duties of the Seller or
the applicable Originator thereunder and (B) does not
contain a confidentiality provision that expressly restricts
the ability of the parties hereto to exercise their rights
under this Agreement, including, without limitation, their
right to review the Contract;
(xvi) such Receivable has not been originated in, or
subject to, the laws of any jurisdiction under which the
sale, transfer and assignment of such Receivables under the
Transaction Documents would be unlawful, void or voidable;
(xvii) all material consents, licenses or
authorizations of any Governmental Authority with respect to
such Receivable, and the related Contract, have been
obtained; and
(xviii) such Receivable constitutes an "account" as
defined in the UCC.
I-12
<PAGE>
<PAGE>
"ERISA" means the Employee Retirement Income Security Act
-----
of 1974, as amended from time to time, and any successor statute of
similar import, together with the regulations thereunder, in each case
as in effect from time to time. References to sections of ERISA also
refer to any successor sections.
"Eurodollar Rate" means, for any Fixed Period, an interest
---------------
rate per annum (rounded upward to the nearest 1/16th of 1%) determined
pursuant to the following formula:
Eurodollar Rate = LIBOR
--------
1.00 - ERP
Where,
"LIBOR" means the rate of interest per annum determined by
-----
the Administrator to be the arithmetic mean (rounded upward to the
nearest 1/16th of 1%) of the rates of interest per annum notified
to the Administrator by each Reference Bank as the rate of
interest at which dollar deposits in the approximate amount of the
Capital associated with such Fixed Period would be offered to
major banks in the London interbank market at their request at or
about 11:00 a.m. (London time) on the second Business Day prior to
the commencement of such Fixed Period.
"ERP" means, for any Fixed Period, the maximum reserve
---
percentage (expressed as a decimal, rounded upward to the nearest
1/100th of 1%) in effect on the date LIBOR for such Fixed Period
is determined under regulations issued from time to time by the
Federal Reserve Board 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") having a
term comparable to such Fixed Period.
"Exchange Act" means the Securities Exchange Act of 1934,
------------
and regulations promulgated thereunder, as amended.
"Facility Termination Date" means the earliest to occur of
-------------------------
(a) June 27, 2004, (b) the Purchase Termination Date, as defined in the
Liquidity Asset Purchase Agreement, which on the date of the Agreement
is June 30, 2000, or such later date designated as the Purchase
Termination Date from time to time pursuant to the Liquidity Asset
Purchase Agreement (it being understood that the Administrator shall
notify the Seller of the designation of such later date, provided that
failure to provide such notice shall not limit or otherwise affect the
obligations of the Seller or the rights of the Administrator, the
Issuer, or any other party to the Liquidity Asset Purchase Agreement),
(c) the date of termination of the commitment under any other Program
Support Agreement, (d) the date determined pursuant to Section 2.2,
-----------
(e) the date the Purchase Limit reduces to zero pursuant to
Section 1.1(b) and (f) the Purchase and Sale Termination Date (as
- --------------
defined in the Purchase and Sale Agreement).
I-13
<PAGE>
<PAGE>
"Facts and Assumptions" means the "Facts and Assumptions"
---------------------
set forth in the true sale/non-consolidation opinion delivered by
Rothgerber, Johnson & Lyons in connection herewith on the Effective Date
(and in any similar opinion delivered in connection with the addition of
any Originator after the Effective Date).
"Federal Funds Rate" means, for any day, the per annum
------------------
rate set forth in the weekly statistical release designated as
H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, "H.15(519)") for such day
opposite the caption "Federal Funds (Effective)". If on any relevant
day such rate is not yet published in H.15(519), the rate for such day
will be the rate set forth in the daily statistical release designated
as the Composite 3:30 p.m. Quotations for U.S. Government Securities, or
any successor publication, published by the Federal Reserve Bank of New
York (including any such successor, the "Composite 3:30 p.m. Quotation")
for such day under the caption "Federal Funds Effective Rate". If on
any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the
rate for such day will be the arithmetic mean as determined by the
Administrator of the rates for the last transaction in overnight Federal
funds arranged prior to 9:00 a.m. (New York time) on that day by each of
three leading brokers of Federal funds transactions in New York City
selected by the Administrator.
"Federal Reserve Board" means the Board of Governors of
---------------------
the Federal Reserve System, or any entity succeeding to any of its
principal functions.
"Fee Letter" has the meaning set forth in Section 1.5.
---------- -----------
"Fees" mean all fees and other amounts payable by the
----
Seller to the Securitization Parties pursuant to the Fee Letter,
including, without limitation, the Administration Fee, the Program Fee
and Liquidity Fee.
"Final Payout Date" means the date following the Facility
-----------------
Termination Date and the Commitment Termination Date on which no Capital
or Discount in respect of the Purchased Interest of any Purchaser shall
be outstanding and all other amounts (excluding contingent obligations
under indemnities and the like as to which no present payment obligation
exists) payable by any Originator, the Seller, the Guarantor or the
Servicer to each Securitization Party or any other Affected Person under
the Transaction Documents shall have been paid in full.
"Fixed Period" means, unless otherwise mutually agreed by
------------
the Administrator and the Seller, (a) with respect to any Portion of
Capital funded by the issuance of Notes, (x) initially the period
commencing on (and including) the date of the initial purchase or
funding of such Portion of Capital and ending on (but excluding) the
first day of the next following calendar month, and (y) thereafter, each
period commencing on (and including) the last day of the immediately
preceding Fixed Period for such Portion of Capital and ending on (but
excluding) the first day of the next following calendar month; and (b)
with respect to any Portion of Capital not funded by the issuance of
Notes, (x) initially the period commencing on (and including) the
I-14
<PAGE>
<PAGE>
date of the initial purchase or funding of such Portion of Capital and
ending on (but excluding) the next following Settlement Date, and (y)
thereafter, each period commencing on (and including) the last day of
the immediately preceding Fixed Period for such Portion of Capital and
ending on (but excluding) the next following Settlement Date;
provided, that
- --------
(i) any Fixed Period (other than of one day or funded
through the issuance of Notes) which would otherwise end on
a day which is not a Business Day shall be extended to the
next succeeding Business Day; provided, however, if
-------- -------
Discount in respect of such Fixed Period is computed by
reference to the Eurodollar Rate, and such Fixed Period
would otherwise end on a day which is not a Business Day,
and there is no subsequent Business Day in the same calendar
month as such day, such Fixed Period shall end on the next
preceding Business Day;
(ii) in the case of any Fixed Period for any Portion
of Capital which commences before the Termination Date and
would otherwise end on a date occurring after the
Termination Date, such Fixed Period shall end on such
Termination Date and the duration of each Fixed Period which
commences on or after the Termination Date shall be of such
duration as shall be selected by the Administrator;
(iii) any Fixed Period in respect of which Discount
is computed by reference to the CP Rate may be terminated at
the election of, and upon notice thereof to the Seller by,
the Administrator at any time, in which case the Portion of
Capital allocated to such terminated Fixed Period shall be
allocated to a new Fixed Period commencing on (and
including) the date of such termination and ending on (but
excluding) the next following Settlement Date, and
thereafter Discount shall accrue at the Alternate Rate.
"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 body or entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including,
without limitation, any court, and any Person owned or controlled,
through stock or capital ownership or otherwise, by any of the
foregoing.
"Guarantor" has the meaning set forth in the Purchase and
---------
Sale Agreement.
"Indemnified Amounts" has the meaning set forth in
-------------------
Section 3.1.
- -----------
"Indemnified Party" has the meaning set forth in Section
----------------- -------
3.1.
- ---
"Insolvency Proceeding" means (a) any case, action or
---------------------
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidations, receivership,
dissolution, winding-up or relief of debtors, or (b) any general
I-15
<PAGE>
<PAGE>
assignment for the benefit of creditors, composition, marshalling of
assets for creditors, or other, similar arrangement in respect of its
creditors generally or any substantial portion of its creditors; in each
case (a) and (b) undertaken under U.S. Federal, state or foreign law,
including the Bankruptcy Code.
"Issuer" has the meaning set forth in the preamble to the
------
Agreement.
"Liquidity Agent" means Bank of America in its capacity as
---------------
Liquidity Agent pursuant to the Liquidity Asset Purchase Agreement.
"Liquidity Asset Purchase Agreement" means that certain
----------------------------------
Liquidity Asset Purchase Agreement, dated as of the date hereof, among
the Issuer, Bank of America and certain other Persons, as Liquidity
Purchasers, and Bank of America, as Liquidity Agent, as amended,
supplemented or otherwise modified from time to time.
"Liquidity Fee" has the meaning set forth in the Fee
-------------
Letter.
"Liquidity Purchaser" has the meaning set forth in
-------------------
Section 4.3(b).
- --------------
"Lock-Box Account" means an account maintained at a bank
----------------
or other financial institution for the purpose of receiving Collections.
"Lock-Box Agreement" means an agreement, in substantially
------------------
the form of Annex B, between the Seller, the Administrator and each
-------
Lock-Box Bank, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with the Agreement.
"Lock-Box Bank" means any of the banks or other financial
-------------
institutions holding one or more Lock-Box Accounts.
"Loss Horizon Ratio" means the ratio (expressed as a
------------------
percentage and rounded upward to the nearest 1/100 of 1%), computed as
of the last day of each Monthly Period, equal to the quotient of (i) the
aggregate original Outstanding Principal Balance of all Pool Receivables
originated by the Originators during the preceding four Monthly Periods,
divided by (ii) the Net Receivables Pool Balance as of such day.
"Loss Reserve" means, on any date, the product of (i) 2,
------------
multiplied by (ii) the highest Average Default Ratio calculated during
the previous twelve Monthly Periods, multiplied by (iii) the Loss
Horizon Ratio, multiplied by (iv) the Net Receivables Pool Balance, all
as of such date.
"Majority Alternate Purchasers" means at any time
-----------------------------
Alternate Purchasers whose Commitment Percentages aggregate to more than
75%.
I-16
<PAGE>
<PAGE>
"Material Adverse Effect" means a material adverse effect
-----------------------
on (i) the Seller's, the Servicer's, the Guarantor's or any Originator's
ability to perform its obligations under the Transaction Documents, (ii)
the enforceability of any Transaction Document, (iii) the Seller's, the
Servicer's, the Guarantor's or any Originator's business or financial
condition, (iv) the interests of any Securitization Party or Program
Support Provider under any Transaction Document or (v) the
enforceability or collectibility of any Pool Receivable.
"Minimum Reserve" means, on any date, the sum of (a) the
---------------
greater of (i) $8,000,000 and (ii) the sum of (A) the product of (1) the
greatest of (x) the "Concentration Percentage" for "Second Tier
Obligors", (y) the product of 2, multiplied by the "Concentration
Percentage" for "Third Tier Obligors", and (z) the product of 4,
multiplied by the "Concentration Percentage" for "Fourth Tier Obligors",
each as determined in accordance with Schedule II, multiplied by (2) the
Net Receivables Pool Balance, plus (B) the product of the Dilution
Ratio, multiplied by the Dilution Horizon Ratio, plus (b) the Servicing
Fee Reserve, plus (c) the Discount Reserve plus (d) the Commingling
Reserve, all as of such date.
"Monthly Period" shall mean initially, the period from
--------------
Saturday, July 3, 1999 to Saturday, July 31, 1999, and thereafter the
period from the last day of the prior Monthly Period to the fourth (or,
in the case of the third Monthly Period of each fiscal quarter, the
fifth) Saturday following such day or such other period as shall be
agreed upon by the Seller, the Servicer and the Administrator. The
Monthly Period preceding the last day of any Monthly Period shall be
that Monthly Period.
"Moody's" means Moody's Investors Service, Inc., or its
-------
successor.
"Net Receivables Pool Balance" means at any time the
----------------------------
difference of (i) the Outstanding Principal Balance of the Eligible
Receivables then in the Receivables Pool minus (ii) the aggregate amount
by which the Outstanding Principal Balance of the Eligible Receivables
of each Obligor exceeds the product of (A) the Concentration Percentage
for such Obligor, multiplied by (B) the amount determined in accordance
with clause (i) above minus (iii) the aggregate amount by which the
Outstanding Principal Balance of all Eligible Receivables the Obligors
of which are the United States or any state or local government thereof
or any agency, department or instrumentality of the United States or any
state or local government thereof, exceeds 5% of the amount determined
in accordance with clause (i) above.
"Notes" means short-term promissory notes issued or to be
-----
issued by the Issuer to fund its investments in accounts receivable or
other financial assets.
"Obligations" means all obligations (monetary or
-----------
otherwise) of Seller to the Securitization Parties and Program Support
Providers and their respective successors, permitted transferees and
assigns arising under or in connection with this Agreement and each
other Transaction Document, in each case however credited, arising or
evidenced, whether direct or indirect, absolute or contingent, now or
hereafter existing, or due or to become due.
I-17
<PAGE>
<PAGE>
"Obligor" means, with respect to any Receivable, the
-------
Person(s) who has incurred the indebtedness under such Receivables and
any guarantor(s) or any other Person obligated to make payments of such
Receivable.
"Originator" has the meaning set forth in the Purchase and
----------
Sale Agreement.
"Originator Note" has the meaning set forth in the
---------------
Purchase and Sale Agreement.
"Outstanding Principal Balance" means, with respect to any
-----------------------------
Receivable as of any date, the amount equal to the original principal
balance of such Receivable, as reduced by the portion of all payments
due and received thereon before such date that would represent principal
if such payments were allocated to the principal of, and interest on,
such Receivable.
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Pension Plan" has the meaning set forth in the Purchase
------------
and Sale Agreement.
"Person" means an individual, partnership, corporation
------
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, limited liability company or other entity,
or a government or any political subdivision or agency thereof.
"Pool Receivable" means a Receivable in the Receivables
---------------
Pool.
"Portion of Capital" means, at any time, each portion of
------------------
the Capital of the Issuer or of the Alternate Purchasers having the same
Fixed Period and accruing Discount by reference to the same Rate Type at
such time. If there is only one such portion, "Portion of Capital"
means 100% of such Capital.
"Prior Purchase Agreement" means the Purchase and
------------------------
Contribution Agreement, dated as of November 15, 1996, among the Seller
and certain Originators, as heretofor amended, supplemented or otherwise
modified.
"Proceeding" means any suit in equity, action at law or
----------
other judicial or administrative proceeding.
"Program Fee" has the meaning set forth in the Fee Letter.
-----------
"Program Support Agreement" means and includes the
-------------------------
Liquidity Asset Purchase Agreement and any other agreement entered into
by any Program Support Provider providing for the issuance of one or
more letters of credit for the account of the Issuer, the issuance of
one or more surety bonds for which the Issuer is obligated to reimburse
the applicable Program Support Provider for any drawings thereunder, the
sale by the Issuer to any Program Support Provider of the Purchased
Interest (or portions thereof) and/or the making of loans and/or other
extensions of
I-18
<PAGE>
<PAGE>
credit to the Issuer in connection with the Issuer's securitization
program, together with any letter of credit, surety bond or other
instrument issued thereunder (but excluding any discretionary advance
facility provided by the Administrator).
"Program Support Provider" means and includes the Issuer
------------------------
and any other or additional Person (other than any customer of the
Issuer) now or hereafter extending credit or having a commitment to
extend credit to or for the account of, or to make purchases from, the
Issuer or issuing a letter of credit, surety bond or other instrument to
support any obligations arising under or in connection with the Issuer's
securitization program, including, without limitation, the Liquidity
Purchasers.
"Purchase and Sale Agreement" means the Purchase and Sale
---------------------------
Agreement, dated as the date hereof, among the Seller, Mail-Well I
Corporation, as initial servicer and as guarantor, and each originator
from time to time party thereto, as the same may be amended,
supplemented or modified from time to time.
"Purchase and Sale Termination Event" has the meaning set
-----------------------------------
forth in the Purchase and Sale Agreement.
"Purchase Limit" means, at any time, the aggregate
--------------
Purchaser Commitment of each Alternate Purchaser at such time.
"Purchased Interest" means, with respect to any Purchaser
------------------
at any time, the undivided percentage ownership interest of such
Purchaser in (i) each and every Pool Receivable now existing or
hereafter arising, other than any Pool Receivable that arises on or
after the later of the Facility Termination Date or the Commitment
Termination Date, (ii) all Related Security with respect to such Pool
Receivables, and (iii) all Collections with respect to, and other
proceeds of, such Pool Receivables and Related Security. Such undivided
percentage interest shall be computed as follows:
C x (1 + (AR/AC))/NRPB
where:
C = the aggregate outstanding Capital of such
Purchaser at the time of computation.
AC = the aggregate outstanding Capital of all
Purchasers at the time of computation.
AR = the Aggregate Reserve at the time of
computation.
NRPB = the Net Receivables Pool Balance at the time of
computation.
I-19
<PAGE>
<PAGE>
The Purchased Interest shall be determined from time to time pursuant to
the provisions of Section 1.3.
-----------
"Purchaser Commitment" means, for any Alternate Purchaser,
--------------------
the amount of such Alternate Purchaser's commitment to make purchases
hereunder set forth under its signature to the Agreement or the
Assignment by which such Alternate Purchaser became a party to the
Agreement, as modified in accordance with Sections 1.1(b) and 4.3.
--------------- ---
"Purchasers" means the Issuer and the Alternate
----------
Purchasers.
"Purchasing Certificate" means a certificate, in
----------------------
substantially the form of Exhibit B to the Servicing Agreement,
---------
furnished by the Servicer to the Administrator in connection with each
purchase hereunder.
"Rate Type" means the Eurodollar Rate, the Base Rate or
---------
the CP Rate.
"Receivable" means the indebtedness of any Obligor
----------
resulting from the provision or sale of merchandise, insurance or
services by an Originator under a Contract, and includes, without
limitation, the right to payment of any interest or finance charges and
other obligations of such Obligor with respect thereto.
"Receivables Pool" means at any time all of the then
----------------
outstanding Receivables that have been transferred and assigned to the
Seller by the Originators from time to time pursuant to the Purchase and
Sale Agreement or the Prior Purchase Agreement and that are owned by the
Seller and/or the Purchasers at such time.
"Reference Bank" means Bank of America.
--------------
"Register" means the "Register" maintained pursuant to the
--------
Liquidity Asset Purchase Agreement.
"Related Security" means with respect to any Receivable:
----------------
(i) any merchandise (including returned merchandise)
relating to any sale giving rise to such Receivable;
(ii) all security interests or liens and property
subject thereto from time to time purporting to secure
payment of such Receivable, whether pursuant to the Contract
related to such Receivable or otherwise, together with all
financing statements signed by an Obligor describing any
collateral securing such Receivable;
I-20
<PAGE>
<PAGE>
(iii) all guaranties, insurance and other agreements
or arrangements of whatever character from time to time
supporting or securing payment of such Receivable whether
pursuant to the Contract related to such Receivable or
otherwise; and
(iv) the Contract Documents and all other books,
records and other information (including, without
limitation, computer programs, tapes, discs, punch cards,
data processing software and related property and rights)
directly relating to such Receivable and the related
Obligor.
"Required Net Worth" means $20,000,000.
------------------
"Required Notice Days" means (i) two (2) Business Days in
--------------------
the case of a reduction of Net Investment of less than $10,000,000, (ii)
three (3) Business Days in the case of a reduction of Net Investment of
at least $10,000,000 and less than $20,000,000, (iii) five (5) Business
Days in the case of a reduction of Net Investment of at least
$20,000,000 and less than $50,000,000, and (iv) ten (10) Business Days
in the case of a reduction of Net Investment of $50,000,000 or more.
"Restricted Payments" has the meaning set forth in clause
------------------- -------
(m) of Exhibit IV to the Agreement.
- --- ----------
"S&P" means Standard & Poor's Ratings Group, a division of
---
The McGraw-Hill Companies, Inc., or its successor.
"Securitization Parties" means the Issuer, the
----------------------
Administrator, the Alternate Purchasers and their respective successors,
transferees and assigns.
"Seller" has the meaning set forth in the preamble to the
------
Agreement.
"Seller Report" means a report, in substantially the form
-------------
of Exhibit A to the Servicing Agreement, furnished by the Servicer to
---------
the Administrator pursuant to the Servicing Agreement.
"Servicer" has the meaning set forth in the preamble to
--------
the Agreement.
"Servicer Report Date" has the meaning set forth in the
--------------------
Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement, dated
-------------------
as of the date hereof, among the Servicer, Seller and the Administrator,
as the same may be amended, supplemented or otherwise modified from time
to time.
"Servicing Fee" has the meaning set forth in the Servicing
-------------
Agreement.
I-21
<PAGE>
<PAGE>
"Servicing Fee Rate" has the meaning set forth in the
------------------
Servicing Agreement.
"Servicing Fee Reserve" means, on any date, the sum of (i)
---------------------
the accrued and unpaid Servicing Fee plus (ii) the product of (a) the
aggregate outstanding Capital of all Purchasers, multiplied by (b) the
Servicing Fee Rate on such date, multiplied by (c) the quotient of (I)
the sum of the Average Maturity plus the Collection Delay Period,
divided by 360, all as of such date.
"Settlement Date" means (a) initially, the 20th day of
---------------
each calendar month (or, if such day is not a Business Day, the
immediately succeeding Business Day) or such other day during the
calendar month as the Administrator may from time to time specify to the
Seller and the Servicer and (b) at the discretion of the Administrator,
each day as the Administrator may from time to time specify to the
Seller and the Servicer (it being understood that the Administrator may
select such Settlement Date to occur as frequently as daily) or, in the
absence of any such selection, the date which would be the Settlement
Date for such Portion of Capital pursuant to clause (a) of this
----------
definition.
"SPC Assignee" means a special purpose company, other than
------------
the Issuer, which (i) is administered by Bank of America or NationsBank
or any Affiliate thereof and (ii) has activities generally similar to
the Issuer.
"Subsidiary" means, for any Person, any other Person of
----------
which at least a majority of the voting stock is owned or controlled by
such Person or by one or more other Subsidiaries of such Person. For
purposes of this definition, the term "voting stock" shall mean capital
stock or other ownership interests having ordinary voting power under
ordinary circumstances for the election of directors (or the equivalent)
for such other Person.
"Tangible Net Worth" means with respect to any Person, the
------------------
total amount which in accordance with generally accepted accounting
principles would be included under "Shareholder's equity" on the balance
sheet of such Person.
"Termination Date" means the earlier of (i) the Business
----------------
Day which the Seller so designates by notice to the Administrator at
least sixty days in advance, (ii) the Facility Termination Date and
(iii) the Commitment Termination Date.
"Termination Day" means (i) each day that occurs during
---------------
the continuance of a Termination Event and (ii) each day which occurs on
or after the Termination Date.
"Termination Event" has the meaning specified in Exhibit V.
----------------- ----------
"Termination Fee" means, for any Fixed Period during which
---------------
either a Termination Day or a reduction of a Portion of Capital pursuant
to Section 1.4(f) occurs, the amount, if any, by which (i) the
additional Discount (calculated without taking into account any
Termination Fee
I-22
<PAGE>
<PAGE>
or any shortened duration of such Fixed Period pursuant to clause
------
(iii) of the definition thereof) which would have accrued during such
- -----
Fixed Period on the reductions of the Portion of Capital relating to
such Fixed Period had such reductions remained as part of such Portion
of Capital, exceeds (ii) the income, if any, received by the affected
Purchasers from their investment of the proceeds of such reductions, as
determined by such Purchasers, which determination shall be binding and
conclusive for all purposes, absent manifest error.
"Transaction Documents" means the Agreement, the Fee
---------------------
Letter, the Purchase and Sale Agreement, the Servicing Agreement, the
Liquidity Asset Purchase Agreement, the Collection Account Agreement,
the Lock-Box Agreements and all other certificates, instruments, UCC
financing statements, reports, notices, agreements and documents
executed or delivered under or in connection with the Agreement and the
Purchase and Sale Agreement, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
the Agreement.
"Trigger Event" means (i) any Lock-Box Agreement is not
-------------
duly executed by all of the parties thereto at any time after July 30,
1999 or (ii) any effective financing statement or other instrument
similar in effect covers (including, without limitation, indirectly as
proceeds) any Pool Receivable or the Related Security at any time after
September 10, 1999, except those filed in favor of the Administrator
relating to the Agreement or in favor of the Seller relating to the
Purchase and Sale Agreement.
"UCC" means the Uniform Commercial Code as from time to
---
time in effect in the applicable jurisdiction.
"Unmatured Termination Event" means an event which, with
---------------------------
the giving of notice or lapse of time, or both, would constitute a
Termination Event.
"Year 2000 Compliant" has the meaning specified in
-------------------
paragraph (z) in Exhibit III.
- ------------- -----------
Other Terms. All accounting terms not specifically defined
-----------
herein shall be construed in accordance with generally accepted
accounting principles. All terms used in Article 9 of the UCC in the
State of New York, and not specifically defined herein, are used herein
as defined in such Article 9. Unless the context otherwise requires,
"or" means "and/or", and "including" (and with correlative meaning
"include" and "includes") means including without limiting the
generality of any description preceding such term.
I-23
<PAGE>
<PAGE>
EXHIBIT II
CONDITIONS OF PURCHASES
1. Conditions Precedent to Initial Purchase. The initial
----------------------------------------
purchase under the Agreement is subject to the conditions precedent that
the Administrator shall have received on or before the date of such
purchase the following, each in form and substance (including the date
thereof) satisfactory to the Administrator:
(a) A counterpart of this Agreement and the other
Transaction Documents duly executed by the parties thereto.
(b) Certified copies of (i) the resolutions of the Board of
Directors of each of the Seller, the Servicer, the Guarantor and each
Originator authorizing the execution, delivery, and performance by such
Person of the Transaction Documents to which such Person is a party,
(ii) all documents evidencing other necessary corporate action and
governmental approvals, if any, with respect to the Transaction
Documents and (iii) the certificate or articles of incorporation and by-
laws of each such Person.
(c) A certificate of the Secretary or Assistant Secretary
of each of the Seller, the Servicer, the Guarantor and each Originator
certifying the names and true signatures of the officers of such Person
authorized to sign the Transaction Documents to which such Person is a
party. Until the Administrator receives a subsequent incumbency
certificate from such Person in form and substance satisfactory to the
Administrator, the Administrator shall be entitled to rely on the last
such certificate delivered to it by such Person.
(d) Originals of proper financing statements, duly
completed and executed for all jurisdictions that the Administrator may
deem necessary or desirable in order to perfect the interests of the
Seller and the Administrator, for the benefit of the Securitization
Parties, contemplated by the Agreement and the other Transaction
Documents.
(e) Acknowledgment copies, or time stamped receipt copies
of proper financing statements, if any, necessary to release all
security interests and other rights of any Person in the Pool
Receivables or Related Security previously granted by the Seller or any
Originator.
(f) Completed UCC requests for information, dated on or
before the date of such initial purchase, listing the financing
statements referred to in subsection (e) above and all other effective
--------------
financing statements filed in the jurisdictions referred to in
subsection (d) above that name the Seller or any Originator as debtor,
- --------------
together with copies of such other financing statements (none of which
shall cover any Pool Receivables or Related Security (except, with
respect to the financing statements listed on Annex E hereto,
-------
indirectly as proceeds) unless terminated or released), and similar
search reports with respect to federal tax liens and liens of
II-1
<PAGE>
<PAGE>
the Pension Benefit Guaranty Corporation in such jurisdictions as the
Administrator may request, showing no such liens on any of the Pool
Receivables or Related Security.
(g) Copies of the Collection Account Agreement and each
Lock-Box Agreement duly executed by the parties thereto (other than by
certain Lock-Box Banks which will duly execute such Lock-Box Agreements
promptly following the Effective Date).
(h) A favorable opinion of Rothgerber, Johnson & Lyons LLP,
counsel for the Seller, in form and substance satisfactory to the
Administrator.
(i) Favorable opinions of Rothgerber, Johnson & Lyons LLP,
counsel for each Originator, the Guarantor and the Servicer, in form and
substance satisfactory to the Administrator.
(j) Satisfactory results of a review and audit of the
Seller's, the Servicer's and each Originator's collection, operating and
reporting systems, Credit and Collection Policy, historical receivables
data and accounts, including satisfactory review and approval of the
Eligible Receivables in existence on the date of the initial purchase
under the Agreement.
(k) Evidence (i) of the execution and delivery by each of
the parties thereto of the Purchase and Sale Agreement and all
documents, agreements and instruments contemplated thereby (which
evidence shall include copies, either original or facsimile, of each of
such documents, instruments and agreements), (ii) that each of the
conditions precedent to the execution and delivery of the Purchase and
Sale Agreement has been satisfied to the Administrator's satisfaction,
and (iii) that the initial purchases under the Purchase and Sale
Agreement have been consummated.
(l) Evidence of payment by the Seller of all accrued and
unpaid fees (including those contemplated by the Fee Letter, costs and
expenses to the extent then due and payable on the date thereof,
together with Attorney Costs of the Administrator to the extent invoiced
prior to or on such date, plus such additional amounts of Attorney Costs
as shall constitute the Administrator's reasonable estimate of Attorney
Costs incurred or to be incurred by it through the closing proceedings
(provided that such estimate shall not thereafter preclude final
settling of accounts between the Seller and the Administrator),
including any such costs, fees and expenses arising under or referenced
in Section 4.4.
-----------
(m) The Fee Letter, duly executed by the parties thereto.
(n) Good standing certificates with respect to the Seller,
the Servicer, the Guarantor and each Originator by the Secretaries of
the States of their state of incorporation and the state in which their
principal place of business is located.
II-2
<PAGE>
<PAGE>
(o) Such other approvals, opinions or documents as the
Administrator or the Issuer may reasonably request.
2. Conditions Precedent to All Purchases and
------------------------------------------
Reinvestments. Each purchase (including the initial purchase) and each
- -------------
reinvestment shall be subject to the further conditions precedent that:
(a) in the case of each purchase, the Servicer shall have
delivered to the Administrator on or prior to such purchase, in form and
substance satisfactory to the Administrator, a completed Purchasing
Certificate dated within three (3) Business days prior to the date of
such purchase together with a listing by Obligor of all Pool Receivables
and such additional information as may reasonably be requested by the
Administrator;
(b) on the date of such purchase or reinvestment the
following statements shall be true (and acceptance of the proceeds of
such purchase or reinvestment shall be deemed a representation and
warranty by the Seller and the Servicer that such statements are then
true):
(i) the representations and warranties contained in
Exhibit III are true and correct in all material respects on and
-----------
as of the date of such purchase or reinvestment as though made on
and as of such date (except to the extent such representations and
warranties relate solely to an earlier date and then as of such
earlier date); and
(ii) no event has occurred and is continuing, or
would result from such purchase or reinvestment, that constitutes
a Termination Event or an Unmatured Termination Event; and
(c) the Administrator shall have received such other
approvals, opinions or documents as it may reasonably request.
