Exhibit 10.23
SECOND AMENDED AND RESTATED SECURITY AGREEMENT
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SECOND AMENDED AND RESTATED SECURITY AGREEMENT, dated as of March
25, 2004 (the "Security Agreement"), by and among each of the undersigned
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Grantors (as such term is defined herein) and BANK OF AMERICA, N.A., in its
capacity as Agent (as such term is defined herein) for the Lenders (as such
term is defined herein).
W I T N E S S E T H:
WHEREAS, Mail-Well, Inc., a Colorado corporation ("Parent"),
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Mail-Well I Corporation, a Delaware corporation ("Mail-Well I"), and certain
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other Subsidiaries of Mail-Well I party thereto (Mail-Well I and each such
Subsidiary, individually, a "Borrower", and, collectively, the "Borrowers"),
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the several financial institutions from time to time party thereto (the
"Lenders") and Bank of America, N.A., as administrative agent for the
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Lenders (the "Agent"), are contemporaneously herewith entering into that
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certain Second Amended and Restated Credit Agreement, dated of even date
herewith (as the same may be amended or amended and restated from time to
time, the "Credit Agreement"), which amends and restates that certain
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Amended and Restated Credit Agreement, dated as of June 27, 2002 (as
amended, the "Old Credit Agreement");
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WHEREAS, in order to induce the Agent and the Lenders to enter into
the Credit Agreement and the other Loan Documents and to make the loans and
issue letters of credit as provided for in the Credit Agreement, the
Grantors have agreed to amend and restate that certain Amended and Restated
Security Agreement, dated as of June 27, 2002 (as amended, the "Old Security
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Agreement"), to, among other things, grant a continuing Lien on the
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Collateral (as hereinafter defined) to secure all indebtedness, liabilities,
and obligations (including, without limitation, the Obligations under the
Credit Agreement) of the Borrowers and the other Grantors outstanding under
or otherwise described in the Credit Agreement, the Parent/Subsidiary
Guaranty and the other Loan Documents (collectively, the "Secured
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Obligations");
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NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:
1. DEFINED TERMS. The following terms shall have the following
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respective meanings:
"Accounts" means, as to any Grantor, all of such Grantor's
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now owned or hereafter acquired or arising accounts, as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition
of services, whether or not they have been earned by performance.
"Administrative Borrower" has the meaning set forth in the
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Credit Agreement.
"Affiliate" means, as to any Person, any other Person
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which, directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person or which owns, directly or
indirectly, 5 percent or more of the outstanding equity interest of such
Person. A
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Person shall be deemed to control another Person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract, or otherwise.
"Chattel Paper" means, as to any Grantor, all of such
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Grantor's now owned or hereafter acquired chattel paper, as defined in the
UCC, including electronic chattel paper.
"Collateral" has the meaning set forth in Section 2(a).
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"Deposit Accounts" means, as to any Grantor, all "deposit
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accounts" as such term is defined in the UCC, now or hereafter held in the
name of such Grantor.
"Documents" means all documents as such term is defined in
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the UCC, including bills of lading, warehouse receipts or other documents of
title, now owned or hereafter acquired by the Grantor.
"Equipment" means, as to any Grantor, all of such
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Grantor's now owned and hereafter acquired machinery, equipment, furniture,
furnishings, fixtures, and other tangible personal property (except
Inventory), including embedded software, motor vehicles with respect to
which a certificate of title has been issued, aircraft, dies, tools, jigs,
molds and office equipment, as well as all of such Grantor's right, title,
and interest in and to all such types of property leased by such Grantor and
all of such Grantor's rights and interests with respect thereto under such
leases (including, without limitation, options to purchase); together with
all present and future additions and accessions thereto, replacements
therefor, component and auxiliary parts and supplies used or to be used in
connection therewith, and all substitutes for any of the foregoing, and all
manuals, drawings, instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"ERCs" means Emission Reduction Credits, as described in
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California Health and Safety Code Section 40709, et seq.
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"General Intangibles" means, as to any Grantor, all of
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such Grantor's now owned or hereafter acquired general intangibles, choses
in action and causes of action and all other intangible personal property of
such Grantor of every kind and nature (other than Accounts), including,
without limitation, all contract rights, payment intangibles, Proprietary
Rights, corporate or other business records, inventions, designs,
blueprints, plans, specifications, trade secrets, goodwill, computer
software, customer lists, registrations, tax refund claims, interests in
ERCs, any funds which may become due to such Grantor in connection with the
termination of any employee benefit plan or any rights thereto and any other
amounts payable to such Grantor from any employee benefit plan, rights and
claims against carriers and shippers, rights to indemnification, business
interruption insurance and proceeds thereof, property, casualty or any
similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which such Grantor is beneficiary,
rights to receive dividends, distributions, cash, Instruments and other
property in respect of or in exchange for pledged equity interests or
Investment Property and any letter of credit, guarantee, claim, security
interest or other security held by or granted to such Grantor.
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"Goods" means, as to any Grantor, all "goods" as defined
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in the UCC, now owned or hereafter acquired by such Grantor, wherever
located, including embedded software to the extent included in "goods" as
defined in the UCC, manufactured homes, standing timber that is cut and
removed for sale and unborn young of animals.
"Grantor" means (a) each of the undersigned Persons and
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(b) each other Person, if any, that becomes a party to this Agreement after
the Closing Date, by joinder or otherwise, pursuant to the terms of the
Credit Agreement, and in each case their respective successors and assigns,
and "Grantors" means two or more of such Persons, collectively.
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"Instruments" means, as to any Grantor, all instruments as
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such term is defined in the UCC, now owned or hereafter acquired by such
Grantor.
"Inventory" means, as to any Grantor, all of such
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Grantor's now owned and hereafter acquired inventory, goods and merchandise,
wherever located, to be furnished under any contract of service or held for
sale or lease, all returned goods, raw materials, work-in-process, finished
goods (including embedded software), other materials and supplies of any
kind, nature or description which are used or consumed in such Grantor's
business or used in connection with the packing, shipping, advertising,
selling or finishing of such goods, merchandise, and all documents of title
or other Documents representing them.
"Investment Property" means, as to any Grantor, all of
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such Grantor's right, title and interest in and to any and all: (a)
securities whether certificated or uncertificated; (b) securities
entitlements; (c) securities accounts; (d) commodity contracts; or (e)
commodity accounts.
"Letter-of-Credit Rights" means, as to any Grantor, all
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"letter-of-credit rights" as such term is defined in the UCC, now owned or
hereafter acquired by such Grantor, including rights to payment or
performance under a letter of credit, whether or not such Grantor, as
beneficiary, has demanded or is entitled to demand payment or performance.
"Payment Account" means each bank account established
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pursuant to this Security Agreement, to which the proceeds of Accounts and
other Collateral of any Grantor are deposited or credited, and which is
maintained in the name of the Agent or such Grantor, as the Agent may
determine, on terms acceptable to the Agent.
"Permitted Disposition" has the meaning set forth in the
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Credit Agreement.
"Person" means any individual, sole proprietorship,
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partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
"Proceeds" has the meaning set forth in the UCC.
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"Proprietary Rights" means, as to any Grantor, all of such
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Grantor's now owned and hereafter arising or acquired: licenses, franchises,
permits, patents, patent rights, copyrights, works which are the subject
matter of copyrights, trademarks, service marks, trade names, trade styles,
trade secrets, patent, trademark and service ▇▇▇▇ applications, and all
licenses and rights
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related to any of the foregoing, and all other rights under any of the
foregoing, all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing, and all rights to ▇▇▇ for
past, present and future infringement of any of the foregoing.
"Software" means, as to any Grantor, all "software" as
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such term is defined in the UCC, now owned or hereafter acquired by such
Grantor, other than software embedded in any category of Goods, including
all computer programs and all supporting information provided in connection
with a transaction related to any program.
"Supporting Obligations" means, as to any Grantor, all
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supporting obligations as such term is defined in the UCC, now owned or
hereafter acquired by such Grantor.
"UCC" means the Uniform Commercial Code, as in effect from
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time to time, of the State of California or of any other state the laws of
which are required as a result thereof to be applied in connection with the
issue of perfection of security interests; provided, that to the extent that
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the UCC is used to define any term herein or in any other documents and such
term is defined differently in different Articles or Divisions of the UCC,
the definition of such term contained in Article or Division 9 shall govern.
All other capitalized terms used but not otherwise defined
herein have the meanings given to them in the Credit Agreement or in Annex A
thereto. All other undefined terms contained in this Security Agreement,
unless the context indicates otherwise, have the meanings provided for by
the UCC to the extent the same are used or defined therein.
