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Guarantee & Collateral Agreement

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Sectors: Consumer Products (Durables)
Governing Law: New York, View New York State Laws
Effective Date: February 28, 1997
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EXHIBIT 10.8


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GUARANTEE AND COLLATERAL AGREEMENT


made by


ANACOMP, INC.


in favor of


THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent


Dated as of February 28, 1997


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TABLE OF CONTENTS


Page


SECTION 1. DEFINED TERMS.................................................... 1
1.1 Definitions........................................................ 1
1.2 Other Definitional Provisions...................................... 5


SECTION 2. GUARANTEE........................................................ 6
2.1 Guarantee.......................................................... 6
2.2 Right of Contribution.............................................. 6
2.3 No Subrogation..................................................... 6
2.4 Amendments, etc. with respect to the Borrower Obligations.......... 7
2.5 Guarantee Absolute and Unconditional............................... 7
2.6 Reinstatement...................................................... 8
2.7 Payments........................................................... 8


SECTION 3. GRANT OF SECURITY INTEREST....................................... 8


SECTION 4. REPRESENTATIONS AND WARRANTIES................................... 9
4.1 Representations in Credit Agreement................................ 9
4.2 Title; No Other Liens.............................................. 9
4.3 Perfected First Priority Liens..................................... 10
4.4 Chief Executive Office............................................. 10
4.5 Inventory and Equipment............................................ 10
4.6 Farm Products...................................................... 10
4.7 Pledged Securities................................................. 10
4.8 Receivables........................................................ 10
4.9 Intellectual Property.............................................. 11


SECTION 5. COVENANTS........................................................ 11
5.1 Covenants in Credit Agreement...................................... 11
5.2 Delivery of Instruments and Chattel Paper.......................... 11
5.3 Maintenance of Insurance........................................... 11
5.4 Payment of Obligations............................................. 12
5.5 Maintenance of Perfected Security Interest; Further Documentation.. 12
5.6 Changes in Locations, Name, etc.................................... 12
5.7 Notices............................................................ 13
5.8 Pledged Securities................................................. 13
5.9 Receivables........................................................ 14
5.10 Intellectual Property............................................. 14


SECTION 6. REMEDIAL PROVISIONS.............................................. 15
6.1 Certain Matters Relating to Receivables............................ 15
6.2 Communications with Obligors; Grantors Remain Liable............... 16
6.3 Pledged Stock...................................................... 17
6.4 Proceeds to be Turned Over To Administrative Agent................. 17
6.5 Application of Proceeds............................................ 18
6.6 Code and Other Remedies............................................ 18


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PAGE


6.7 Private Sales...................................................... 19
6.8 Waiver; Deficiency................................................. 19


SECTION 7. THE ADMINISTRATIVE AGENT......................................... 19
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc........ 19
7.2 Duty of Administrative Agent....................................... 21
7.3 Execution of Financing Statements.................................. 21
7.4 Authority of Administrative Agent.................................. 21


SECTION 8. MISCELLANEOUS.................................................... 22
8.1 Amendments in Writing.............................................. 22
8.2 Notices............................................................ 22
8.3 No Waiver by Course of Conduct; Cumulative Remedies................ 22
8.4 Enforcement Expenses; Indemnification.............................. 22
8.5 Successors and Assigns............................................. 23
8.6 Set-Off............................................................ 23
8.7 Counterparts....................................................... 23
8.8 Severability....................................................... 23
8.9 Section Headings................................................... 23
8.10 Integration....................................................... 24
8.11 GOVERNING LAW..................................................... 24
8.12 Submission To Jurisdiction; Waivers............................... 24
8.13 Acknowledgements.................................................. 24
8.14 WAIVER OF JURY TRIAL.............................................. 25
8.15 Additional Grantors............................................... 25
8.16 Judgment.......................................................... 25
8.17 Releases.......................................................... 25