II-3
<PAGE>
<PAGE>
EXHIBIT III
REPRESENTATIONS AND WARRANTIES
The Seller represents and warrants as follows:
(a) Organization and Good Standing. The Seller is a
------------------------------
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Colorado, and is duly qualified to do
business, and is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so
qualified.
(b) Power and Authority; Due Authorization; No Violation.
----------------------------------------------------
The execution, delivery and performance by the Seller of the Agreement
and the other Transaction Documents to which it is a party, including
the Seller's use of the proceeds of purchases and reinvestments, (i) are
within the Seller's corporate powers, (ii) have been duly authorized by
all necessary corporate action, (iii) do not contravene or result in a
default under or conflict with (1) the Seller's charter or by-laws, (2)
any law, rule or regulation applicable to the Seller, except to the
extent such contravention, default or conflict will not have a Material
Adverse Effect, (3) any contractual restriction binding on or affecting
the Seller or its property or (4) any order, writ, judgment, award,
injunction or decree binding on or affecting the Seller or its property,
and (iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. The Agreement and the
other Transaction Documents to which it is a party have been duly
executed and delivered by the Seller.
(c) Government Approvals. No authorization or approval
--------------------
or other action by, and no notice to or filing with, any Governmental
Authority or other Person is required for the due execution, delivery
and performance by the Seller of the Agreement or any other Transaction
Document to which it is a party.
(d) Validity and Binding Nature. Each of the Agreement
---------------------------
and the other Transaction Documents to which it is a party constitutes
the legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether
such enforceability is considered in a proceeding in equity or at law.
(e) Financial Condition. The balance sheets of Mail-
-------------------
Well, Inc. and its subsidiaries as at December 31, 1998, and the related
statements of income and retained earnings for the fiscal year then
ended, copies of which have been furnished to the Administrator, fairly
present the financial condition thereof as at such date and the results
of operations thereof for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since December 31, 1998 there has been no material adverse
change in the business, operations, property or financial or other
condition or operations of the Seller, the
III-1
<PAGE>
<PAGE>
Servicer, the Guarantor, any Originator, the ability of the Seller, the
Servicer, the Guarantor, or any Originator to perform its obligations
under the Agreement or the other Transaction Documents or the
collectibility of the Pool Receivables, or which affects the legality,
validity or enforceability of the Agreement or the other Transaction
Documents.
(f) No Proceedings. There is no pending or threatened
--------------
action or proceeding affecting the Seller or any of its Affiliates
before any Governmental Authority or arbitrator which could materially
adversely affect the business, operations, property, financial or other
condition or operations of the Seller or any of its Affiliates, the
ability of the Seller to perform its obligations under the Agreement or
the other Transaction Documents or the collectibility of the Pool
Receivables, or which affects or purports to affect the legality,
validity or enforceability of the Agreement or the other Transaction
Documents.
(g) Use of Proceeds. No proceeds of any purchase or
---------------
reinvestment will be used to acquire more than 5% of any class of any
security in any transaction which is subject to Sections 13 and 14 of
the Exchange Act of 1934, except for a nonhostile, invited Acquisition
of a Person (approved by the board of directors (or other body
exercising similar-authority) of such Person) by the Seller or any
Affiliate thereof, which does not violate any laws, rules or regulations
applicable thereto or any other provision of the Transaction Documents.
(h) Quality of Title. The Seller is the legal and
----------------
beneficial owner of the Pool Receivables and Related Security free and
clear of any Adverse Claim; upon each purchase or reinvestment, the
Administrator, for the benefit of the Securitization Parties, shall
acquire a valid and enforceable perfected undivided percentage ownership
interest, to the extent of the Purchased Interest, in each Pool
Receivable then existing or thereafter arising and in the Related
Security and Collections and other proceeds, with respect thereto, free
and clear of any Adverse Claim; the Agreement creates a security
interest in favor of the Securitization Parties in the items described
in Section 1.2(d), and the Securitization Parties have a first
--------------
priority perfected security interest in such items, free and clear of
any Adverse Claims. No effective financing statement or other
instrument similar in effect covering any Contract Document or any Pool
Receivable or the Related Security or Collections with respect thereto
or any Lock-Box Account or the Collection Account is on file in any
recording office, except those filed in favor of the Administrator
relating to the Agreement or in favor of the Seller relating to the
Purchase and Sale Agreement and except those which are both
(i) indirectly covering any Pool Receivable or the Related Security as
proceeds which will be released or terminated within 60 days after the
Effective Date and (ii) listed on Annex E hereto.
-------
(i) Accuracy of Information. Each Seller Report,
-----------------------
certificate, exhibit, financial statement, document, book, record,
report or other information furnished or to be furnished at any time by
or on behalf of the Seller to any Securitization Party in connection
with the Agreement is or will be accurate in all material respects as of
its date or as of the date so furnished, and no such item contains or
will contain any untrue statement of a material fact or
III-2
<PAGE>
<PAGE>
omits or will omit to state a material fact necessary in order to make
the statements contained therein, in the light of the circumstances
under which they were made, not misleading.
(j) Offices. The principal place of business and chief
-------
executive office (as such terms are used in the UCC) of the Seller and
the office where the Seller keeps its records concerning the Receivables
are located at the addresses referred to in paragraph (b) of Exhibit IV.
------------- -----------
(k) Governmental Authority. The Seller is not in
----------------------
violation of any order of any court, arbitrator or Governmental
Authority which could have a Material Adverse Effect.
(l) Lock-Box Banks and Collection Account Bank. The
------------------------------------------
names and addresses of all the Lock-Box Banks and Collection Account
Bank, together with the account numbers of the related Lock-Box Accounts
or Collection Account, as applicable, are specified in Schedule I to
----------
the Agreement (or at such other Lock-Box Banks or Collection Account
Bank, as applicable, and/or with such other Lock-Box Accounts or
Collection Account, as applicable, as have been notified to the
Administrator in accordance with the Agreement) and the Collection
Account is subject to the Collection Account Agreement and all Lock-Box
Accounts are subject to Lock-Box Agreements, duly executed by the
parties thereto (in the case of certain Lock-Box Banks, within 30 days
after the date hereof).
(m) Federal Reserve Regulations. No proceeds of any
---------------------------
purchase or reinvestment will be used for any purpose that violates any
applicable law, rule or regulation, including, without limitation,
Regulations T, U and X of the Federal Reserve Board.
(n) Eligible Receivables. Each Pool Receivable included
--------------------
as an Eligible Receivable in the calculation of the Net Receivables Pool
Balance, is an Eligible Receivable.
(o) No Termination Event. No event has occurred and is
--------------------
continuing, or would result from a purchase or reinvestment by any
Purchaser hereunder or from the application of the proceeds therefrom,
which constitutes a Termination Event.
(p) Accounting as Sales. The Seller has accounted for
-------------------
each sale of undivided percentage ownership interests in the Pool
Receivables in its books and financial statements as a sale, consistent
with generally accepted accounting principles.
(q) Compliance With Credit and Collection Policy. The
--------------------------------------------
Seller has complied in all material respects with the Credit and
Collection Policy in effect at the time with regard to each Pool
Receivable.
(r) Compliance with Transaction Documents. The Seller
-------------------------------------
has complied in all material respects with all of the terms, covenants
and agreements contained in the Agreement and the other Transaction
Documents and applicable to it.
III-3
<PAGE>
<PAGE>
(s) Trade Names. The Seller's complete corporate name is
-----------
set forth in the preamble to the Agreement, and the Seller does not use
and has not during the last five years used any other corporate name,
trade name, doing business name or fictitious name, except for names
first used after the date of the Agreement and set forth in a notice
delivered to the Administrator pursuant to paragraph (b)(iii) of
------------------
Exhibit IV.
- ----------
(t) Capitalization. The authorized capital stock of
--------------
Seller consists of 1000 shares of common stock, $.01 par value, all of
which shares are currently issued and outstanding. All of such
outstanding shares are validly issued, fully paid and nonassessable and
are owned (beneficially and of record) by Mail-Well I Corporation.
(u) Taxes. The Seller has filed all federal and other
-----
tax returns and reports required by law to have been filed by it and has
paid all taxes and governmental charges thereby shown to be owing.
(v) Bulk Sales Act. No transaction contemplated by this
--------------
Agreement or any other Transaction Document requires compliance with, or
will be subject to avoidance under, any bulk sales act or similar law.
(w) Investment Company Act. Seller is not an "investment
----------------------
company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an affiliate of a "holding company," or a "subsidiary
company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(y) All Consents Required. All approvals, authorizations,
---------------------
consents, orders or other actions of or notices to or filings with any
Person or any Governmental Authority required in connection with the
execution and delivery by the Seller of this Agreement or the other
Transaction Documents, the performance by the Seller of the transactions
contemplated hereby and thereby and the fulfillment by the Seller of the
terms hereof and thereof, have been duly obtained and are in full force
and effect.
(z) Year 2000 Compliance. Any reprogramming required to
--------------------
permit the proper functioning, in and following the year 2000, of the
computer application systems used to conduct, operate and manage the
business, assets and operations of the Seller, as so reprogrammed, will
be completed by September 30, 1999 ,unless failure to complete such
reprogramming could not reasonably be expected to have a Material
Adverse Effect. With respect to any computer hardware, the Seller: (i)
has initiated a review and assessment of all areas within the Seller's
business and operations, (ii) has developed a plan and timeline for
addressing any problems which would cause it not to be able to properly
recognize and process date-sensitive information for all dates before
and after January 1, 2000 ("Year 2000 Compliant") on a timely basis,
-------------------
(iii) to date, has implemented such plan in accordance with such
timetable and (iv) believes, based upon the foregoing, that the Seller
will be Year 2000 Compliant prior to
III-4
<PAGE>
<PAGE>
January 1, 2000. There are no additional costs to the Seller relating
to becoming Year 2000 Compliant that will result in a Termination Event
or have a Material Adverse Effect. The computer and management
information systems used to conduct, operate and manage the business,
assets and operations of the Seller are and with ordinary course
upgrading and maintenance (and with any additions to accommodate
growth), will continue for the term of this Agreement to be, sufficient
to permit the Seller to conduct its business without having a Material
Adverse Effect.
(aa) Insolvency. (i) The fair value of the property of
----------
the Seller is greater than the total amount of liabilities, including
contingent liabilities, of the Seller, (ii) the present fair salable
value of the assets of the Seller is not less than the amount that will
be required to pay all probable liabilities of the Seller on its debts
as they become absolute and matured, (iii) the Seller does not intend
to, and does not believe that it will, incur debts or liabilities beyond
the Seller's abilities to pay such debts and liabilities as they mature,
(iv) the Seller is not engaged in a business or a transaction, and is
not about to engage in a business or a transaction, for which the
Seller's property would constitute unreasonably small capital and (v)
the transfer of the Purchased Interest by the Seller will not render the
Seller insolvent.
(bb) Pension Plans. During the preceding twelve months,
-------------
no steps have been taken to terminate any Pension Plan, and no
contribution failure has occurred with respect to any Pension Plan
sufficient to give rise to a lien under section 302(f) of ERISA. No
condition exists or event or transaction has occurred with respect to
any Pension Plan which could result in the incurrence by the Seller of
any material liability, fine or penalty. The Seller has no contingent
liability with respect to any post-retirement benefit under a "welfare
plan" as defined in Section 3(1) of ERISA, other than liability for
continuation coverage described in Part 6 of title I of ERISA.
(cc) Separate Existence. The Facts and Assumptions with
------------------
respect to the Seller are true and correct.
III-5
<PAGE>
<PAGE>
EXHIBIT IV
COVENANTS
Covenants. Until the Final Pay Out Date:
---------
(a) Compliance with Laws, Etc. The Seller shall comply
--------------------------
in all material respects with all applicable laws, rules, regulations
and orders, and preserve and maintain its corporate existence, rights,
franchises, qualifications, and privileges except to the extent that the
failure so to comply with such laws, rules and regulations or the
failure so to preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not have a Material Adverse Effect.
(b) Offices, Records and Books of Account; Etc. The
-------------------------------------------
Seller (i) shall keep its principal place of business and chief
executive office (as such terms are used in the UCC) at the address of
the Seller set forth under its name on the signature page to the
Agreement and the office where it keeps its records concerning the Pool
Receivables at such address or one of the locations specified in
Schedule III hereto or, upon at least 60 days' prior written notice of
- ------------
a proposed change to the Administrator, at any other locations in
jurisdictions where all actions reasonably requested by the
Administrator to protect and perfect the interest of the Issuer in the
Pool Receivables and related items (including, without limitation, the
items described in Section 1.2(d)) have been taken and completed and
--------------
(ii) shall provide the Administrator with at least 60 days' written
notice prior to making any change in the Seller's name or making any
other change in the Seller's identity or corporate structure (including,
without limitation, a merger) which could render any UCC financing
statement filed in connection with this Agreement "seriously misleading"
as such term is used in the UCC; each notice to the Administrator
pursuant to this sentence shall set forth the applicable change and the
effective date thereof. The Seller also will maintain and implement
administrative and operating procedures (including, without limitation,
an ability to recreate records evidencing Pool Receivables in the event
of the destruction of the originals thereof), and keep and maintain all
documents, books, records, computer tapes and disks and other
information reasonably necessary or advisable for the collection of all
Pool Receivables (including, without limitation, records adequate to
permit the daily identification of each Pool Receivable and all
Collections of and adjustments to each existing Pool Receivable).
(c) Performance and Compliance with Receivables and
-----------------------------------------------
Credit and Collection Policy. The Seller shall, at its expense, timely
- ----------------------------
and fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Pool Receivables,
and timely and fully comply in all material respects with the Credit and
Collection Policy with regard to each Pool Receivable.
IV-1
<PAGE>
<PAGE>
(d) Ownership Interest, Etc. The Seller shall, at its
------------------------
expense, take all action necessary or desirable to establish and
maintain (i) a valid and enforceable perfected undivided ownership
interest in favor of the Administrator, for the benefit of the
Securitization Parties, to the extent of the Purchased Interests, in the
Pool Receivables and the Related Security and Collections and other
proceeds with respect thereto, and (ii) a first priority perfected
security interest in favor of the Administrator, for the benefit of the
Securitization Parties, in the items described in Section 1.2(d), in
--------------
each case free and clear of any Adverse Claim, including, without
limitation, taking such action to perfect, protect or more fully
evidence the interests of the Securitization Parties under the Agreement
as the Securitization Parties may request.
(e) Sales, Liens, Etc. The Seller shall not sell,
------------------
assign (by operation of law or otherwise) or otherwise dispose of, or
create or suffer to exist any Adverse Claim upon or with respect to, any
or all of its right, title or interest in, to or under, any item
described in Section 1.2(d) (including, without limitation, the
--------------
Seller's undivided interest in any Pool Receivable, Related Security, or
Collections, or upon or with respect to any account to which any
Collections of any Pool Receivables are sent), or assign any right to
receive income in respect of any items contemplated by this paragraph (e).
-------------
(f) Extension or Amendment of Receivables. Except as
-------------------------------------
provided in the Agreement or the Servicing Agreement, neither the Seller
nor the Servicer shall extend the maturity or adjust the Outstanding
Principal Balance or otherwise amend, modify or waive the terms of any
Pool Receivable.
(g) Change in Business or Credit and Collection Policy.
--------------------------------------------------
The Seller shall not make any material change in the character of its
business or in the Credit and Collection Policy, or any change in the
Credit and Collection Policy that would adversely affect the
collectibility or enforceability of any Pool Receivable or the ability
of the Seller to perform its obligations, if any, under any Pool
Receivable or under the Agreement or the other Transaction Documents to
which it is a party, without the prior written consent of the
Administrator.
(h) Audits. The Seller shall, from time to time during
------
regular business hours as reasonably requested by the Administrator,
permit the Administrator, or its agents or representatives, (i) to
examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in
the possession or under the control of the Seller relating to
Receivables and the Related Security, and (ii) to visit the offices and
properties of the Seller for the purpose of examining such materials
described in clause (i) above, and to discuss matters relating to Pool
Receivables and the Related Security with any of the officers,
employees, agents or contractors of the Seller having knowledge of such
matters, and shall permit and cooperate with an annual (or more
frequently if reasonably required by the Administrator) audit (conducted
at the Seller's expense) of the Seller by the Administrator and the
independent accountants selected thereby.
IV-2
<PAGE>
<PAGE>
(i) Lock-Box Accounts and Collection Account. (i) The
----------------------------------------
Seller shall not add or terminate any bank as a Lock-Box Bank or any
account as a Lock-Box Account from those listed in Schedule I to the
----------
Agreement, or make any change in its instructions to Obligors regarding
payments to be made to the Seller or payments to be made to any Lock-Box
Account (or related post office box), unless the Administrator shall
have consented thereto in writing and the Administrator shall have
received copies of all agreements and documents (including, without
limitation, Lock-Box Agreements) that it may request in connection
therewith.
(ii) The Seller shall (A) instruct all Obligors to make
payments of all Receivables to one or more Lock-Box Accounts or to
post office boxes to which only Lock-Box Banks have access (and
shall instruct the Lock-Box Banks to cause all items and amounts
relating to such Receivables received in such post office boxes to
be removed and deposited into a Lock-Box Account on a daily
basis), and (B) deposit, or cause to be deposited, any Collections
(other than those described in clause (b) of the definition
thereof) of Pool Receivables received by it into Lock-Box Accounts
not later than two Business Days after receipt thereof. Each
Lock-Box Account shall at all times be subject to a Lock-Box
Agreement.
(iii) The Seller shall not add or terminate any bank as a
Collection Account Bank or any account as a Collection Account
from those listed in Schedule I to the Agreement, unless the
----------
Administrator shall have consented thereto in writing and the
Administrator shall have received copies of all agreements and
documents (including, without limitation, Collection Account
Agreements) that it may request in connection therewith.
(iv) Each Collection Account shall at all times be subject
to a Collection Agreement. The Seller will not deposit or
otherwise credit, or cause or permit to be so deposited or
credited, to any Collection Account cash or cash proceeds other
than Collections.
(j) Marking of Records. At its expense, the Seller (or
------------------
the Servicer on its behalf) shall mark (a) its master data processing
records and storage cabinets relating to Pool Receivables, including
with a legend evidencing that the undivided percentage ownership
interests in such Pool Receivables have been sold in accordance with the
Agreement and (b) at the request of the Administrator, each Pool
Receivable with a legend, in form satisfactory to the Administrator, to
the effect that such Pool Receivable (or an undivided interest thereon)
has been sold in accordance with this Agreement.
(k) Separate Corporate Existence. The Seller hereby
----------------------------
acknowledges that the Securitization Parties are entering into the
transactions contemplated by the Agreement in reliance upon the Seller's
identity as a legal entity separate from the Servicer, the Guarantor and
each Originator. Therefore, from and after the date hereof, the Seller
shall take all reasonable steps to continue the Seller's identity as a
separate legal entity and to make it apparent to third Persons that the
Seller is an entity with assets and liabilities distinct from those of
the Servicer,
IV-3
<PAGE>
<PAGE>
the Guarantor, any Originator and any other Person, and is not a
division of the Servicer, the Guarantor, any Originator or any other
Person. Without limiting the generality of the foregoing and in
addition to and consistent with the covenant set forth in
paragraph (a) of this Exhibit IV, the Seller shall take such actions
- ------------- ----------
as shall be required in order that:
(i) The Seller will be a limited purpose corporation whose
primary activities are restricted in its certificate of
incorporation to purchasing Receivables from the Originators,
entering into agreements for the servicing of such Receivables,
selling undivided interests in such Receivables and conducting
such other activities as it deems necessary or appropriate to
carry out its primary activities;
(ii) Not less than one member of the Seller's Board of
Directors (the "Independent Director") shall be an individual
--------------------
who is not direct, indirect or beneficial stockholder, officer,
director, employee, affiliate, associate, customer or supplier of
the Servicer, the Guarantor or any Originator or any of their
Affiliates, except that such member may be an independent director
of a limited purpose bankruptcy-remote Affiliate of the Servicer,
the Guarantor or an Originator. The Seller's Board of Directors
shall not approve, or take any other action to cause the
commencement of a voluntary case or other proceeding with respect
to the Seller under any applicable bankruptcy, insolvency,
reorganization, debt arrangement, dissolution or other similar
law, or the appointment of or taking possession by, a receiver,
liquidator, assignee, trustee, custodian, or other similar
official for the Seller unless in each case the Independent
Director shall approve the taking of such action in writing prior
to the taking of such action. To the extent permissible under
Colorado law, the Independent Director's fiduciary duty shall be
to the Seller (and creditors) and not to the Seller's shareholders
in respect of any decision of the type described in the preceding
sentence. In the event the Independent Director resigns or
otherwise ceases to be a director of the Seller, there shall be
selected a replacement Independent Director who shall not be an
individual within the proscriptions of the first sentence of this
clause (ii) or any individual who has any other type of
-----------
professional relationship with the Servicer, the Guarantor, any
Originator or any Affiliates thereof or any management personnel
of any such Person or Affiliate and who shall be (x) a tenured
professor at a business or law school, (y) a retired judge or (z)
an established independent member of the business community,
having a sound reputation and experience relative to the duties to
be performed by such individual as an Independent Director;
(iii) No Independent Director shall at any time serve as a
trustee in bankruptcy for the Servicer, the Guarantor, any
Originator or any Affiliate thereof;
(iv) Any employee, consultant or agent of the Seller will
be compensated from the Seller's own bank accounts for services
provided to the Seller except as provided herein in respect of the
Servicer's Fee. The Seller will engage no agents other than a
servicer for the Pool Receivables, which servicer will be fully
compensated for its services to Seller by payment of the
Servicer's Fee;
IV-4
<PAGE>
<PAGE>
(v) The Seller will contract with Servicer to perform for
the Seller all operations required on a daily basis to service its
Receivables. The Seller will pay Servicer a monthly fee based on
the level of Receivables being managed by Servicer. To the
extent, if any, that the Seller, the Guarantor, any Originator or
any Affiliate thereof share items of expenses not reflected in the
Servicer's Fee, such as legal, auditing and other professional
services, such expenses will be allocated to the extent practical
on the basis of actual use or the value of services rendered, and
otherwise on a basis reasonably related to the actual use or the
value of services rendered, it being understood that Mail-Well I
Corporation shall pay all expenses relating to the preparation,
negotiation, execution and delivery of the Transaction Documents,
including, without limitation, legal and other fees;
(vi) The Seller's operating expenses will not be paid by
the Servicer, the Guarantor, any Originator or any Affiliate
thereof unless the Seller shall have agreed in writing with such
Person to reimburse such Person for any such payments;
(vii) The Seller will have its own separate mailing address
and stationery;
(viii) The Seller's books and records will be maintained
separately from those of the Servicer, the Guarantor, any
Originator or any Affiliate thereof;
(ix) Any financial statements of the Servicer, the
Guarantor, any Originator or any Affiliate thereof which are
consolidated to include the Seller will contain detailed notes
clearly stating that the Seller is a separate corporate entity and
has sold ownership interests in the Seller's accounts receivable;
(x) The Seller's assets will be maintained in a manner that
facilitates their identification and segregation from those of the
Servicer, the Guarantor, any Originator and any Affiliate thereof;
(xi) The Seller will strictly observe corporate formalities
in its dealings with the Servicer, the Guarantor, any Originator
and any Affiliate thereof, and funds or other assets of the Seller
will not be commingled with those of the Guarantor, any Originator
or any Affiliate thereof (other than in their capacity as Servicer
or sub-servicer). Seller shall not maintain joint bank accounts
or other depository accounts to which the Guarantor, any
Originator or any Affiliate thereof (other than in their capacity
as Servicer or sub-servicer) has independent access. None of the
Seller's funds will at any time be pooled with any funds of the
Servicer, the Guarantor or any Originator or any Affiliate
thereof;
(xii) The Seller shall pay to the Servicer, the Guarantor or
applicable Originator the marginal increase (or, in the absence of
such increase, the market amount of its portion) of the premium
payable with respect to any insurance policy that covers the
Seller and any Affiliate thereof, but the Seller shall not,
directly or indirectly, be named or enter into an agreement to be
named, as a direct or contingent beneficiary or loss payee,
IV-5
<PAGE>
<PAGE>
under any such insurance policy, with respect to any amounts
payable due to occurrences or events related to the Servicer, the
Guarantor, any Originator or any Affiliate thereof; and
(xiii) The Seller will maintain arm's length relationships
with the Servicer, the Guarantor, any Originator and any Affiliate
thereof. The Servicer, the Guarantor, any Originator or any
Affiliate thereof that renders or otherwise furnishes services to
the Seller will be compensated by the Seller at market rates for
such services. Neither the Seller nor the Servicer, the
Guarantor, any Originator or any Affiliate thereof will be or will
hold itself out to be responsible for the debts of the other or
the decisions or actions respecting the daily business and affairs
of the other.
(xiv) The Seller shall not cause, or take any action, or
omit to take any action, that would be inconsistent with the Facts
and Assumptions.
(l) Mergers, Acquisitions, Sales, etc. The Seller shall not:
---------------------------------
(A) be a party to any merger or consolidation, or
directly or indirectly purchase or otherwise acquire,
whether in one or a series of transactions, all or
substantially all of the assets or any stock of any class
of, or any partnership or joint venture interest in, any
other Person, or sell, transfer, assign, convey or lease any
of its property and assets (including, without limitation,
any Pool Receivable or any interest therein) other than
pursuant to this Agreement;
(B) make, incur or suffer to exist an investment in,
equity contribution to, loan, credit or advance to, or
payment obligation in respect of the deferred purchase price
of property from, any other Person, except for Permitted
Investments and obligations incurred pursuant to the
Transaction Documents; or
(C) create any direct or indirect subsidiary or
otherwise acquire direct or indirect ownership of any equity
interests in any other Person.
(m) Restricted Payments.
-------------------
(i) General Restriction. Except in accordance with this
-------------------
paragraph (m), the Seller shall not (A) purchase or redeem any
-------------
shares of its capital stock, (B) declare or pay any Dividend or
set aside any funds for any such purpose, (C) prepay, purchase or
redeem any subordinated indebtedness of the Seller, (D) lend or
advance any funds or (E) repay any loans or advances to, for or
from the Servicer, the Guarantor or any Originator. Actions of
the type described in this clause (i) are herein collectively
----------
called "Restricted Payments".
-------------------
IV-6
<PAGE>
<PAGE>
(ii) Types of Permitted Payments. Subject to the
---------------------------
limitations set forth in clause (iii) below, the Seller may make
------------
Restricted Payments so long as such Restricted Payments are made
only to an Originator and only in the form of payments under the
Originator Notes.
(iii) Specific Restrictions. The Seller may make
---------------------
Restricted Payments only out of Collections paid or released to
the Seller pursuant to Section 1.4(b)(ii) or 1.4(c)(ii)(D).
------------------ -------------
Furthermore, the Seller shall not pay make:
(A) any payments on the Originator Notes if, after
giving effect thereto, the Seller's Tangible Net Worth would
be less than Required Net Worth; or
(B) any Restricted Payment (including any payments on
the Originator Notes) if, after giving effect thereto, any
Termination Event or Unmatured Termination Event shall have
occurred and be continuing.
(n) Amendments to Certain Documents. (i) The Seller
-------------------------------
shall not amend, supplement, terminate, amend and restate, or otherwise
modify any Transaction Document or the Seller's certificate of
incorporation or by-laws, except (A) in accordance with the terms of
such document, instrument or agreement and (B) with the advance written
consent of the Administrator.
(ii) The Seller shall not enter into, execute and deliver,
or otherwise become bound by, any agreement, instrument, document
or other arrangement that restricts its right to amend,
supplement, amend and restate or otherwise modify, or to extend or
renew, or to waive any right under, this Agreement or any other
Transaction Document.
(o) Incurrence of Indebtedness. The Seller shall not
--------------------------
(i) create, incur or permit to exist, any Debt or liability or (ii)
cause or permit to be issued for its account any letters of credit or
bankers' acceptances, except for Debt incurred in the ordinary course of
business and not exceeding $5,000 and liabilities incurred pursuant to
or in connection with the Transaction Documents or otherwise permitted
therein.
(p) Reporting Requirements. The Seller will provide to
----------------------
the Administrator (in multiple copies, if requested by the
Administrator) the following:
(i) as soon as available and in any event within
45 days after the end of the first three quarters of each
fiscal year (beginning with the quarter ended June 30, 1999)
of Mail-Well, Inc., balance sheets of Mail-Well, Inc. and
its subsidiaries as of the end of such quarter and
statements of income and retained earnings thereof for the
period commencing at the beginning of such previous fiscal
year and ending with the end of such quarter, certified by
the treasurer or assistant treasurer thereof (as
applicable);
IV-7
<PAGE>
<PAGE>
(ii) as soon as available and in any event
within 90 days after the end of each fiscal year (beginning
with the year ended December 31, 1999) of Mail-Well, Inc., a
copy of the annual report for such year for Mail-Well, Inc.
and its subsidiaries containing financial statements for
such year audited by nationally-recognized independent
certified public accountants;
(iii) as soon as available and in any event not
later than the Servicer Report Date, a Seller Report as of
the Monthly Period ended immediately prior to such Servicer
Report Date;
(iv) as soon as possible and in any event within
five days after the occurrence of each Termination Event or
Unmatured Termination Event, a statement of the treasurer or
assistant treasurer of the Seller setting forth details of
such Termination Event or Unmatured Termination Event, and
the action that the Seller has taken and proposes to take
with respect thereto;
(v) promptly after the sending or filing
thereof, copies of all reports that may be material to the
transactions contemplated hereby that the Servicer, the
Guarantor or any Originator sends to any of its security
holders, and copies of all reports and registration
statements that the Servicer, the Guarantor or any
Originator or any subsidiary thereof files with the
Securities and Exchange Commission or any national
securities exchange;
(vi) promptly after the filing by the Seller or
receiving notice or knowledge thereof, copies of all reports
and notices that the Seller or any Affiliate files under
ERISA with the Internal Revenue Service or the Pension
Benefit Guaranty Corporation or the U.S. Department of Labor
or that the Seller or any Affiliate receives from any of the
foregoing or from any multiemployer plan (within the meaning
of Section 4001(a)(3) of ERISA) to which the Seller or any
Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the
assessment of withdrawal liability or an event or condition
which could, in the aggregate, result in the imposition of
liability on the Seller and/or any such Affiliate in excess
of $500,000 or which could have a Material Adverse Effect;
(vii) at least 60 days prior to any change in
the Seller's name or any other change requiring the
amendment of UCC financing statements, a notice setting
forth such changes and the effective date thereof;
(viii) such other information respecting the
Receivables (including, without limitation, a Seller Report
on a more frequent basis than provided in clause (iii)
above) or the condition or operations, financial or
otherwise, of the
IV-8
<PAGE>
<PAGE>
Seller or any of its Affiliates as the Administrator may
from time to time reasonably request;
(ix) promptly after the Seller obtains knowledge
thereof, notice of any (a) litigation, investigation or
proceeding which may exist at any time between the Seller
and any Governmental Authority which, if not cured or if
adversely determined, as the case may be, could have a
Material Adverse Effect; or (b) litigation or proceeding
affecting (i) the Seller, the Servicer, the Guarantor or any
Originator in which the amount involved is $100,000 or more
and, which is not covered by insurance or in which
injunctive or similar relief is sought or (c) litigation or
proceedings relating to any Transaction Document; and
(x) promptly after the occurrence thereof,
notice of a material adverse change in the business,
operations, property or financial or other condition of the
Seller, the Servicer, the Guarantor or any Originator.