2. GRANT OF LIEN.
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(a) As security for the Secured Obligations, each Grantor
hereby grants to the Agent, for the benefit of the Agent and the Lenders, a
continuing security interest in, lien on, assignment of and right of set-off
against, all of the following property and assets of such Grantor, whether
now owned or existing or hereafter acquired or arising, regardless of where
located:
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights;
(iv) all Chattel Paper;
(v) all Documents;
(vi) all Instruments;
(vii) all Supporting Obligations and
Letter-of-Credit Rights;
(viii) all General Intangibles (including payment
intangibles and Software);
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(ix) all Goods;
(x) all Equipment;
(xi) all Investment Property;
(xii) all money, cash, cash equivalents,
securities and other property of any kind of such Grantor held directly or
indirectly by the Agent or any Lender;
(xiii) all of such Grantor's Deposit Accounts,
credits, and balances with and other claims against the Agent or any Lender
or any of their Affiliates or any other financial institution with which
such Grantor maintains deposits, including any Payment Accounts;
(xiv) all books, records and other property
related to or referring to any of the foregoing, including books, records,
account ledgers, data processing records, computer software and other
property and General Intangibles at any time evidencing or relating to any
of the foregoing;
(xv) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but
not limited to, proceeds of any insurance policies, claims against third
parties, and condemnation or requisition payments with respect to all or any
of the foregoing; and
(xvi) notwithstanding anything herein to the
contrary, in no event shall the Collateral include, and no Grantor shall be
deemed to have granted a security interest in, 35% of such Grantor's shares
of each of its foreign Subsidiaries that are not Canadian Guarantors under
the Credit Agreement.
All of the foregoing for each Grantor, together with the Real Estate covered
by the Mortgages, all equity interests in Subsidiaries pledged to the Agent
and all other property of any of the Grantors in which the Agent or any
Lender may at any time be granted a Lien as collateral for the Secured
Obligations, is herein collectively referred to as the "Collateral."
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(b) All of the Secured Obligations shall be secured by all
of the Collateral.
3. PERFECTION AND PROTECTION OF SECURITY INTEREST.
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(a) Each Grantor shall, at its expense, perform all steps
requested by the Agent at any time to perfect, maintain, protect, and
enforce the Agent's Liens, including: (i) executing, delivering and/or
filing and recording of the Intellectual Property Security Agreements and
the Mortgages and executing and filing financing or continuation statements,
and amendments thereof, in form and substance reasonably satisfactory to the
Agent; (ii) delivering to the Agent the originals of all Instruments,
Documents, and tangible Chattel Paper, and all other Collateral in such
Grantor's possession of which the Agent determines it should have physical
possession in order to perfect or protect the Agent's security interest
therein, duly pledged, endorsed, or assigned to the Agent without
restriction; (iii) delivering to the Agent warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse
receipts are issued and certificates of title covering any portion of the
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collateral for which certificates of title have been issued; (iv) when an
Event of Default has occurred and is continuing, transferring Inventory to
warehouses or other locations designated by the Agent; (v) placing notations
on such Grantor's books of account to disclose the Agent's security
interest; (vi) assigning and, upon the Agent's request during the
continuance of an Event of Default, delivering to the Agent all such
Grantor's Supporting Obligations, including letters of credit on which such
Grantor is named beneficiary with the written consent of the issuer thereof;
and (vii) taking such other steps as are deemed necessary or desirable by
the Agent to maintain and protect the Agent's Liens, including without
limitation, delivering to Agent upon request originals and copies, as
needed, of any and all certificates evidencing ERCs owned by the Company,
together with all documentation necessary to perfect Agent's security
interest in such ERCs with the applicable air quality management districts
or other Governmental Authority pursuant to California Health and Safety
Code Section 40709, et seq. In addition, the Grantors shall deliver to Agent
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upon request an authorization in blank authorizing Agent to perfect Agent's
Liens in future ERCs earned or acquired by the Company. Each Grantor agrees
that a carbon, photographic, photostatic, electronic or other reproduction
of this Security Agreement or of a financing statement is sufficient as a
financing statement.
(b) Unless Agent shall otherwise consent in writing (which
consent may be revoked), each Grantor shall deliver to Agent all Collateral
consisting of negotiable Documents, certificated securities (accompanied by
stock powers executed in blank), Chattel Paper and Instruments promptly
after such Grantor receives the same.
(c) Each Grantor shall, in accordance with the terms of
the Credit Agreement, obtain or use its reasonable best efforts to obtain
waivers or subordinations of Liens from landlords and mortgagees, and each
Grantor shall use its reasonable best efforts to obtain signed
acknowledgements of Agent's Liens from bailees having possession of any
Collateral that they hold for the benefit of Agent.
(d) If required by the terms of the Credit Agreement and
not waived by Agent in writing (which waiver may be revoked), each Grantor
shall obtain authenticated control agreements from each issuer of
uncertificated securities, securities intermediary, or commodities
intermediary issuing or holding any financial assets or commodities to or
for such Grantor.
(e) If any Grantor is or becomes the beneficiary of a
letter of credit such Grantor shall promptly notify Agent thereof and enter
into a tri-party agreement with Agent and the issuer and/or confirmation
bank with respect to Letter-of-Credit Rights assigning such Letter-of-Credit
Rights to Agent and directing all payments thereunder to the Payment
Account, all in form and substance reasonably satisfactory to Agent.
(f) Each Grantor shall take all steps necessary to grant
the Agent control of all of such Grantor's electronic chattel paper in
accordance with the Code and all "transferable records" as defined in the
Uniform Electronic Transactions Act.
(g) Each Grantor hereby irrevocably authorizes the Agent
at any time and from time to time to file in any filing office in any
Uniform Commercial Code jurisdiction any initial financing statements and
amendments thereto that (i) indicate the Collateral (1) as all assets of
such Grantor or words of similar effect, regardless of whether any
particular asset that
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is part of the Collateral falls within the scope of Division 9 of the UCC of
the State of California or such jurisdiction, or (2) as being of an equal or
lesser scope or with greater detail, and (ii) contain any other information
required by Part 5 of Division 9 of the UCC of the State of California for
the sufficiency or filing office acceptance of any financing statement or
amendment, including (1) whether such Grantor is an organization, the type
of organization and any organization identification number issued to such
Grantor, and (2) in the case of a financing statement filed as a fixture
filing or indicating Collateral as as-extracted collateral or timber to be
cut, a sufficient description of real property to which the Collateral
relates. Each Grantor agrees to furnish any such information to the Agent
promptly upon request. Each Grantor also ratifies its authorization for the
Agent to have filed in any Uniform Commercial Code jurisdiction any like
initial financing statements or amendments thereto if filed prior to the
date hereof.
(h) Each Grantor shall promptly notify Agent of any
commercial tort claim (as defined in the UCC) that exceeds $200,000 or any
group of commercial tort claims that exceed $500,000 in the aggregate,
acquired by it and, unless otherwise consented by Agent, such Grantor shall
enter into a supplement to this Security Agreement, granting to Agent a Lien
in such commercial tort claim or claims.
(i) From time to time, each Grantor shall, upon the
Agent's request, execute and deliver confirmatory written instruments
pledging to the Agent, for the ratable benefit of the Agent and the Lenders,
the Collateral, but any Grantor's failure to do so shall not affect or limit
any security interest or any other rights of the Agent or any Lender in and
to the Collateral with respect to such Grantor. So long as the Credit
Agreement is in effect and until all Secured Obligations have been fully
satisfied, the Agent's Liens shall continue in full force and effect in all
Collateral (whether or not deemed eligible for the purpose of calculating
Availability or as the basis for any advance, loan, extension of credit, or
other financial accommodation).
(j) Good Standing Certificates. Upon Agent's request, each
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Grantor shall provide to Agent a certificate of good standing from its state
of incorporation or organization.
(k) No Reincorporation. Without limiting the prohibitions
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on mergers involving Grantors contained in the Credit Agreement, no Grantor
shall reincorporate or reorganize itself under the laws of any jurisdiction
other than the jurisdiction in which it is incorporated or organized as of
the date hereof or change its type of entity as identified on Schedule II
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without the prior written consent of Agent.
(l) Terminations Amendments Not Authorized. Each Grantor
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acknowledges that it is not authorized to file any financing statement or
amendment or termination statement with respect to any financing statement
without the prior written consent of Agent and agrees that it will not do so
without the prior written consent of Agent, subject to such Grantor's rights
under Section 9509(d)(2) of the UCC.
(m) Terminations for Permitted Dispositions. Agent agrees
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to terminate its Liens in any Collateral that has been disposed of in a
Permitted Disposition conducted in accordance with the terms of the Credit
Agreement.
