Second Amended & Restated Equipment Lease

EXHIBIT 10.26


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SECOND AMENDED AND RESTATED EQUIPMENT LEASE


Dated as of August 6, 2002


between


WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
as trustee under MW 1997-1 Trust,
as the Lessor Trustee


and


MAIL-WELL I CORPORATION,
as the Lessee


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TABLE OF CONTENTS


Page Section 1. DEFINITIONS 1
Section 1.1. Definitions; Interpretation 1


Section 2. LEASE 1
Section 2.1. Lease of Equipment 1
Section 2.2. Lease Supplement 1
Section 2.3. Lease Term 2
Section 2.4. Title 2


Section 3. PAYMENT OF RENT 2
Section 3.1. Rent 2
Section 3.2. Payment of Rent 2
Section 3.3. Supplemental Rent 2
Section 3.4. Method of Payment 3


Section 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS 3
Section 4.1. Quiet Enjoyment 3
Section 4.2. Right to Inspect 3
Section 4.3. Change in the Nature of Business 3
Section 4.4. Corporate Changes 3


Section 5. NET LEASE, ETC. 4
Section 5.1. Net Lease 4
Section 5.2. No Termination or Abatement 5


Section 6. LESSEE ACKNOWLEDGMENTS 6
Section 6.1. Condition of the Equipment 6
Section 6.2. Risk of Loss 6


Section 7. MARKING 7
Section 7.1. Marking of Equipment 7


Section 8. POSSESSION AND USE OF THE EQUIPMENT, ETC. 7
Section 8.1. Use of the Equipment 7
Section 8.2. Possession of the Equipment 8
Section 8.3. Landlord Waivers 8


Section 9. MAINTENANCE AND REPAIR; RETURN 8
Section 9.1. Repairs and Maintenance 8
Section 9.2. Maintenance Costs and Warranties 8
Section 9.3. Lessor Trustee Not Obligated to Maintain or Repair 9
Section 9.4. Return 9


Section 10. MODIFICATIONS, ETC. 12
Section 10.1. Replacement of Parts 12


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TABLE OF CONTENTS
(CONT.)
Page
Section 10.2. Required Alterations 13
Section 10.3. Optional Alterations 13
Section 10.4. Title to Parts 13


Section 11. WARRANTY OF TITLE 13
Section 11.1. Warranty of Title 13


Section 12. PERMITTED CONTESTS 14
Section 12.1. Permitted Contests in Respect of Applicable Law 14


Section 13. INSURANCE 15
Section 13.1. Required Insurance Coverages and Limits 15
Section 13.2. Adjustment and Payment of Losses 16
Section 13.3. Evidence of Insurance 16
Section 13.4. Application of Insurance Proceeds 16
Section 13.5. Deductibles and Self-Insurance 17
Section 13.6. Insurance for Own Account 17


Section 14. CASUALTY OCCURRENCE 17
Section 14.1. Casualty Occurrence 17
Section 14.2. Conveyance of Replacement Equipment 19
Section 14.3. Application of Payments 20
Section 14.4. Certain Government Requisitions 20
Section 14.5. Application of Payments from Governmental Authorities for
Requisition of Title 21
Section 14.6. Application of Payments During Existence of Default 21


Section 15. SUBSTITUTION OF EQUIPMENT 21
Section 15.1. Substitution of Equipment 21


Section 16. EVENTS OF DEFAULT 22
Section 16.1. Events of Default 22
Section 16.2. Remedies 24
Section 16.3. Waiver of Certain Rights 27


Section 17. LESSOR TRUSTEE'S RIGHT TO REMEDY 27
Section 17.1. The Lessor Trustee's Right to Remedy the Lessee's Defaults 27


Section 18. OPTIONS TO RENEW, PURCHASE AND SELL 28
Section 18.1. Purchase of the Equipment 28
Section 18.2. [Intentionally Omitted] 28
Section 18.3. Option to Sell the Equipment 28
Section 18.4. End of Term Adjustment 30