(q) Year 2000 Compliance. The Seller shall promptly
--------------------
notify the Administrator in the event the Seller discovers or determines
that any computer application (including those of its suppliers or
vendors) that is material to its business and operations will not be
Year 2000 Compliant on a timely basis, except to the extent that any
such failure to comply could not reasonably be expected to have a
Material Adverse Effect and could not reasonably be expected to cause a
Termination Event.
(r) ERISA Matters. The Seller shall notify the
-------------
Administrator as soon as is practicable and in any event not later than
two Business Days after (i) the institution of any steps by the Seller
or any other Person to terminate any Pension Plan, (ii) the failure to
make a required contribution to any Pension Plan if such failure is
sufficient to give rise to a lien under section 302(f) of ERISA,
(iii) the taking of any action with respect to a Pension Plan which
could result in the requirement that the Seller furnish a bond or other
security to the PBGC or such Pension Plan or (iv) the occurrence of any
event with respect to any Pension Plan which could result in the
incurrence by the Seller of any material liability, fine or penalty, or
any material increase in the contingent liability of the Seller with
respect to any post-retirement "welfare plan" (as defined in Section
3(1) of ERISA) benefit.
IV-9
<PAGE>
<PAGE>
EXHIBIT V
TERMINATION EVENTS
Each of the following shall be a "Termination Event":
-----------------
(a) The rating of the $300,000,000 senior subordinated notes
due December 15, 2008 issued by Mail-Well I Corporation shall fall below
"B" by S&P or "B2" by Moody's (or any such rating has been withdrawn or
suspended); or
(b) The Seller, the Servicer, the Guarantor or any
Originator shall fail to make any payment required under the Agreement
or under any other Transaction Document, and such failure shall remain
unremedied for more than one Business Day after the Seller, the
Servicer, the Guarantor or any Originator had actual knowledge or notice
thereof, or should have known, after the exercise of reasonable
diligence, thereof; or
(c) Any representation or warranty made or deemed made by
the Seller, the Servicer, the Guarantor or any Originator (or any of
their respective officers) under or in connection with the Agreement or
any other Transaction Document or any other writing or certificate
delivered by the Seller, the Servicer, the Guarantor or any Originator
pursuant to such Transaction Document shall prove to have been incorrect
or untrue in any material respect when made or deemed made or delivered
and shall remain incorrect or untrue for more than 10 days after the
Seller, the Servicer, the Guarantor or any Originator had actual
knowledge or notice thereof, or should have known, after the exercise of
reasonable diligence, thereof; or
(d) The Seller, the Servicer, the Guarantor or any
Originator shall fail in any material respect to perform or observe any
other term, covenant or agreement contained in the Agreement or any
other Transaction Document on its part to be performed or observed and
any such failure shall remain unremedied for ten days (or, with respect
to a failure to deliver the Seller Report pursuant to the Agreement,
such failure shall remain unremedied for five days) after the Seller,
the Servicer, the Guarantor or any Originator had actual knowledge or
notice thereof, or should have known, after the exercise of reasonable
diligence, thereof; or
(e) The Seller, the Servicer, the Guarantor or any
Originator shall fail to pay any principal of or premium or interest on
any of its Debt which is outstanding in a principal amount of at least
$5,000,000 (or, with respect to the Seller, $100,000)in the aggregate
when the same becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such Debt; or any
other event shall occur or condition shall exist under any agreement or
instrument relating to any such Debt and shall continue after the
applicable grace period, if any, specified in such agreement or
instrument, if the effect of such event or condition is to accelerate,
or to permit the acceleration
V-1
<PAGE>
<PAGE>
of, the maturity of such Debt; or any such Debt shall be declared to be
due and payable, or required to be prepaid (other than by a regularly
scheduled required prepayment), redeemed, purchased or defeased, or an
offer to repay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case prior to the stated maturity thereof;
or
(f) This Agreement or any purchase or any reinvestment
pursuant to this Agreement shall for any reason (other than pursuant to
the terms hereof) (i) cease to create, or the Purchased Interests of the
Purchasers shall for any reason cease to be, a valid and enforceable
perfected undivided percentage ownership interest to the extent of such
Purchased Interests in the Receivables Pool and the Related Security and
Collections and other proceeds with respect thereto, free and clear of
any Adverse Claim or (ii) cease to create with respect to the items
described in Section 1.2(d), or the interest of the Securitization
--------------
Party with respect to such items shall cease to be, a valid and
enforceable first priority perfected security interest, free and clear
of any Adverse Claim; or
(g) The Seller, the Servicer, the Guarantor, any Originator
or any Affiliate thereof shall generally not pay its debts as such debts
become due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against the
Seller, the Servicer, the Guarantor, any Originator or any Affiliate
thereof seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts under any law
relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment
of a receiver, trustee, custodian or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 30 days,
or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or
for any substantial part of its property) shall occur; or the Seller,
the Servicer, the Guarantor, any Originator or any Affiliate thereof
shall take any corporate action to authorize any of the actions set
forth above in this paragraph (g); or
-------------
(h) (i) The arithmetic mean of the Default Ratios for the
three most recent Monthly Periods shall equal or exceed 5.0%; or
(ii) The Dilution Ratio shall equal or exceed 9.0%; or
(i) The aggregate of the Purchased Interests of all
Purchasers (expressed as a percentage) shall exceed 100% (in each case
calculated as though the "NRB" included the aggregate amount of
Collections held in trust by the Servicer in the Collection Account for
the benefit of the applicable Purchasers for payment to such Purchaser
as a reduction of the Capital of such Purchaser on the next Settlement
Date); or
V-2
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<PAGE>
(j) The Internal Revenue Service shall file notice of a
lien pursuant to Section 6323 of the Internal Revenue Code with regard
to any of the assets of the Seller, the Servicer, the Guarantor or any
Originator, or the Pension Benefit Guaranty Corporation shall, or shall
indicate its intention to, file notice of a lien pursuant to
Section 4068 of ERISA with regard to any of the assets of the Seller,
the Servicer, the Guarantor or any Originator; or
(k) (i) Any Transaction Document, or any ownership or other
interest granted or created thereunder, shall (except in accordance with
its terms), in whole or in part, terminate, cease to be effective or
cease to be the legally valid, binding and enforceable obligation of the
Seller, the Servicer, the Guarantor or any Originator or (ii) the
Seller, the Servicer, the Guarantor or any Originator shall, directly or
indirectly, contest in any manner such effectiveness, validity, binding
nature or enforceability; or
(l) A Purchase and Sale Termination Event under the
Purchase and Sale Agreement shall have occurred and be continuing; or
(m) Any Change in Control shall have occurred; or
(n) Any event or circumstance has a material adverse effect
on the validity, enforceability or collectibility of any material
portion of the Pool Receivables or the ability of the Servicer to
collect such Pool Receivables; or
(o) A material adverse change in the financial condition,
operations or prospects shall have occurred with respect to the Seller,
the Servicer, the Guarantor or any Originator; or
(p) The Tangible Net Worth of the Seller falls below the
Required Net Worth.
V-3
<PAGE>
<PAGE>
FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO RECEIVABLES PURCHASE AGREEMENT, dated as
of July 1, 1999 (the "Amendment"), is entered into among MAIL-WELL
---------
TRADE RECEIVABLES CORPORATION, a Colorado corporation, as seller (the
"Seller"), MAIL-WELL I CORPORATION, a Delaware corporation, as initial
------
Servicer (the "Servicer"), QUINCY CAPITAL CORPORATION, a Delaware
--------
corporation (the "Issuer"), the Alternate Purchasers from time to time
------
party thereto (the "Alternate Purchasers") and BANK OF AMERICA,
--------------------
NATIONAL ASSOCIATION (f/k/a BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION), a national banking association, as administrator (the
"Administrator").
-------------
R E C I T A L S
- - - - - - - -
A. The Seller, the Servicer, the Issuer, the Alternate
Purchasers and the Administrator are parties to Receivables Purchase
Agreement, dated as of July 1, 1999 (the "Agreement"); and
---------
B. The parties to the Agreement desire to amend the Agreement
as set forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Certain Defined Terms. Capitalized terms used but not
---------------------
defined herein shall have the meanings set forth for such terms in
Exhibit I to the Agreement.
2. Amendments to the Agreement. The Agreement is hereby
---------------------------
amended as follows:
2.1 The introductory paragraph of the Agreement is hereby
amended by adding, immediately after the parenthetical defining
"Bank of America", the following phrase:
, HARRIS TRUST AND SAVINGS BANK, THE BANK OF NOVA SCOTIA
2.2 A new Section 4.15 is hereby added to the Agreement to
be and to read as follows:
Section 4.15 Addition of Included Sites.
--------------------------
Additional locations of an Originator may be added to
Schedule IV as Included Sites with the consent of the Seller
and the Administrator (which consent shall not be
unreasonably withheld), provided that the following
conditions are satisfied on or before the date of such
addition:
<PAGE>
<PAGE>
(a) the applicable Originator shall have given
the Seller and the Administrator at least five (5)
Business Days' prior written notice of such proposed
addition and the identity of the proposed location;
(b) such Originator has delivered to the
Seller and the Administrator a revised Schedule IV
reflecting such additional location;
(c) such Originator has delivered to the
Administrator copies of each Lock-Box Agreement with
respect to such additional location, duly executed by
each of the parties thereto, in substantially the form
of Annex B and a revised Schedule I reflecting such
additional Lock-Box Agreements;
(d) the Seller and the Administrator shall
have completed their review, if any, of the historical
receivables data and accounts and such information
shall be satisfactory thereto; and
(e) no event has occurred and is continuing,
or would result from the addition of such location as
an Included Site, that constitutes a Termination Event
or an Unmatured Termination Event.
2.3 The definition of "Included Site" is hereby added to
Exhibit I to the Agreement, as alphabetically appropriate, to be
and to read as follows:
"Included Site" means any location of an Originator
-------------
listed on Schedule IV, as such schedule may from time to
time be revised in accordance with Section 4.15.
2.4 The definition of "Receivable" in Exhibit I to the
Agreement is hereby amended by adding the following phrase,
immediately prior to the period, at the end thereof:
, other than any such indebtedness not arising at or through
an Included Site
2.5 Clause (ii)(A) of paragraph (i) in Exhibit IV to the
Agreement is hereby amended by adding the following proviso,
immediately prior to the comma, at the end thereof:
; provided, however, that the Obligors of Receivables
originated by WISCO II, LLC or WISCO III, LLC may be
instructed to make payments directly to the Servicer (or
any sub-servicer), which payments shall be deposited by the
Servicer (or such sub-servicer) into a Lock-Box Account not
later than two Business Days after receipt thereof.
2.6 Schedule I to the Agreement is hereby amended and
restated to be read as set forth on Schedule I hereto.
2
<PAGE>
<PAGE>
2.7 A new Schedule IV is hereby added to the Agreement to
be and to read as set forth on Schedule IV hereto.
3. Effect of Amendment. This Amendment shall become effective
-------------------
upon (i) the execution of this Amendment and the first amendments to the
Purchase and Sale Agreement and to the Servicing Agreement, each dated
as of the date hereof (the "Other First Amendments") by all of the
----------------------
parties and (ii) receipt by the Administrator of all agreements,
opinions and other documents reasonably requested thereby. Except as
expressly amended and modified by this Amendment, all provisions of the
Receivables Purchase Agreement shall remain in full force and effect.
After this Amendment becomes effective, all references in each of the
Agreements to "this Agreement", "hereof", "herein", or words of similar
effect referring to such Agreement shall be deemed to be references to
the Receivables Purchase Agreement, as amended by this Amendment. This
Amendment shall not be deemed to expressly or impliedly waive, amend or
supplement any provision of the Agreements other than as set forth
herein.
4. Counterparts. This Amendment may be executed in any number
------------
of counterparts and by different parties on separate counterparts, each
of which shall be deemed to be an original and all of which when take
together shall constitute but one and the same instrument.
5. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without
regard to any otherwise applicable principles of conflicts of law.
6. Section Headings. The various headings of this Amendment
----------------
are included for convenience only and shall not affect the meaning or
interpretation of this Amendment, the Agreement or any provision hereof
or thereof.
7. Consent. Each party hereto hereby consents to the
-------
execution and delivery of the Other First Amendments.
[signature pages on next page]
3
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of
the date first above written.
MAIL-WELL TRADE RECEIVABLES
CORPORATION, as Seller
By:_____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL I CORPORATION, as Servicer
By:_____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
4
<PAGE>
<PAGE>
BANK OF AMERICA, NATIONAL ASSOCIATION
(f/k/a BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION), as Administrator
By:______________________________________
Name:
Title:
BANK OF AMERICA, NATIONAL ASSOCIATION
(f/k/a BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION), as an Alternate
Purchaser
By:______________________________________
Name:
Title:
5
<PAGE>
<PAGE>
HARRIS TRUST AND SAVINGS BANK,
as an Alternate Purchaser
By:__________________________________
Name:
Title:
6
<PAGE>
<PAGE>
THE BANK OF NOVA SCOTIA,
as an Alternate Purchaser
By:_________________________________
Name:
Title:
7
<PAGE>
<PAGE>
QUINCY CAPITAL CORPORATION,
as Issuer
By:_________________________________
Name:
Title:
8
<PAGE>
<PAGE>
SCHEDULE IV
INCLUDED SITES
Originator Location
---------- --------
<PAGE>
==============================================================
PURCHASE AND SALE AGREEMENT
between
MAIL-WELL I CORPORATION
as initial Servicer and as Guarantor,
THE ORIGINATORS FROM TIME TO TIME PARTY HERETO
and
MAIL-WELL TRADE RECEIVABLE CORPORATION,
as Purchaser
Dated as of July 1, 1999
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TABLE OF CONTENTS
ARTICLE I AMOUNTS AND TERMS OF THE PURCHASES -1-
SECTION 1.1. Agreement to Purchase and Sell -1-
SECTION 1.2. Purchases and Conveyance -2-
SECTION 1.3. Purchase Price -2-
SECTION 1.4. Payments of Purchase Price -2-
SECTION 1.5. The Originator Notes -3-
SECTION 1.6. Payments and Computations, Etc. -4-
SECTION 1.7. Limited Repurchase Obligation. -4-
SECTION 1.8. No Recourse -5-
SECTION 1.9. True Sales -5-
ARTICLE II CONDITIONS TO PURCHASES; REPRESENTATIONS AND WARRANTIES;
COVENANTS; PURCHASE AND SALE TERMINATION EVENTS -5-
SECTION 2.1. Conditions to Purchases -5-
SECTION 2.2. Representations and Warranties; Covenants -6-
SECTION 2.3. Purchase and Sale Termination Events -6-
ARTICLE III INDEMNIFICATION -6-
SECTION 3.1. Indemnities by each Originator and the Guarantor -6-
ARTICLE IV ADDITIONAL RIGHTS AND OBLIGATIONS
IN RESPECT OF THE RECEIVABLES POOL -8-
SECTION 4.1. Servicing of Receivables Pool and Related Assets -8-
SECTION 4.2. Rights of the Purchaser; Enforcement Rights -9-
SECTION 4.3. Responsibilities of each Originator -10-
SECTION 4.4. Further Action Evidencing Purchases -10-
ARTICLE V MISCELLANEOUS -11-
SECTION 5.1. Amendments, Etc. -11-
SECTION 5.2. Notices, Etc. -11-
SECTION 5.3. Acknowledgment and Consent -12-
SECTION 5.4. Binding Effect; Assignability -12-
SECTION 5.5. Costs, Expenses and Taxes -13-
SECTION 5.6. No Proceedings; Limitation on Payments -13-
SECTION 5.7. GOVERNING LAW AND JURISDICTION -13-
SECTION 5.8. Execution in Counterparts -14-
SECTION 5.9. Survival -14-
SECTION 5.10. WAIVER OF JURY TRIAL -14-
SECTION 5.11. Entire Agreement -14-
SECTION 5.12. Headings -14-
SECTION 5.13. Addition of Originators -14-
SECTION 5.14. Confidentiality -15-
SECTION 5.15. Performance Guaranty -15-
(i)
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EXHIBIT I CONDITIONS OF PURCHASES
EXHIBIT II REPRESENTATIONS AND WARRANTIES
EXHIBIT III COVENANTS
EXHIBIT IV PURCHASE AND SALE TERMINATION EVENTS
ANNEX A DEFINITIONS
ANNEX B FORM OF ORIGINATOR NOTE
ANNEX C FORM OF JOINDER AGREEMENT
(ii)
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (this "Agreement") is entered
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into as of July 1, 1999 among MAIL-WELL I CORPORATION, a Delaware
corporation, as initial Servicer (the "Servicer") and as guarantor
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(the "Guarantor"), the Originators from time to time party hereto
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(each, an "Originator") and MAIL-WELL TRADE RECEIVABLE CORPORATION, a
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Colorado corporation, as purchaser (the "Purchaser").
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PRELIMINARY STATEMENTS
a. Unless otherwise defined herein or the context
otherwise requires, certain terms that are used throughout
this Agreement (including the Exhibits hereto) are defined
in (i) Annex A to this Agreement and (ii) if not otherwise
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defined herein or in Annex A, in Exhibit I to the
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Receivables Purchase Agreement, dated as of the date hereof,
among the Purchaser, the Servicer, Quincy Capital
Corporation, the Alternate Purchasers from time to time
party thereto and Bank of America National Trust and Savings
Association, as Administrator (as the same may be amended,
modified or supplemented from time to time, the "RPA").
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Any reference to "this Agreement" or "the Purchase and Sale
Agreement", including any such reference in any Exhibit
hereto, shall mean this Agreement in its entirety, including
the Exhibits and other attachments hereto, as amended,
modified or supplemented from time to time in accordance
with the terms hereof.
b. Each Originator wishes to sell Receivables that it now
owns and from time to time hereafter will own to the
Purchaser, and the Purchaser is willing, on the terms and
subject to the conditions contained in this Agreement, to
purchase or accept such Receivables from such Originator at
such time.
c. The Purchaser has entered into the RPA pursuant to
which, among other things, the Purchaser may sell to the
Issuer thereunder, undivided ownership interests in the
Receivables Pool and Related Assets.
In consideration of the mutual agreements, provisions and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
AMOUNTS AND TERMS OF THE PURCHASES
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SECTION 1.1. Agreement to Purchase and Sell. On the terms and
conditions hereinafter set forth, each Originator agrees to sell to the
Purchaser, and the Purchaser agrees to purchase or accept from such
Originator, at the times set forth in Section 1.2 herein, but prior to
the Purchase
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and Sale Termination Date, all of its right, title, and interest in, to
and under (a) all Receivables of such Originator, (b) all Related
Security with respect to such Receivables, (c) all Collections with
respect to each such Receivable, and (d) all proceeds of, and all other
amounts received or receivable under any or all of, the foregoing. The
items listed in clauses (b), (c) and (d) of the preceding sentence
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in relation to any Receivables are herein collectively called the
"Related Assets" or, with respect to any such Receivable, the
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"Related Asset".
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SECTION 1.2. Purchases and Conveyance.
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(a) Initial Purchase. Each Originator hereby sells,
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transfers, assigns and conveys to the Purchaser (without any formal or
other instrument of assignment and without further action by any Person)
all of its right, title and interest in and to all of the Receivables
and the Related Assets of such Originator that exist at the opening of
such Originator's business on the Effective Date (or, with respect to
any Originator added in accordance with Section 5.13, on the date such
Originator becomes a party hereto).
(b) Regular Purchases. After the date of the initial purchase
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hereunder until the Purchase and Sale Termination Date, each Receivable
and Related Asset of each Originator shall be deemed to have been sold,
transferred, assigned and conveyed to the Purchaser pursuant hereto
immediately (and without any formal or other instrument of assignment
and without further action by any Person) upon the creation of such
Receivable.
(c) Prior Purchases. Prior to the Effective Date, certain
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Originators party hereto on the date hereof sold, transferred, assigned
or conveyed Receivables and Related Assets to the Purchaser pursuant to
the Prior Purchase Agreement (the "Prior Transfers"). Each Originator
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hereby confirms and reaffirms the Prior Transfers, if any, made (or
purported to be made) by such Originator, acknowledges that such
Originator has received fair consideration for such Prior Transfers and
agrees that such Prior Transfers shall otherwise be subject to the
terms, conditions, representations, warranties, covenants, indemnities
and other provisions contained herein (excluding Sections 1.3, 1.4, 1.5
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and 2.1) as though such Prior Transfers were made on the Effective
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Date.
(d) Contribution. On the Effective Date, Mail-Well I
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Corporation shall, and hereby does, contribute to the capital of the
Purchaser, cash in an amount equal to $20,000,000.
SECTION 1.3. Purchase Price. The amount payable by the
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Purchaser to each Originator (the "Purchase Price") for each Pool
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Receivable and Related Asset purchased by Purchaser from such Originator
on each Payment Day under this Agreement shall be equal to the
Outstanding Principal Balance of such Pool Receivable minus the Discount
for such Pool Receivable.
SECTION 1.4. Payments of Purchase Price.
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(a) Upon fulfillment of the conditions set forth in Exhibit I,
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the Purchase Price for each Pool Receivable and Related Asset shall be
paid or provided for in the manner provided
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below on the day each such Pool Receivable and Related Asset is sold to
the Purchaser hereunder (each such day, a "Payment Day").
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(b) The Purchase Price for each Pool Receivable and Related
Asset shall be paid by the Purchaser to each Originator on each Payment
Day as follows:
(i) First, subject to the proviso to Section 1.7, by
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netting against such Purchase Price any Repurchase Amounts or
Dilution amounts owed by such Originator to Purchaser pursuant to
Section 1.7;
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(ii) Second, by making a cash payment to such
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Originator to the extent that the Purchaser has cash available to
make such payment (including cash from the net proceeds of a sale
of undivided interests in the Receivables Pool to the Issuer)
subject to the terms of the RPA; and
(iii) Third, the remaining portion of such Purchase
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Price not paid pursuant to clauses (i) and (ii) above, shall
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be paid by means of an automatic increase to the outstanding
principal amount of the Originator Note of such Originator.
SECTION 1.5. The Originator Notes.
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(a) On or prior to the Effective Date (or, with respect to any
Originator added in accordance with Section 5.13, on or prior to the
date such Originator becomes a party hereto), the Purchaser shall
deliver to each Originator a promissory note in the form of Annex B to
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this Agreement payable to the order of such Originator (each such
promissory note, as it may be amended, supplemented, endorsed or
otherwise modified from time to time, together with any promissory notes
issued from time to time in substitution therefor or renewal thereof in
accordance with the Transaction Documents, being called an "Originator
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Note"), which Originator Note shall, accordance with its terms, be
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subordinated to all interests in Receivables and Related Assets and all
obligations of the Purchaser, of any nature, whether now or hereafter
arising under or in connection with the RPA.
(b) The Servicer shall hold each Originator Note for the benefit
of the applicable Originator, and shall make all appropriate record-
keeping entries with respect to such Originator Note or otherwise to
reflect the payments on and adjustments of such Originator Note. The
Servicer's books and records shall constitute rebuttable presumptive
evidence of the principal amount of and accrued interest on such
Originator Note at any time. Each Originator hereby irrevocably
authorizes the Servicer to mark its Originator Note "CANCELLED" and to
return such Originator Note to the Purchaser upon the full and final
payment thereof after the Purchase and Sale Termination Date.
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SECTION 1.6. Payments and Computations, Etc.
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(a) All amounts to be paid or deposited by any Originator, the
Guarantor or the Servicer or the Purchaser hereunder shall be paid or
deposited no later than 12:00 noon (New York City time) on the day when
due in same day funds. All amounts received after 12:00 noon (New York
City time) will be deemed to have been received on the immediately
succeeding Business Day.
(b) Each Originator, the Servicer and the Guarantor shall, to
the extent permitted by law, pay interest on any amount not paid or
deposited by such Person when due hereunder, at an interest rate per
annum equal to 2.0% per annum above the Base Rate, payable on demand.
(c) Whenever any payment or deposit to be made hereunder shall
be due on a day other than a Business Day, such payment or deposit shall
be made on the next succeeding Business Day and such extension of time
shall be included in the computation of such payment or deposit.
SECTION 1.7. Limited Repurchase Obligation. In the event that
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(i) any of the representations or warranties of any Originator contained
in paragraphs (h) or (n) of Exhibit II hereof with respect to any
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Pool Receivable shall be or have been incorrect in any material respect
as of the date made or re-made, (ii) any Originator shall have failed to
comply with the provisions of paragraph (d) of Exhibit III hereof
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with respect to any Pool Receivable or (iii) any Pool Receivable from
any Originator shall be subject to any Dilution, then upon notice given
to such Originator by the Purchaser, the Servicer or the Administrator,
such Originator shall within fifteen (15) days after its receipt of such
notice, cure the default of such covenant or eliminate or otherwise cure
the circumstances or condition giving rise to such Dilution or in
respect of which the representation or warranty was incorrect as of the
time made, as the case may be. In the event that such Originator is
unable to so cure such default or so eliminate or otherwise cure such
circumstances or condition within such period of time, it shall
immediately purchase such Pool Receivable and Related Asset from the
Purchaser or pay to the Purchaser the amount of such Dilution, as the
case may be, by depositing Dollars in immediately available funds to the
Collections Account in an amount equal to the Outstanding Principal
Balance of such Pool Receivable plus the accrued and unpaid interest, if
any, payable thereunder as of the date of purchase (the "Repurchase
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Amount") or the amount of such Dilution, as the case may be;
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provided, however, that prior to the occurrence of any Purchase and
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Sale Termination Event or any Unmatured Purchase and Sale Termination
Event, any such Repurchase Amount or Dilution amount payable to the
Purchaser shall be netted against the Purchase Price of newly created
Receivables in accordance with Section 1.4(b)(i) but only to the
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extent of the Purchase Price payable on the Payment Day on which such
amount is due. Upon any such purchase, the Purchaser shall execute and
deliver such instruments of release, transfer or assignment, in each
case "as is" and without recourse, as shall be necessary to vest in such
Originator title to whatever interest the Purchaser may have in such
Pool Receivable and Related Asset.
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SECTION 1.8. No Recourse. Except as specifically provided in
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this Agreement, the purchase and sale of each Pool Receivable and
Related Asset under this Agreement shall be without recourse to any
Originator; provided, that each Originator shall be liable to the
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Purchaser for all representations, warranties, covenants and indemnities
made by such Originator pursuant to the terms of this Agreement, it
being understood that such liability of such Originator will not arise
on account of the failure of the Obligor for credit reasons to make any
payment in respect of a Pool Receivable.
SECTION 1.9. True Sales.
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(a) Each Originator and the Purchaser intend the transactions
hereunder to constitute true sales of Receivables and Related Assets by
each Originator to the Purchaser providing the Purchaser with the full
benefits of ownership thereof, and no party hereto intends the
transactions contemplated hereunder to be, or for any purpose to be
characterized as, a loan from the Purchaser to any Originator.
(b) In the event (but only to the extent) that the conveyance of
Receivables and Related Assets hereunder is characterized by a court or
other Governmental Authority as a loan rather than a sale, each
Originator shall be deemed hereunder to have granted to the Purchaser,
and each Originator hereby grants to the Purchaser, a security interest
in all of such Originator's right, title and interest in, to and under
all of the following, whether now or hereafter owned, existing or
arising: (A) all Receivables of such Originator, (B) all Related
Security with respect to each such Receivable, (C) all Collections with
respect to each such Receivable, and (D) all proceeds of, and all
amounts received or receivable under any or all of, the foregoing. Such
security interest shall secure all of such Originator's obligations
(monetary or otherwise) under this Agreement and the other Transaction
Documents to which it is a party, whether now or hereafter existing or
arising, due or to become due, direct or indirect, absolute or
contingent. The Purchaser shall have, with respect to the property
described in this Section 1.9(b), and in addition to all the other
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rights and remedies available to the Purchaser under this Agreement and
applicable law, all the rights and remedies of a secured party under any
applicable UCC, and this Agreement shall constitute a security agreement
under applicable law.
ARTICLE II
CONDITIONS TO PURCHASES; REPRESENTATIONS AND WARRANTIES;
COVENANTS; PURCHASE AND SALE TERMINATION EVENTS
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SECTION 2.1. Conditions to Purchases. The obligation of the
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Purchaser to make any purchase of any Receivable and Related Asset
hereunder is subject to satisfaction of the conditions to purchase set
forth in Exhibit I hereto.
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SECTION 2.2. Representations and Warranties; Covenants. Each
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Originator and the Guarantor hereby makes the representations and
warranties, and hereby agrees to perform and observe the covenants, set
forth in Exhibits II and III, respectively, hereto.
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SECTION 2.3. Purchase and Sale Termination Events. If any of
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the Purchase and Sale Termination Events set forth in Exhibit IV
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hereto shall occur, the Purchaser may, by notice to each Originator
(with a copy to the Administrator), declare the "Purchase and Sale
Termination Date" to have occurred; provided that automatically upon
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the occurrence of an event (without any requirement for the passage of
time or the giving of notice) described in clause (f) of Exhibit IV
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hereto the Purchase and Sale Termination Date shall occur.