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(n) No Restriction on Payments to Agent. No Grantor shall
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enter into any Contract that restricts or prohibits the grant of a security
interest in Accounts, Chattel Paper, Instruments or payment intangibles or
the proceeds of the foregoing to Agent.
4. LOCATION OF COLLATERAL.
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(a) Each Grantor represents and warrants to the Agent and
the Lenders that: (i) Schedule I is a correct and complete list of the
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location of such Grantor's chief executive office, the location of its books
and records, the locations of its Collateral, and the locations of all of
its other places of business; and (ii) Schedule I correctly identifies any
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of such facilities and locations that are not owned by such Grantor and sets
forth the names of the owners and lessors or sublessors of such facilities
and locations.
(b) Each Grantor covenants and agrees that it will not (i)
maintain any Collateral at any location other than those locations listed
for such Grantor on Schedule I, (ii) otherwise change or add to any of such
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locations, or (iii) change the location of its chief executive office from
the location identified in Schedule I, unless it gives the Agent concurrent
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notice thereof and executes any and all financing statements and other
documents that the Agent reasonably requests in connection therewith.
(c) Without limiting the foregoing, each Grantor
represents that all of its Inventory (other than Inventory in transit) is,
and covenants that all of its Inventory will be, located either: (i) on
premises owned by such Grantor; (ii) on premises leased by such Grantor,
provided that the Agent has received an executed landlord waiver from the
landlord of such premises in form and substance satisfactory to the Agent or
has created a rent Reserve for at least 3 months of rent for such locations;
(iii) in a public warehouse, provided that the Agent has received an
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executed bailee letter from the applicable Person in form and substance
satisfactory to the Agent or has created a rent Reserve for at least 3
months of rent for such locations; or (iv) on premises owned by processors
in the ordinary course of business.
5. JURISDICTION OF ORGANIZATION. Schedule II hereto identifies each
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Grantor's name as of the Closing Date as it appears in official filings in
the state of its incorporation or other organization, the type of entity of
such Grantor (including corporation, partnership, limited partnership or
limited liability company), organizational identification number issued by
such Grantor's state of incorporation or organization or a statement that no
such number has been issued and the jurisdiction in which such Grantor is
incorporated or organized. Each Grantor has only one state of incorporation
or organization.
6. TITLE TO, LIENS ON, AND SALE AND USE OF COLLATERAL. Each Grantor
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represents and warrants to the Agent and the Lenders and agrees with the
Agent and the Lenders that: (a) such Grantor has, and will continue to have,
rights in and the power to transfer all of the Collateral free and clear of
all Liens whatsoever, except for Permitted Liens; (b) the Agent's Liens in
the Collateral will not be subject to any prior Lien except for those Liens
identified in the definition of Permitted Liens; and (c) such Grantor will
use, store, and maintain the Collateral with all reasonable care and will
use such Collateral for lawful purposes only.
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7. APPRAISALS. Whenever a Default or Event of Default exists, and
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at such other times not more frequently than once a year as the Agent
requests, each Grantor shall, at the Grantors' sole expense, and upon the
Agent's request, provide the Agent with appraisals or updates thereof of any
or all of the Collateral, or any other assets of any other Subsidiary of
Parent in which Agent is hereafter granted a Lien, from an appraiser, and
prepared on a basis, satisfactory to the Agent, such appraisals and updates
to include, without limitation, information required by applicable laws and
regulations and by the internal policies of the Lenders or required to
calculate the Borrowing Base.
8. ACCESS AND EXAMINATION. The Agent may at all reasonable times
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during regular business hours (and at any time when a Default or Event of
Default exists and is continuing) have access to, examine, audit, make
extracts from or copies of and inspect any or all of each Grantor's records,
files, and books of account and the Collateral, and discuss each Grantor's
affairs with such Grantor's officers. The foregoing may be accomplished by
Agent's own employees or its agents or independent contractors, at the
Grantors' sole expense and provided such Persons are subject to the
confidentiality requirements set forth in Section 14.17 of the Credit
Agreement. Each Grantor will deliver to the Agent any instrument necessary
for the Agent to obtain records from any service bureau maintaining records
for such Grantor. The Agent may, and at the direction of the Required
Lenders shall, at any time when a Default or Event of Default exists, and at
the Grantors' expense, make copies of all of the Grantors' books and
records, or require the Grantors to deliver such copies to the Agent. The
Agent may, without expense to the Agent, use such of the Grantors'
respective personnel, supplies, and Real Estate as may be reasonably
necessary for maintaining or enforcing the Agent's Liens. The Agent shall
have the right, at any time, in the Agent's name or in the name of a nominee
of the Agent, to contact Account Debtors, warehousemen, bailees, and similar
third Persons, and to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by mail,
telephone, or otherwise.
9. COLLATERAL REPORTING. Administrative Borrower shall provide the
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Agent with the following documents at the following times in form reasonably
satisfactory to the Agent: (a) at the times specified in Section 5.2(k) of
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the Credit Agreement, a schedule of Borrowers' Accounts created, credits
given, cash collected and other adjustments to such Accounts since the last
such schedule and a Borrowing Base Certificate that includes (i) a detailed
calculation of the Eligible Accounts and Eligible Inventory in form and
substance similar to that presented in Exhibit B of the Credit Agreement,
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and (ii) a list of any sales accruals included in the Borrowing Base
Certificate; (b) on a fiscal monthly basis, by the 20th day of the following
fiscal month, agings of each Borrower's Accounts, together with a
reconciliation from the corresponding Borrowing Base to the Parent's
consolidated financial statements for the most recent fiscal period then
ended (provided, that for the first 90 days after the Initial Funding Date,
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Administrative Borrower need only deliver agings that cover, in the
aggregate, 50% in Dollar amount of the Accounts of all Borrowers); (c) upon
request, and if so requested by the 20th day of the following fiscal month,
agings of each Borrower's accounts payable; (d) on a fiscal monthly basis by
the 20th day of the following fiscal month, Borrowers' Inventory by category
and location, together with a reconciliation from the corresponding
Borrowing Base to the Parent's consolidated financial statements for the
most recent fiscal period then ended; (e) upon request, copies of invoices
in connection with each Borrower's Accounts, customer statements, credit
memos, remittance advices and reports, deposit slips, shipping and delivery
documents in
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connection with each Borrower's Accounts and for Inventory and Equipment
acquired by such Borrower, purchase orders and invoices; (g) upon request, a
statement of the balance of each of the Intercompany Accounts; (h) such
other reports as to the Collateral of each Borrower as the Agent shall
reasonably request from time to time; and (i) with the delivery of each of
the foregoing, a certificate of Administrative Borrower executed by an
officer thereof certifying as to the accuracy and completeness of the
foregoing. If any of the Borrowers' records or reports of the Collateral are
prepared by an accounting service or other agent, each Borrower hereby
authorizes such service or agent to deliver such records, reports, and
related documents to the Agent, for distribution to the Lenders.
10. ACCOUNTS.
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(a) Each Grantor hereby represents and warrants to the
Agent and the Lenders, with respect to such Grantor's Accounts, that: (i)
each existing Account represents, and each future Account will represent, a
bona fide sale or lease and delivery of goods by such Grantor, or rendition
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of services by such Grantor, in the ordinary course of such Grantor's
business; (ii) each existing Account is, and each future Account will be,
for a liquidated amount payable by the Account Debtor thereon on the terms
set forth in the invoice therefor or in the schedule thereof delivered to
the Agent, without any offset, deduction, defense, or counterclaim except
those known to such Grantor and disclosed to the Agent and the Lenders
pursuant to this Security Agreement; (iii) no payment will be received with
respect to any Account, and no credit, discount, or extension, or agreement
therefor will be granted on any Account, except as reported to the Agent in
Borrowing Base Certificates delivered in accordance with this Security
Agreement; (iv) each copy of an invoice delivered to the Agent by such
Grantor will be a genuine copy of the original invoice sent to the Account
Debtor named therein; and (v) except for those goods sold on a ▇▇▇▇-and-hold
basis in the ordinary course of business and as reported to Agent, all goods
described in any invoice representing a sale of goods will have been
delivered to the Account Debtor and all services of such Grantor described
in each invoice will have been performed.
(b) No Grantor shall re-date any invoice or sale or make
sales on extended dating beyond that customary in such Grantor's business or
extend or modify any Account. If any Grantor becomes aware of any matter
adversely affecting the collectibility of any Account or the Account Debtor,
including information regarding the Account Debtor's creditworthiness, such
Grantor will promptly so advise the Agent and exclude such Account from
Eligible Accounts.