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TABLE OF CONTENTS
(CONT.)
Page Section 19. PROCEDURES RELATING TO PURCHASE OF EQUIPMENT 31
Section 19.1. Provisions Relating to the Purchase of Equipment; Conveyance
upon Certain Other Events 31


Section 20. ADDITIONAL GUARANTORS 31
Section 20.1. Additional Guarantors 31


Section 21. ASSIGNMENT RESTRICTIONS 32
Section 21.1. Restrictions on Assignments by the Lessee 32


Section 22. NO MERGER OF TITLE 32
Section 22.1. No Merger of Title 32


Section 23. INTENT OF THE PARTIES 32
Section 23.1. Nature of Transaction 32
Section 23.2. Liens and Security Interests 33


Section 24. MISCELLANEOUS 35
Section 24.1. Severability 35
Section 24.2. Amendments and Modifications 36
Section 24.3. No Waiver 36
Section 24.4. Notices 36
Section 24.5. Successors and Assigns 36
Section 24.6. Headings and Table of Contents 36
Section 24.7. Counterparts 36
Section 24.8. Third Party Beneficiaries 36
Section 24.9. Governing Law 36
Section 24.10. Time of Essence 36


ATTACHMENTS TO EQUIPMENT LEASE


Exhibit A Form of Lease Supplement Exhibit B Form of Landlord Waiver


Schedule 13.1 Insurance


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SECOND AMENDED AND RESTATED EQUIPMENT LEASE


THIS SECOND AMENDED AND RESTATED EQUIPMENT LEASE (this "Lease"), dated as of August 6, 2002 between WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, as trustee under MW 1997-1 Trust (the "Lessor Trustee"), as lessor, and MAIL-WELL I CORPORATION, a Delaware corporation, as lessee (the "Lessee").


RECITALS


A. Pursuant to the Amended and Restated Participation Agreement, the Existing Certificate Purchasers financed the Equipment leased by the Lessor Trustee to the Lessee pursuant to the Amended and Restated Equipment Lease;


B. The Lessor Trustee, the Lessee and the Trust Certificate Purchasers now desire to refinance the Equipment pursuant to the Second Amended and Restated Participation Agreement, dated as of August 6, 2002 (the "Participation Agreement"), among the Lessee, the Lessor Trustee and the Trust Certificate Purchasers;


C. On the Closing Date, the Trust Certificate Purchasers will purchase the Trust Certificates, and the Lessor Trustee will prepay in full the Existing Trust Certificates;


D. The Lessor Trustee and the Lessee desire to amend and restate the Amended and Restated Equipment Lease to provide for the lease from the Lessor Trustee to the Lessee of the Equipment on the terms of this Lease;


NOW THEREFORE, in consideration of the foregoing, and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties amend and restate the Amended and Restated Equipment Lease in its entirety to provide as follows.


AGREEMENT


SECTION 1. DEFINITIONS


Section 1.1. Definitions; Interpretation. Capitalized terms used but not otherwise defined in this Lease have the meanings specified in Annex I to the Participation Agreement. The rules of interpretation set forth in Annex I to the Participation Agreement apply to this Lease.


SECTION 2. LEASE


Section 2.1. Lease of Equipment. Subject to the conditions set forth in the Participation Agreement, the Lessor Trustee leases to the Lessee the Equipment and other property described in Section 23.2 for the Lease Term, and the Lessee leases the Equipment from the Lessor Trustee for the Lease Term, such leasing to be further evidenced by the execution by the Lessor Trustee and the Lessee of Lease Supplement No. 1 covering the Equipment.