The agreement of each Originator to sell Receivables and Related
Assets hereunder, and the agreement of the Purchaser to purchase or
accept Receivables and Related Assets from each Originator hereunder,
shall terminate automatically on the earlier to occur of (i) the
Purchase and Sale Termination Date and (ii) the Facility Termination
Date. Notwithstanding the occurrence of the Purchase and Sale
Termination Date, all obligations of each Originator and Purchaser under
the Transaction Documents that shall have arisen prior to the Purchase
and Sale Termination Date shall survive until each such obligation has
been finally and fully paid and performed by each such Originator or the
Purchaser, as applicable.
Upon the occurrence of a Purchase and Sale Termination Event, the
Purchaser shall have, in addition to all other rights and remedies under
this Agreement or otherwise, all other rights and remedies provided
under the UCC of each applicable jurisdiction and other applicable laws,
which rights shall be cumulative. Without limiting the foregoing, the
occurrence of a Purchase and Sale Termination Event hereunder shall not
deny to the Purchaser any remedy to which the Purchaser may be otherwise
appropriately entitled, whether by statute or applicable law, at law or
in equity.
ARTICLE III
INDEMNIFICATION
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SECTION 3.1. Indemnities by each Originator and the Guarantor.
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Without limiting any other rights which the Purchaser may have hereunder
or under applicable law, each Originator and the Guarantor hereby agrees
to indemnify the Purchaser from and against any and all claims, damages,
expenses, losses and liabilities (including Attorney Costs) (all of the
foregoing being collectively referred to as "Damages") arising out of
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or resulting from this Agreement (whether directly or indirectly) or the
use of proceeds of purchases or the ownership of any Pool Receivable or
Related Asset, excluding, however, (a) Damages to the extent resulting
from gross negligence or willful misconduct on the part of the
Purchaser, (b) recourse (except as otherwise specifically provided in
this Agreement) for uncollectible Pool Receivables to be written off
consistent with the Credit and Collection Policy, or (c) any net income
taxes or franchise taxes imposed on the Purchaser by the jurisdiction
under the laws of which the Purchaser is organized
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or qualified (or should be qualified) to do business or any political
subdivision thereof. Without limiting or being limited by the
foregoing, and subject to the exclusions set forth in the preceding
sentence, each Originator and the Guarantor shall pay on demand to the
Purchaser any and all amounts necessary to indemnify the Purchaser from
and against any and all Damages relating to or resulting from any of the
following:
(i) the failure of any Receivable sold by such
Originator to the Purchaser hereunder to be an Eligible Receivable
at the time of such sale, the failure of any information delivered
with respect to any such Receivable to be true and correct, or the
failure of any other information provided by such Originator to
the Purchaser, the Servicer or any Securitization Party with
respect to any Receivable or Related Asset or this Agreement to be
true and correct;
(ii) the failure of any representation or warranty or
statement made or deemed made by such Originator or Guarantor (or
any of its officers) under or in connection with this Agreement or
any other Transaction Document to have been true and correct in
all respects when made;
(iii) the failure by such Originator to comply with the
Credit and Collection Policy or any applicable law, rule or
regulation with respect to any Receivable or Related Asset; or the
failure of any Receivable or Related Asset created by such
Originator to conform to any such applicable law, rule or
regulation;
(iv) the failure to vest, and maintain vested, in the
Purchaser a valid and enforceable (A) ownership interest in each
Receivable and Related Asset created by such Originator and (B) a
first priority perfected security interest in the items described
in Section 1.9(b), in each case, free and clear of any Adverse
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Claim;
(v) Intentionally Omitted;
(vi) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the
payment of any Receivable created by such Originator (including,
without limitation, a defense based on such Receivable or the
related Contract Document not being a legal, valid and binding
obligation of such Obligor enforceable against it in accordance
with its terms), or any other claim resulting from the sale of the
goods or services related to such Receivable or the furnishing or
failure to furnish such goods or services or relating to
collection activities with respect to such Receivable (if such
collection activities were performed by such Originator, or any of
its Affiliates, acting as Servicer or by any agent or independent
contractor retained by such Originator or any of its Affiliates);
(vii) any failure of such Originator or Guarantor to
perform its duties or obligations in accordance with the
provisions of this Agreement or any other Transaction
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Document or to perform its duties or obligations in connection
with any Receivable or Related Asset;
(viii) any claim (including, without limitation, any breach
of warranty, product liability or environmental claim),
investigation, litigation or proceeding arising out of or in
connection with any Receivable or Related Asset;
(ix) the commingling of Collections of Receivables
created by such Originator at any time with other funds and any
lost, mutilated, destroyed or missing Contract Documents;
(x) any investigation, litigation or proceeding related
to this Agreement or any other Transaction Document or the use of
proceeds of purchases or reinvestments or the ownership of the
Purchased Interest or in connection with any Receivable or Related
Security created by such Originator;
(xi) any requirement that all or a portion of any
payments made by such Originator or Guarantor pursuant to this
Agreement shall be rescinded or otherwise must be returned for any
reason; or
(xii) the enforcement of any Transaction Document against
such Originator or Guarantor.
Indemnification under this Section 3.1 shall survive the
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termination of this Agreement and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation.
ARTICLE IV
ADDITIONAL RIGHTS AND OBLIGATIONS
IN RESPECT OF THE RECEIVABLES POOL
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SECTION 4.1. Servicing of Receivables Pool and Related Assets.
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Consistent with the Purchaser's ownership of the Receivables Pool and
the Related Assets, the Purchaser shall have the sole right to service,
administer and collect the Receivables Pool, to assign such right and to
delegate such right to others. In consideration of the Purchaser's
purchase of the Receivables Pool and the Related Assets, each Originator
agrees to cooperate fully with the Purchaser to facilitate the full and
proper performance of such duties and obligations for the benefit of the
Purchaser and the Securitization Parties.
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SECTION 4.2. Rights of the Purchaser; Enforcement Rights.
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(a) Subject to the repurchase obligation of each Originator
under Section 1.7, the Purchaser shall have no obligation (i) to
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account for, to replace, to substitute or to return any Pool Receivable
and Related Asset to any Originator or (ii) to account for, or to return
to any Originator any Collections, or any interest or other finance
charge collected pursuant thereto, without regard to whether such
Collections and charges are in excess of the Purchase Price for such
Pool Receivable and Related Asset.
(b) The Purchaser shall have the unrestricted right to further
assign, transfer, deliver, hypothecate, subdivide or otherwise deal with
the Receivables Pool and Related Assets, and all of the Purchaser's
right, title and interest in, to and under this Agreement, on whatever
terms the Purchaser shall determine.
(c) The Purchaser shall have the sole right to retain any gains
or profits created by buying, selling or holding the Receivables Pool
and Related Assets and shall have the sole risk of and responsibility
for losses or damages created by such buying, selling or holding.
(d) At any time following the designation of a successor
Servicer under the Servicing Agreement:
(i) the Administrator may direct the Obligors that
payment of all amounts payable under any Pool Receivable be made
directly to the Administrator or its designee;
(ii) the Administrator may instruct each Originator to
give notice of the Purchaser's or the Securitization Parties'
interest in the Pool Receivables created by such Originator to
each Obligor, which notice shall direct that payments be made
directly to the Administrator or its designee, and upon such
instruction from the Administrator, each such Originator shall
give such notice at the expense of such Originator; provided,
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that if such Originator fails to so notify each Obligor, the
Administrator may so notify such Obligors; and
(iii) the Administrator may request each Originator to,
and upon such request each such Originator shall, (A) assemble all
of the records necessary or desirable to collect the Pool
Receivables created by such Originator and the Related Assets, and
transfer or license the use of, to the successor Servicer, all
software (to the extent permitted under the terms of the
agreements governing the use of such software (or, in the event
not permitted, such Originator shall take reasonable steps to
assist in obtaining such permission)) necessary or desirable to
collect such Pool Receivables and the Related Assets, and make the
same available to the Administrator or its designee at a place
selected by the Administrator, and (B) segregate all cash, checks
and other instruments received by it from time to time
constituting Collections with respect to the Receivables Pool in a
manner acceptable to the Administrator and, promptly upon receipt,
remit all
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such cash, checks and instruments, duly endorsed or with duly
executed instruments of transfer, to the Administrator or its
designee.
(e) Each Originator hereby authorizes the Purchaser, and
irrevocably appoints the Purchaser as its attorney-in-fact with full
power of substitution and with full authority in the place and stead of
such Originator, which appointment is coupled with an interest, to take
any and all steps in the name of such Originator and on behalf of such
Originator necessary or desirable, in the determination of the
Purchaser, to collect any and all amounts or portions thereof due under
any Pool Receivable or Related Asset, including, without limitation,
endorsing the name of such Originator on checks and other instruments
representing Collections and on such instruments or documents as may be
necessary to effect foreclosure, repossession or other conversions of
the ownership of any Related Asset, and enforcing such Pool Receivable
and Related Asset. Notwithstanding anything to the contrary contained
in this subsection (e), none of the powers conferred upon such attorney-
in-fact pursuant to the immediately preceding sentence shall subject
such attorney-in-fact to any liability if any action taken by it shall
prove to be inadequate or invalid, nor shall they confer any obligations
upon such attorney-in-fact in any manner whatsoever.
SECTION 4.3. Responsibilities of each Originator. Anything
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herein to the contrary notwithstanding:
(a) Each Originator agrees to deliver directly to the
Servicer (for deposit to the Collection Account), within one
Business Day of receipt thereof, any Collections that it receives,
in the form so received, and agrees that all such Collections
shall be deemed to be received in trust for the Purchaser and
shall be maintained and segregated separate and apart from all
other funds and moneys of such Originator until delivery of such
Collections to the Servicer; and
(b) Each Originator shall (i) perform all of its
obligations hereunder and under each Pool Receivable and Related
Asset to the same extent as if such Pool Receivable and Related
Asset had not been sold hereunder, and the exercise by the
Purchaser or its designee or assignee of the Purchaser's rights
hereunder or in connection herewith shall not relieve such
Originator from such obligations and (ii) pay when due any taxes,
including, without limitation, any sales taxes payable in
connection with any Pool Receivable and their creation and
satisfaction.
SECTION 4.4. Further Action Evidencing Purchases. Each
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Originator agrees that from time to time, at its expense, it will
promptly execute and deliver all further instruments and documents, and
take all further action upon the reasonable request of the Purchaser, in
order to perfect or protect the purchase by the Purchaser of the
Receivables Pool and Related Assets hereunder, or to enable the
Purchaser to exercise or enforce any of its rights hereunder or under
any other Transaction Document. Each Originator further agrees from
time to time, at its expense, promptly to take all action that the
Purchaser, the Servicer or the Administrator may reasonably request in
order to perfect or protect such purchase of the Receivables Pool and
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<PAGE>
<PAGE>
Related Assets or to enable the Purchaser (and its successors and
assigns) to exercise or enforce any of its or their respective rights
hereunder or under any other Transaction Document in respect of the
Receivables Pool and Related Assets. Without limiting the generality of
the foregoing, upon the request of the Purchaser, each Originator or the
Administrator will:
(a) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as the Purchaser or the
Administrator may reasonably determine to be necessary or
appropriate; and
(b) mark the master data processing records to reflect
the sale of the Receivables Pool and Related Assets pursuant to
this Agreement.
Each Originator hereby authorizes the Purchaser or its designee or
assignee to file one or more financing or continuation statements, and
amendments thereto and assignments thereof, relative to all or any of
the Pool Receivables and Related Assets created by such Originator, in
each case whether now existing or hereafter generated. If any
Originator fails to perform any of its agreements or obligations under
this Agreement, the Purchaser or its designee or assignee may (but shall
not be required to) itself perform, or cause performance of, such
agreement or obligation, and the reasonable expenses of the Purchaser or
its designee or assignee incurred in connection therewith shall be
payable by such Originator under Section 5.5.
-----------
ARTICLE V
MISCELLANEOUS
-------------
SECTION 5.1. Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement or consent to any departure by any
Originator or the Guarantor therefrom shall be effective unless in a
writing signed by the parties hereto (and consented to by the
Administrator), and, any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
No failure on the part of any Originator, the Purchaser, the Guarantor,
the Servicer or the Administrator to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any
other or further exercise thereof or the exercise of any other right.
SECTION 5.2. Notices, Etc. All notices and other
-------------
communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication) and sent or
delivered, to each party hereto, at its address set forth under its name
on the signature pages hereof or at such other address as shall be
designated by such party in a written notice to the other parties
hereto. Notices and communications by facsimile shall be effective when
sent (and shall be followed by hard copy sent by first class mail), and
notices and communications sent by other means shall be effective when
received.
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<PAGE>
<PAGE>
SECTION 5.3. Acknowledgment and Consent.
--------------------------
(a) Each Originator and the Guarantor acknowledges that,
contemporaneously herewith or at any time hereafter, the Purchaser (i)
is assigning or will assign to the Issuer, pursuant to the RPA, one or
more undivided interests in all of the Purchaser's rights, title and
interest in, to and under the Receivables Pool and Related Assets, and
(ii) is assigning to the Issuer pursuant to the RPA all of the
Purchaser's right, title and interest in, to and under this Agreement,
it being understood that such assignment shall not relieve any party
hereto from (or require any of the Securitization Parties to undertake)
the performance of any term, covenant or agreement on the part of any
party hereto to be performed or observed under or in connection with
this Agreement. Each Originator and the Guarantor hereby consents to
such assignments, including, without limitation, the assignment by the
Purchaser to the Issuer of (i) the right of the Purchaser, at any time,
to enforce this Agreement against such Originator or Guarantor and the
obligations of such Originator or Guarantor hereunder, (ii) the right,
at any time, in accordance with the terms hereof, to give or withhold
any and all consents, requests, notices, directions, approvals, demands,
extensions or waivers under or with respect to this Agreement, any other
Transaction Document or the obligations in respect of such Originator or
Guarantor thereunder to the same extent as the Purchaser may do, and
(iii) all of the Purchaser's rights, remedies, powers and privileges,
and all claims of the Purchaser against such Originator or Guarantor,
under or with respect to this Agreement and the other Transaction
Documents (whether arising pursuant to the terms of this Agreement or
otherwise available at law or in equity). Each of the parties hereto
acknowledges and agrees that the Securitization Parties and the other
Affected Persons are third party beneficiaries of the rights of the
Purchaser arising hereunder and under the other Transaction Documents to
which any Originator or the Guarantor is a party.
(b) Each Originator and the Guarantor hereby agrees to execute
all agreements, instruments and documents, and to take all other action,
that the Purchaser or the Administrator determines is necessary or
reasonably desirable to evidence its consent described in
Section 5.3(a).
- --------------
(c) Each Originator and the Guarantor hereby acknowledges that
its obligations to the Securitization Parties, as assignees of the
Purchaser, are and shall be, to the extent permitted by applicable law
or not prohibited by any order of any court or administrative or
regulatory authority, absolute and unconditional under any and all
circumstances and shall be unaffected by any claims, offsets or other
defenses such Originator or Guarantor may have against the Purchaser,
and each Originator and the Guarantor agrees that it shall not interpose
any such claims, offsets or defenses as a defense to its performance of
its obligations under this Agreement or any other Transaction Documents
to which it is a party.
SECTION 5.4. Binding Effect; Assignability. This Agreement
-----------------------------
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. No Originator nor
the Guarantor may assign any of its rights or delegate its obligations
hereunder or any interest herein without the prior written consent of
the Purchaser and the
-12-
<PAGE>
<PAGE>
Administrator. Without limiting any other rights that may be available
under applicable law, the rights of the Purchaser may be enforced
through it or by its agents.
SECTION 5.5. Costs, Expenses and Taxes. In addition to the
-------------------------
rights of indemnification granted under Article III, each Originator
-----------
and the Guarantor agrees to pay on demand all costs and expenses,
including, without limitation, Attorney Costs incurred by Purchaser in
connection with (i) the preparation, execution, delivery and
administration (including, without limitation, periodic auditing of
Receivables Pool) of this Agreement and the other Transaction Documents,
(ii) any amendment, modification or waiver of any of the foregoing and
(iii) the enforcement of Purchaser's rights and remedies against such
Originator or Guarantor under this Agreement and the other Transaction
Documents.
SECTION 5.6. No Proceedings; Limitation on Payments.
--------------------------------------
(a) Each party hereto hereby agrees that it will not institute
against, or join any other Person in instituting against, the Purchaser
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding, or other proceeding under any federal or state bankruptcy or
similar law, for one year and one day after the latest maturing Note is
paid in full.
(b) Notwithstanding any provisions contained in this Agreement
to the contrary, the Purchaser shall not, and shall not be obligated to,
pay any amount pursuant to this Agreement unless the Purchaser has
excess cash flow from operations or has received funds with respect to
such obligation which may be used to make such payment.
SECTION 5.7. GOVERNING LAW AND JURISDICTION.
------------------------------
(a) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF
THE NEW YORK GENERAL OBLIGATIONS LAW).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY
EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-
EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY LAW, 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 TRANSACTION DOCUMENT. EACH PARTY
HERETO WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
-13-
<PAGE>
<PAGE>
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW
YORK LAW.
SECTION 5.8. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts, each of which when so executed
shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement.
SECTION 5.9. Survival. The provisions of Section 1.7,
-------- -----------
Section 2.2, Article III, Section 5.1, Section 5.2, Section
- ----------- ----------- ----------- ----------- -
5.3, Section 5.4, Section 5.5, Section 5.6, Section 5.7,
- --- ----------- ----------- ----------- -----------
Section 5.10, Section 5.11, Section 5.12, Section 5.15 and
- ------------ ------------ ------------ ------------
Exhibits II, III and IV hereto and of this Section 5.9, shall
- ----------- --- -- -----------
survive any termination of this Agreement.
SECTION 5.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES
--------------------
ITS 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 OR ANY OTHER
TRANSACTION DOCUMENT 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 PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH PARTY HERETO AGREES
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL
WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, EACH OF THE PARTIES
HERETO FURTHER AGREES THAT ITS 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 ANY OTHER TRANSACTION
DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO
ANY SUBSEQUENT AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.
SECTION 5.11. Entire Agreement. This Agreement embodies the
----------------
entire agreement and understanding of the parties hereto, and supersedes
all prior or contemporaneous agreements and understandings of such
Persons, verbal or written, relating to the subject matter hereof and
thereof. The Exhibits, Schedules and Annexes to this Agreement shall be
deemed incorporated by reference into this Agreement as if set forth
herein.
SECTION 5.12. Headings. The captions and headings of this
--------
Agreement and in any Exhibit hereto are for convenience of reference
only and shall not affect the interpretation hereof or thereof.
SECTION 5.13. Addition of Originators. Additional direct or
-----------------------
indirect subsidiaries of Mail-Well, Inc. may be added as Originators
hereunder with the consent of the Purchaser and the
-14-
<PAGE>
<PAGE>
Administrator (which consent shall not be unreasonably withheld),
provided that the following conditions are satisfied on or before the
date of such addition:
(a) the Servicer shall have given the Purchaser and the
Administrator at least five (5) Business Days' prior written notice of
such proposed addition and the identity of the proposed additional
Originator;
(b) such proposed additional Originator has executed and
delivered to the Purchaser and the Administrator an agreement
substantially in the form attached hereto as Annex C (each, a
-------
"Joinder Agreement");
-----------------
(c) such proposed additional Originator has delivered to the
Purchaser and the Administrator each of the documents with respect to
such Originator described in paragraphs 1(b), 1(c), 1(d), 1(e),
--------------- ---- ---- ----
1(f), 1(i), 1(j), 1(n) and 1(o) of Exhibit II to the RPA; and
- ---- ---- ---- ---- ---- ----------
(d) no event has occurred and is continuing, or would result
from the addition of such Originator as a party hereto, that constitutes
a Purchase and Sale Termination Event or an Unmatured Purchase and Sale
Termination Event.
SECTION 5.14. Confidentiality. Unless otherwise required by
---------------
applicable law, the Originators and the Guarantor agree to maintain the
confidentiality of this Agreement and the other Transaction Documents
(and all drafts thereof) in communications with third parties and
otherwise; provided, however, that this Agreement may be disclosed
-------- -------
(a) to third parties to the extent such disclosure is made pursuant to a
written agreement of confidentiality in form and substance reasonably
satisfactory to the Purchaser and the Administrator, (b) to the
Originators' and the Guarantors' legal counsel and auditors if they
agree to hold it confidential and (c) as required by any law, rule or
regulation.
SECTION 5.15. Performance Guaranty. The Guarantor hereby
--------------------
unconditionally and irrevocably (a) guarantees to the Purchaser and each
Indemnified Party and their respective successors and assigns the
punctual payment and performance, as the case may be, when due of all
covenants, obligations, agreements, terms, conditions and indemnities to
be performed and observed by each Originator under the Transaction
Documents, in each case whether now or hereafter existing, and including
all obligations of each Originator in respect of the payment or delivery
of any sum or funds, whether for collections, indemnification, payments,
fees, interest, expenses or otherwise; (b) agrees to reimburse each of
the Purchaser and each Indemnified Party, on demand, in respect of any
and all reasonable costs and expenses incurred by such Person in
enforcing its rights against any Originator under any of the Transaction
Documents (including counsel fees and expenses) and (c) agrees to cause
each and every obligation, covenant, agreement and term imposed upon any
Originator under the Transaction Documents to be performed (all of the
obligations, covenants, agreements and terms described in and not
excluded from clauses (a), (b) and (c) above being herein collectively
called the "Guaranteed Obligations").
-15-
<PAGE>
<PAGE>
The obligations of the Guarantor under this Section 5.15
constitute a present and continuing guaranty of payment and performance
as set forth in the preceding paragraph, but not of collectibility of
any Receivable, and shall be absolute and unconditional, shall not be
subject to any counterclaim, set-off, deduction or defense based upon
any claim any Originator, the Servicer, the Guarantor, the Purchaser or
any Indemnified Party may have against each other or any other Person
and shall remain in full force and effect without regard to and shall
not be released, discharged or in any way affected or impaired by any
thing, event, happening, matter, circumstance or condition whatsoever
(whether or not the Guarantor shall have any knowledge or notice thereof
or consent thereto, including: (i) any amendment to any of the
Transaction Documents including any renewal or extension of the terms of
payment (or change in the manner or place of payment) of any sums due or
contingently due thereunder or the granting of time in respect of any
payment, or any security so furnished or accepted for the sum due or
contingently due thereunder or to add any parties thereto (including
additional Originators); (ii) any waiver, consent, extension, granting
of time, forbearance, indulgence or other action or inaction under or in
respect of any Transaction Document or any exercise or nonexercise of
any right, remedy or power in respect thereof; (iii) any Insolvency
Proceeding, bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or similar proceedings with
respect to any Originator or the properties or creditors thereof; (iv)
any invalidity or any unenforceability of, or any misrepresentation by
any Originator, irregularity or other defect in, any Transaction
Document or Guaranteed Obligation; (v) any transfer or purported
transfer of any asset or interest in property of any Originator; (vi)
any consolidation or merger of any Originator with or into any other
corporation or entity, or any change whatsoever in the objects, capital
structure, constitution or business of any Originator; (vii) the
occurrence of any default under any Transaction Document or any failure
on the part of any Originator to perform or comply with any term of any
Transaction Document or the failure of the Purchaser or any Indemnified
Party to exercise any right or remedy arising upon such occurrence;
(viii) any law, regulation or order of any jurisdiction affecting any
term of any Guaranteed Obligation or the rights of the Purchaser or any
Indemnified Party with respect thereto; (ix) any suit or other action
brought by any creditors of the any Originator for any reason
whatsoever, including any suit or action in any way attacking or
involving any Transaction Document; (x) any assignment or transfer of
any interest of the Purchaser or any Indemnified Party in or under any
Transaction Document (or any assignment or transfer thereof by any
subsequent assignee or transferee), or (xi) any other circumstance which
might otherwise constitute a defense (other than payment and
performance) available to, or a discharge of, any Originator or any
guarantor). The Purchaser or the Indemnified Party will use reasonable
efforts to provide notice to the Guarantor in connection with a demand
for payment hereunder; provided, however, that the failure or
-------- -------
inability of the Purchaser or any Indemnified Party to give such notice
at any time shall not impair the ability of the Purchaser or any
Indemnified Party to make a claim hereunder, and the Guarantor waives
promptness, protest and diligence with respect to any Guaranteed
Obligation and any requirement that the Purchaser or any Indemnified
Party exhaust any right or take any action against any Originator or
with respect to the Receivables or Related Assets (or any interest
therein) sold or otherwise transferred or purported to be transferred by
the Purchaser or any Indemnified Party, or with respect to any
collateral, any other guarantor or any other Person, prior to making
demand or receiving payment under this Section 5.15.
-16-
<PAGE>
<PAGE>
This is a continuing guaranty and shall remain in full force and
effect until the date which is one year and one day after all Guaranteed
Obligations shall have been paid and performed in full and each of the
Transaction Documents have been terminated. The undertakings of the
Guarantor hereunder shall continue to be effective or be reinstated, as
the case may be, if at any time any payment or other performance of any
of the Guaranteed Obligations is rescinded or must otherwise be returned
upon the insolvency, bankruptcy or reorganization of any Originator or
otherwise, all as though such payment had not been made or such
performance had not occurred. If the Guarantor shall make any payment
or render any other performance due in respect of the Transaction
Documents pursuant to this Section 5.15, until satisfaction in full of
the Guaranteed Obligations, the Guarantor shall not assert any claim as
a result thereof against any Originator, and until satisfaction in full
of the Guaranteed Obligations, the Guarantor shall not assert any right
it might otherwise have to be subrogated to the rights of the Purchaser
or any Indemnified Party in respect of which such payment or performance
shall have been made.
-17-
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of
the date first above written.
MAIL-WELL I CORPORATION,
as initial Servicer and as Guarantor
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
MAIL-WELL TRADE RECEIVABLE
CORPORATION, as Purchaser
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
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<PAGE>
<PAGE>
GRAPHIC ARTS CENTER, INC., as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
MURRAY ENVELOPE CORP.,
as an Originator
By: ___________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
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<PAGE>
<PAGE>
MAIL-WELL COMMERCIAL PRINTING, INC.,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
-20-
<PAGE>
<PAGE>
MAIL-WELL I CORPORATION,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
MAIL-WELL LABEL USA, INC.,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
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<PAGE>
<PAGE>
MAIL-WELL WEST, INC., as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
POSER BUSINESS FORMS INC.,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
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<PAGE>
<PAGE>
WISCO II, LLC, as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
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<PAGE>
<PAGE>
WISCO III, LLC, as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
23 Inverness Way East, Suite 160
Englewood, Colorado 80112
Attention: Robert Meyer
Telephone: (303) 790-8023
Facsimile: (303) 768-7380
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<PAGE>
<PAGE>
EXHIBIT I
CONDITIONS OF PURCHASES
-----------------------
1. Conditions Precedent to Initial Purchase. The initial
----------------------------------------
purchase under this Agreement is subject to the condition precedent that
the Purchaser shall have received each of the following (with copies to
the Administrator), on or before the date of such purchase, each in form
and substance (including the date thereof) satisfactory to the Purchaser
and the Administrator:
(a) The RPA, duly executed by the parties thereto,
together with evidence reasonably satisfactory to the Purchaser
that all conditions precedent to the initial purchase of an
undivided interest thereunder (other than any condition relating
to the effectiveness of the purchase commitment under this
Agreement) shall have been met; and
(b) Such other agreements, instruments, UCC financing
statements, certificates, opinions and other documents as the
Purchaser or the Administrator may reasonably request.
2. Conditions Precedent to All Purchases. Each purchase
-------------------------------------
(including, without limitation, the initial purchase) hereunder is
subject to the satisfaction of each of the following conditions:
(a) The representations and warranties of each
Originator and the Guarantor hereunder shall be true and correct
on the date of such purchase (except to the extent such
representations and warranties relate solely to an earlier date
and then as of such earlier date), with the same effect as if then
made, and each Originator and the Guarantor shall have performed
all obligations to be performed by it hereunder on or prior to
such date; and
(b) On or prior to the date of such purchase, such
Originator shall have delivered to the Servicer (or one of its
sub-servicers) the Contract Documents, in each case relating to
the Receivables to be sold on such date.
3. Certification as to Representations and Warranties. Each
--------------------------------------------------
Originator, by accepting the Purchase Price paid for each purchase of
Receivables and Related Assets on any day, shall be deemed to have
certified that its representations and warranties contained in Exhibit
-------
II are true and correct on and as of such day, with the same effect as
- --
though made on and as of such day.
I-1
<PAGE>
<PAGE>
4. Effect of Payment of Purchase Price. Upon the payment of
-----------------------------------
the Purchase Price for any purchase of Receivables and Related Assets,
title to such Receivables and Related Assets shall vest in the
Purchaser, whether or not the conditions precedent to such purchase were
in fact satisfied; provided, that the Purchaser shall not be deemed to
--------
have waived any claim it may have under this Agreement for the failure
by any Originator in fact to satisfy any such condition precedent to be
satisfied by it.
I-2
<PAGE>
<PAGE>
EXHIBIT II
REPRESENTATIONS AND WARRANTIES
------------------------------
In order to induce the Purchaser to enter into this Agreement and
to make purchases hereunder, each Originator (which, for purposes of
paragraphs (a), (b), (c), (d), (e), (f), (i), (k), (r), (u), (w), (x),
(y), and (z), shall include the Guarantor) hereby represents and
warrants as follows:
(a) Organization and Good Standing. Such Originator
------------------------------
is a corporation or limited liability company duly organized,
validly existing and in good standing under the laws of its state
of formation, and is duly qualified to do business, and is in good
standing, in the jurisdiction where its principal place of
business and chief executive office are located and in every other
jurisdiction where the nature of its business requires it to be so
qualified.