(c) No Grantor shall accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account without the Agent's written consent. If the Agent
consents to the acceptance of any such instrument, it shall be considered as
evidence of the Account and not payment thereof and the applicable Grantor
will promptly deliver such instrument to the Agent, endorsed by such Grantor
to the Agent in a manner satisfactory in form and substance to the Agent.
Regardless of the form of presentment, demand, notice of protest with
respect thereto, the applicable Grantor shall remain liable thereon until
such instrument is paid in full.
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(d) Each Grantor shall notify the Agent promptly of all
disputes and claims in excess of $500,000 with any Account Debtor, and
agrees to settle, contest, or adjust such dispute or claim at no expense to
the Agent or any Lender. No discount, credit or allowance shall be granted
by any Grantor to any Account Debtor without the Agent's prior written
consent, except for discounts, credits and allowances made or given in the
ordinary course of such Grantor's business when no Event of Default exists
hereunder. Each Grantor shall send the Agent a copy of each credit
memorandum in excess of $500,000 within 10 Business Days of issuance, and
such Grantor shall report that credit on the Borrowing Base Certificates
submitted by it after such issuance. The Agent may at all times when an
Event of Default exists hereunder, settle or adjust disputes and claims
directly with Account Debtors for amounts and upon terms which the Agent or
the Required Lenders, as applicable, shall consider advisable and, in all
cases, the Agent will credit the Grantors' Loan Account with the net amounts
received by the Agent in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to a
Grantor when no Event of Default exists, then such Grantor shall promptly
determine the reason for such return and shall issue a credit memorandum to
the Account Debtor in the appropriate amount. Each Grantor shall report to
the Agent any return involving an amount in excess of $500,000 by no later
than the earlier of the 10th Business Day following such return or the
delivery of the next Borrowing Base Certificate following such return. Each
such report shall indicate the reasons for the returns and the locations and
condition of the returned Inventory. In the event any Account Debtor returns
Inventory to a Grantor when an Event of Default exists, such Grantor, upon
the request of the Agent, shall: (i) hold the returned Inventory in trust
for the Agent; (ii) segregate all of its returned Inventory from all of its
other property; (iii) dispose of the returned Inventory solely according to
the Agent's written instructions; and (iv) not issue any credits or
allowances with respect thereto without the Agent's prior written consent.
All returned Inventory of any Grantor shall be subject to the Agent's Liens
thereon. Whenever any Inventory is returned, the related Account shall be
deemed ineligible to the extent of the amount owing by the Account Debtor
with respect to such returned Inventory and such returned Inventory shall
not be Eligible Inventory.
11. COLLECTION OF ACCOUNTS; PAYMENTS.
--------------------------------
(a) Until the Agent notifies the Grantors to the contrary,
each Grantor shall make collection of all of its Accounts and other
Collateral for the Agent, shall receive all payments as the Agent's trustee,
and shall immediately deliver all payments in their original form duly
endorsed in blank into a Payment Account established for the account of such
Grantor at a Clearing Bank reasonably acceptable to the Agent, subject to a
Blocked Account Agreement. On or prior to the date hereof, each Grantor
shall establish a lock-box service for collections of Accounts at a Clearing
Bank reasonably acceptable to the Agent and subject to a Blocked Account
Agreement and other documentation reasonably acceptable to the Agent. Each
Grantor shall instruct all of its Account Debtors to make all payments
directly to the address established for such service. If, notwithstanding
such instructions, a Grantor receives any proceeds of Accounts, it shall
receive such payments as the Agent's trustee, and shall immediately deliver
such payments to the Agent in their original form duly endorsed in blank or
deposit them into a Payment Account, as the Agent may direct. All
collections received in any lock-box or Payment Account or directly by a
Grantor or the Agent, and all funds in any Payment Account or other
11
account to which such collections are deposited shall be subject to the
Agent's sole control and withdrawals by the Grantors shall not be permitted.
The Agent or the Agent's designee may, at any time after the occurrence and
during the continuance of an Event of Default, notify Account Debtors that
the Grantors' Accounts have been assigned to the Agent and of the Agent's
security interest therein, and may collect them directly and charge the
collection costs and expenses to the Loan Account as a Revolving Loan. So
long as an Event of Default has occurred and is continuing, each Grantor, at
the Agent's request, shall execute and deliver to the Agent such documents
as the Agent shall require to grant the Agent access to any post office box
in which collections of Accounts are received.
(b) If sales of any Grantor's Inventory are made or
services are rendered for cash, such Grantor shall immediately deliver to
the Agent or deposit into a Payment Account the cash which such Grantor
receives.
(c) All payments including immediately available funds
received by the Agent at a bank account designated by it, will be the
Agent's sole property for its benefit and the benefit of the Lenders and
will be credited to the Loan Account (conditional upon final collection)
after allowing one (1) Business Day for collection; provided, however, that
-------- -------
such payments shall be deemed to be credited to the Loan Account immediately
upon receipt for purposes of (i) determining Availability, (ii) calculating
the Unused Line Fee pursuant to Section 2.5 of the Credit Agreement, and
-----------
(iii) calculating the amount of interest accrued thereon solely for purposes
of determining the amount of interest to be distributed by the Agent to the
Lenders (but not the amount of interest payable by the Grantors).
12. INVENTORY; PERPETUAL INVENTORY.
------------------------------
(a) Each Grantor represents and warrants to the Agent and
the Lenders and agrees with the Agent and the Lenders that all of the
Inventory owned by such Grantor is and will be held for sale or lease, or to
be furnished in connection with the rendition of services, in the ordinary
course of such Grantor's business, and is and will be fit for such purposes.
Each Grantor will keep its Inventory in good and marketable condition,
except for damaged or defective goods arising in the ordinary course of such
Grantor's business. No Grantor will, without the prior written consent of
the Agent, acquire or accept any Inventory on consignment or approval;
provided, however, Grantors may acquire or accept any Inventory on
-------- -------
consignment or approval if such Inventory is not reported as Inventory of
Grantor, is clearly identified as Inventory held on consignment or approval
and is segregated from other Inventory of Grantor. Each Grantor agrees that
all Inventory produced by such Grantor in the United States of America will
be produced in accordance with the Federal Fair Labor Standards Act of 1938,
as amended, and all rules, regulations, and orders thereunder. Each Grantor
will conduct a physical count of its Inventory at least once per Fiscal
Year, and after and during the continuation of an Event of Default, at such
other times as the Agent requests. Except as otherwise disclosed to the
Agent, each Grantor will maintain a perpetual inventory reporting system at
all times. No Grantor will, without the Agent's written consent, sell any
Inventory on a ▇▇▇▇-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis; provided,
--------
however, Grantors may sell Inventory on a ▇▇▇▇-and-hold basis in the
-------
ordinary course of its business and as reported to Agent.
12
(b) In connection with all of its Inventory financed by
Letters of Credit, each Grantor will, at the Agent's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others
receiving or holding cash, checks, Inventory, Documents or Instruments in
which the Agent holds a security interest to deliver them to the Agent
and/or subject to the Agent's order, and if they shall come into such
Grantor's possession, to deliver them, upon request, to the Agent in their
original form. Each Grantor shall also, at the Agent's request, designate
the Agent as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
13. EQUIPMENT.
---------
(a) Each Grantor represents and warrants to the Agent and
the Lenders and agrees with the Agent and the Lenders that all of the
Equipment owned by such Grantor is and will be used or held for use in such
Grantor's business, and is and will be fit for such purposes. Each Grantor
shall keep and maintain its Equipment in good operating condition and repair
(ordinary wear and tear excepted) and shall make all necessary replacements
thereof.
(b) Each Grantor shall promptly notify the Agent of any
material additions to or deletions from its Equipment; provided, however,
-------- -------
that with respect to each Grantor that is a Borrower such notification shall
be in accordance with Section 5.3 of the Credit Agreement. Each Grantor
-----------
shall not permit any of its Equipment to become a fixture with respect to
real property or to become an accession with respect to other personal
property with respect to which real or personal property the Agent does not
have a Lien. No Grantor will, without the Agent's prior written consent,
alter or remove any identifying symbol or number on any of such Grantor's
Equipment constituting Collateral.
(c) Except as set forth in the Credit Agreement, no
Grantor shall, without the Agent's prior written consent, sell, license,
lease as a lessor, or otherwise dispose of any of such Grantor's Equipment.