Section 2.2. Lease Supplement. On the Closing Date, the Lessee and the Lessor Trustee shall enter into Lease Supplement No. 1, substantially in the form of Exhibit A to this Lease, covering the Equipment, describing the Items of Equipment leased on the Closing Date,


and setting forth the Equipment Cost therefor. The Lessee's execution and delivery of a Lease Supplement with respect to an Item of Equipment shall conclusively establish as between the Lessor Trustee and the Lessee that such Item of Equipment is acceptable to and accepted by the Lessee under this Lease, notwithstanding any defect with respect to design, manufacture, condition or in any other respect, and that such Item of Equipment is in good order and condition and appears to conform to the specifications applicable thereto and to all governmental standards and requirements applicable thereto.


Section 2.3. Lease Term. Subject to the termination provisions of this Lease, each Item of Equipment shall be leased for the Lease Term.


Section 2.4. Title. The Equipment is leased to the Lessee AS-IS, WHERE-IS, without any representation or warranty, express or implied, by the Lessor Trustee, the Agent or any Certificate Holder and subject to the existing state of title (including, without limitation, all Liens other than Lessor's Liens) and all applicable Requirements of Law. The Lessee shall in no event have any recourse against the Lessor Trustee, the Agent or any Certificate Holder for any defect in or exception to title to the Equipment or leasehold interest therein other than resulting from Lessor's Liens attributable to the Lessor Trustee, the Agent or such Certificate Holder.


SECTION 3. PAYMENT OF RENT


Section 3.1. Rent.


(a) During the Lease Term, the Lessee shall pay Periodic Rent
for all Items of Equipment subject to this Lease to the Lessor
Trustee on each Scheduled Payment Date and on any date on which this
Lease is terminated, provided that any payment of Periodic Rent which
is due on a date which is not a Business Day shall be payable on the
next succeeding Business Day, unless the result of the extension
would be that such payment would be made in another calendar month in
which event such payment shall be made on the immediately preceding
Business Day.


(b) Neither the Lessee's inability or failure to take
possession of all or any portion of the Equipment when delivered by
the Lessor Trustee, nor the inability or failure of the Lessor
Trustee to deliver all or any portion of the Equipment to the Lessee
on or before the Closing Date, whether or not attributable to any act
or omission of the Lessee or any act or omission of the Lessor
Trustee or any Certificate Holder, or for any other reason
whatsoever, shall delay or otherwise affect the Lessee's obligation
to pay Rent for all of the Equipment in accordance with the terms of
this Lease.


Section 3.2. Payment of Rent. Lessee shall pay Rent absolutely net to the Lessor Trustee or other Person entitled to it, so that this Lease yields to that Person the full amount of Rent when due, without setoff, deduction or reduction.


Section 3.3. Supplemental Rent. The Lessee shall pay to the Lessor Trustee or any other Person entitled thereto any and all Supplemental Rent promptly as the same shall become due and payable, and if the Lessee fails to pay any Supplemental Rent, the Lessor Trustee and such other Persons shall have all rights, powers and remedies provided for herein or by law or equity or otherwise in the case of nonpayment of Periodic Rent. The Lessee shall pay to the


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Lessor Trustee, as Supplemental Rent, among other things, on demand, to the extent permitted by applicable Requirements of Law, interest at the applicable Overdue Rate on any installment of Periodic Rent not paid when due for the period for which the same shall be overdue and on any payment of Supplemental Rent not paid when due or demanded by the Lessor Trustee for the period from the due date or the date of any such demand, as the case may be, until the same shall be paid. The expiration or other termination of the Lessee's obligations to pay Periodic Rent hereunder shall not limit or modify the obligations of the Lessee with respect to Supplemental Rent. Unless expressly provided otherwise in this Lease, in the event of any failure on the part of the Lessee to pay and discharge any Supplemental Rent as and when due, the Lessee shall also promptly pay and discharge any fine, penalty, interest or cost which may be assessed or added against the Lessor Trustee by a third party for nonpayment or late payment of such Supplemental Rent, all of which shall also constitute Supplemental Rent.