(b) Power and Authority; Due Authorization; No
------------------------------------------
Violation. The execution, delivery and performance by such
---------
Originator of this Agreement and the other Transaction Documents
to which it is a party, including, without limitation, such
Originator's use of the proceeds of purchases, (i) are within such
Originator's powers, (ii) have been duly authorized by all
necessary action, (iii) do not contravene or result in a default
under or conflict with (1) such Originator's constating documents,
(2) any law, rule or regulation applicable to such Originator,
except to the extent such contravention, default or conflict will
not have a Material Adverse Effect, (3) any contractual
restriction binding on or affecting such Originator or its
property or (4) any order, writ, judgment, award, injunction or
decree binding on or affecting such Originator or its property and
(iv) do not result in or require the creation of any Adverse Claim
upon or with respect to any of its properties. This Agreement and
the other Transaction Documents to which it is a party have been
duly executed and delivered by such Originator.
(c) Government Approvals. No authorization or
--------------------
approval or other action by, and no notice to or filing with, any
Governmental Authority or other Person is required for the due
execution, delivery and performance by such Originator of this
Agreement or any other Transaction Document to which it is a
party.
(d) Validity and Binding Nature. Each of this
---------------------------
Agreement and the other Transaction Documents to which it is a
party constitutes the legal, valid and binding obligation of such
Originator enforceable against such Originator in accordance with
its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by general
principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
II-1
<PAGE>
<PAGE>
(e) Financial Condition. The balance sheets of Mail-
-------------------
Well, Inc. and its subsidiaries as at December 31, 1998, and the
related statements of income and retained earnings for the fiscal
year then ended, copies of which have been furnished to the
Purchaser and the Administrator, fairly represent the financial
condition thereof as at such date and the results of operations
thereof for the period ended on such date, all in accordance with
generally accepted accounting principles consistently applied, and
since December 31, 1998 there has been no material adverse change
in the business, operations, property or financial or other
condition or operations of the Seller, or such Originator the
ability of the Seller, or such Originator to perform its
obligations under this Agreement or the other Transaction
Documents or the collectibility of the Pool Receivables, or which
affects the legality, validity or enforceability of the Agreement
or the other Transaction Documents.
(f) No Proceedings. There is no pending or threatened
--------------
action or proceeding affecting such Originator or any of its
Affiliates before any Governmental Authority or arbitrator which
could materially adversely affect the business, operations,
property, financial or other condition or operations of such
Originator or any of its Affiliates, the ability of such
Originator to perform its obligations under this Agreement or the
other Transaction Documents or the collectibility of the Pool
Receivables, or which affects or purports to affect the legality,
validity or enforceability of this Agreement or the other
Transaction Documents.
(g) Use of Proceeds. No proceeds of any purchase will
---------------
be used to acquire more than 5% of any class of any security in
any transaction which is subject to Sections 13 and 14 of the
Exchange Act, except for a nonhostile, invited Acquisition of a
Person (approved by the board of directors (or other body
exercising similar authority) of such Person) by such Originator
or any Subsidiary thereof, which does not violate any laws, rules
or regulations applicable thereto or any other provision of the
Transaction Documents.
(h) Quality of Title. Immediately prior to its sale
----------------
to the Purchaser under this Agreement, such Originator is the
legal and beneficial owner of each of the Receivables and Related
Assets sold hereunder free and clear of any Adverse Claim; and
upon each purchase hereunder, the Purchaser shall acquire a valid
and enforceable perfected ownership interest in such Receivables
and Related Assets, free and clear of any Adverse Claim. No
effective financing statement or other instrument similar in
effect covering any such Receivable or Related Asset is on file in
any recording office, except those filed in favor of the Purchaser
pursuant to this Agreement and in favor of any of the
Securitization Parties pursuant to the Transaction Documents and
except those which are both (i) indirectly covering any Pool
Receivable or the Related Security as proceeds which will be
released or terminated within 60 days after the Effective Date and
(ii) listed on Annex E to the RPA.
-------
II-2
<PAGE>
<PAGE>
(i) Accuracy of Information. Each certificate,
-----------------------
exhibit, financial statement, document, book, record, report or
other information furnished or to be furnished at any time by or
on behalf of such Originator to the Purchaser or any
Securitization Party in connection with this Agreement is or will
be accurate in all material respects as of its date or as of the
date so furnished, and no such item contains or will contain any
untrue statement of a material fact or omits or will omit to state
a material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they
were made, not misleading.
(j) Offices. The principal place of business and
-------
chief executive office (as such terms are used in the UCC) of such
Originator and the office where such Originator keeps its records
concerning the Receivables are located at the address referred to
in paragraph (b) of Exhibit III.
(k) Governmental Authority. Such Originator is not in
----------------------
violation of any order of any court, arbitrator or Governmental
Authority which would have a Material Adverse Effect.
(l) Lock-Box Banks and Collection Account Bank. The
------------------------------------------
names and addresses of all the Lock-Box Banks and Collection
Account Bank, together with the account numbers of the related
Lock-Box Accounts or Collection Account, as applicable, are
specified in Schedule I to the RPA (or at such other Lock-Box
----------
Banks or Collection Account Bank, as applicable, and/or with such
other Lock-Box Accounts or Collection Account, as applicable, as
have been notified to the Administrator in accordance with the
Agreement) and the Collection Account is subject to the Collection
Account Agreement and all Lock-Box Accounts are subject to Lock-
Box Agreements, duly executed by the parties thereto (in the case
of certain Lock-Box Banks, within 30 days after the date hereof).
(m) Federal Reserve Regulations. No proceeds of any
---------------------------
purchase will be used for any purpose that violates any applicable
law, rule or regulation, including, without limitation,
Regulations T, U, and X of the Federal Reserve Board.
(n) Eligible Receivables. Each Pool Receivable
--------------------
created by such Originator, as of the date it was sold to the
Purchaser hereunder, will be an Eligible Receivable unless
otherwise specified to the Purchaser and Servicer on such date.
(o) No Purchase and Sale Termination Event. No event
--------------------------------------
has occurred and is continuing, or would result from a purchase by
the Purchaser hereunder or from the application of the proceeds
therefrom, which constitutes a Purchase and Sale Termination
Event.
II-3
<PAGE>
<PAGE>
(p) Accounting as Sales. Such Originator has
-------------------
accounted for each sale of Receivables and Related Assets
hereunder in its books and financial statements as a sale,
consistent with generally accepted accounting principles.
(q) Compliance With Credit and Collection Policy.
--------------------------------------------
Such Originator has complied in all material respects with the
Credit and Collection Policy in effect at the time with regard to
each Receivable.
(r) Compliance with Transaction Documents. Such
-------------------------------------
Originator has complied in all material respects with all of the
terms, covenants and agreements contained in this Agreement and
the other Transaction Documents and applicable to it.
(s) Trade Name. Such Originator's complete corporate
----------
name is set forth in the preamble to this Agreement, and such
Originator does not use and has not during the last five years
used any other corporate name, trade name, doing business name or
fictitious name, except for names first used after the date of
this Agreement and set forth in a notice delivered to the
Administrator pursuant to paragraph (b)(iii) of Exhibit III.
(t) Intentionally Omitted.
(u) Taxes. Such Originator has filed all material
-----
federal and other tax returns and reports required by law to have
been filed by it and has paid or made allowances for all material
taxes, or made allowances for, and governmental charges thereby
shown to be owing.
(v) Bulk Sales Act. No transaction contemplated by
--------------
this Agreement or any other Transaction Document requires
compliance with, or will be subject to avoidance under, any bulk
sales act or similar law.
(w) Investment Company Act. Such Originator is not,
----------------------
and is not controlled by, an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a
"holding company," or a "subsidiary company" of a "holding
company," or an affiliate of a "holding company," or a "subsidiary
company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
(x) Pension Plans. During the preceding twelve
-------------
months, no steps have been taken to terminate any Pension Plan,
and no contribution failure has occurred with respect to any
Pension Plan, which has given rise to a lien under section 302(f)
of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which could result in
the incurrence by such Originator of any material liability, fine
or penalty. Such Originator has no material unaccrued liability
with respect to any post-retirement benefit under a "welfare plan"
as defined in Section 3(1) of ERISA, other than liability for
continuation coverage described in Part 6 of title I of ERISA.
II-4
<PAGE>
<PAGE>
(y) Year 2000 Compliance. Any reprogramming required
--------------------
to permit the proper functioning, in and following the year 2000,
of the computer application systems used to conduct, operate and
manage the business, assets and operations of such Originator, as
so reprogrammed, will be completed by September 30, 1999, unless
failure to complete such reprogramming could not reasonably be
expected to have a Material Adverse Effect. With respect to any
computer hardware, such Originator: (i) has initiated a review and
assessment of all areas within such Originator's business and
operations, (ii) has developed a plan and timeline for addressing
any problems which would cause it not to be Year 2000 Compliant on
a timely basis, (iii) to date, has implemented such plan in
accordance with such timetable and (iv) believes, based upon the
foregoing, that the Seller will be Year 2000 Compliant prior to
January 1, 2000. There are no additional costs to such Originator
relating to becoming Year 2000 Compliant that will result in a
Purchase and Sale Termination Event or have a Material Adverse
Effect. The computer and management information systems used to
conduct, operate and manage the business, assets and operations of
such Originator are and with ordinary course upgrading and
maintenance (and with any additions to accommodate growth), will
continue for the term of this Agreement to be, sufficient to
permit such Originator to conduct its business without having a
Material Adverse Effect.
(z) Insolvency. (i) The fair value of the property of
----------
such Originator is greater than the total amount of liabilities,
including contingent liabilities, of such Originator, (ii) the
present fair salable value of the assets of such Originator is not
less than the amount that will be required to pay all probable
liabilities of such Originator on its debts as they become
absolute and matured, (iii) such Originator does not intend to,
and does not believe that it will, incur debts or liabilities
beyond such Originator's abilities to pay such debts and
liabilities as they mature, (iv) such Originator is not engaged in
a business or a transaction, and is not about to engage in a
business or a transaction, for which such Originator's property
would constitute unreasonably small capital and (v) the transfer
of the Receivables and Related Assets by such Originator will not
render such Originator insolvent.
(aa) Separate Existence. The Facts and Assumptions
------------------
with respect to such Originator are true and correct.
II-5
<PAGE>
<PAGE>
EXHIBIT III
COVENANTS
---------
Until the later of the Purchase and Sale Termination Date and the
Final Payout Date:
(a) Compliance with Laws, Etc. Each Originator and
--------------------------
the Guarantor shall comply in all material respects with all
applicable laws, rules, regulations and orders, and preserve and
maintain its existence, rights, franchises, qualifications, and
privileges except to the extent that the failure so to comply with
such laws, rules and regulations or the failure so to preserve and
maintain such existence, rights, franchises, qualifications, and
privileges would not have a Material Adverse Effect.
(b) Offices, Records and Books of Account; Etc. Each
------------------------------------------
Originator (i) shall keep its principal place of business and
chief executive office (as such terms are used in the UCC) at the
address of such Originator set forth under its name on the
signature page to this Agreement and the office where it keeps its
records concerning the Pool Receivables created by such Originator
at such address or the location for such Originator, if any,
specified in Schedule III to the RPA or, upon at least 60 days'
prior written notice of a proposed change to the Purchaser and
Administrator, at any other address or locations in jurisdictions
where all actions reasonably requested by the Purchaser or the
Administrator to protect and perfect the interests of the
Purchaser and the Securitization Parties in the Receivables Pool
and Related Assets have been taken and completed and (ii) shall
provide the Purchaser and Administrator with at least 60 days'
written notice prior to making any change in such Originator's
name or making any other change in such Originator's identity or
corporate structure (including, without limitation, a merger)
which could render any UCC financing statement filed in connection
with this Agreement "seriously misleading" as such term is used in
the UCC; each notice to the Purchaser and Administrator pursuant
to this sentence shall set forth the applicable change and the
effective date thereof. Each Originator also will maintain and
implement administrative and operating procedures (including,
without limitation, an ability to recreate records evidencing the
Pool Receivables and Related Asset created by such Originator in
the event of the destruction of the originals thereof), and keep
and maintain all documents, books, records, computer tapes and
disks and other information reasonably necessary or advisable for
the collection of such Pool Receivables (including, without
limitation, records adequate to permit the daily identification of
such Pool Receivable and all Collections of and adjustments to
such Pool Receivable created by such Originator).
(c) Performance and Compliance with Receivables and
-----------------------------------------------
Credit and Collection Policy. Each Originator shall, at its
----------------------------
expense, timely and fully perform and comply with all material
provisions, covenants and other promises required to be observed
by it under the Pool Receivables, and timely and fully comply in
all material respects with the Credit and Collection Policy with
regard to each Pool Receivable created by such Originator.
III-1
<PAGE>
<PAGE>
(d) Ownership Interest, Etc. Each Originator shall,
-----------------------
at its expense, take all action necessary or desirable to
establish and maintain in favor of the Purchaser, a valid and
enforceable perfected ownership interest in the Receivables Pool
and the Related Assets, free and clear of any Adverse Claim,
including, without limitation, taking such action to perfect or
more fully evidence the interest of the Purchaser under this
Agreement as the Purchaser or the Securitization Parties may
request.
(e) Sales, Liens, Etc. No Originator shall sell,
------------------
assign (by operation of law or otherwise) or otherwise dispose of,
or create or suffer to exist any Adverse Claim upon or with
respect to, any or all of its right, title or interest in, to or
under, any Pool Receivable or Related Asset, except to the
Purchaser hereunder, or assign any right to receive income in
respect of any items contemplated by this paragraph (e).
-------------
(f) Extension or Amendment of Receivables. Except as
-------------------------------------
provided in the Agreement or the Servicing Agreement, no
Originator shall extend the maturity or adjust the Outstanding
Principal Balance or otherwise amend, modify or waive the terms of
any Pool Receivable.
(g) Change in Business or Credit and Collection
-------------------------------------------
Policy. No Originator nor the Guarantor shall make any material
------
change in the character of its business and no Originator shall
make any material change in the Credit and Collection Policy, or
any change in the Credit and Collection Policy that would
adversely affect the collectibility or enforceability of any Pool
Receivable or the ability of any Originator to perform its
obligations, if any, under any Pool Receivable or under this
Agreement or the other Transaction Documents to which it is a
party, in each case, without the prior written consent of the
Purchaser and the Administrator.
(h) Audits. Each Originator and the Guarantor shall,
------
from time to time during regular business hours as reasonably
requested by the Purchaser or the Administrator, permit the
Purchaser and/or the Administrator, or its agents or
representatives, (i) to examine and make copies of and abstracts
from all books, records and documents (including, without
limitation, computer tapes and disks) in the possession or under
the control of such Originator or Guarantor relating to the
Receivables Pool and Related Assets, and (ii) to visit the offices
and properties of such Originator or Guarantor for the purpose of
examining such materials described in clause (i) above, and to
discuss matters relating to the Receivables Pool and Related
Assets with any of the officers, employees, agents or contractors
of such Originator or Guarantor having knowledge of such matters,
and shall permit and cooperate with an annual (or more frequently
if reasonably required by the Purchaser or Administrator) audit
(conducted at such Originator's or Guarantor's expense) of such
Originator or Guarantor by the Purchaser or Administrator and the
independent accountants selected thereby.
III-2
<PAGE>
<PAGE>
(i) Lock Box Accounts and Collection Account.
----------------------------------------
(i) No Originator shall add or terminate any bank as a
Lock-Box Bank or any account as a Lock-Box Account from those
listed in Schedule I to the RPA, or make any change in its
----------
instructions to Obligors regarding payments to be made to the
Seller or payments to be made to any Lock-Box Account (or related
post office box), unless the Purchaser and the Administrator
shall have consented thereto in writing and the Purchaser and the
Administrator shall have received copies of all agreements and
documents (including, without limitation, Lock-Box Agreements)
that it may request in connection therewith.
(ii) Each Originator shall (A) instruct all Obligors to
make payments of all Receivables created by such Originator to
one or more Lock-Box Accounts or to post office boxes to which
only Lock-Box Banks have access (and shall instruct the Lock-Box
Banks to cause all items and amounts relating to such Receivables
received in such post office boxes to be removed and deposited
into a Lock-Box Account on a daily basis), and (B) deposit, or
cause to be deposited, any Collections (other than those described
in clause (b) of the definition thereof) of Pool Receivables
received by it into Lock-Box Accounts not later than two Business
Days after receipt thereof. Each Lock-Box Account shall at all
times be subject to a Lock-Box Agreement.
(iii) No Originator shall add or terminate any bank as a
Collection Account Bank or any account as a Collection Account
from those listed in Schedule I to the Agreement, unless the
----------
Purchaser and the Administrator shall have consented thereto
in writing and the Purchaser and the Administrator shall have
received copies of all agreements and documents (including,
without limitation, Collection Account Agreements) that it may
request in connection therewith.
(iv) Each Collection Account shall at all times be
subject to a Collection Agreement. No Originator will deposit
or otherwise credit, or cause or permit to be so deposited or
credited, to any Collection Account cash or cash proceeds other
than Collections.
(j) Marking of Records. At its expense, each
------------------
Originator shall mark (a) its master data processing records and
storage cabinets relating to the Pool Receivables, including with
a legend evidencing that the ownership interests in such Pool
Receivables have been sold in accordance with this Agreement and
(b) at the request of the Purchaser or the Administrator following
the occurrence of a Purchase and Sale Termination Event, each Pool
Receivable with a legend, in form satisfactory to the Purchaser
and the Administrator, to the effect that such Pool Receivable
have been sold in accordance with this Agreement.
(k) Separate Corporate Existence of the Purchaser.
---------------------------------------------
Each Originator and the Guarantor hereby acknowledges that the
Purchaser and the Securitization Parties are
III-3
<PAGE>
<PAGE>
entering into the transactions contemplated by the Transaction
Documents in reliance upon the Purchaser's identity as a legal
entity separate from the Servicer, the Guarantor and each
Originator. Therefore, from and after the date hereof, each
Originator and the Guarantor shall take all steps to continue the
Purchaser's identity as such a separate legal entity and to make
it apparent to third Persons that the Purchaser is an entity with
assets and liabilities distinct from those of the Servicer, the
Guarantor, any Originator or any other Person, and not a division
of the Servicer, the Guarantor, any Originator or any other
Person. Without limiting the generality of the foregoing, no
Originator nor the Guarantor shall cause, or take any action, or
omit to take any action, that would cause the Purchaser to violate
any of the provisions contained in paragraph (k) of Exhibit IV to
the RPA or would be inconsistent with the Facts and Assumptions.
(l) Mergers, Acquisitions, Sales, etc. Any Person (a)
---------------------------------
into which any Originator or the Guarantor may be merged or
consolidated, (b) which may result from any merger or
consolidation to which any Originator or the Guarantor shall be a
party (if such Originator or Guarantor is not the surviving
entity), or (c) which may succeed to the properties and assets of
any Originator or the Guarantor substantially as a whole, shall be
the successor to such Originator or Guarantor under this Agreement
without further action on the part of any of the parties to this
Agreement; provided, however, that no Originator nor the
-------- -------
Guarantor shall be a party to any merger, consolidation or
Acquisition with or of another Person (or substantially all of its
properties or assets) unless (i) immediately after giving effect
to such transaction, no Purchase and Sale Termination Event, and
no Unmatured Purchase and Sale Termination Event shall have
happened and be continuing, (ii) such Originator or Guarantor
shall have delivered to the Administrator (for the benefit of each
Securitization Party) an officer's certificate (and, if such
Originator or Guarantor is not the surviving entity, an Opinion of
Counsel) stating that such consolidation, merger or succession and
such agreement of assumption comply with this paragraph (l), and
(iii) such Originator or Guarantor shall have delivered to the
Administrator (for the benefit of each Securitization Party) an
officer's certificate (and, if such Originator or Guarantor is not
the surviving entity , an Opinion of Counsel) either (A) stating
that all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary
fully to preserve and protect the interest of each Securitization
Party in the Pool Receivables, and reciting the details of such
filings, or (B) stating that no such action shall be necessary to
preserve and protect such interest. Notwithstanding anything
herein to the contrary, no Originator nor the Guarantor shall
consummate any transaction of a type referred to in clauses (a),
(b) or (c) above without the prior written consent of the
Administrator (except if one Originator is merging or
consolidating with another Originator) and unless at or prior
thereto the foregoing agreement of assumption shall have been
executed and the conditions described in clauses (i), (ii) and
(iii) shall have been met to the reasonable satisfaction of the
Administrator.
III-4
<PAGE>
<PAGE>
(m) ERISA Matters. Each Originator and the Guarantor
-------------
shall notify the Purchaser and the Administrator as soon as is
practicable and in any event not later than two Business Days
after (i) the institution of any steps by such Originator or
Guarantor or any other Person to terminate any Pension Plan which
could have a Material Adverse Effect, (ii) the failure to make a
required contribution to any Pension Plan if such failure is
sufficient to give rise to a lien under section 302(f) of ERISA,
(iii) the taking of any action with respect to a Pension Plan
which could result in the requirement that such Originator or
Guarantor furnish a bond or other security to the PBGC or such
Pension Plan or (iv) the occurrence of any event with respect to
any Pension Plan which could have a Material Adverse Effect, or
any material increase in the contingent liability of such
Originator or Guarantor with respect to any post-retirement
"welfare plan" (as defined in Section 3(1) of ERISA) benefit.
(n) Reporting Requirements. Each Originator and the
----------------------
Guarantor will provide to the Purchaser and the Administrator (in
multiple copies, if requested by the Administrator) the following:
(i) as soon as available and in any event
within 45 days after the end of the first three quarters of
each fiscal year (beginning with the quarter ended June 30,
1999) of Mail-Well, Inc., balance sheets of Mail-Well, Inc.
and its subsidiaries as of the end of such quarter and
statements of income and retained earnings thereof for the
period commencing at the beginning of such previous fiscal
year and ending with the end of such quarter, certified by
the treasurer or assistant treasurer thereof (as
applicable);
(ii) as soon as available and in any event
within 90 days after the end of each fiscal year (beginning
with the year ended December 31, 1999) of Mail-Well, Inc., a
copy of the annual report for such year for Mail-Well, Inc.
and its subsidiaries containing financial statements for
such year audited by nationally-recognized independent
certified public accountants;
(iii) as soon as possible and in any event
within five days after the occurrence of each Purchase and
Sale Termination Event or event which, with the giving of
notice or lapse of time, or both, would constitute a
Purchase and Sale Termination Event, a statement of the
treasurer or assistant treasurer of such Originator or
Guarantor setting forth details of such Purchase and Sale
Termination Event or event and the action that such
Originator or Guarantor has taken and proposes to take with
respect thereto;
(iv) promptly after the sending or filing
thereof, copies of all reports that may be material to the
transactions contemplated hereby that such Originator or
Guarantor sends to any of its security holders, and copies
of all reports and registration statements that such
Originator or Guarantor or any
III-5
<PAGE>
<PAGE>
subsidiary files with the Securities and Exchange Commission
or any national securities exchange;
(v) promptly after the filing by such
Originator or Guarantor or receiving notice or knowledge
thereof, copies of all reports and notices that such
Originator or Guarantor or any Affiliate files under ERISA
with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or that
such Originator or Guarantor or any Affiliate receives from
any of the foregoing or from any multiemployer plan (within
the meaning of Section 4001(a)(3) of ERISA) to which such
Originator or Guarantor or any Affiliate is or was, within
the preceding five years, a contributing employer, in each
case in respect of the assessment of withdrawal liability or
an event or condition which could result in the imposition
of liability on such Originator or Guarantor and/or any such
Affiliate in excess of $500,000 or which, in the aggregate,
could have a Material Adverse Effect;
(vi) at least 60 days prior to any change in
such Originator's name or any other change requiring the
amendment of UCC financing statements, a notice setting
forth such changes and the effective date thereof;
(vii) such other information respecting the
Receivables or the condition or operations, financial or
otherwise, of such Originator or Guarantor or any of its
Affiliates as the Purchaser or the Administrator may from
time to time reasonably request;
(viii) promptly after such Originator or
Guarantor obtains knowledge thereof, notice of any (a)
litigation, investigation or proceeding which may exist at
any time between such Originator or Guarantor and any
Governmental Authority which, if not cured or if adversely
determined, as the case may be, could have a Material
Adverse Effect; or (b) litigation or proceeding affecting
(i) such Originator or Guarantor which could have a Material
Adverse Effect which is not covered by insurance or in which
injunctive or similar relief is sought or (c) litigation or
proceedings relating to any Transaction Document;
(ix) promptly after the occurrence thereof,
notice of a material adverse change in the business,
operations, property or financial or other condition of such
Originator or Guarantor.
(o) Year 2000 Compliance. Each Originator and the
--------------------
Guarantor shall promptly notify the Administrator in the event
such Originator or Guarantor discovers or determines that any
computer application (including those of its suppliers or vendors)
that is material to its business and operations will not be Year
2000 Compliant on a timely basis, except to the extent that any
such failure to comply could not reasonably be
III-6
<PAGE>
<PAGE>
expected to have a Material Adverse Effect and could not
reasonably be expected to cause a Termination Event.
(p) Delivery of Credit and Collection Policy. Each
----------------------------------------
Originator shall deliver to the Purchaser and the Administrator a
document that sets forth the Credit and Collection Policy, which
document shall be reasonably satisfactory, in form and substance,
to the Purchaser and the Administrator.
III-7
<PAGE>
<PAGE>
EXHIBIT IV
PURCHASE AND SALE TERMINATION EVENTS
------------------------------------
Each of the following events or occurrences described in this
Exhibit IV shall constitute a "Purchase and Sale Termination Event":
- ---------- -----------------------------------
(a) A Termination Event of the type described in Exhibit
V to the RPA shall have occurred; or
(b) Any Originator or the Guarantor shall fail to make
any payment required under this Agreement or under any other
Transaction Document, and such failure shall remain unremedied for
more than two Business Days after any Originator or the Guarantor
had actual knowledge or notice thereof, of should have known,
after the exercise of reasonable diligence thereof; or
(c) Any representation or warranty made or deemed to be
made by any Originator or the Guarantor (or any of its officers)
under or in connection with this Agreement or any other
Transaction Document or any other writing or certificate delivered
by any Originator or the Guarantor pursuant to such Transaction
Document shall prove to have been incorrect or untrue in any
material respect when made or deemed made or delivered and shall
remain incorrect or untrue for more than 10 days after any
Originator or the Guarantor had actual knowledge or notice
thereof, or should have known, after the exercise of reasonable
diligence, thereof; or
(d) Any Originator or the Guarantor shall fail in any
material respect to perform or observe any other term, covenant or
agreement contained in this Agreement or any other Transaction
Document on its part to be performed or observed and any such
failure shall remain unremedied for ten days after any Originator
or the Guarantor had actual knowledge or notice thereof, or should
have known, after the exercise of reasonable diligence, thereof;
or
(e) This Agreement shall for any reason (other than
pursuant to the terms hereof) cease to create in favor of the
Purchaser a valid and enforceable perfected ownership interest in
each Pool Receivable and Related Asset in favor of the Purchaser
free and clear of any Adverse Claim; or
(f) Any Originator or the Guarantor or any Affiliate
thereof shall generally not pay its debts as such debts become
due, or shall admit in writing its inability to pay its debts
generally, or shall make a general assignment for the benefit of
creditors; or any proceeding shall be instituted by or against any
Originator or the Guarantor or any Affiliate thereof seeking to
adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of
IV-1
<PAGE>
<PAGE>
it or its debts under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee,
custodian or other similar official for it or for any substantial
part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 30
days, or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against, or
the appointment of a receiver, trustee, custodian or other similar
official for, it or for any substantial part of its property)
shall occur; or any Originator or the Guarantor or any Affiliate
thereof shall take any corporate action to authorize any of the
actions set forth above in this paragraph (g).
IV-2
<PAGE>
<PAGE>
ANNEX A
DEFINITIONS
-----------
As used in the Agreement (including Exhibits and Annexes), the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined). Unless otherwise indicated, all Section, Annex, Exhibit and
Schedule references in this Annex are Sections of and Annexes, Exhibits
and Schedules to the Agreement.
"Agreement" means this Purchase and Sale Agreement, amended,
---------
supplemented or otherwise modified from time to time in accordance with
the Transaction Documents.
"Cost Rate" means, for any Originator on any Servicer Report
---------
Date, the percentage established on such Servicer Report Date as such by
agreement of such Originator and the Purchaser; provided, however,
-------- -------
that if such Originator and the Purchaser are unable to so agree as to
the Cost Rate applicable to any Servicer Report Date, the Cost Rate
shall equal the product of (i) the quotient of the Average Maturity
divided by 180 multiplied by (ii) the sum of (a) the Eurodollar Rate on
such Servicer Report Date plus (b) 1.125% plus (c) the Servicing Fee
Rate on such Servicer Report Date plus (d) the amount, expressed as a
per annum percentage rate, of any fees, costs and expenses incurred by
the Purchaser during the month immediately preceding such Servicer
Report Date (and not accounted for in clauses (a), (b) or (c) above),
including, without limitation, reserve costs, tax payments, commitment
fees and indemnity obligations of the Purchaser for which the Purchaser
is not indemnified pursuant to this Agreement; provided, however,
-------- -------
that, for purposes of minimizing fluctuations in the rate calculated as
the Cost Rate, the Purchaser may allocate and spread any unscheduled or
unaccruable costs and expenses of the Purchaser over several Servicer
Reporting Dates, subject to the requirement that such allocation be
reasonably calculated to allow the Purchaser to recover such costs and
expenses over a reasonable period of time.
"Discount" means, for any Receivable of any Originator, the
--------
product of the Outstanding Principal Balance of such Receivable
multiplied by the sum of the Loss Rate plus the Cost Rate for such
Originator as measured on the preceding Servicer Report Date.
"Guaranteed Obligations" has the meaning set forth in
----------------------
Section 5.15 of the Agreement.
"Guarantor" has the meaning set forth in the preamble to the
--------- --------
Agreement.
"Joinder Agreement" has the meaning set forth in
-----------------
Section 5.13(b) of the Agreement.
- ---------------
"Loss Rate" means, for any Originator on any Servicer Report
---------
Date, the percentage established on such Servicer Report Date as such by
agreement of such Originator and the Purchaser; provided, however,
-------- -------
that if such Originator and the Purchaser are unable to so agree as to
the Loss Rate applicable to any Servicer Report Date, the Loss Rate
shall mean the ratio,
Annex A-1
<PAGE>
<PAGE>
expressed as a percentage, of (i) the losses (i.e., write-offs to the
----
bad debt reserve or other write-offs consistent with the Credit and
Collection Policy, in each case, net of recoveries) recognized for all
Receivables generated by such Originator during the six (6) preceding
Monthly Periods divided by (ii) the Collections on all Receivables
generated by such Originator received during such six (6)preceding
Monthly Periods.