14. DOCUMENTS, INSTRUMENTS, AND CHATTEL PAPER. Each Grantor
-----------------------------------------
represents and warrants to the Agent and the Lenders that (a) all of its
Documents, Instruments, and Chattel Paper describing, evidencing, or
constituting Collateral, and all signatures and endorsements thereon, are
and will be complete, valid, and genuine, and (b) all goods evidenced by
such Documents, Instruments, and Chattel Paper are and will be owned by such
Grantor, free and clear of all Liens other than Permitted Liens. If any
Grantor retains possession of any Chattel Paper or Instruments with Agent's
consent, such Chattel Paper and Instruments shall be marked with the
following legend: "This writing and the obligations evidenced or served
hereby are subject to the security interest of Bank of America, N.A., as
Agent, for the benefit of Agent and certain Lenders."
15. RIGHT TO CURE. The Agent may, in its discretion, and shall, at
-------------
the direction of the Required Lenders, pay any amount or do any act required
of any Grantor hereunder or under any other Loan Document in order to
preserve, protect, maintain or enforce the Secured Obligations, the
Collateral or the Agent's Liens therein, and which such Grantor fails to pay
or do, including payment of any judgment against such Grantor, any insurance
premium, any warehouse charge, any finishing or processing charge, any
landlord's or bailee's claim, and any
13
other Lien upon or with respect to the Collateral. All payments that the
Agent makes under this Section 15 and all out-of-pocket costs and expenses
----------
that the Agent pays or incurs in connection with any action taken by it
hereunder shall be charged to the Grantors' Loan Account as a Revolving
Loan. Any payment made or other action taken by the Agent under this Section
-------
15 shall be without prejudice to any right to assert an Event of Default
--
hereunder and to proceed thereafter as herein provided.
16. POWER OF ATTORNEY. Each Grantor hereby appoints the Agent and
-----------------
the Agent's designee as such Grantor's attorney, with power: (a) to endorse
such Grantor's name on any checks, notes, acceptances, money orders, or
other forms of payment or security that come into the Agent's or any
Lender's possession; (b) to sign such Grantor's name on any invoice, ▇▇▇▇ of
lading, warehouse receipt or other negotiable or non-negotiable Document
constituting Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and other public
records and to file any such financing statements by electronic means with
or without a signature as authorized or required by applicable law or filing
procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of such Grantor's mail to an address designated by the Agent and to
receive, open and dispose of all mail addressed to such Grantor; provided,
--------
however, that the Agent and the Agent's designee, as appropriate, upon
-------
completion of its review of such mail and handling of any Collateral
contained therein, shall promptly forward it to Grantor and shall use
reasonable best efforts to avoid opening mail from Grantor's attorneys to
Grantors containing privileged information in such a manner as to destroy
such Grantor's attorney-client privilege; (d) to send requests for
verification of Accounts to such Grantor's customers or Account Debtors; (e)
to complete in such Grantor's name or the Agent's name, any order, sale or
transaction, obtain the necessary Documents in connection therewith, and
collect the proceeds thereof; (f) to clear Inventory through customs in such
Grantor's name, the Agent's name or the name of the Agent's designee, and to
sign and deliver to customs officials powers of attorney in such Grantor's
name for such purpose; (g) to the extent that such Grantor's authorization
given in Section 3(g) of this Security Agreement is not sufficient, to file
------------
such financing statements with respect to this Security Agreement, with or
without such Grantor's signature, or to file a photocopy of this Security
Agreement in substitution for a financing statement, as the Agent may deem
appropriate and to execute in such Grantor's name such financing statements
and amendments thereto and continuation statements which may require such
Grantor's signature; and (h) to do all things necessary to carry out the
Credit Agreement and this Security Agreement. Each Grantor ratifies and
approves all acts of such attorney. None of the Lenders or the Agent nor
their attorneys will be liable for any acts or omissions or for any error of
judgment or mistake of fact or law except where such liability is
attributable primarily to the bad faith, gross negligence or willful
misconduct of Agent or such Lender, as the case may be, as finally
determined by a court of competent jurisdiction. This power, being coupled
with an interest, is irrevocable until the Credit Agreement has been
terminated and the Secured Obligations have been fully satisfied.
17. THE AGENT'S AND LENDERS' RIGHTS, DUTIES AND LIABILITIES.
-------------------------------------------------------
(a) Each Grantor assumes all responsibility and liability
arising from or relating to the use, sale, license or other disposition of
the Collateral. The Secured Obligations shall not be affected by any failure
of the Agent or any Lender to take any steps to perfect the
14
Agent's Liens or to collect or realize upon the Collateral, nor shall loss
of or damage to the Collateral release any Grantor from any of its Secured
Obligations. Following the occurrence and during the continuation of an
Event of Default, the Agent may (but shall not be required to), and at the
direction of the Required Lenders shall, without notice to or consent from
any Grantor, ▇▇▇ upon or otherwise collect, extend the time for payment of,
modify or amend the terms of, compromise or settle for cash, credit, or
otherwise upon any terms, grant other indulgences, extensions, renewals,
compositions, or releases, and take or omit to take any other action with
respect to the Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable directly or
indirectly in connection with any of the foregoing, without discharging or
otherwise affecting the liability of any Grantor for the Secured Obligations
or under the Credit Agreement or any other agreement now or hereafter
existing between the Agent and/or any Lender and any Grantor.
(b) It is expressly agreed by each Grantor that, anything
herein to the contrary notwithstanding, such Grantor shall remain liable
under each of its contracts and each of its licenses to observe and perform
all the conditions and obligations to be observed and performed by it
thereunder. Neither Agent nor any Lender shall have any obligation or
liability under any contract or license by reason of or arising out of this
Security Agreement or the granting herein of a Lien thereon or the receipt
by Agent or any Lender of any payment relating to any contract or license
pursuant hereto. Neither Agent nor any Lender shall be required or obligated
in any manner to perform or fulfill any of the obligations of any Grantor
under or pursuant to any contract or license, or to make any payment, or to
make any inquiry as to the nature or the sufficiency of any payment received
by it or the sufficiency of any performance by any party under any contract
or license, or to present or file any claims, or to take any action to
collect or enforce any performance or the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or
times.
(c) Agent may at any time after a Default or an Event of
Default has occurred and is continuing (or if any rights of set-off (other
than set-offs against an Account arising under the contract giving rise to
the same Account) or contra accounts may be asserted with respect to the
following), without prior notice to any Grantor, notify Account Debtors, and
other Persons obligated on the Collateral that Agent has a security interest
therein, and that payments shall be made directly to Agent, for itself and
the benefit of Lenders. Upon the request of Agent, each Grantor shall so
notify Account Debtors and other Persons obligated on Collateral. Once any
such notice has been given to any Account Debtor or other Person obligated
on the Collateral, no Grantor shall give any contrary instructions to such
Account Debtor or other Person without Agent's prior written consent.
(d) Agent may at any reasonable time in Agent's own name
or in the name of any Grantor communicate with such Grantor's Account
Debtors, parties to such Grantor's Contracts and obligors in respect of such
Grantor's Instruments to verify with such Persons, to Agent's reasonable
satisfaction, the existence, amount and terms of such Grantor's Accounts,
payment intangibles, Instruments or Chattel Paper. If a Default or Event of
Default shall have occurred and be continuing, each Grantor, at its own
expense, shall cause the independent certified public accountants then
engaged by such Grantor to prepare and deliver to Agent and each Lender at
any time and from time to time promptly upon Agent's request the following
reports with respect to such Grantor: (i) a reconciliation of all such
Grantor's Accounts; (ii) an
15
aging of all such Grantor's Accounts; (iii) trial balances; and (iv) a test
verification of such Accounts of such Grantor as Agent may request.
Sufficient hard copies or an electronic version of all such information
shall be delivered to the Agent by the applicable Grantor to enable the
Agent to deliver such information to each Lender. Each Grantor, at its own
expense, shall deliver to Agent the results of each physical verification,
if any, which such Grantor may in its discretion have made, or caused any
other Person to have made on its behalf, of all or any portion of its
Inventory.
18. PATENT, TRADEMARK AND COPYRIGHT COLLATERAL.
------------------------------------------
(a) No Grantor has any interest in, or title to, any
material or registered Patent, Trademark or Copyright except as set forth in
Schedule III hereto. This Security Agreement is effective to create valid
------------
and continuing (and, upon filing of the Intellectual Property Security
Agreement with the United States Copyright Office and the filing of
appropriate financing statements, perfected) Liens in favor of Agent on each
Grantor's patents, trademarks and registered copyrights and such perfected
Liens are enforceable as such as against any and all creditors of and
purchasers from each Grantor. Upon filing of the Intellectual Property
Security Agreement with the United States Copyright Office and the filing of
appropriate financing statements, all action necessary or desirable to
protect and perfect Agent's Lien on each Grantor's patents, trademarks or
registered copyrights shall have been duly taken.