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SCHEDULES


Schedule 1 Notice Addresses of Guarantors Schedule 2 Description of Pledged Securities Schedule 3 Filings and Other Actions Required to Perfect Security Interests Schedule 4 Location of Jurisdiction of Organization and Chief Executive
Office Schedule 5 Location of Inventory and Equipment Schedule 6 Copyrights and Copyright Licenses; Patents and Patent Licenses;
Trademark and Trademark Licenses Schedule 7 Immaterial Subsidiaries Schedule 8 Existing Prior Liens


GUARANTEE AND COLLATERAL AGREEMENT


GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 28, 1997, made by each of the signatories hereto (together with any other entity that may become a party hereto as provided herein, the "GRANTORS"), in favor of THE FIRST NATIONAL BANK OF CHICAGO, as Administrative Agent (in such capacity, the "ADMINISTRATIVE AGENT") for the banks and other financial institutions (the "LENDERS") from time to time parties to the Credit and Guarantee Agreement, dated as of February 28, 1997 (as amended, supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT"), among ANACOMP, INC., an Indiana corporation (the "COMPANY"), the Foreign Subsidiary Borrowers parties thereto (together with the Company, the "BORROWERS"), LEHMAN COMMERCIAL PAPER INC., as Arranger and Syndication Agent, the Lenders and the Administrative Agent.


W I T N E S S E T H:


WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to make extensions of credit to the Borrowers upon the terms and subject to the conditions set forth therein;


WHEREAS, each Borrower is a member of an affiliated group of companies that includes each other Grantor;


WHEREAS, the proceeds of the extensions of credit under the Credit Agreement will be used in part to enable the Borrowers to make valuable transfers to one or more of the other Grantors in connection with the operation of their respective businesses;


WHEREAS, the Borrowers and the other Grantors are engaged in related businesses, and each Grantor will derive substantial direct and indirect benefit from the making of the extensions of credit under the Credit Agreement; and


WHEREAS, it is a condition precedent to the obligation of the Lenders to make their respective extensions of credit to the Borrowers under the Credit Agreement that the Grantors shall have executed and delivered this Agreement to the Administrative Agent for the ratable benefit of the Lenders;


NOW, THEREFORE, in consideration of the premises and to induce the Administrative Agent and the Lenders to enter into the Credit Agreement and to induce the Lenders to make their respective extensions of credit to the Borrower thereunder, each Grantor hereby agrees with the Administrative Agent, for the ratable benefit of the Lenders, as follows:


SECTION 1. DEFINED TERMS


1.1 DEFINITIONS. (a) Unless otherwise defined herein, terms defined in the Credit Agreement and used herein shall have the meanings given to them in the Credit Agreement, and the following terms which are defined in the Uniform Commercial Code in effect in the State of New York on the date hereof are used herein as so defined: Accounts, Chattel Paper, Documents, Equipment, Farm Products, Instruments and Inventory.


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(b) The following terms shall have the following meanings:


"AGREEMENT": this Guarantee and Collateral Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.


"BORROWER OBLIGATIONS": in respect of any Borrower, the collective
reference to the unpaid principal of and interest on the Loans made to such
Borrower, the Reimbursement Obligations of such Borrower and all other
obligations and liabilities of such Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of such Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to such Borrower, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding, and including, with respect to the
Company, its guarantee obligations pursuant to Section 12 of the Credit
Agreement) to the Administrative Agent or any Lender (or, in the case of
any Hedge Agreement referred to below, any Affiliate of any Lender),
whether direct or indirect, absolute or contingent, due or to become due,
or now existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, this Agreement, the other Loan
Documents, any Letter of Credit or any Hedge Agreement entered into by such
Borrower with any Lender (or any Affiliate of any Lender) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Administrative Agent or to the
Lenders that are required to be paid by such Borrower pursuant to the terms
of any of the foregoing agreements).


"COLLATERAL": as defined in Section 3.


"COLLATERAL ACCOUNT": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.