"Officer's Certificate" has the meaning set forth in the
---------------------
Servicing Agreement.
"Opinion of Counsel" has the meaning set forth in the Servicing
------------------
Agreement.
"Originator" has the meaning set forth in the preamble to the
---------- --------
Agreement.
"Originator Note" has the meaning set forth in Section 1.5(b)
--------------- --------------
of the Agreement.
"Payment Day" has the meaning set forth in Section 1.4(a) of
----------- --------------
the Agreement.
"Pension Plan" means a "pension plan", as such term is defined
------------
in section 3(2) of ERISA, which is subject to title IV of ERISA (other
than a multiemployer plan as defined in section 4001(a)(3) of ERISA),
and to which any Originator, the Servicer, the Guarantor or the
Purchaser or any corporation, trade or business that is, along with any
Originator, the Servicer, the Guarantor or the Purchaser, a member of a
controlled group of corporations or a controlled group of trades or
businesses, as described in sections 414(b) and 414(c), respectively, of
the Internal Revenue Code of 1986, as amended, or section 4001 of ERISA
may have any liability, including any liability by reason of having been
a substantial employer within the meaning of section 4063 of ERISA at
any time during the preceding five years, or by reason of being deemed
to be a contributing sponsor under section 4069 of ERISA.
"Purchase and Sale Termination Date" means the date determined
----------------------------------
in accordance with Section 2.3 of the Agreement.
-----------
"Purchase Price" has the meaning set forth in Section 1.3 of
-------------- -----------
the Agreement.
"Purchaser" has the meaning set forth in the preamble to the
--------- --------
Agreement.
"Related Assets" has the meaning set forth in Section 1.1.
-------------- -----------
"Repurchase Amount" has the meaning set forth in Section 1.7
----------------- -----------
of the Agreement.
"RPA" has the meaning set forth in recital A to the Agreement.
--- ---------
"Unmatured Purchase and Sale Termination Event" means any event
---------------------------------------------
or condition which but for the giving of notice or lapse of time, or
both, would constitute a Purchase and Sale Termination Event.
Annex A-2
<PAGE>
<PAGE>
ANNEX B
FORM OF ORIGINATOR NOTE
___ ____, 199__
FOR VALUE RECEIVED, the undersigned, MAIL-WELL TRADE RECEIVABLES
CORPORATION, a Nevada corporation (the "Purchaser"), promises to pay
---------
to [NAME OF ORIGINATOR], a __________ corporation (the "Originator"),
----------
on the terms and subject to the conditions set forth herein and in the
Purchase and Sale Agreement referred to below, the aggregate unpaid
Purchase Price of all Receivables and Related Assets purchased and to be
purchased by the Purchaser from the Originator pursuant to the Purchase
and Sale Agreement (subject to adjustment pursuant to Section 1.7 of
such Purchase and Sale Agreement). Such amount as shown in the records
of the Servicer will be rebuttable presumptive evidence of the principal
amount owing under this Note.
1. Purchase and Sale Agreement. This Note is an "Originator
---------------------------
Note" described in, and is subject to the terms and conditions set forth
in, the Purchase and Sale Agreement, dated as of July 1, 1999 (as
amended, supplemented, or otherwise modified from time to time, the
"Purchase and Sale Agreement"), among the Purchaser, Mail-Well I
---------------------------
Corporation, as initial servicer and as guarantor, and the originators
from time to time party thereto, including the Originator. Reference
is hereby made to the Purchase and Sale Agreement for a statement of
certain other rights and obligations of the Purchaser and the
Originator. In the case of any conflict between the terms of this Note
and the terms of the Purchase and Sale Agreement, the terms of the
Purchase and Sale Agreement shall control.
2. Definitions. Capitalized terms used (but not defined)
-----------
herein have the meanings ascribed thereto in the Purchase and Sale
Agreement or in the RPA (as defined in the Purchase and Sale Agreement).
In addition, as used herein, the following terms have the following
meanings:
"Final Maturity Date" means the date that falls one year
-------------------
and one day after the later of (x) the Purchase and Sale
Termination Date and (y) the Final Payout Date.
"Junior Liabilities" means all obligations of the
------------------
Purchaser to the Originator under this Note.
"Senior Agent" means the Administrator.
------------
"Senior Interests" means (a) the undivided percentage
----------------
ownership interests acquired by the Senior Interest Holders
pursuant to the RPA and (b) all obligations of the Purchaser to
the Senior Interest Holders, howsoever created, arising or
Annex B-1
<PAGE>
<PAGE>
evidenced, whether direct or indirect, absolute or contingent, now
or hereafter existing, or due or to become due on or before the
Final Maturity Date.
"Senior Interest Holders" means, collectively, the Senior
-----------------------
Agent, the Issuer, the Alternate Purchasers and the other
Indemnified Parties.
"Subordination Provisions" means, collectively, clauses
------------------------ -------
(a) through (k) of Section 7 hereof.
--- --- ---------
3. Interest. Subject to the Subordination Provisions, the
--------
Purchaser promises to pay interest on the aggregate unpaid principal
amount of this Note outstanding on each day at a variable rate per
---
annum equal to the Alternate Rate, as determined by the Servicer.
- -----
4. Interest Payment Dates. Subject to the Subordination
----------------------
Provisions, the Purchaser shall pay accrued interest on this Note on
each Settlement Date and on the Final Maturity Date (or, if any such day
is not a Business Day, the next succeeding Business Day). The Purchaser
also shall pay accrued interest on the principal amount of each
prepayment hereof on the date of each such prepayment.
5. Basis of Computation. Interest accrued hereunder shall be
--------------------
computed for the actual number of days elapsed on the basis of a 360-day
year.
6. Principal Payment Dates. Subject to the Subordination
-----------------------
Provisions, any unpaid principal of this Note shall be paid on the Final
Maturity Date (or, if such date is not a Business Day, the next
succeeding Business Day). Subject to the Subordination Provisions, the
principal amount of and accrued interest on this Note may be prepaid on
any Business Day without premium or penalty.
7. Subordination Provisions. The Purchaser covenants and
------------------------
agrees, and the Originator, by its acceptance of this Note, likewise
covenants and agrees, that the payment of all Junior Liabilities is
hereby expressly subordinated in right of payment to the payment and
performance of the Senior Interests to the extent and in the manner set
forth in the following clauses of this Section 7:
---------
(a) No payment or other distribution of the Purchaser's
assets of any kind or character, whether in cash, securities, or
other rights or property, shall be made on account of this Note
except to the extent such payment or other distribution is (i)
permitted under the RPA and (ii) made pursuant to Section 4 or 6
--------- -
of this Note;
(b) If the Purchaser has taken any action or suffered any
event to occur of the type described in subsection (g) of
--------------
Exhibit V to the RPA or any other Insolvency Proceeding or the
---------
Purchase and Sale Termination Date has occurred, then the Senior
Interests shall first be paid and performed in full and in cash
before
Annex B-2
<PAGE>
<PAGE>
the Originator shall be entitled to receive and to retain any
payment or distribution in respect of the Junior Liabilities. In
order to implement the foregoing: (x) all payments and
distributions of any kind or character in respect of the Junior
Liabilities to which the Originator would be entitled except for
this subsection 7.(b) shall be made directly to the Senior Agent
----------------
(for the benefit of the Senior Interest Holders); and (y) the
Originator hereby irrevocably agrees that the Senior Agent, in the
name of the Originator or otherwise, may demand, sue for, collect,
receive and receipt for any and all such payments or
distributions, and file, prove and vote or consent in any such
proceeding with respect to any and all claims of the Originator
relating to the Junior Liabilities, in each case until the Senior
Interests shall have been paid and performed in full and in cash.
(c) In the event that the Originator receives any
payment or other distribution of any kind or character from the
Purchaser or from any other source whatsoever, in respect of the
Junior Liabilities, other than as expressly permitted by the terms
of this Note, such payment or other distribution shall be received
in trust for the Senior Interest Holders and shall be turned over
by the Originator to the Senior Agent (for the benefit of the
Senior Interest Holders) forthwith. All payments and
distributions received by the Senior Agent in respect of this
Note, to the extent received in or converted into cash, may be
applied by the Senior Agent (for the benefit of the Senior
Interest Holders) first to the payment of any and all reasonable
expenses (including, without limitation, reasonable attorneys'
fees and other legal expenses) paid or incurred by the Senior
Agent or the Senior Interest Holders in enforcing these
Subordination Provisions, or in endeavoring to collect or realize
upon the Junior Liabilities, and any balance thereof shall, solely
as between the Originator and the Senior Interest Holders, be
applied by the Senior Agent toward the payment of the Senior
Interests in a manner determined by the Senior Agent to be in
accordance with the Receivables Purchase Agreement; but as between
the Purchaser and its creditors, no such payments or
distributions of any kind or character shall be deemed to be
payments or distributions in respect of the Senior Interests.
(d) Upon the final payment in full and in cash of all
Senior Interests, the Originator shall be subrogated to the rights
of the Senior Interest Holders to receive payments or
distributions from the Purchaser that are applicable to the Senior
Interests until the Junior Liabilities are paid in full.
(e) These Subordination Provisions are intended solely for
the purpose of defining the relative rights of the Originator, on
the one hand, and the Senior Interest Holders, on the other hand.
Nothing contained in the Subordination Provisions or elsewhere in
this Note is intended to or shall impair, as between the
Purchaser, its creditors (other than the Senior Interest Holders)
and the Originator, the Purchaser's obligation, which is
unconditional and absolute, to pay the Junior Liabilities as and
when the same shall become due and payable in accordance with
Annex B-3
<PAGE>
<PAGE>
the terms hereof and of the Purchase and Sale Agreement or to
affect the relative rights of the Originator and creditors of the
Purchaser (other than the Senior Interest Holders).
(f) The Originator shall not, until the Senior Interests
have been finally paid and performed in full and in cash,
(i) cancel, waive, forgive, transfer or assign, or commence legal
proceedings to enforce or collect, or subordinate to any
obligation of the Purchaser, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, or
now or hereafter existing, or due or to become due, other than the
Senior Interests, the Junior Liabilities, or any rights in respect
thereof or (ii) convert the Junior Liabilities into an equity
interest in the Purchaser, unless, in the case of each of
clauses (i) and (ii) above, the Originator shall have received
----------- ----
the prior written consent of the Senior Agent in each case.
(g) The Originator shall not, without the advance written
consent of the Senior Agent, commence, or join with any other
Person in commencing, any Insolvency Proceedings with respect to
the Purchaser until at least one year and one day shall have
passed since the Senior Interests shall have been finally paid and
performed in full and in cash.
(h) If, at any time, any payment (in whole or in part) made
with respect to any Senior Interest is rescinded or must be
restored or returned by a Senior Interest Holder (whether in
connection with any Event of Bankruptcy or otherwise), these
Subordination Provisions shall continue to be effective or shall
be reinstated, as the case may be, as though such payment had not
been made.
(i) Each of the Senior Interest Holders may, from time to
time, at its sole discretion, without notice to the Originator,
and without waiving any of its rights under these Subordination
Provisions, take any or all of the following actions: (i) retain
or obtain an interest in any property to secure any of the Senior
Interests; (ii) retain or obtain the primary or secondary
obligations of any other obligor or obligors with respect to any
of the Senior Interests; (iii) extend or renew for one or more
periods (whether or not longer than the original period), alter or
exchange any of the Senior Interests, or release or compromise any
obligation of any nature with respect to any of the Senior
Interests; (iv) amend, supplement, or otherwise modify any
Transaction Document; and (v) release its security interest in, or
surrender, release or permit any substitution or exchange for all
or any part of any rights or property securing any of the Senior
Interests, or extend or renew for one or more periods (whether or
not longer than the original period), or release, compromise,
alter or exchange any obligations of any nature of any obligor
with respect to any such rights or property.
(j) The Originator hereby waives: (i) notice of acceptance
of these Subordination Provisions by any of the Senior Interest
Holders; (ii) notice of the
Annex B-4
<PAGE>
<PAGE>
existence, creation, non-payment or non-performance of all or any
of the Senior Interests; and (iii) all diligence in enforcement,
collection or protection of, or realization upon the Senior
Interests, or any thereof, or any security therefor.
(k) These Subordination Provisions constitute a continuing
offer from the Purchaser to all Persons who become the holders of,
or who continue to hold, Senior Interests; and these Subordination
Provisions are made for the benefit of the Senior Interest
Holders, and the Senior Agent may proceed to enforce such
provisions on behalf of each of such Persons.
8. Amendments, Etc. No failure or delay on the part of the
---------------
Originator in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such
power or right preclude any other or further exercise thereof or the
exercise of any other power or right. No amendment, modification or
waiver of, or consent with respect to, any provision of this Note shall
in any event be effective unless (a) the same shall be in writing and
signed and delivered by the Purchaser and the Originator, and (b) all
consents required for such actions under the Transaction Documents shall
have been received by the appropriate Persons.
9. Limitation on Interest. Notwithstanding anything in this
----------------------
Note to the contrary, the Purchaser shall never be required to pay
unearned interest on any amount outstanding hereunder, and shall never
be required to pay interest on the principal amount outstanding
hereunder, at a rate in excess of the maximum interest rate that may be
contracted for, charged or received without violating applicable federal
or state law.
10. No Negotiation. This Note is not negotiable.
--------------
11. Governing Law. THIS NOTE SHALL GOVERNED BY, AND CONSTRUED
-------------
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
12. Captions. Paragraph captions used in this Note are
--------
provided solely for convenience of reference only and shall not affect
the meaning or interpretation of any provision of this Note.
Annex B-5
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Note to be
executed by its officer thereunto duly authorized on the date first
above written.
MAIL-WELL TRADE RECEIVABLES CORPORATION,
a Colorado corporation
By:_____________________________________
Title:__________________________________
Annex B-6
<PAGE>
<PAGE>
ANNEX C
FORM OF JOINDER AGREEMENT
-------------------------
THIS JOINDER AGREEMENT, dated as of , 199 (this
---------- -
"Agreement") is executed by , a corporation
--------- --------------------
organized under the laws of (the "Additional
----------- ----------
Originator"), with its principal place of business located at
- ----------
_______________.
BACKGROUND
i. Mail-Well Trade Receivables Corporation, as Purchaser,
MailWell I Corporation, as initial servicer and the guarantor, and the
Originators from time to time party thereto, have entered into the
Purchase and Sale Agreement, dated as of July 1, 1999 (as amended,
supplemented or otherwise from time to time, the "Purchase and Sale
-----------------
Agreement").
- ---------
ii. The Additional Originator desires to become an Originator
pursuant to Section 5.13 of the Purchase and Sale Agreement.
------------
NOW, THEREFORE, in consideration of the foregoing and other good
and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Additional Originator hereby agrees as follows:
SECTION 1. Definitions. Capitalized terms used in this
-----------
Agreement and not otherwise defined herein shall have the meanings
assigned thereto in the Purchase and Sale Agreement or in the RPA (as
defined in the Purchase and Sale Agreement).
SECTION 2. Transaction Documents. The Additional Originator
---------------------
hereby agrees that it shall be bound by all of the terms, conditions and
provisions of, and shall be deemed to be a party to (as if it were an
original signatory to), the Purchase and Sale Agreement. From and after
the later of the date hereof and the date that the Additional Originator
has complied with all of the requirements of Section 5.13 of the
------------
Purchase and Sale Agreement, the Additional Originator shall be an
Originator for all purposes of the Transaction Documents and on such
date, and thereafter, shall sell, transfer, assign and convey its
Receivables and Related Assets in accordance with Section 1.2 of the
Purchase and Sale Agreement. The Additional Originator hereby
acknowledges that it has received copies of the Purchase and Sale
Agreement, its Originator Note and the other Transaction Documents
SECTION 3. Representations and Warranties. The Additional
------------------------------
Originator hereby makes all of the representations and warranties set
forth in Exhibit II of the Purchase and Sale Agreement as of the date
----------
hereof, as if such representations and warranties were fully set forth
herein. The Additional Originator hereby represents and warrants that
the chief place of business and chief executive office of the Additional
Originator, and the offices where the
Annex C-1
<PAGE>
<PAGE>
Additional Originator keeps all of its books, records and documents
evidencing or otherwise relating to the Receivables generated by it, and
the Related Assets, at the addresses set forth below:
_____________________________
_____________________________
_____________________________
SECTION 4. Miscellaneous. This Agreement shall be governed
-------------
by, and construed in accordance with, the internal laws of the State of
New York. This Agreement shall be binding upon, and shall inure to the
benefit of, the Additional Originator and its successors and permitted
assigns.
Annex C-2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this Agreement to
be executed by its duly authorized officer as of the date and year first
above written.
[NAME OF ADDITIONAL ORIGINATOR]
By:_________________________________________
Name Printed:____________________________
Title:___________________________________
Consented to:
MAIL-WELL TRADE RECEIVABLES CORPORATION
By:______________________________
Name:_________________________
Title:________________________
MAIL-WELL I CORPORATION
By:______________________________
Name:_________________________
Title:________________________
Acknowledged by:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS BANK, as Administrator
By:______________________________
Name:_________________________
Title:________________________
Annex C-3
<PAGE>
<PAGE>
FIRST AMENDMENT TO
PURCHASE AND SALE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AND SALE AGREEMENT, dated as of
July 1, 1999 (this "Amendment"), is entered into among the Originators
---------
from time to time party thereto (the "Originators"), MAIL-WELL I
-----------
CORPORATION, a Delaware corporation, as initial Servicer (the
"Servicer") and as guarantor (the "Guarantor"), and MAIL-WELL TRADE
-------- ---------
RECEIVABLES CORPORATION, a Colorado corporation, as purchaser (the
"Purchaser").
---------
RECITALS
1. The Originators, the Servicer, the Guarantor and the Purchaser
are parties to the Purchase and Sale Agreement, dated as of July 1, 1999
(the "Agreement"); and
---------
2. The parties hereto desire to amend the Agreement as set forth
herein.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Certain Defined Terms. Capitalized terms used but not
---------------------
defined herein shall have the meaning set forth in Annex A to the
Agreement or in Exhibit I to the Receivables Purchase Agreement.
2. Amendments to the Agreement. The Agreement is hereby
---------------------------
amended as follows:
2.1 A new Section 1.2(e) is hereby added to the
Agreement to be and to read as follows:
(e) Additional Included Sites. Upon the addition
-------------------------
of a new location as an Included Site pursuant to Section
4.15 of the RPA, the applicable Originator hereby sells,
transfers, assigns and conveys to Purchaser (without any
formal or other instrument of assignment and without further
action by any Person) all of its right, title and interest
to all of the Receivables and Related Assets of such
Originator with respect to such new location that exist at
the opening of such Originator's business on the date such
location is added as Included Site. After the initial
purchase under this paragraph (e), regular purchases will be
made in accordance with paragraph (b) above.
<PAGE>
<PAGE>
2.2 Clause (ii)(A) of paragraph (i) in Exhibit III to
the Agreement is hereby amended by adding the following proviso,
immediately prior to the comma, at the end thereof:
; provided, however, that the Obligors of Receivables
originated by WISCO II, LLC or WISCO III, LLC may be
instructed to make payments directly to the Servicer (or
any sub-servicer), which payments shall be deposited by the
Servicer (or such sub-servicer) into a Lock-Box Account not
later than two Business Days after receipt thereof.
2.3 The first proviso of the definition of "Cost Rate"
in Annex A to the Agreement is hereby amended and restated to be
and to read as follows:
provided, however, that if such Originator and the
-------- -------
Purchaser are unable to so agree as to the Cost Rate
applicable to any Servicer Report Date, the Cost Rate shall
equal the product of (i) the quotient of the Average
Maturity divided by 360 multiplied by (ii) the sum of (a)
the highest Alternate Rate or CP Rate applicable to any
Portion of Capital on such Servicer Report Date plus (b) the
Servicing Fee Rate on such Servicer Report Date plus (c) the
amount, expressed as a per annum percentage rate, of any
fees, costs and expenses incurred by the Purchaser during
the month immediately preceding such Servicer Report Date
(and not accounted for in clauses (a) or (b) above),
including, without limitation, reserve costs, tax payments,
commitment fees and indemnity obligations of the Purchaser
for which the Purchaser is not indemnified pursuant to this
Agreement;
3. Effect of Amendment. Except as expressly amended and
-------------------
modified by this Amendment, all provisions of the Agreement shall remain
in full force and effect. After this Amendment becomes effective, all
references in the Agreement (or in any other Transaction Document) to
"this Agreement", "hereof", "herein" or words of similar effect
referring to the Agreement shall be deemed to be references to the
Agreement as amended by this Amendment. This Amendment shall not be
deemed, expressly or impliedly, to waive, amend or supplement any
provision of the Agreement other than as set forth herein.
4. Counterparts. This Amendment may be executed in any number
------------
of counterparts and by different parties on separate counterparts, each
of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute but one and the same
instrument.
5. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without
regard to any otherwise applicable principles of conflicts of law.
6. Section Headings. The various headings of this Amendment are
----------------
included for convenience only and shall not affect the meaning or
interpretation of this Amendment, the Agreement or any provision hereof
or thereof.
[signature pages on next page]
2
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of
the date first written above.
MAIL-WELL I CORPORATION,
as initial Servicer and as Guarantor
By: _______________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL TRADE RECEIVABLE CORPORATION,
as Purchaser
By: _______________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
GRAPHIC ARTS CENTER, INC., as an Originator
By: _______________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MURRAY ENVELOPE CORP.,
as an Originator
By: _______________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
3
<PAGE>
<PAGE>
MAIL-WELL COMMERCIAL PRINTING, INC.,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL I CORPORATION,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL LABEL USA, INC.,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL WEST, INC., as an
Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
POSER BUSINESS FORMS INC.,
as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
4
<PAGE>
<PAGE>
WISCO II, LLC, as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
WISCO III, LLC, as an Originator
By: ____________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL I CORPORATION,
as Servicer,
MAIL-WELL TRADE RECEIVABLES CORPORATION,
as Seller under the Receivables Purchase Agreement,
and
BANK OF AMERICA NATIONAL TRUST AND SAVING ASSOCIATION,
as Administrator
SERVICING AGREEMENT
Dated as of July 1, 1999
<PAGE>
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.1. Definitions 1
SECTION 1.2. Usage of Terms 2
SECTION 1.3. Section References 3
SECTION 1.4. Other Terms 3
ARTICLE II
The Receivables
SECTION 2.1. Custody of Contract Documents 3
SECTION 2.2. Duties of Servicer as Custodian 3
SECTION 2.3. Instructions; Authority to Act 4
SECTION 2.4. Custodian's Indemnification 4
SECTION 2.5. Effective Period and Termination 4
ARTICLE III
Administration and Servicing of Receivables
SECTION 3.1. Duties of Servicer 5
SECTION 3.2. Collection of Pool Receivables
Payments 5
SECTION 3.3. Realization Upon Related Security 6
SECTION 3.4. Servicing Fee 6
SECTION 3.5. Servicer Expenses 6
SECTION 3.6. Covenants of Servicer 6
SECTION 3.7. Purchase of Receivables Upon Breach 7
SECTION 3.8. Appointment of SubServicer 7
SECTION 3.9. Seller Report 8
SECTION 3.10. Annual Statement as to Compliance;
Notice of Default 8
SECTION 3.11. Annual Independent Certified Public
Accountant's Report 9
ARTICLE IV
Collections
SECTION 4.1. Collection Account 9
SECTION 4.2. Collections 9
ARTICLE V
The Servicer
SECTION 5.1. Representations and Warranties of
Servicer 10
SECTION 5.2. (a) Liability of Servicer;
Indemnities 14
SECTION 5.3. Covenants of Servicer 18
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<PAGE>
ARTICLE VI
Servicer Termination
SECTION 6.1. MailWell Not to Resign as Servicer 25
SECTION 6.2. Servicer Termination 26
SECTION 6.3. Appointment of Successor 26
ARTICLE VII
Miscellaneous Provisions
SECTION 7.1. Amendment 27
SECTION 7.2. Protection of Title to Pool
Receivables 28
SECTION 7.3. GOVERNING LAW AND JURISDICTION 28
SECTION 7.4. Notices, Etc 29
SECTION 7.5. Severability of Provisions 29
SECTION 7.6. Assignment 29
SECTION 7.7. Counterparts 30
SECTION 7.8. Third Party Beneficiary 31
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<PAGE>
<PAGE>
SCHEDULE A SCHEDULE OF PERMITTED INVESTMENTS
EXHIBIT A FORM OF SELLER REPORT
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<PAGE>
<PAGE>
SERVICING AGREEMENT
This Servicing Agreement (as amended, supplemented or otherwise
modified, this "Agreement"), dated as of July 1, 1999, is made among
---------
MAIL-WELL I CORPORATION, a Delaware corporation ("Mail-Well"), as
---------
initial Servicer (in such capacity, together with its successors and
permitted assigns in such capacity, the "Servicer"), MAIL-WELL TRADE
--------
RECEIVABLES CORPORATION, a Colorado corporation, as the Seller under the
Receivables Purchase Agreement (the "Seller"), and BANK OF AMERICA
------
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association,
as administrator (in such capacity, together with its successors and
assigns in such capacity, the "Administrator").
-------------
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
SECTION 1.1. Definitions. Whenever used in this Agreement
-----------
the following words and phrases, unless the context otherwise requires,
shall have the following meanings:
"Agreement" has the meaning set forth in the preamble.
---------
"Indemnified Party" means each of the Securitization Parties
-----------------
and each of their respective Affiliates, employees, agents, successors,
transferees and assigns.
"Mail-Well" has the meaning set forth in the preamble.
---------
"Officer's Certificate" means a certificate signed by the
---------------------
president, secretary or assistant secretary, any vice president, the
treasurer, any assistant treasurer or the controller of the Seller or
the Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel who
------------------
may but need not be counsel to the Seller or Servicer, which opinion
shall be reasonably acceptable to the Administrator.
"Payment Day" has the meaning set forth in the Purchase and
-----------
Sale Agreement.
"Permitted Investments" means any of the Permitted
---------------------
Investments set forth in Schedule A.
<PAGE>
<PAGE>
"Purchasing Certificate" means a certificate completed and
----------------------
executed on behalf of the Servicer by the president, any secretary or
assistant secretary, any vice president, the treasurer, any assistant
treasurer or the controller of the Servicer pursuant to Section 3.9,
substantially in the form of Exhibit B.
"Receivables Purchase Agreement" means the Receivables
------------------------------
Purchase Agreement, dated as of July 1, 1999, among the Servicer, the
Seller, Quincy Capital Corporation, as Issuer, and the Administrator, as
amended, supplemented or otherwise modified from time to time.
"Repurchase Amount" has the meaning set forth in the Purchase
-----------------
and Sale Agreement.
"Seller Report" means a certificate completed and executed by
-------------
the Servicer by its president, any vice president, any secretary or
assistant secretary, the treasurer, any assistant treasurer or the
controller of the Servicer pursuant to Section 3.9, substantially in the
form of Exhibit A.
"Servicer" means Mail-Well, together with its successors and
--------
permitted assigns in such capacity, pursuant to Section 6.3.
"Servicer Report Date" means the date three Business Days
--------------------
prior to the Settlement Date.
"Servicing Fee"means the fee payable to the Servicer for
-------------
services rendered during each Fixed Period, determined pursuant to
Section 3.8.
"Servicing Fee Rate" means 0.5% per annum (or, in the case of
------------------
a Servicer other than Mail-Well or any Affiliate thereof, such higher
amount as is agreed by such Servicer and the Administrator, if any, not
to exceed 110% of such Servicer's reasonable estimate of costs and
expenses that it shall incur in connection with performing its
obligations as Servicer).
"State" means any state of the United States of America or
-----
the District of Columbia.
SECTION 1.2. Usage of Terms. With respect to all terms in
--------------
this Agreement, the singular includes the plural and the plural the
singular; words importing any gender include the other gender;
references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements
and other contractual instruments include all subsequent amendments
thereto or changes therein entered into in accordance with their
respective terms and not
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<PAGE>
<PAGE>
prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means
"including without limitation."
SECTION 1.3. Section References. All Section references
------------------
shall be to this Agreement.
SECTION 1.4. Other Terms. Capitalized terms used herein and
-----------
not defined herein shall have the meanings assigned to such terms in the
Receivables Purchase Agreement.
ARTICLE II
The Receivables
---------------
SECTION 2.1. Custody of Contract Documents. To assure
-----------------------------
uniform quality in servicing the Pool Receivables and to reduce
administrative costs, the Seller and the Administrator, as agent for the
Securitization Parties, upon the execution and delivery of this
Agreement, hereby appoints the Servicer (subject to the Administrator's
right to terminate the Servicer (or any sub-servicer) in accordance
herewith), and the Servicer hereby accepts such appointment, to act as
the agent of the Seller and the Securitization Parties as custodian of
the Contract Documents for each Pool Receivable. Neither the
Administrator nor any other Securitization Party shall have any duty to
monitor the performance of the Servicer and shall have no liability in
connection with the Servicer's performance hereunder.
SECTION 2.2. Duties of Servicer as Custodian. (a) Safekeeping.
------------------------------- -----------
The Servicer shall hold the Contract Documents on behalf of the Seller
and the Securitization Parties for the use and benefit of the Seller
and the Securitization Parties and maintain such accurate and complete
accounts, records and computer systems pertaining to each Contract
Document as shall enable compliance with this Agreement. In performing
its duties as custodian the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises
with respect to the contract documents relating to all comparable
receivables that the Servicer services for itself or others. The
Servicer shall promptly report to the Seller and the Administrator
any material failure on its part to hold the Contract Documents and
maintain its accounts, records and computer systems as herein provided
and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or
any periodic review by the Administrator or any other Securitization
Party of the Contract Documents.
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<PAGE>
<PAGE>
(b) Maintenance of and Access to Records. The Servicer
------------------------------------
shall maintain each Contract Document at its address set forth on its
signature page to the Receivables Purchase Agreement or at one of the
locations specified in Schedule III to the Receivables Purchase
Agreement, or at such other office as shall be specified to the Seller
and the Administrator with 60 days prior written notice of such change
or additions in location. The Servicer shall make available to the
Seller and the Administrator or its duly authorized representatives,
attorneys or auditors a list of locations of the Contract Documents, and
shall also so make available the Contract Documents themselves, and the
related accounts, records and computer systems maintained by the
Servicer, at such times during reasonable business hours as the Seller
or the Administrator shall reasonably instruct.