(b) Each Grantor shall notify Agent immediately if it
knows or has reason to know that any application or registration relating to
any material patent, trademark or copyright (now or hereafter existing) may
become abandoned or dedicated, or of any adverse determination or
development (including the institution of, or any such determination or
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any court) regarding such
Grantor's ownership of any patent, trademark or copyright, its right to
register the same, or to keep and maintain the same.
(c) In no event shall any Grantor, either directly or
through any agent, employee, licensee or designee, file an application for
the registration of any patent, trademark or copyright with the United
States Patent and Trademark Office, the United States Copyright Office or
any similar office or agency without giving Agent prior written notice
thereof, and, upon request of Agent, such Grantor shall execute and deliver
any and all Intellectual Property Security Agreements, as Agent may request
to evidence Agent's Lien on such patent, trademark or copyright, and the
General Intangibles of Grantor relating thereto or represented thereby.
(d) Each Grantor shall take all actions necessary or
requested by Agent to maintain and pursue each application, to obtain the
relevant registration and to maintain the registration of each of the
patents, trademarks and copyrights (now or hereafter existing), including
the filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation
proceedings unless such Grantor shall determine that such patent, trademark
or copyright is not material to the conduct of its business.
(e) In the event that any of the material patent,
trademark or copyright Collateral is infringed upon, or misappropriated or
diluted by a third party, the Grantor owning or licensing the same shall
notify Agent promptly after such Grantor learns thereof. Such
16
Grantor shall, unless it shall reasonably determine that such patent,
trademark or copyright Collateral is in no way material to the conduct of
its business or operations, promptly seek to recover any and all damages for
such infringement, misappropriation or dilution, and shall take such other
actions as Agent shall deem appropriate under the circumstances to protect
such patent, trademark or copyright Collateral.
19. INDEMNIFICATION. In any suit, proceeding or action brought by
---------------
Agent or any Lender relating to any Collateral for any sum owing with
respect thereto or to enforce any rights or claims with respect thereto,
each Grantor will save, indemnify and keep Agent and Lenders harmless from
and against all expense (including reasonable attorneys' fees and expenses),
loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction of liability whatsoever of an Account Debtor or
other Person obligated on the Collateral, arising out of a breach by any
Grantor of any obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to, or in favor of, such obligor
or its successors from any Grantor, except in the case of Agent or any
Lender, to the extent such expense, loss, or damage is attributable
primarily to the bad faith, gross negligence or willful misconduct of Agent
or such Lender as finally determined by a court of competent jurisdiction.
All such obligations of each Grantor shall be and remain enforceable against
and only against such Grantor and shall not be enforceable against Agent or
any Lender.
20. LIMITATION ON LIENS ON COLLATERAL. No Grantor will create,
---------------------------------
permit or suffer to exist, and will defend the Collateral against, and take
such other action as is necessary to remove, any Lien on the Collateral
except Permitted Liens, and will defend the right, title and interest of
Agent and Lenders in and to any of such Grantor's rights under the
Collateral against the claims and demands of all Persons whomsoever.
21. NOTICE REGARDING COLLATERAL. Each Grantor will advise Agent
---------------------------
promptly, in reasonable detail, (a) of any Lien (other than Permitted Liens)
or claim made or asserted against any of the Collateral, and (b) of the
occurrence of any other event which could reasonably be expected to have a
Material Adverse Effect.
22. REMEDIES; RIGHTS UPON DEFAULT.
-----------------------------
(a) In addition to all other rights and remedies granted
to it under this Security Agreement, the Credit Agreement, the other Loan
Documents and under any other instrument or agreement securing, evidencing
or relating to any of the Secured Obligations, if any Event of Default shall
have occurred and be continuing, Agent may exercise all rights and remedies
of a secured party under the UCC. Without limiting the generality of the
foregoing, each Grantor expressly agrees that in any such event Agent,
without demand of performance or other demand, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon such Grantor or any other Person (all and each of
which demands, advertisements and notices are hereby expressly waived to the
maximum extent permitted by the UCC and other applicable law), may forthwith
enter upon the premises of such Grantor where any Collateral is located
through self-help, without judicial process, without first obtaining a final
judgment or giving such Grantor or any other Person notice and opportunity
for a hearing on Agent's claim or action and may collect, receive, assemble,
process, appropriate and realize upon the Collateral, or any part thereof,
and may forthwith sell, lease, license, assign,
17
give an option or options to purchase, or sell or otherwise dispose of and
deliver said Collateral (or contract to do so), or any part thereof, in one
or more parcels at a public or private sale or sales, at any exchange at
such prices as it may deem acceptable, for cash or on credit or for future
delivery without assumption of any credit risk. Agent or any Lender shall
have the right upon any such public sale or sales and, to the extent
permitted by law, upon any such private sale or sales, to purchase for the
benefit of Agent and Lenders, the whole or any part of said Collateral so
sold, free of any right or equity of redemption, which equity of redemption
each Grantor hereby releases. Such sales may be adjourned and continued from
time to time with or without notice. Agent shall have the right to conduct
such sales on any Grantor's premises or elsewhere and shall have the right
to use any Grantor's premises without charge for such time or times as Agent
deems necessary or advisable.
(b) Each Grantor further agrees, at Agent's request, to
assemble the Collateral of such Grantor and make it available to Agent at a
place or places designated by Agent which are reasonably convenient to Agent
and such Grantor, whether at such Grantor's premises or elsewhere. Until
Agent is able to effect a sale, lease, or other disposition of Collateral,
Agent shall have the right to hold or use Collateral, or any part thereof,
to the extent that it deems appropriate for the purpose of preserving
Collateral or its value or for any other purpose deemed appropriate by
Agent. Agent shall have no obligation to any Grantor to maintain or preserve
the rights of such Grantor as against third parties with respect to
Collateral while Collateral is in the possession of Agent. Agent may, if it
so elects, seek the appointment of a receiver or keeper to take possession
of Collateral and to enforce any of Agent's remedies (for the benefit of
Agent and Lenders), with respect to such appointment without prior notice or
hearing as to such appointment. Agent shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale to
the Secured Obligations as provided in the Credit Agreement, and only after
so paying over such net proceeds, and after the payment by Agent of any
other amount required by any provision of law, need Agent account for the
surplus, if any, to Grantors. To the maximum extent permitted by applicable
law, each Grantor waives all claims, damages, and demands against Agent or
any Lender arising out of the repossession, retention or sale of the
Collateral except such as arise primarily out of the bad faith, gross
negligence or willful misconduct of Agent or such Lender as finally
determined by a court of competent jurisdiction. Each Grantor agrees that 10
days prior notice by Agent of the time and place of any public sale or of
the time after which a private sale may take place is reasonable
notification of such matters. Each Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all Secured Obligations, including any attorneys' fees
or other expenses incurred by Agent or any Lender to collect such
deficiency.
(c) Except as otherwise specifically provided herein, each
Grantor hereby waives presentment, demand, protest or any notice (to the
maximum extent permitted by applicable law) of any kind in connection with
this Security Agreement or any Collateral.
(d) To the extent that applicable law imposes duties on
the Agent to exercise remedies in a commercially reasonable manner, each
Grantor acknowledges and agrees that it is not commercially unreasonable for
the Agent (i) to fail to incur expenses reasonably deemed significant by the
Agent to prepare Collateral for disposition or otherwise to complete raw
material or work in process into finished goods or other finished products
for disposition, (ii) to fail to obtain third party consents for access to
Collateral to be disposed of, or to obtain or, if not
18
required by other law, to fail to obtain governmental or third party
consents for the collection or disposition of Collateral to be collected or
disposed of, (iii) to fail to exercise collection remedies against Account
Debtors or other Persons obligated on Collateral or to remove Liens on or
any adverse claims against Collateral, (iv) to exercise collection remedies
against Account Debtors and other Persons obligated on Collateral directly
or through the use of collection agencies and other collection specialists,
(v) to advertise dispositions of Collateral through publications or media of
general circulation, whether or not the Collateral is of a specialized
nature, (vi) to contact other Persons, whether or not in the same business
as any Grantor, for expressions of interest in acquiring all or any portion
of such Collateral, (vii) to hire one or more professional auctioneers to
assist in the disposition of Collateral, whether or not the Collateral is of
a specialized nature, (viii) to dispose of Collateral by utilizing internet
sites that provide for the auction of assets of the types included in the
Collateral or that have the reasonable capacity of doing so, or that match
buyers and sellers of assets, (ix) to dispose of assets in wholesale rather
than retail markets, (x) to disclaim disposition warranties, such as title,
possession or quiet enjoyment, (xi) to purchase insurance or credit
enhancements to insure the Agent against risks of loss, collection or
disposition of Collateral or to provide to the Agent a guaranteed return
from the collection or disposition of Collateral, or (xii) to the extent
deemed appropriate by the Agent, to obtain the services of other brokers,
investment bankers, consultants and other professionals to assist the Agent
in the collection or disposition of any of the Collateral. Each Grantor
acknowledges that the purpose of this Section 22(d) is to provide
-------------
non-exhaustive indications of what actions or omissions by the Agent would
not be commercially unreasonable in the Agent's exercise of remedies against
the Collateral and that other actions or omissions by the Agent shall not be
deemed commercially unreasonable solely on account of not being indicated in
this Section 22(d). Without limitation upon the foregoing, nothing contained
-------------
in this Section 22(d) shall be construed to grant any rights to any Grantor
-------------
or to impose any duties on Agent that would not have been granted or imposed
by this Security Agreement or by applicable law in the absence of this
Section 22(d).