Section 3.4. Method of Payment. Each payment of Rent payable by the Lessee to the Lessor Trustee under this Lease or any other Operative Agreement shall be made by the Lessee to the Lessor Trustee prior to 10:00 a.m. (Salt Lake City, Utah time) on the date when such payment is due to the Account by wire transfer of federal or other immediately available funds consisting of lawful currency of the United States of America.


SECTION 4. QUIET ENJOYMENT; RIGHT TO INSPECT; NATURE OF BUSINESS


Section 4.1. Quiet Enjoyment. So long as no Event of Default has occurred and is continuing and subject to other terms of the Operative Agreements, the Lessee shall peaceably and quietly have, hold and enjoy each Item of Equipment for the Lease Term, free of any claim or other action by the Lessor Trustee, the Agent or the Certificate Holders or anyone claiming through or under the Lessor Trustee, the Agent or the Certificate Holders (other than the Lessee) with respect to any matters arising from and after the Closing Date. The Lessee's right of quiet enjoyment shall in no way affect the rights of the Lessor Trustee, the Agent or the Certificate Holders (or anyone claiming through or under the Lessor Trustee, the Agent or the Certificate Holders) to initiate legal action to enforce the Lessee's obligations under this Lease.


Section 4.2. Right to Inspect. During the Lease Term, the Lessee shall upon reasonable notice, and from time to time, permit the Lessor Trustee, the Agent, any Certificate Holder, and their respective authorized representatives to inspect the Equipment, to examine the records or books of account of the Lessee relating to the Equipment and to discuss the affairs, finances and accounts of the Lessee with appropriate officers, during normal business hours, provided that if an Event of Default has occurred and is continuing, no notice shall be required and any inspection shall be at the Lessee's expense.


Section 4.3. Change in the Nature of Business. The Lessee shall not engage in any business or activity if as a result the general nature of the business of the Lessee would be changed in any material respect from the general nature of the business engaged in by the Lessee on the date of this Lease.


Section 4.4. Corporate Changes. The Lessee shall notify the Lessor Trustee and the Agent at least 10 Business Days before it changes the jurisdiction where it is organized, the location of its chief executive office; or its name. In connection with any such change, the Lessee


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shall deliver to the Lessor Trustee and the Agent any additional UCC financing statements and other documents reasonably requested by them to maintain the validity, perfection and priority of the security interests granted in this Lease or the other Operative Documents.


SECTION 5. NET LEASE, ETC.


Section 5.1. Net Lease.


(a) This Lease shall constitute a net lease, and it is intended
that the Lessee shall pay all costs and expenses of every character,
whether foreseen or unforeseen, ordinary or extraordinary, or
structural or non-structural, in connection with the Lessee's
installation, use, possession, operation, maintenance, repair and
return of the Equipment, including, without limitation, every cost
and expense particularly described in this Lease.


(b) Any present or future law to the contrary notwithstanding,
this Lease shall not terminate (except as expressly permitted by this
Lease and upon performance of the obligations in connection
therewith), nor shall the Lessee be entitled to any abatement,
suspension, deferment, reduction, setoff, counterclaim, or defense
with respect to the Rent, nor shall the Lessee's obligations
hereunder be affected for any reason, cause or circumstance, whether
or not the Lessee shall have notice or knowledge of it, including,
without limitation, the following reasons, causes or circumstances:


(i) any defect in the condition, merchantability,
design, construction, quality or fitness for use of the Equipment
or any part thereof, or the failure of the Equipment to comply
with all Requirements of Law, including any inability to use the
Equipment by reason of such defect or failure to comply;


(ii) any damage to, removal, abandonment, salvage,
loss, contamination of, scrapping or destruction of or any
requisition or taking of the Equipment or any part thereof;


(iii) any restriction, prevention or curtailment of or
interference with any use or possession of the Equipment or any
part thereof;


(iv) any defect in title of or rights to the Equipment
or any Lien on such title or rights or on the Equipment;


(v) any change, waiver, extension, indulgence or other
action or omission or breach in respect of any obligation or
liability of or by the Lessor Trustee, the Agent or any
Certificate Holder;