(c) Release of Documents. Upon instruction from the
--------------------
Administrator, the Servicer shall release any Contract Document (or, if
requested, copies thereof) to the Administrator or the Administrator's
agent or designee, as the case may be, at such place or places as the
Administrator may designate, as soon as practicable.
SECTION 2.3. Instructions; Authority to Act. The Servicer
------------------------------
shall be deemed to have received proper instructions with respect to the
Contract Documents upon its receipt of written instructions signed by an
authorized officer of the Administrator.
SECTION 2.4. Custodian's Indemnification. The Servicer as
---------------------------
custodian shall indemnify the Seller and each Indemnified Party for any
and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses of any kind whatsoever that may be imposed
on, incurred or asserted against the Seller or such Indemnified Party,
as the case may be, as the result of any improper act or any omission in
any way relating to the maintenance and custody by the Servicer as
custodian of the Contract Documents; provided, however, that the
-------- -------
Servicer shall not be liable for any portion of any such amount
resulting from the willful misconduct or gross negligence of the Seller
or such Indemnified Party, as the case may be.
SECTION 2.5. Effective Period and Termination. The Servicer's
--------------------------------
appointment as custodian shall become effective as of the date hereof
and shall continue in full force and effect until terminated pursuant
to this Section 2.5. If Mail-Well shall resign as Servicer in accordance
with the provisions of this Agreement or if all the rights and obligations
of the Servicer (or any sub-servicer) shall have been terminated under
Section 6.2, the appointment of the Servicer (or such sub-servicer) as
custodian may be terminated by the Administrator. The Administrator
may terminate the Servicer's (or such sub-
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<PAGE>
<PAGE>
servicer's) appointment as custodian upon a Termination Event or in the
event that the Servicer (or such sub-servicer) shall no longer be
permitted under law to act as custodian at any time upon written notice
to the Servicer. As soon as practicable after any termination of such
appointment, the Servicer shall deliver (and cause each sub-servicer to
deliver) the Contract Documents to the Administrator or the
Administrator's agent or designee at such place or places as the
Administrator may reasonably designate.
ARTICLE III
Administration and Servicing of Receivables
-------------------------------------------
SECTION 3.1. Duties of Servicer. The Servicer as agent for
------------------
the Seller and the Securitization Parties (to the extent provided
herein) shall manage, service, administer and make collections on the
Pool Receivables with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable
receivables that it services for itself or others. The Servicer's
duties shall include collection and posting of all payments, responding
to inquiries of Obligors on such Pool Receivables, investigating
delinquencies, sending payment statements or coupon books to Obligors,
reporting tax information to Obligors as required by law, accounting for
collections and furnishing monthly and annual statements to the Seller,
the Administrator and other Securitization Parties with respect to
distributions. The Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer and the
Credit and Collection Policy. Without limiting the generality of the
foregoing, subject to Section 3.6, the Servicer is authorized and
empowered by the Seller and the Securitization Parties to execute and
deliver, on behalf of itself, the Seller or the Securitization Parties,
any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with
respect to such Pool Receivables. If the Servicer shall commence a
legal proceeding to enforce a Pool Receivable pursuant to such policies
and procedures, the Seller and the Securitization Parties shall
thereupon be deemed to have automatically assigned, solely for the
purpose of collection on behalf of the party retaining an interest in
such Pool Receivable, such Pool Receivable to the Servicer.
SECTION 3.2. Collection of Pool Receivables Payments. (a)
---------------------------------------
Collection of the Receivables shall be administered by the Servicer in
accordance with the terms of this Agreement, and the Receivables
Purchase Agreement. The Seller shall provide to the Servicer on a
timely basis all information necessary for such
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<PAGE>
<PAGE>
administration, including notice of the occurrence of any Termination
Day and current computations of Purchased Interests. All amounts
deposited to a Lock-Box Account shall be identified as Collections of
Pool Receivables or other collections within two Business Days.
(b) The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Pool
Receivables which the Servicer deems reasonably collectable as and when
the same shall become due and shall follow such collection procedures as
it follows with respect to all comparable receivables that it services
for itself or others in addition to the Credit and Collection Policy.
On each day on which Collections of Pool Receivables are received (or
deemed received), the Servicer shall follow the procedures set forth in
Sections 1.4(a) and (b) of the Receivables Purchase Agreement. Pursuant
to this Agreement and to the Credit and Collection Policy, the Servicer
may grant extensions, rebates or adjustments on a Pool Receivable
subject to the provisions of Section 3.6, and may waive any late payment
charge or any other fees that may be collected in the ordinary course of
servicing a Pool Receivable.
SECTION 3.3. Realization Upon Related Security. On behalf of
---------------------------------
the Seller and the Securitization Parties, the Servicer shall use its
commercially reasonable efforts, consistent with its customary servicing
procedures and the Credit and Collection Policy of the Seller, to
realize upon, foreclose or repossess the Related Security securing an
Obligor's indebtedness under any such Pool Receivable as to which the
Servicer shall have determined eventual payment in full is unlikely.
SECTION 3.4. Servicing Fee. The Servicing Fee for each Fixed
-------------
Period shall equal the product of one twelfth times the Servicing Fee
Rate times the Outstanding Principal Balance of all Pool Receivables as
of the first day of such Fixed Period.
SECTION 3.5. Servicer Expenses. The Servicer shall be
-----------------
required to pay all expenses incurred by it in connection with its
activities hereunder, including fees and disbursements of independent
accountants, taxes imposed on the Servicer and expenses incurred in
connection with distributions and reports to the Seller, the
Administrator or any other Securitization Party.
SECTION 3.6. Covenants of Servicer. The Servicer shall not
---------------------
impair the rights of the Seller or the Securitization Parties in any
Pool Receivable. The Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of Pool
Receivables as and when the same shall become due and follow such
collection procedures and the Credit and Collection Policy as it follows
with respect to
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<PAGE>
<PAGE>
comparable receivables that it services for itself and others. The
Servicer shall maintain the Lock-Box Accounts and identify all amounts
deposited into such Lock-Box Accounts as Collections of Pool Receivables
or other collections. The Servicer shall not sell, pledge, transfer,
deliver or otherwise dispose of any Pool Receivable, except as provided
in this Agreement. The Servicer will not extend, rewrite or otherwise
modify the payment terms of a Pool Receivable; provided, however,
-------- -------
that prior to the occurrence of a Termination Event or Unmatured
Termination Event, the Servicer may, subject to the limitations below,
extend any Receivable (but not beyond 30 days) in accordance with the
Credit and Collection Policy as in effect on the date hereof (with such
changes as have been approved by the Administrator); provided
--------
further, that any such extension shall not affect such Receivables
- -------
status as a delinquent Receivable or a Defaulted Receivable. In the
event that the Servicer fails to comply with the provisions of the
preceding sentence or if there is a determination by the Servicer and
the Administrator or a Governmental Authority that the Servicer has
modified the terms of a Pool Receivable in such a manner as to
constitute a cancellation of such Pool Receivable and the creation of a
new Pool Receivable for federal income tax purposes, the Servicer shall
be required to purchase such Pool Receivable for the Repurchase Amount,
in the manner specified in Section 3.7 as of the Settlement Date
following the Fixed Period in which such failure occurs.
SECTION 3.7. Purchase of Receivables Upon Breach. The
-----------------------------------
Servicer, the Seller or the Administrator shall inform the other parties
promptly, in writing, upon the discovery of any breach by Servicer of
its obligations pursuant to Section 3.6. Unless the breach shall have
been cured by the Settlement Date in the month following such discovery,
the Servicer shall purchase any Pool Receivable, which as a result of
such breach would materially and adversely affect the interests of the
Seller or the Securitization Parties, as of such Settlement Date. In
consideration of the purchase of such Pool Receivable, the Servicer
shall remit the Repurchase Amount on such Settlement Date to the
Collection Account. The sole remedy with respect to a breach of
Section 3.6 shall be to require the Servicer to repurchase Pool
Receivables pursuant to this Section 3.7.
SECTION 3.8. Appointment of Sub-Servicer. The Servicer may,
---------------------------
at any time, at the direction of the Seller appoint a sub-servicer to
perform all or any portion of its obligations as Servicer hereunder,
including, without limitation, in its capacity as custodian of the
Contract Documents; provided, however, that the Servicer shall
-------- -------
remain obligated and be liable for the servicing and administering of
the Pool Receivables and custody of the Contract Documents in accordance
with the Receivables Purchase Agreement and this Agreement without
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<PAGE>
<PAGE>
diminution of such obligation and liability by virtue of the appointment
of such sub-servicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Pool Receivables and maintaining the custody of the Contract Documents.
The fees and expenses of the sub-servicer shall be as agreed between the
Servicer and its sub-servicer from time to time and none of the Seller,
the Administrator or any other Securitization Party shall have any
responsibility therefor. Following the occurrence of a Termination
Event, the Administrator may terminate or replace any sub-servicer in
accordance with Section 6.2.
SECTION 3.9. Seller Report. On or before each Servicer
-------------
Report Date, the Servicer shall deliver to the Seller and the
Administrator a Seller Report, containing all information necessary to
make the transfers and distributions pursuant to the Receivables
Purchase Agreement for the Fixed Period immediately preceding the date
of such Seller Report. If on any Settlement Date there is a default by
the Seller or the Servicer in respect of any Repurchase Amounts to be
deposited into the Collection Account, the Servicer shall recalculate
all of the amounts described in the Seller Report to reflect such
default and deliver to the Seller and the Administrator a revised Seller
Report reflecting such recalculations on such Settlement Date. Prior to
each purchase by any Securitization Party under the Receivables Purchase
Agreement, the Servicer shall deliver to the Administrator a Borrowing
Certificate in accordance therewith.
SECTION 3.10. Annual Statement as to Compliance; Notice of
--------------------------------------------
Default. (a) The Servicer shall deliver to the Seller and the
- -------
Administrator, on or before July 31 of each year, beginning July 31,
2000, an Officer's Certificate, dated as of June 30 of such year,
stating that (i) a review of the activities of the Servicer during the
preceding 12-month period and of its performance under this Agreement
has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Servicer has
fulfilled in all material respects all its obligations under this
Agreement throughout such year (or such shorter period, as the case may
be), or, if there has been a material default in the fulfillment of any
such obligation, specifying each such material default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Seller and the
Administrator promptly after having obtained knowledge thereof, but in
no event later than two Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or
lapse of time, or both, would become a Termination Event.
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<PAGE>
SECTION 3.11. Annual Independent Certified Public Accountant's
-------------------------------------------------
Report. The Servicer shall cause a firm of independent certified
- ------
public accountants acceptable to the Administrator (who may also render
other services to the Servicer and the Seller) to deliver to the Seller
and the Administrator on or before March 31 of each year commencing
March 31, 2000, a report on applying agreed upon procedures as outlined
by the standards established by the American Institute of Certified
Public Accountants, verifying the accuracy of the information contained
within the monthly Seller Reports. Procedures performed in the
preparation of the report will be agreed upon by the Seller and the
Administrator prior to the commencement of the engagement and will be
specifically outlined in the issued report. These procedures can
include, on a nonstatistical selection basis, the selection of a monthly
Seller Report which was prepared in the year reported on, the
verification of divisional and individual receivable balances which
comprise the Net Receivables Pool Balance, recalculation and
verification of receivable classifications and agings, and the
recalculation of mathematical ratios and formulas. The accountants
report will denote exceptions to the agreed upon procedures based upon
materiality levels agreed upon by the Seller and the Administrator.
ARTICLE IV
Collections
-----------
SECTION 4.1. Collection Account. (a) All amounts held in the
------------------
Collection Account may be invested in Permitted Investments by the
Servicer, in each case such investments maturing not later than the next
Settlement Date. All income or other gains from the investment of
moneys deposited in the Collection Account shall be deposited in such
account immediately upon receipt.
(b) The Servicer (if the Servicer is Mail-Well or any
affiliate thereof) shall be liable for any insufficiency in the
Collection Account resulting from net losses on investments made in
accordance with the provisions of this Section 4.1. No successor
Servicer (that is not an affiliate of Mail-Well) nor any Securitization
Party shall be liable for any investment made by it in accordance with
this Section 4.1.
SECTION 4.2. Collections. The Servicer shall remit and apply
-----------
all Collections and other amounts in accordance with the Receivables
Purchase Agreement.
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<PAGE>
<PAGE>
ARTICLE V
The Servicer
------------
SECTION 5.1. Representations and Warranties of Servicer. The
------------------------------------------
Servicer makes the following representations on which the Seller and the
Securitization Parties rely. The representations speak as of the
execution and delivery of this Agreement and as of each Payment Day and
shall survive the sale of the Pool Receivables to the Seller pursuant to
the terms of the Purchase and Sale Agreement and to the Administrator,
for the benefit of the Securitization Parties, pursuant to the terms of
the Receivables Purchase Agreement.
(a) Organization and Good Standing. The Servicer is a
------------------------------
corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware, and is duly qualified to do
business, and is in good standing as a foreign corporation in every
jurisdiction where the nature of its business requires it to be so
qualified and had at all relevant times, and shall have, power,
authority and legal right to acquire, own, sell and service the Pool
Receivables and to hold the Contract Documents as custodian on behalf of
the Seller and the Securitization Parties.
(b) Power and Authority; Due Authorization; No Violation.
----------------------------------------------------
The execution, delivery and performance by the Servicer of the Agreement
and the other Transaction Documents to which it is a party, including
the Servicer's use of the proceeds of purchases and reinvestments, (i)
are within the Servicer's corporate powers, (ii) have been duly
authorized by all necessary corporate action, (iii) do not contravene or
result in a default under or conflict with (1) the Servicer's charter or
by-laws, (2) any law, rule or regulation applicable to the Servicer,
except to the extent such contravention, default or conflict will not
have a Material Adverse Effect, (3) any contractual restriction binding
on or affecting the Servicer or its property or (4) any order, writ,
judgment, award, injunction or decree binding on or affecting the
Servicer or its property, and (iv) do not result in or require the
creation of any Adverse Claim upon or with respect to any of its
properties. The Agreement and the other Transaction Documents to which
it is a party have been duly executed and delivered by the Servicer.
(c) Government Approvals. No authorization or approval or
--------------------
other action by, and no notice to or filing with, any Governmental
Authority or other Person is required for the due execution, delivery
and performance by the Servicer of this Agreement or any other
Transaction Document to which it is a party.
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<PAGE>
(d) Valid, Binding Obligations. Each of the Agreement and
--------------------------
the other Transaction Documents to which the Servicer is a party each
constitute a legal, valid and binding obligation of the Servicer
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
(e) Financial Condition. The balance sheets of Mail-Well,
-------------------
Inc. and its subsidiaries as at December 31, 1998, and the related
statements of income and retained earnings for the fiscal year then
ended, copies of which have been furnished to the Administrator, fairly
present the financial condition thereof as at such date and the results
of operations thereof for the period ended on such date, all in
accordance with generally accepted accounting principles consistently
applied, and since December 31, 1998 there has been no material adverse
change in the business, operations, property or financial or other
condition or operations of the Seller, the Servicer, the Guarantor or
any Originator, the ability of the Seller, the Servicer, the Guarantor
or any Originator to perform its obligations under the Agreement or the
other Transaction Documents or the collectibility of the Pool
Receivables, or which affects the legality, validity or enforceability
of the Agreement or the other Transaction Documents.
(f) No Proceedings. There is no pending, threatened action
--------------
or proceeding affecting the Servicer or any of its Affiliates before any
Governmental Authority or arbitrator which could materially adversely
affect the business, operations, property, financial or other condition
or operations of the Servicer or any of its Affiliates, the ability of
the Servicer to perform its obligations under the Agreement or the other
Transaction Documents or the collectibility of the Pool Receivables, or
which affects or purports to affect the legality, validity or
enforceability of the Agreement or the other Transaction Documents.
(g) Use of Proceeds. No proceeds of any purchase or
---------------
reinvestment will be used to acquire more than 5% of any class of any
security in any transaction which is subject to Sections 13 and 14 of
the Exchange Act, except for a nonhostile, invited Acquisition of a
Person (approved by the board of directors (or other body exercising
similar authority) of such Person, which does not violate any laws,
rules or regulations applicable thereto or any other provision of the
Transaction Documents.
(h) Quality of Title. The Seller is the legal and beneficial
----------------
owner of the Pool Receivables and Related Security
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<PAGE>
free and clear of any Adverse Claim; upon each purchase or reinvestment,
the Administrator, for the benefit of the Securitization Parties, shall
acquire a valid and enforceable perfected undivided percentage ownership
interest, to the extent of the Purchased Interest, in each Pool
Receivable then existing or thereafter arising and in the Related
Security and Collections and other proceeds, with respect thereto, free
and clear of any Adverse Claim; the Agreement creates a security
interest in favor of the Securitization Parties in the items described
in Section 1.2(d), and the Securitization Parties have a first
--------------
priority perfected security interest in such items, free and clear of
any Adverse Claims. No effective financing statement or other
instrument similar in effect covering any Contract Document or any Pool
Receivable or the Related Security or Collections with respect thereto
or any Lock-Box Account or the Collection Account is on file in any
recording office, except those filed in favor of the Administrator
relating to the Agreement or in favor of the Seller relating to the
Purchase and Sale Agreement and except those which are both
(i) indirectly covering any Pool Receivable or the Related Security as
proceeds which will be released or terminated within 60 days after the
Effective Date and (ii) listed on Annex E to the Receivables Purchase
-------
Agreement.
(i) Accuracy of Information. Each Seller Report certificate,
-----------------------
exhibit, financial statement, document, book, record, report or other
information furnished or to be furnished at any time by or on behalf of
the Servicer to the Seller or the Administrator in connection with the
Agreement is or will be accurate in all material respects as of its date
or as of the date so furnished, and no such item contains or will
contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements
contained therein, in the light of the circumstances under which they
were made, not misleading.
(j) Offices. The principal place of business and chief
-------
executive office (as such terms are used in the UCC) of the Servicer
and the office where the Servicer keeps its records concerning the
Receivables are located at the addresses referred to in Section 5.3(b).
--------------
(k) Governmental Authority. The Servicer is not in violation
----------------------
of any order of any court, arbitrator or Governmental Authority which
could have a Material Adverse Effect.
(l) Lock-Box Banks and Collection Account Bank. The names
------------------------------------------
and addresses of all the Lock-Box Banks and Collection Account Bank,
together with the account numbers of the related Lock-Box Accounts or
Collection Account, as applicable, are specified in Schedule I to the
----------
Receivables Purchase Agreement (or at such other Lock-Box Banks or
Collection Account Bank, as
-12-
<PAGE>
<PAGE>
applicable, and/or with such other Lock-Box Accounts or Collection
Account, as applicable, as have been notified to the Administrator in
accordance with the Agreement) and the Collection Account is subject to
the Collection Account Agreement and all Lock-Box Accounts subject to
Lock-Box Agreements, duly executed by the parties thereto (in the case
of certain Lock-Box Banks, within 30 days after the date hereof).
(m) Federal Reserve Regulations. No proceeds of any purchase
---------------------------
or reinvestment will be used for any purpose that violates any
applicable law, rule or regulation, including, without limitation,
Regulations T, U and X of the Federal Reserve Board.
(n) Eligible Receivables. Each Pool Receivable included as
--------------------
an Eligible Receivable in the calculation of the Net Receivables Pool
Balance, is an Eligible Receivable.
(o) No Termination Event. No event has occurred and is
--------------------
continuing, or would result from a purchase or reinvestment by any
Purchaser under the Receivables Purchase Agreement or from the
application of the proceeds therefrom, which constitutes a Termination
Event.
(p) Accounting as Sales. The Seller and each Originator have
-------------------
accounted for each sale of undivided percentage ownership interests in
the Pool Receivables in its books and financial statements as a sale,
consistent with generally accepted accounting principles.
(q) Compliance with Credit and Collection Policy. The
--------------------------------------------
Servicer has complied in all material respects with the Credit and
Collection Policy in effect at the time with regard to the collection of
Pool Receivables.
(r) Compliance with Transaction Documents. The Servicer has
-------------------------------------
complied in all material respects with all of the terms, covenants and
agreements contained in this Agreement and the other Transaction
Documents to which the Servicer is a party.
(s) Taxes. Each of the Servicer and the Seller has filed all
-----
federal and other tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges thereby
shown to be owing.
(t) Bulk Sales Act. No transaction contemplated by this
--------------
Agreement or any other Transaction Document requires compliance with, or
will be subject to avoidance under, any bulk sales act or similar law.
-13-
<PAGE>
<PAGE>
(u) Investment Company Act. The Servicer is not, and is not
----------------------
controlled by, an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company," or a
"subsidiary company" of a "holding company," or an affiliate of a
"holding company," or a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
(v) Pension Plans. During the preceding twelve months, no
-------------
steps have been taken to terminate any Pension Plan, and no contribution
failure has occurred with respect to any Pension Plan which has given
rise to a lien under Section 302(f) of ERISA. No condition exists or
event or transaction has occurred with respect to any Pension Plan which
could result in the incurrence by the Servicer of any material
liability, fine or penalty. The Servicer has no material unaccrued
liability with respect to any post-retirement benefit under a "welfare
plan" as defined in Section 3(1) of ERISA, other than liability for
continuation coverage described in Part 6 of title I of ERISA.
(w) Year 2000 Compliance. Any reprogramming required to
--------------------
permit the proper functioning, in and following the year 2000, of the
computer application systems used to conduct, operate and manage the
business, assets and operations of the Servicer, as so reprogrammed,
will be completed September 30, 1999, unless failure to complete such
reprogramming could not reasonably be expected to have a Material
Adverse Effect. With respect to any computer hardware, the Servicer:
(i) has initiated a review and assessment of all areas within the
Servicer's business and operations, (ii) has developed a plan and
timeline for addressing any problems which would cause it not to be Year
2000 Compliant on a timely basis, (iii) to date, has implemented such
plan in accordance with such timetable and (iv) believes, based upon the
foregoing, that the Servicer will be Year 2000 Compliant prior to
January 1, 2000. There are no additional costs to the Servicer relating
to becoming Year 2000 Compliant that will result in a Termination Event
or have a Material Adverse Effect. The computer and management
information systems used to conduct, operate and manage the business,
assets and operations of the Servicer are and with ordinary course
upgrading and maintenance (and with any additions to accommodate
growth), will continue for the term of this Agreement to be, sufficient
to permit the Servicer to conduct its business without having a Material
Adverse Effect.
(x) Separate Existence. The Facts and Assumptions are true
------------------
and correct.
SECTION 5.2. (a) Liability of Servicer; Indemnities. The
----------------------------------
Servicer shall be liable in accordance herewith only to the
-14-
<PAGE>
<PAGE>
extent of the obligations specifically undertaken by the Servicer under
this Agreement:
(i) The Servicer shall indemnify, defend and hold
harmless each Indemnified Party from and against any taxes that
may at any time be asserted against such Indemnified Party with
respect to the transactions contemplated herein, including,
without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege or license
taxes (other than any overall income taxes or franchise taxes
imposed on such Indemnified Party by the jurisdiction under the
laws of which such Indemnified Party is organized or qualified
(or should be qualified) to do business or any political
subdivision thereof) and costs and expenses in defending
against the same to the extent, directly or indirectly,
resulting from any action or omission of the Servicer in
connection with the Pool Receivables or relating to the
Transaction Documents.
(ii) The Servicer shall indemnify, defend and hold
harmless each Indemnified Party from and against any and all
costs, expenses, losses, claims, damages and liabilities to the
extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon such Indemnified
Party through, the willful misconduct or negligence of the
Servicer in the acceptance or performance of its duties under
this Agreement or any other Transaction Document to which the
Servicer is a party or by reason of reckless disregard of its
obligations and duties under this Agreement or any other
Transaction Document to which the Servicer is a party.
(iii) The Servicer shall indemnify, defend and hold
harmless each Indemnified Party from and against all costs,
expenses, losses, claims, damages and liabilities arising out
of or incurred in connection with the acceptance or performance
of the duties by Servicer, including any action by such
Indemnified Party at the direction of the Servicer taken
pursuant to Section 3.1, herein contained, except to the extent
that such cost, expense, loss, claim, damage or liability: (a)
shall be due to the willful misconduct or gross negligence of
such Indemnified Party; (b) relates to any tax other than the
taxes with respect to which either the Seller or the Servicer
shall be required to indemnify such Indemnified Party; or (c)
shall arise out of or be incurred in connection with the
acceptance or performance by such Indemnified Party
-15-
<PAGE>
<PAGE>
of the duties of successor Servicer hereunder unless such cost,
expense, loss, claim, damage or liability was caused by the act
or omission of the predecessor Servicer.
(iv) Without limiting the foregoing, the Servicer shall
indemnify, defend and hold harmless each Indemnified Party from
and against any and all costs, expenses, losses, claims,
damages and liabilities relating to or resulting from any of
the following:
(A) the failure of any Receivable included in the
calculation of the Net Receivables Pool Balance as an
Eligible Receivable to be an Eligible Receivable, the
failure of any information contained in a Seller Report
to be true and correct, or the failure of any other
information provided to the Seller or any Securitization
Party with respect to Receivables, Related Security,
Collections or this Agreement to be true and correct;
(B) the failure of any representation or warranty
or statement made or deemed made by the Servicer (or any
of its officers) under or in connection with this
Agreement or any other Transaction Document to have been
true and correct in all respects when made;
(C) the failure by the Servicer to comply with
the Credit and Collection Policy or any applicable law,
rule or regulation with respect to any Pool Receivable,
Related Security or the related Contract Documents to
conform to any such applicable law, rule or regulation;
(D) the failure to vest, and maintain vested, in
the Administrator, for the benefit of the Securitization
Parties, a valid and enforceable (A) perfected undivided
percentage ownership interest, to the extent of the
Purchased Interests, in the Receivables in, or purporting
to be in, the Receivables Pool and the Related Security
and Collections with respect thereto and (B) first
priority perfected security interest in the items
described in Section 1.2(d) of the Receivables Purchase
--------------
Agreement, in each case, free and clear of any Adverse
Claim;
(E) Intentionally Omitted;
-16-
<PAGE>
<PAGE>
(F) any dispute, claim, offset or defense (other
than discharge in bankruptcy of the Obligor) of the
Obligor to the payment of any Receivable in, or
purporting to be in, the Receivables Pool (including,
without limitation, a defense based on such Receivable or
the related Contract Document not being a legal, valid
and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other
claim resulting from the sale of the goods or services
related to such Receivable or the furnishing or failure
to furnish such goods or services or relating to
collection activities with respect to such Receivable (if
any such collection activities were performed by the
Servicer or any of its Affiliates or by any agent or
independent contractor retained by the Servicer or any of
its Affiliates);
(G) any failure of the Servicer to perform its
duties or obligations in accordance with the provisions
of this Agreement or any other Transaction Document or to
perform its duties or obligations in connection with any
Pool Receivable;
(H) any claim (including, without limitation, any
breach of warranty, product liability or environmental
claim), investigation, litigation or proceeding arising
out of or in connection with any Pool Receivable or
Related Security;
(I) the commingling of Collections of Pool
Receivables at any time with other funds and any lost,
mutilated, destroyed or missing Contract Documents;
(J) any investigation, litigation or proceeding
related to this Agreement or any other Transaction
Document or the use of proceeds of purchases or
reinvestments or the ownership of the Purchased Interests
or in connection with any Pool Receivable or Related
Security;
(K) any reduction in Capital as a result of the
distribution of Collections pursuant to Section 1.4(d),
--------------
in the event that all or a portion of such distributions
shall thereafter be rescinded or otherwise must be
returned for any
-17-
<PAGE>
<PAGE>
reason related to the servicing of the Pool Receivables
by the Servicer;
(L) as at the date of any purchase or
reinvestment the aggregate of the Purchased Interests of
all Purchasers exceeds 100% after giving effect to any
purchase or reinvestment by any Purchaser under the
Receivables Purchase Agreement;
(M) the failure of the Servicer to perform its
duties or obligations in accordance with the provisions
of the Transaction Documents or any claim relating to the
collection activities with respect to the Pool
Receivables; or
(N) the enforcement of any Transaction Document
against the Servicer by the Seller or any Securitization
Party.
(b) For purposes of this Section 5.2, in the event of the
termination of the rights and obligations of Mail-Well (or any successor
thereto pursuant to Section 5.3(l)) as Servicer pursuant to Section 6.2,
or a resignation by such Servicer pursuant to Section 6.1, such Servicer
shall be deemed to be the Servicer pending appointment of a successor
Servicer (other than the Issuer) pursuant to Section 6.3.
(c) Indemnification under this Section 5.2 shall survive
termination of this Agreement and the resignation or removal of the
Servicer and shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation.
SECTION 5.3. Covenants of Servicer.
---------------------
Until the Final Pay Out Date:
(a) Compliance with Laws, Etc. The Servicer shall comply in
--------------------------
all material respects with all applicable laws, rules, regulations and
orders, and preserve and maintain its corporate existence, rights,
franchises, qualifications, and privileges except to the extent that the
failure so to comply with such laws, rules and regulations or the
failure so to preserve and maintain such existence, rights, franchises,
qualifications, and privileges would not have a Material Adverse Effect.
(b) Offices, Records and Books of Account; Etc. The Servicer
-------------------------------------------
(i) shall keep its principal place of business and chief executive
office (as such terms are used in the UCC) at the address of the Seller
set forth under its name on the signature
-18-
<PAGE>
<PAGE>
page to the Receivables Purchase Agreement and the office where it keeps
its records concerning the Pool Receivables and the Contract Documents
at such address or at one of the locations specified in Schedule III to
the Receivables Purchase Agreement or, upon at least 60 days' prior
written notice of a proposed change to the Seller and the Administrator,
at any other address or locations in jurisdictions where all actions
reasonably requested by the Seller and the Administrator to protect and
perfect the interest of the Issuer in the Pool Receivables and related
items (including, without limitation, the items described in
Section 1.2(d) of the Receivables Purchase Agreement) have been taken
- --------------
and completed and (ii) shall provide the Seller and the Administrator
with at least 60 days' written notice prior to making any change in the
Servicer's name or making any other change in the Servicer's identity or
corporate structure (including, without limitation, a merger) which
could render any UCC financing statement filed in connection with this
Agreement "seriously misleading" as such term is used in the UCC; each
notice to the Seller or the Administrator pursuant to this sentence
shall set forth the applicable change and the effective date thereof.