-------------
23. GRANT OF LICENSE TO USE INTELLECTUAL PROPERTY. For the purpose
---------------------------------------------
of enabling Agent to exercise rights and remedies under Section 22 hereof
----------
(including, without limiting the terms of Section 22 hereof, in order to
----------
take possession of, hold, preserve, process, assemble, prepare for sale,
market for sale, sell or otherwise dispose of Collateral) at such time as
Agent shall be lawfully entitled to exercise such rights and remedies, each
Grantor hereby grants to Agent, for the benefit of Agent and Lenders, an
irrevocable, nonexclusive license (exercisable without payment of royalty or
other compensation to such Grantor) to use, license or sublicense any
Proprietary Rights now owned or hereafter acquired by such Grantor, and
wherever the same may be located, and including in such license access to
all media in which any of the licensed items may be recorded or stored and
to all computer software and programs used for the compilation or printout
thereof.
24. LIMITATION ON AGENT'S AND LENDERS' DUTY IN RESPECT OF
-----------------------------------------------------
COLLATERAL. Agent and each Lender shall use reasonable care with respect to
----------
the Collateral in its possession or under its control and in its selection
of any third Persons to take possession or control of any Collateral.
Neither Agent nor any Lender shall have any other duty as to any Collateral
in its possession or control or in the possession or control of any agent or
nominee of Agent or such Lender, or any income thereon or as to the
preservation of rights against prior parties or any other rights pertaining
thereto.
19
25. MISCELLANEOUS.
-------------
(a) REINSTATEMENT. This Security Agreement shall remain in
-------------
full force and effect and continue to be effective should any petition be
filed by or against any Grantor for liquidation or reorganization, should
any Grantor become insolvent or make an assignment for the benefit of any
creditor or creditors or should a receiver or trustee be appointed for all
or any significant part of such Grantor's assets, and shall continue to be
effective or be reinstated, as the case may be, if at any time payment and
performance of the Secured Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by any obligee of the Secured Obligations, whether as a
"voidable preference," "fraudulent conveyance," or otherwise, all as though
such payment or performance had not been made. In the event that any
payment, or any part thereof, is rescinded, reduced, restored or returned,
the Secured Obligations shall be reinstated and deemed reduced only by such
amount paid and not so rescinded, reduced, restored or returned.
(b) NOTICES. Except as otherwise provided herein, whenever
-------
it is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon
any of the parties by any other party, or whenever any of the parties
desires to give and serve upon any other party any communication with
respect to this Security Agreement, each such notice, demand, request,
consent, approval, declaration or other communication shall be in writing
and shall be given in the manner, and deemed received, as provided for in
the Credit Agreement.
(c) SEVERABILITY. Whenever possible, each provision of
------------
this Security Agreement shall be interpreted in a manner as to be effective
and valid under applicable law, but if any provision of this Security
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity without invalidating the remainder of such provision or the
remaining provisions of this Security Agreement. This Security Agreement is
to be read, construed and applied together with the Credit Agreement and the
other Loan Documents which, taken together, set forth the complete
understanding and agreement of Agent, Lenders and Grantors with respect to
the matters referred to herein and therein.
(d) NO WAIVER; CUMULATIVE REMEDIES. Neither Agent nor any
------------------------------
Lender shall by any act, delay, omission or otherwise be deemed to have
waived any of its rights or remedies hereunder, and no waiver shall be valid
unless in writing, signed by Agent and then only to the extent therein set
forth. A waiver by Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Agent
would otherwise have had on any future occasion. No failure to exercise nor
any delay in exercising on the part of Agent or any Lender, any right, power
or privilege hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended except by an instrument in writing, duly executed by Agent and
Administrative Borrower.
20
(e) LIMITATION BY LAW. All rights, remedies and powers
-----------------
provided in this Security Agreement may be exercised only to the extent that
the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to
all applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable, in whole or in part, or not entitled to be
recorded, registered or filed under the provisions of any applicable law.
(f) TERMINATION OF THIS SECURITY AGREEMENT. Subject to
--------------------------------------
Section 25(a) hereof, this Security Agreement shall terminate only upon: the
-------------
termination of all Commitments, the posting of satisfactory collateral for
all outstanding Letters of Credit, and the payment in full of all other
Secured Obligations (other than indemnification Secured Obligations as to
which no claim has been asserted).
(g) SUCCESSORS AND ASSIGNS. This Security Agreement and
----------------------
all obligations of Grantors hereunder shall be binding upon the successors
and assigns of each Grantor (including any debtor-in-possession on behalf of
any Grantor) and shall, together with the rights and remedies of Agent, for
the benefit of Agent and Lenders, hereunder, inure to the benefit of Agent
and Lenders, all future holders of any instrument evidencing any of the
Secured Obligations and their respective successors and assigns. No sales of
participations, other sales, assignments, transfers or other dispositions of
any agreement governing or instrument evidencing the Secured Obligations or
any portion thereof or interest therein shall in any manner affect the Lien
granted to Agent, for the benefit of Agent and Lenders, hereunder. No
Grantor may assign, sell, hypothecate or otherwise transfer any interest in
or obligation under this Security Agreement.
(h) COUNTERPARTS. This Security Agreement may be
------------
authenticated in any number of separate counterparts, each of which shall
collectively and separately constitute one and the same agreement. This
Security Agreement may be authenticated by manual signature, facsimile or,
if approved in writing by Agent, electronic means, all of which shall be
equally valid.
(i) GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS;
---------------------------------------------------
JURY TRIAL WAIVER.
-----------------
(i) THIS SECURITY AGREEMENT SHALL BE INTERPRETED
AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN
ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS
PROVISIONS PROVIDED THAT ISSUES WITH RESPECT TO CREATION, PERFECTION, AND
ENFORCEMENT OF LIENS UNDER DIVISION 9 OF THE UCC MAY GIVE EFFECT TO
APPLICABLE CHOICE OR CONFLICT OF LAW RULES SET FORTH IN DIVISION 9 OF THE
UCC) OF THE STATE OF CALIFORNIA; PROVIDED, THAT, THE AGENT AND THE LENDERS
-------- ----
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(ii) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT
TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED
21
STATES OF AMERICA LOCATED IN LOS ANGELES COUNTY, CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, EACH OF THE GRANTORS AND
THE AGENT CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE
NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE GRANTORS AND THE
AGENT IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
--------------------
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN
SUCH JURISDICTION IN RESPECT OF THIS SECURITY AGREEMENT OR ANY DOCUMENT
RELATED HERETO. NOTWITHSTANDING THE FOREGOING: (1) THE AGENT SHALL HAVE THE
RIGHT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY GRANTOR OR ITS PROPERTY
IN THE COURTS OF ANY OTHER JURISDICTION THE AGENT DEEMS NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER SECURITY FOR THE
SECURED OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO ACKNOWLEDGES THAT ANY
APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY PRECEDING SENTENCE MAY
HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE JURISDICTIONS.