(vi) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like
proceedings relating to the Lessee, any Guarantor, the Lessor
Trustee, the Agent, any Certificate Holder or any other Person,
or any action taken with respect to this Lease by any trustee or
receiver of the Lessee, any Guarantor, the Lessor Trustee, the
Agent, any Certificate Holder or any other Person, or by any
court in any such proceeding;


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(vii) any claim that the Lessee has or might have
against any Person, including without limitation the Lessor
Trustee, the Agent, any Certificate Holder or any vendor,
manufacturer, contractor of or for the Equipment;


(viii) any failure on the part of the Lessor Trustee or
any other Person to perform or comply with any of the terms of
this Lease, of any other Operative Agreement or of any other
agreement or any breach of any representation or warranty of, or
any act or omission of the Lessee, any Guarantor, the Lessor
Trustee, the Agent or any Certificate Holder under this Lease or
any of the other Operative Agreements, or any claims, rights or
remedies occurring or arising as a result of any other business
dealings between or among the Lessee or any Guarantor and any of
the Lessor Trustee, the Agent or any Certificate Holder;


(ix) any invalidity or unenforceability or illegality
or disaffirmance of this Lease against or by the Lessee or any
provision of any Operative Agreement or any lack of right, power
or authority of the Lessee, any Guarantor, the Lessor Trustee,
the Agent or any Certificate Holder to enter into any Operative
Agreement or any of the transactions contemplated thereby;


(x) the impossibility or illegality of performance of
its obligations under this Lease by the Lessee or the Lessor
Trustee or both of them;


(xi) any action by any Governmental Authority;


(xii) the Lessee's acquisition of any Item of Equipment
(except to the extent this Lease is terminated in accordance with
its terms); or


(xiii) breach of any warranty or representation
regarding any Item of Equipment.


(c) The Lessee's agreement in Section 5.1(b) shall not affect
any claim, action or right the Lessee may have against the Lessor
Trustee or any Certificate Holder. The parties intend that the
Lessee's obligations under this Lease shall be obligations that are
separate and independent from any obligations of the Lessor Trustee
hereunder or under any other Operative Agreements, and the
obligations of the Lessee shall continue unchanged, except as they
may be modified in accordance with Section 24.2. Without affecting
Lessee's obligation to pay Rent under any Operative Agreement, Lessee
may seek damages for a breach by the Lessor Trustee or any
Certificate Holder of its obligations under this Lease (including,
without limitation, Section 4.1) or any other Operative Agreement.


Section 5.2. No Termination or Abatement. The Lessee shall remain obligated under this Lease in accordance with its terms and shall not take any action to terminate (except as expressly permitted by this Lease and upon performance of the obligations in connection therewith), rescind or avoid this Lease, notwithstanding any action for bankruptcy, insolvency, reorganization, liquidation, dissolution, or other proceeding affecting the Lessor Trustee or any Certificate Holder, or any action with respect to this Lease which may be taken by any trustee, receiver or liquidator of the Lessor Trustee or any Certificate Holder or by any court with respect


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to the Lessor Trustee or any Certificate Holder. The Lessee's obligations hereunder, including, without limitation, its obligations to pay Periodic Rent for the Equipment and to pay Supplemental Rent, shall be unconditional and irrevocable under any and all circumstances and the Lessee hereby waives, to the extent permitted by law, all right (a) to terminate or surrender this Lease (except as provided herein) or (b) to avail itself of any abatement, suspension, deferment, reduction, setoff, counterclaim or defense with respect to any Rent. Each Rent payment made pursuant to this Lease by the Lessee shall be final and the Lessee shall not seek to recover all or any part of such payment from the Lessor Trustee or any Certificate Holder for any reason whatsoever. If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein or as otherwise agreed, the Lessee nonetheless agrees to pay to the Lessor Trustee, or to whomever shall be entitled thereto, an amount equal to each Rent payment at the time such payment would have become du ...