The Servicer also will maintain and implement administrative and
operating procedures (including, without limitation, an ability to
recreate records evidencing Pool Receivables in the event of the
destruction of the originals thereof), and keep and maintain all
documents, books, records, computer tapes and disks and other
information reasonably necessary or advisable for the collection of all
Pool Receivables (including, without limitation, records adequate to
permit the daily identification of each Pool Receivable and all
Collections of and adjustments to each existing Pool Receivable).
(c) Performance and Compliance with Receivables and Credit and
-----------------------------------------------------------
Collection Policy. The Servicer shall, at its expense, timely and
- -----------------
fully perform and comply with all material provisions, covenants and
other promises required to be observed by it under the Pool Receivables,
and timely and fully comply in all material respects with the Credit and
Collection Policy with regard to each Pool Receivable.
(d) Ownership Interest, Etc. The Servicer shall, at its
------------------------
expense, take all action necessary or desirable to establish and
maintain (i) a valid and enforceable perfected undivided ownership
interest in favor of the Administrator, for the benefit of the
Securitization Parties, to the extent of the Purchased Interests, in the
Pool Receivables and the Related Security and Collections and other
proceeds with respect thereto, and (ii) a first priority perfected
security interest in favor of the Administrator, for the benefit of the
Securitization Parties, in the items described in Section 1.2(d) of
--------------
the Receivables Purchase Agreement, in each case free and clear of any
Adverse Claim, including, without limitation, taking such action to
perfect,
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<PAGE>
<PAGE>
protect or more fully evidence the interests of the Securitization
Parties under the Agreement as the Securitization Parties may request.
(e) Sales, Liens, Etc. The Servicer shall not sell, assign
------------------
(by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any or all of
its right, title or interest in, to or under, any item described in
Section 1.2(d) of the Receivables Purchase Agreement (including, without
limitation, the Servicer's obligation to preserve the Seller's undivided
interest in any Pool Receivable, Related Security, or Collections, or
upon or with respect to any account to which any Collections of any Pool
Receivables are sent), or assign any right to receive income in respect
of any items contemplated by this paragraph (e).
-------------
(f) Extension or Amendment of Receivables. Except as
-------------------------------------
provided in the Agreement and the other Transaction Documents, the
Servicer shall not extend the maturity or adjust the Outstanding
Principal Balance or otherwise amend, modify or waive the terms of any
Pool Receivable.
(g) Change in Business or Credit and Collection Policy. The
--------------------------------------------------
Servicer shall not make any material change in the character of its
business or in the Credit and Collection Policy, or any change in the
Credit and Collection Policy that would adversely affect the
collectibility or enforceability of any Pool Receivable or the ability
of the Servicer to perform its obligations, if any, under any Pool
Receivable or under the Agreement or the other Transaction Documents to
which it is a party, without the prior written consent of the Seller and
the Administrator.
(h) Audits. The Servicer shall, from time to time during
------
regular business hours as reasonably requested by the Seller or the
Administrator, permit the Seller and the Administrator, or their agents
or representatives, (i) to examine and make copies of and abstracts from
all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the
Servicer relating to Receivables and the Related Security, and (ii) to
visit the offices and properties of the Servicer for the purpose of
examining such materials described in clause (i) above, and to discuss
matters relating to Pool Receivables and the Related Security with any
of the officers, employees, agents or contractors of the Servicer having
knowledge of such matters, and shall permit and cooperate with an annual
(or more frequently if reasonably required by the Seller or the
Administrator) audit (conducted at the Servicer's expense) of the
Servicer and its servicing activities by the Seller and the
Administrator and the independent accountants selected thereby.
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<PAGE>
<PAGE>
(i) Lock-Box Accounts and Collection Account. (i) The
----------------------------------------
Servicer shall not add or terminate any bank as a Lock-Box Bank or any
account as a Lock-Box Account from those listed in Schedule I to the
Receivables Purchase Agreement, or make any change in its instructions
to Obligors regarding payments to be made to the Seller or payments made
to any Lock-Box Account (or related post office box), unless the Seller
and the Administrator shall have consented thereto in writing and the
Seller and the Administrator shall have received copies of all
agreements and documents (including, without limitation, Lock-Box
Agreements) that it may request in connection therewith.
(ii) The Servicer (on behalf of the Seller) shall (A) instruct
all Obligors to make payments of all Receivables to one or more Lock-
Box Accounts or to post office boxes to which only Lock-Box Banks
have access (and shall instruct the Lock-Box Banks to cause all items
and amounts relating to such Pool Receivables received in such post
office boxes to be removed and deposited into a Lock-Box Account on a
daily basis), and (B) deposit, or cause to be deposited, any
Collections of Pool Receivables (other than those described in clause
(b) of the definition thereof) received by it into Lock-Box Accounts
not later than two Business Days after receipt thereof. The Servicer
shall at all times maintain the Lock-Box Accounts. Each Lock-Box
Account shall at all times be subject to a Lock-Box Agreement.
(iii) The Servicer shall not add or terminate any bank as a
Collection Account Bank or any account as a Collection Account from
those listed in Schedule I to the Agreement, unless the Seller and
----------
the Administrator shall have consented thereto in writing and the
Seller and the Administrator shall have received copies of all
agreements and documents (including without limitation, Collection
Account Agreements) that it may request in connection therewith.
(iv) Each Collection Account shall at all times be subject to
a Collection Agreement. The Seller will not deposit or otherwise
credit, or cause or permit to be so deposited or credited, to any
Collection Account cash or cash proceeds other than Collections.
(j) Marking of Records. At its expense, the Servicer (on
------------------
behalf of the Seller) shall mark (a) the master data processing records
and storage cabinets relating to Pool Receivables, including with a
legend evidencing that the undivided percentage ownership interests in
such Pool Receivables have been sold in accordance with the Receivables
Purchase Agreement and (b) at the request of the Seller or the
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<PAGE>
Administrator, each Pool Receivable with a legend, in form reasonably
satisfactory to the Seller and the Administrator, to the effect that
such Pool Receivable (or an undivided interest thereon) has been sold in
accordance with the Receivables Purchase Agreement.
(k) Separate Corporate Existence of the Seller. The Servicer
------------------------------------------
hereby acknowledges that the Seller and the Securitization Parties are
entering into the transactions contemplated by the Transaction Documents
in reliance upon the Seller's identity as a legal entity separate from
the Servicer, the Guarantor and each Originator. Therefore, from and
after the date hereof, the Servicer shall take all steps to continue the
Seller's identity as such a separate legal entity and to make it
apparent to third Persons that the Seller is an entity with assets and
liabilities distinct from those of the Servicer, the Guarantor, any
Originator or any other Person, and not a division of the Servicer, the
Guarantor, any Originator or any other Person. Without limiting the
generality of the foregoing, the Servicer shall not cause, or take any
action, or omit to take any action, that would cause the Seller to
violate any of the provisions contained in paragraph (k) of Exhibit IV
to the RPA or would be inconsistent with the Facts and Assumptions.
(l) Mergers, Acquisitions, Sales, etc. Any Person (a) into
---------------------------------
which the Servicer may be merged or consolidated, (b) which may result
from any merger or consolidation to which the Servicer shall be a party
(if the Servicer is not the surviving entity), or (c) which may succeed
to the properties and assets of the Servicer substantially as a whole,
shall be the successor to the Servicer under this Agreement without
further action on the part of any of the parties to this Agreement;
provided, however, that the Servicer shall not be a party to any
- -------- -------
merger, consolidation or Acquisition with or of another Person (or
substantially all of its properties or assets) unless (i) immediately
after giving effect to such transaction, no Termination Event, and no
Unmatured Termination Event shall have happened and be continuing, (ii)
the Servicer shall have delivered to the Seller and the Administrator
(for the benefit of each Securitization Party) an officer's certificate
(and, if the Servicer is not the surviving entity, an Opinion of
Counsel) stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 5.3(l), and (iii) the
Servicer shall have delivered to the Seller and the Administrator (for
the benefit of each Securitization Party) an officer's certificate (and,
if the Servicer is not the surviving entity, an Opinion of Counsel)
either (A) stating that all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Seller and
each Securitization Party in the Pool Receivables, and reciting the
details of such
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<PAGE>
<PAGE>
filings, or (B) stating that no such action shall be necessary to
preserve and protect such interest. Notwithstanding anything herein to
the contrary, the Servicer shall not consummate any transaction of a
type referred to in clauses (a), (b) or (c) above without the prior
written consent of the Administrator (except if the Servicer is merging
or consolidating with an Originator) and unless at or prior thereto the
foregoing agreement of assumption shall have been executed and the
conditions described in clauses (i), (ii) and (iii) shall have been met
to the reasonable satisfaction of the Administrator.
(m) ERISA Matters. The Servicer shall notify the Seller and
-------------
the Administrator as soon as is practicable and in any event not later
than two Business Days after (i) the institution of any steps by the
Servicer or any other Person to terminate any Pension Plan which could
have a Material Adverse Effect, (ii) the failure to make a required
contribution to any Pension Plan if such failure is sufficient to give
rise to a lien under section 302(f) of ERISA, (iii) the taking of any
action with respect to a Pension Plan which could result in the
requirement that the Servicer furnish a bond or other security to the
PBGC or such Pension Plan or (iv) the occurrence of any event with
respect to any Pension Plan which could have a Material Adverse Effect,
or any material increase in the contingent liability of the Servicer
with respect to any post-retirement "welfare plan" (as defined in
Section 3(1) of ERISA) benefit.
(n) Reporting Requirements. The Servicer will provide to
----------------------
the Seller and the Administrator (in multiple copies, if requested by
the Administrator) the following:
(i) as soon as available and in any event within 45
days after the end of the first three quarters of each fiscal
year (beginning with the quarter ended June 30, 1999) of Mail-
Well, Inc., balance sheets of Mail-Well, Inc. and its
subsidiaries as of the end of such quarter and statements of
income and retained earnings thereof for the period commencing
at the beginning of such previous fiscal year and ending with
the end of such quarter, certified by the treasurer or
assistant treasurer thereof (as applicable);
(ii) as soon as available and in any event within 90
days after the end of each fiscal year (beginning with the year
ended December 31, 1999) of Mail-Well, Inc., a copy of the
annual report for such year for Mail-Well, Inc. and its
subsidiaries containing financial statements for such year
audited by nationally-recognized independent certified public
accountants;
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<PAGE>
<PAGE>
(iii) as soon as possible and in any event within five
days after the occurrence of each Purchase and Sale Termination
Event or event which, with the giving of notice or lapse of
time, or both, would constitute a Purchase and Sale Termination
Event, a statement of the treasurer or assistant treasurer of
the Servicer setting forth details of such Purchase and Sale
Termination Event or event and the action that the Servicer has
taken and proposes to take with respect thereto;
(iv) promptly after the sending or filing thereof,
copies of all reports that may be material to the transactions
contemplated hereby that the Servicer sends to any of its
security holders, and copies of all reports and registration
statements that the Servicer or any subsidiary files with the
Securities and Exchange Commission or any national securities
exchange;
(v) promptly after the filing by the Servicer or
receiving notice or knowledge thereof, copies of all reports
and notices that the Servicer or any Affiliate files under
ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or that
the Servicer or any Affiliate receives from any of the
foregoing or from any multiemployer plan (within the meaning of
Section 4001(a)(3) of ERISA) to which the Servicer or any
Affiliate is or was, within the preceding five years, a
contributing employer, in each case in respect of the
assessment of withdrawal liability or an event or condition
which could result in the imposition of liability on the
Servicer and/or any such Affiliate in excess of $500,000 or
which, in the aggregate, could have a Material Adverse Effect;
(vi) at least 60 days prior to any change in the
Servicer's name or any other change requiring the amendment of
UCC financing statements, a notice setting forth such changes
and the effective date thereof;
(vii) such other information respecting the Receivables
or the condition or operations, financial or otherwise, of the
Servicer or any of its Affiliates as the Seller or the
Administrator may from time to time reasonably request;
(viii) promptly after the Servicer obtains knowledge
thereof, notice of any (a) litigation, investigation or
proceeding which may exist at any time
-24-
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<PAGE>
between the Servicer and any Governmental Authority which, if
not cured or if adversely determined, as the case may be, could
have a Material Adverse Effect; or (b) litigation or proceeding
affecting (i) the Servicer which could have a Material Adverse
Effect which is not covered by insurance or in which injunctive
or similar relief is sought or (c) litigation or proceedings
relating to any Transaction Document;
(ix) promptly after the occurrence thereof, notice of
a material adverse change in the business, operations, property
or financial or other condition of the Servicer.
(o) Year 2000 Compliance. The Servicer shall promptly
--------------------
notify the Seller and the Administrator in the event the Servicer
becomes aware that any of its computer applications (including those of
its suppliers or vendors) that is material to its business and
operations will not be Year 2000 Compliant on a timely basis, except to
the extent that any such failure to comply could not reasonably be
expected to have a Material Adverse Effect on the Servicer and could not
reasonably be expected to cause a Termination Event.
(p) Delivery of Credit and Collection Policy. The Servicer
----------------------------------------
shall deliver to the Seller and the Administrator a document that sets
forth the Credit and Collection Policy, which document shall be
reasonably satisfactory, in form and substance, to the Seller and the
Administrator.
ARTICLE VI
Servicer Termination
--------------------
SECTION 6.1. Mail-Well Not to Resign as Servicer. Except as
-----------------------------------
a result of the operation of Section 5.3(l), Mail-Well shall not resign
from the obligations and duties hereby imposed on it as Servicer under
this Agreement and the other Transaction Documents to which the Servicer
is a party except upon determination that the performance of its duties
under this Agreement and the other Transaction Documents to which the
Servicer is a party shall no longer be permissible under applicable law.
Notice of any such determination permitting the resignation of Mail-Well
shall be communicated to the Seller, the Administrator and the other
Securitization Parties at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced
by an Opinion of Counsel to such effect delivered to the Seller, the
Administrator and the other Securitization Parties
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<PAGE>
concurrently with or promptly after such notice. Except where
resignation occurs by reason of a legal prohibition, no such
registration shall become effective until a successor Servicer shall
have assumed the responsibilities and obligations of the Servicer in
accordance with Section 6.3.
SECTION 6.2. Servicer Termination. Following the occurrence
--------------------
of a Termination Event, the Administrator may, by written notice to the
Servicer (a "Servicer Termination"), terminate all of the rights and
--------------------
obligations of the Servicer (or such sub-servicers) under this Agreement
and the other Transaction Documents. On or after the receipt by the
Servicer of a Servicer Termination, all authority and power of the
Servicer (or such sub-servicers) under this Agreement, whether with
respect to the Pool Receivables, the Contract Documents or otherwise,
shall, without further action, pass to and be vested in the
Administrator or such successor Servicer as may be appointed under
Section 6.3 pursuant to and under this Section 6.2; and the
Administrator is hereby authorized and empowered to execute and deliver,
on behalf of the predecessor Servicer, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to effect the purposes of
such notice of termination, whether to complete the transfer and
endorsement of the Pool Receivables and related documents, or otherwise.
The predecessor Servicer shall cooperate (and cause each sub-servicer to
cooperate) with the successor Servicer and the Administrator and the
other Securitization Parties in effecting the termination of the
responsibilities and rights of the predecessor Servicer (or such sub-
servicers) under this Agreement and the other Transaction Documents,
including the transfer to the successor Servicer for administration by
it of all cash amounts that shall at the time be held by the predecessor
Servicer for deposit, or shall thereafter be received with respect to a
Pool Receivable. All reasonable costs and expenses (including
attorneys' fees and disbursements) incurred in connection with
transferring the Contract Documents to the successor Servicer and
amending this Agreement to reflect such succession as Servicer pursuant
to this Section 6.2 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
SECTION 6.3. Appointment of Successor. (a) Upon the
------------------------
Servicer's receipt of notice of termination pursuant to Section 6.2 or
the Servicer's resignation in accordance with Section 6.1, the
predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement and the other Transaction Documents, in the case of
termination, only until the date specified in such termination notice
or, if no such date is specified in a notice of termination, until
receipt of such notice and, in the case of resignation, until the later
of (x)
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<PAGE>
the date 45 days from the delivery to the Administrator and the other
Securitization Parties of written notice of such resignation (or written
confirmation of such notice of resignation) in accordance with the terms
of this Agreement and the other Transaction Documents and (y) the date
upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and an accompanying
Opinion of Counsel. In the event of the Servicer's resignation or
termination hereunder, a successor Servicer appointed by the
Administrator will succeed to all the subsequently accruing
responsibilities, duties and liabilities of the Servicer under this
Agreement and will be entitled to similar compensation arrangements.
The successor Servicer shall accept its appointment by a written
assumption in form acceptable to the Administrator.
(b) Upon appointment, the successor Servicer shall be the
successor in all respects to the predecessor Servicer and shall be
subject to all the responsibilities, duties and liabilities arising
thereafter relating thereto placed on the predecessor Servicer, and
shall be entitled to the Servicing Fee and other fees payable to the
Servicer pursuant to Section 3.8 hereof, and all the rights granted to
the predecessor Servicer, by the terms and provisions of this Agreement
and the other Transaction Documents; provided, however, that the
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Administrator and successor Servicer may negotiate any amendments with
respect to the rights and obligations of the Servicer (other than the
Servicing Fee) to this Agreement or other Transaction Documents to the
extent reasonably required by such successor Servicer. No such
appointment shall make the successor Servicer responsible for any
liabilities of the predecessor Servicer incurred prior to such
appointment or for any acts, omissions or misrepresentations of such
predecessor Servicer.
ARTICLE VII
Miscellaneous Provisions
------------------------
SECTION 7.1. Amendment. No amendment or waiver of any
---------
provision of this Agreement or consent to any departure by the Servicer
therefrom shall be effective unless in a writing signed by the Seller
and the Administrator, and, in the case of any amendment other than in
accordance with the proviso in Section 6.3(b), by the Seller and the
--------------
Servicer and then such amendment, waiver or consent shall be effective
only in the specific instance and for the specific purpose for which
given. No failure on the part of the Seller, the Servicer or the
Administrator to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, nor shall any single
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or partial exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 7.2. Protection of Title to Pool Receivables.
---------------------------------------
(a) The Servicer shall maintain accounts and records as to each
Pool Receivable accurately and in sufficient detail to permit (i) the
reader thereof to know at any time the status of such Pool Receivable,
including, without limitation, payments and recoveries made and payments
owing (and the nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Pool Receivable and the
amounts from time to time deposited in the Lock-Box Account and the
Collection Account in respect of such Pool Receivable.
(b) The Servicer shall maintain its computer systems so that,
from and after the time of sale of the Pool Receivables to the Seller or
the Administrator, for the benefit of the Securitization Parties, the
Servicer's master computer records (including any back-up archives) that
refer to a Pool Receivable shall indicate clearly that such Pool
Receivable is owned thereby. Indication of such ownership of a Pool
Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Pool Receivable shall have been paid in
full or repurchased or sold.
(c) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest
in any Pool Receivables to any prospective lender or other transferee,
the Servicer shall give to such prospective lender or other transferee
computer tapes, records or print-outs (including, without limitation,
any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Pool Receivable, shall indicate clearly that
such Pool Receivable has been sold and is owned by the Administrator,
for the benefit of the Securitization Parties.
(d) Upon request, the Servicer shall furnish to the Seller and
the Administrator, within three Business Days, a list of all Pool
Receivables (by contract number and name of Obligor), together with a
reconciliation of such list to each of the Seller Reports finished
before such request.
SECTION 7.3. GOVERNING LAW AND JURISDICTION. (A) THIS
------------------------------
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAWS PRINCIPLES THEREOF OTHER THAN SECTION 5-1401 OF THE NEW YORK
GENERAL OBLIGATIONS LAW).
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW
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YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE SELLER, THE
SERVICER AND THE ADMINISTRATOR CONSENTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH
OF THE SELLER, THE SERVICER AND THE ADMINISTRATOR IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, 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 PROCEEDINGS IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT
OR ANY DOCUMENT RELATED HERETO. THE SELLER, THE SERVICER AND THE
ADMINISTRATOR EACH WAIVE PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT OR
OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY NEW
YORK LAW.
SECTION 7.4. Notices, Etc. All notices and other
------------
communications hereunder shall, unless otherwise stated herein, be in
writing (which shall include facsimile communication) and sent or
delivered, to each party hereto, at its address set forth under its name
on the signature pages of the Receivables Purchase Agreement or at such
other address as shall be designated by such party in a written notice
to the other parties hereto. Notices and communications by facsimile
shall be effective when sent and the confirmation of transmission has
been received (and shall be followed by hard copy sent by first class
mail), and notices and communications sent by other means shall be
effective when received.
SECTION 7.5. Severability of Provisions. If any or more of
--------------------------
the covenants, agreements, provisions or terms of this Agreement shall
be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement
and shall in no way affect the validity or enforceability of the other
provisions of this Agreement.
SECTION 7.6. Assignment. (a) This Agreement and the rights
----------
and obligations of the Administrator hereunder shall be assignable, in
whole or in part, by the Administrator and its successors and assigns.
Without limiting any other rights that may be available under applicable
law, the rights of the Seller or the Securitization Parties may be
enforced thereby or by their agents.
(b) The Servicer acknowledges that, contemporaneously herewith or
at any time hereafter, the Seller (i) is assigning or will assign to the
Issuer, pursuant to the Receivables Purchase Agreement, one or more
undivided interests in all of the Seller's rights, title and interest
in, to and under the Receivables Pool and Related Security and
Collections with respect thereto and proceeds with respect to the
foregoing, and (ii) is hereby
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assigning to the Administrator, for the benefit of the Securitization
Parties, all of the Seller's right, title and interest in, to and under
this Agreement, including, without limitation, the assignment by the
Seller to the Administrator, for the benefit of the Securitization
Parties, of the right of the Seller, at any time, to enforce this
Agreement against the Servicer and the obligations of the Servicer
hereunder, the right, at any time, in accordance with the terms hereof,
to give or withhold any and all consents, requests, notices, directions,
approvals, demands, extensions or waivers under or with respect to this
Agreement, any other Transaction Document or the obligations in respect
of the Servicer thereunder to the same extent as the Seller may do, and
all of the Seller's rights, remedies, powers and privileges, and all
claims of the Seller against the Servicer, under or with respect to this
Agreement (whether arising pursuant to the terms of this Agreement or
otherwise available at law or in equity), it being understood that such
assignment shall not relieve any party hereto from (or require any of
the Securitization Parties to undertake) the performance of any term,
covenant or agreement on the part of any party hereto to be performed or
observed under or in connection with this Agreement. The Servicer
hereby consents to such assignments. Each of the parties hereto
acknowledges and agrees that the Securitization Parties and the other
Affected Persons are third party beneficiaries of the rights of the
Seller arising hereunder and under the other Transaction Documents to
which the Servicer is a party.
(c) The Servicer hereby agrees to execute all agreements,
instruments and documents, and to take all other action, that the Seller
or the Administrator determines is necessary or reasonably desirable to
evidence its consent described in Section 7.6(b).
--------------
(d) The Servicer hereby acknowledges that its obligations to the
Securitization Parties are and shall be, to the extent permitted by
applicable law or not prohibited by any order of any court or
administrative or regulatory authority, absolute and unconditional under
any and all circumstances and shall be unaffected by any claims, offsets
or other defenses the Servicer may have against any Securitization
Party, and the Servicer agrees that it shall not interpose any such
claims, offsets or defenses as a defense to its performance of its
obligations under this Agreement or any other Transaction Documents to
which it is a party.
SECTION 7.7. Counterparts. For the purpose of facilitating
------------
the execution of this Agreement and for other purposes, this Agreement
may be executed simultaneously in any number of counterparts, each of
which counterparts shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same instrument.
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<PAGE>
SECTION 7.8. Third Party Beneficiary. The Securitization
-----------------------
Parties (other than the Administrator) shall be a third party
beneficiary entitled to enforce any provisions in its favor hereunder.
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IN WITNESS WHEREOF, the Seller, the Servicer, and the
Administrator, as agent for the Issuer, have caused this Agreement to be
duly executed by their respective officers as of the day and year first
above written.
MAIL-WELL I CORPORATION, as Servicer
By:__________________________________________
Name:________________________________________
Title:_______________________________________
MAIL-WELL TRADE RECEIVABLES CORPORATION,
as Seller
By:__________________________________________
Name:________________________________________
Title:_______________________________________
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrator
By:__________________________________________
Name:________________________________________
Title:_______________________________________
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SCHEDULE A
Schedule of Permitted Investments
---------------------------------
"Permitted Investments" are any of the following:
---------------------
(a) negotiable instruments or securities represented by
instruments or securities represented by instruments in bearer or
registered or in book-entry form which evidence:
(i) obligations fully guaranteed by the United
States of America;
(ii) time deposits in, or bankers acceptances
issued by, any depositary institution or trust company
incorporated under the laws of the United States of
America or any State and subject to supervision and
examination by Federal or State banking or depositary
institution authorities; provided, however, that at
-------- -------
the time of investment or contractual commitment to
invest therein, the certificates of deposit or short-term
deposits, if any, or long-term unsecured debt obligations
(other than such obligation whose rating is based on
collateral or on the credit of a Person other than such
institution or trust company) of such depositary
institution or trust company shall have a credit rating
from Moody's and S&P of at least "P-l" and "A-1,"
respectively, in the case of the certificates of deposit
or short-term deposits, or a rating not lower than one of
the two highest investment categories granted by Moody's
and by S&P;
(iii) certificates of deposit having, at the time
of investment or contractual commitment to invest
therein, a rating from Moody's and S&P of at least "P-1"
and "A-1," respectively; or
(iv) investments in money market funds rated in
the highest investment category or otherwise approved in
writing by the Administrator;
(b) demand deposits in any depositary institution or
trust company referred to in (a) (ii) above;
(c) commercial paper (having original or remaining
maturities of no more than 30 days) having, at the time of investment or
contractual commitment to invest therein, a credit rating from Moody's
and S&P of at least "P-1" and "A-1," respectively;
A-1
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(d) Eurodollar time deposits having a credit rating
from Moody's and S&P of at least "P-1" and "A-1," respectively; and
(e) repurchase agreements involving any of the Eligible
Investments described in clauses (a) (1), (a) (iii) and (d) hereof so
long as the other party to the repurchase agreement has at the time of
investment therein, a rating from Moody's and S&P of at least "P-1" and
"A-1," respectively.
Exhibit A-1
<PAGE>
<PAGE>
FIRST AMENDMENT TO
SERVICING AGREEMENT
THIS FIRST AMENDMENT TO SERVICING AGREEMENT, dated as of July
1, 1999 (this "Amendment"), is entered into among MAIL-WELL I
---------
CORPORATION, a Delaware corporation, as initial servicer (the
"Servicer"), MAIL-WELL TRADE RECEIVABLES CORPORATION, a Colorado
--------
corporation, as seller (the "Seller"), and BANK OF AMERICA, NATIONAL
------
ASSOCIATION (f/k/a BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION), as administratoar (the "Administrator").
-------------
RECITALS
1. The Servicer, the Seller and the Administrator are parties
to the Servicing Agreement, dated as of July 1, 1999 (the
"Agreement"); and
---------
2. The parties hereto desire to amend the Agreement as set
forth herein.
NOW THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Certain Defined Terms. Capitalized terms used but not
---------------------
defined herein shall have the meaning set forth in Article I to the
Agreement or in Exhibit I to the Receivables Purchase Agreement.
2. Amendments to the Agreement. The Agreement is hereby
---------------------------
amended as follows:
2.1 Clause (ii)(A) of paragraph (i) in Section 5.3 of
the Agreement is hereby amended by adding the following
proviso, immediately prior to the comma, at the end thereof:
; provided, however, that the Obligors of Receivables
originated by WISCO II, LLC or WISCO III, LLC may be
instructed to make payments directly to the Servicer (or
any sub-servicer), which payments shall be deposited by
the Servicer (or such sub-servicer) into a Lock-Box
Account not later than two Business Days after receipt
thereof.
3. Effect of Amendment. Except as expressly amended and
-------------------
modified by this Amendment, all provisions of the Agreement shall remain
in full force and effect. After this Amendment becomes effective, all
references in the Agreement (or in any other Transaction Document) to
"this Agreement", "hereof", "herein" or words of similar effect
referring to the Agreement shall be deemed to be references to the
Agreement as amended by this Amendment. This Amendment shall
<PAGE>
<PAGE>
not be deemed, expressly or impliedly, to waive, amend or supplement any
provision of the Agreement other than as set forth herein.
4. Counterparts. This Amendment may be executed in any
------------
number of counterparts and by different parties on separate
counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute but one
and the same instrument.
5. Governing Law. This Amendment shall be governed by, and
-------------
construed in accordance with, the law of the State of New York without
regard to any otherwise applicable principles of conflicts of law.
6. Section Headings. The various headings of this Amendment
----------------
are included for convenience only and shall not affect the meaning or
interpretation of this Amendment, the Agreement or any provision hereof
or thereof.
[signature page on next page]
2
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IN WITNESS WHEREOF, the parties have executed this Amendment as
of the date first written above.
MAIL-WELL I CORPORATION,
as initial Servicer
By:______________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
MAIL-WELL TRADE RECEIVABLE CORPORATION,
as Seller
By:______________________________________
Name: Robert Meyer
Title: Vice President, Treasurer and Tax
BANK OF AMERICA, NATIONAL ASSOCIATION
(f/k/a BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION), as Administrator
By:______________________________________
Name:
Title:
3
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,147
<SECURITIES> 92,891
<RECEIVABLES> 91,328
<ALLOWANCES> 0
<INVENTORY> 139,771
<CURRENT-ASSETS> 367,699
<PP&E> 656,265
<DEPRECIATION> (133,817)
<TOTAL-ASSETS> 1,360,262
<CURRENT-LIABILITIES> 259,443
<BONDS> 0
0
0
<COMMON> 490
<OTHER-SE> 354,092
<TOTAL-LIABILITY-AND-EQUITY> 1,360,262
<SALES> 1,372,250
<TOTAL-REVENUES> 1,372,250
<CGS> 1,052,229
<TOTAL-COSTS> 1,251,248
<OTHER-EXPENSES> (640)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,545
<INCOME-PRETAX> 80,097
<INCOME-TAX> 32,840
<INCOME-CONTINUING> 47,257
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 47,257
<EPS-BASIC> 0.97
<EPS-DILUTED> 0.88
</TABLE>