"COPYRIGHTS": (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in SCHEDULE 6), all registrations and
recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and
applications in the United States Copyright Office, and (ii) the right to
obtain all renewals thereof.


"COPYRIGHT LICENSES": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
SCHEDULE 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright, to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such Copyright License is not prohibited by such
Copyright License without the consent of any other party thereto, would not
give any other party to such Copyright License the right to terminate its
obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the


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foregoing shall not be deemed to obligate such Grantor to obtain such
consents); PROVIDED, that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any money or other amounts due or to become
due under any such Copyright License.


"GENERAL INTANGIBLES": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, including, without
limitation, with respect to any Grantor, all contracts, agreements,
instruments and indentures in any form, and portions thereof, to which such
Grantor is a party or under which such Grantor has any right, title or
interest or to which such Grantor or any property of such Grantor is
subject, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of such
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of such Grantor to damages arising
thereunder and (iii) all rights of such Grantor to perform and to exercise
all remedies thereunder, in each case to the extent the grant by such
Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is
not prohibited by such contract, agreement, instrument or indenture without
the consent of any other party thereto, would not give any other party to
such contract, agreement, instrument or indenture the right to terminate
its obligations thereunder, or is permitted with consent if all necessary
consents to such grant of a security interest have been obtained from the
other parties thereto (it being understood that the foregoing shall not be
deemed to obligate such Grantor to obtain such consents); PROVIDED, that
the foregoing limitation shall not affect, limit, restrict or impair the
grant by such Grantor of a security interest pursuant to this Agreement in
any Receivable or any money or other amounts due or to become due under any
such contract, agreement, instrument or indenture.


"GUARANTOR OBLIGATIONS": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations of all Borrowers and
(ii) all obligations and liabilities of such Guarantor which may arise
under or in connection with this Agreement or any other Loan Document to
which such Guarantor is a party, in each case whether on account of
guarantee obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the Lenders that
are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Loan Document).


"GUARANTORS": the collective reference to each Grantor other than the
Company.


"HEDGE AGREEMENTS": as to any Person, all interest rate swaps, caps
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either
generally or under specific contingencies.


"IMMATERIAL SUBSIDIARY": the Subsidiaries of the Company listed on
Schedule 7.


"INTELLECTUAL PROPERTY": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, the Copyrights, the Copyright Licenses, the


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Patents, the Patent Licenses, the Trademarks and the Trademark Licenses,
and all rights to sue at law or in equity for any infringement or other
impairment thereof, including the right to receive all proceeds and damages
therefrom.


"INTERCOMPANY NOTE": any promissory note evidencing loans made by any
Grantor to the Company or any of its Subsidiaries.


"ISSUERS": the collective reference to each issuer of a Pledged
Security.


"NEW YORK UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.


"OBLIGATIONS": (i) in the case of each Borrower, its Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.


"PATENTS": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, (ii) all
applications for letters patent of the United States or any other country
and all divisions, continuations and continuations-in-part thereof,
including, without limitation, any of the foregoing referred to in SCHEDULE
6, and (iii) all rights to obtain any reissues or extensions of the
foregoing.


"PATENT LICENSE": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell
any invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, to the extent
the grant by such Grantor of a security interest pursuant to this Agreement
in its right, title and interest in such Patent License is not prohibited
by such Patent License without the consent of any other party thereto,
would not give any other party to such Patent License the right to
terminate its obligations thereunder, or is permitted with consent if all
necessary consents to such grant of a security interest have been obtained
from the other parties thereto (it being understood that the foregoing
shall not be deemed to obligate such Grantor to obtain such consents);
PROVIDED, that the foregoing limitation shall not affect, limit, restrict
or impair the grant by such Grantor of a security interest pursuant to this
Agreement in any money or other amounts due or to become due under any such
Patent License.


"PLEDGED NOTES": all Intercompany Notes at any time issued to any
Grantor and all other promissory notes issued to or held by any Grantor
(other than promissory notes issued in connection with extensions of trade
credit by any Grantor in the ordinary course of business).