(iii) EACH GRANTOR HEREBY WAIVES PERSONAL SERVICE
OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS
MAY BE MADE BY OVERNIGHT MAIL, COURIER SERVICE, OR REGISTERED MAIL (RETURN
RECEIPT REQUESTED) DIRECTED TO GRANTORS AT THEIR ADDRESS SET FORTH IN THE
CREDIT AGREEMENT AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED 5 DAYS
AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS POSTAGE
PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT TO SERVE
LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(iv) NOTWITHSTANDING ANY OTHER PROVISION OF THIS
SECURITY AGREEMENT TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR
AMONG THE PARTIES, ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT OR
ANY OTHER LOAN DOCUMENT INCLUDING ANY CLAIM BASED ON OR ARISING FROM AN
ALLEGED TORT, SHALL AT THE REQUEST OF ANY PARTY HERETO BE DETERMINED BY
BINDING ARBITRATION. The arbitration shall be conducted in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Security Agreement, and under the Commercial
Rules of the American Arbitration Association ("AAA"). The arbitrator(s)
---
shall give effect to statutes of limitation in determining any claim. Any
controversy concerning whether an issue is arbitrable shall be determined by
the arbitrator(s). Judgment upon the arbitration award may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuant to a provisional or ancillary remedy shall not
constitute a waiver of the right of either party, including the plaintiff,
to submit the controversy or claim to arbitration if any other party
contests such action for judicial relief.
(v) Notwithstanding the provisions of (iv) above,
no controversy or claim shall be submitted to arbitration without the
consent of all parties if, at the time of the proposed submission, such
controversy or claim arises from or related to an obligation to the
22
Agent or any Lender which is secured by real estate property collateral
(exclusive of real estate space lease assignments). If all the parties do
not consent to submission of such a controversy or claim to arbitration, the
controversy or claim shall be determined as provided in Section 25 (i)(vi).
------------------
(vi) At the request of either party a controversy
or claim which is not submitted to arbitration as provided and limited in
Sections 25 (i)(iv) and 25(i)(v) shall be determined by judicial reference.
--------------------------------
If such an election is made, the parties shall designate to the court a
referee or referees selected under the auspices of the AAA in the same
manner as arbitrators are selected in AAA-sponsored proceedings. The
presiding referee of the panel, or the referee if there is a single referee,
shall be an active attorney or retired judge. Judgment upon the award
rendered by such referee or referees shall be entered in the court in which
such proceeding was commenced.
(vii) No provision of Sections (iv) through (vi)
shall limit the right of the Agent or the Lenders to exercise self-help
remedies such as setoff, foreclosure against or sale of any real or personal
property collateral or security, or obtaining provisional or ancillary
remedies from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a remedy
does not waive the right of either party to resort to arbitration or
reference. At the Agent's option, foreclosure under a deed of trust or
mortgage may be accomplished either by exercise of power of sale under the
deed of trust or mortgage or by judicial foreclosure.
(j) WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF
--------------------
SECTION 25 (i)(iv), EACH GRANTOR AND THE AGENT EACH IRREVOCABLY 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 SECURITY AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE
PARTIES AGAINST ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR
ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. EACH GRANTOR AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT
LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE
RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO ANY
ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS SECURITY AGREEMENT OR
THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS SECURITY AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(k) LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY
-----------------------
GRANTOR AGAINST THE AGENT OR THE LENDERS, OR THE AFFILIATES, DIRECTORS,
OFFICERS, OFFICERS, EMPLOYEES, OR AGENTS OF THE AGENT OR
23
THE LENDERS FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM FOR BREACH OF CONTRACT OR ANY OTHER THEORY OF LIABILITY
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS SECURITY
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY ACT, OMISSION OR EVENT
OCCURRING IN CONNECTION THEREWITH, AND EACH GRANTOR HEREBY WAIVES, RELEASES
AND AGREES NOT TO ▇▇▇ UPON ANY CLAIM FOR SUCH DAMAGES, WHETHER OR NOT
ACCRUED AND WHETHER OR NOT KNOWN OR SUSPECTED TO EXIST IN ITS FAVOR.
(l) SECTION TITLES. The Section titles contained in this
--------------
Security Agreement are and shall be without substantive meaning or content
of any kind whatsoever and are not a part of the agreement between the
parties hereto.
(m) NO STRICT CONSTRUCTION. The parties hereto have
----------------------
participated jointly in the negotiation and drafting of this Security
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Security Agreement shall be construed as if drafted jointly by
the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any
provisions of this Security Agreement.
(n) ADVICE OF COUNSEL. Each of the parties represents to
-----------------
each other party hereto that it has discussed this Security Agreement and,
specifically, the provisions of Section 25(i) and Section 25(j), with its
------------- -------------
counsel.
(o) BENEFIT OF LENDERS. All Liens granted or contemplated
------------------
hereby shall be for the benefit of Agent and Lenders, and all proceeds or
payments realized from Collateral in accordance herewith shall be applied to
the Secured Obligations in accordance with the terms of the Credit
Agreement.
(p) CONSENTS. Notwithstanding any other provision
--------
contained herein, Agent shall not take any action hereunder that would
require the consent of the Majority Lenders, the Required Lenders or any
Lender, as applicable, under the terms of the Credit Agreement without first
obtaining such Person's or Persons' consent thereunder.
(q) AMENDED AND RESTATED AGREEMENT. This Agreement amends,
------------------------------
restates, and supersedes in its entirety the Old Security Agreement.
* * * * *
24
IN WITNESS WHEREOF, each of the parties hereto has caused this
Security Agreement to be executed and delivered by its duly authorized
officer as of the date first set forth above.
"GRANTORS"
MAIL-WELL, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
MAIL-WELL I CORPORATION,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
MAIL-WELL COMMERCIAL PRINTING, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
POSER BUSINESS FORMS, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
DISCOUNT LABELS, INC.,
an Indiana corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
NATIONAL GRAPHICS COMPANY,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
S-1
Second Amended And Restated Security Agreement
MAIL-WELL WEST, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
WISCO III, L.L.C.,
a Delaware limited liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
MAIL-WELL GOVERNMENT PRINTING, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
MAIL-WELL SERVICES, LLC,
a Colorado limited liability company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
MAIL-WELL TEXAS FINANCE, L.P.,
a Texas limited partnership
By: Mail-Well I Corporation,
a Delaware corporation,
its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
MAIL-WELL MEXICO HOLDINGS, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
S-2
Second Amended And Restated Security Agreement
MMTP HOLDINGS, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
COLORHOUSE CHINA, INC.,
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------
Name:
----------------------------
Title:
----------------------------
"AGENT"
Bank of America, N.A.,
as the Agent for the Lenders
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------
Title: Vice President
----------------------------
S-3
Second Amended And Restated Security Agreement
SCHEDULE I
----------
to
SECURITY AGREEMENT
LOCATION OF COLLATERAL
----------------------
A. Location of Chief Executive Office:
B. Location of Books and Records:
C. Location of Collateral:
D. Location of all other places of business:
E. Location of leased facilities and name of lessor/sublessor:
Schedule I
SCHEDULE II
-----------
to
SECURITY AGREEMENT
JURISDICTION OF ORGANIZATION FOR EACH GRANTOR
State of Organization
Grantor Incorporation Type of Entity Identification No.
----------------------------------------------------------------------------------------------------------------------
ABP Books, Inc. Michigan Corporation 163817
----------------------------------------------------------------------------------------------------------------------
Discount Labels, Inc. Indiana Corporation 194412-068
----------------------------------------------------------------------------------------------------------------------
Hill Graphics, Inc. Texas Corporation 0042273800
----------------------------------------------------------------------------------------------------------------------
MMTP Holdings, Inc. Colorado Corporation 20021168260
----------------------------------------------------------------------------------------------------------------------
Mail-Well, Inc. Colorado Corporation 19971069830
----------------------------------------------------------------------------------------------------------------------
Mail-Well I Corporation Delaware Corporation 2361607
----------------------------------------------------------------------------------------------------------------------
Mail-Well Commercial Printing, Inc. Delaware Corporation 2899119
----------------------------------------------------------------------------------------------------------------------
Mail-Well Government Printing, Inc. Colorado Corporation 20021144160
----------------------------------------------------------------------------------------------------------------------
Mail-Well Mexico Holdings, Inc. Colorado Corporation 19981120415
----------------------------------------------------------------------------------------------------------------------
Mail-Well Services, Inc. Colorado Corporation 19991168160
----------------------------------------------------------------------------------------------------------------------
Mail-Well Texas Finance LP Texas Corporation 20104835
----------------------------------------------------------------------------------------------------------------------
Mail-Well West, Inc. Delaware Corporation 2459285
----------------------------------------------------------------------------------------------------------------------
National Graphics Company Colorado Corporation 19871290701
----------------------------------------------------------------------------------------------------------------------
Poser Business Forms, Inc. Delaware Corporation 2130166
----------------------------------------------------------------------------------------------------------------------
Wisco III, L.L.C. Delaware Limited Liability Company 2680040
----------------------------------------------------------------------------------------------------------------------
Schedule II
SCHEDULE III
------------
to
SECURITY AGREEMENT
PATENTS, TRADEMARKS AND COPYRIGHTS
----------------------------------
Schedule III