"PLEDGED SECURITIES": the collective reference to the Pledged Notes
and the Pledged Stock.


"PLEDGED STOCK": the shares of Capital Stock listed on SCHEDULE 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever pledged pursuant to subsection 9.9 of the Credit
Agreement.


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"PROCEEDS": all "proceeds" as such term is defined in Section 9- 306(1) of the Uniform Commercial Code in effect in the State of New York on the date hereof and, in any event, shall include, without limitation, all dividends or other income from the Pledged Securities, collections thereon or distributions or payments with respect thereto.


"RECEIVABLE": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument
or Chattel Paper and whether or not it has been earned by performance
(including, without limitation, any Account).


"SECURITIES ACT": the Securities Act of 1933, as amended.


"TRADEMARKS": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, whether in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, or
otherwise, and all common-law rights related thereto, including, without
limitation, any of the foregoing referred to in SCHEDULE 6, and (ii) the
right to obtain all renewals thereof.


"TRADEMARK LICENSE": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred to
in SCHEDULE 6, to the extent the grant by such Grantor of a security
interest pursuant to this Agreement in its right, title and interest in
such Trademark License is not prohibited by such Trademark License without
the consent of any other party thereto, would not give any other party to
such Trademark License the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); PROVIDED, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any money or other amounts
due or to become due under any such Trademark License.


"VEHICLES": all cars, trucks, trailers, construction and earth moving
equipment and other vehicles covered by a certificate of title law of any
state.


1.2 OTHER DEFINITIONAL PROVISIONS. (a) The words "hereof," "herein", "hereto" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section and Schedule references are to this Agreement unless otherwise specified.


(b) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms.


(c) Where the context requires, terms relating to the Collateral or any part thereof, when used in relation to a Grantor, shall refer to such Grantor's Collateral or the relevant part thereof.


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SECTION 2. GUARANTEE


2.1 GUARANTEE. (a) Each of the Guarantors hereby, jointly and severally, unconditionally and irrevocably, guarantees to the Administrative Agent, for the ratable benefit of the Lenders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Borrower Obligations of all Borrowers.


(b) Anything herein or in any other Loan Document to the contrary notwithstanding, the maximum liability of each Guarantor hereunder and under the other Loan Documents shall in no event exceed the amount which can be guaranteed by such Guarantor under applicable federal and state laws relating to the insolvency of debtors (after giving effect to the right of contribution established in Section 2.2).


(c) Each Guarantor agrees that the Borrower Obligations of one or more Borrowers may at any time and from time to time exceed the amount of the liability of such Guarantor hereunder without impairing the guarantee contained in this Section 2 or affecting the rights and remedies of the Administrative Agent or any Lender hereunder.


(d) The guarantee contained in this Section 2 shall remain in full force and effect until all the Borrower Obligations and the obligations of each Guarantor under the guarantee contained in this Section 2 shall have been satisfied by payment in full, no Letter of Credit shall be outstanding and the Commitments shall be terminated, notwithstanding that from time to time during the term of the Credit Agreement the Borrowers may be free from any Borrower Obligations.


(e) No payment made by any Borrower, any of the Guarantors, any other guarantor or any other Person or received or collected by the Administrative Agent or any Lender from any Borrower, any of the Guarantors, any other guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of any of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of any Guarantor hereunder which shall, notwithstanding any such payment (other than any payment made by such Guarantor in respect of such Borrower Obligations or any payment received or collected from such Guarantor in respect of such Borrower Obligations), remain liable for the Borrower Obligations of all Borrowers up to the maximum liability of such Guarantor hereunder until all Borrower Obligations are paid in full, no Letter of Credit shall be outstanding and the Commitments are terminated.


2.2 RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to the extent that a Guarantor shall have paid more than its proportionate share of any payment made hereunder, such Guarantor shall be entitled to seek and receive contribution from and against any other Guarantor hereunder which has
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