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App. A To Participation, Master Lease & Loan Agrmt

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APPENDIX A
to
Participation Agreement,
Master Lease, and Loan Agreement


DEFINITIONS AND INTERPRETATION


A. Interpretation. In each Operative Document, unless a clear contrary
-------------- intention appears:


(i) the singular number includes the plural number and vice versa;
-----------


(ii) reference to any Person includes such Person's successors and assigns but, if applicable, only if such successors and assigns are permitted by the Operative Documents, and reference to a Person in a particular capacity excludes such Person in any other capacity or individually;


(iii) reference to any gender includes each other gender;


(iv) reference to any agreement (including any Operative Document), document or instrument means such agreement, document or instrument as amended or modified and in effect from time to time in accordance with the terms thereof and, if applicable, the terms of the other Operative Documents and reference to any promissory note includes any promissory note which is an extension or renewal thereof or a substitute or replacement therefor;


(v) reference to any Applicable Law means such Applicable Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time, including rules and regulations promulgated thereunder and reference to any section or other provision of any Applicable Law means that provision of such Applicable Law from time to time in effect and constituting the substantive amendment, modification, codification, replacement or reenactment of such section or other provision;


(vi) reference in any Operative Document to any Article, Section, Appendix, Schedule or Exhibit means such Article or Section thereof or Appendix, Schedule or Exhibit thereto;


(vii) "hereunder, "hereof", "hereto" and words of similar import shall be deemed references to an Operative Document as a whole and not to any particular Article, Section or other provision thereof;


(viii) "including" (and with correlative meaning "include") means including without limiting the generality of any description preceding such term; and


(ix) relative to the determination of any period of time, "from" means "from and including" and "to" means "to but excluding".
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement


B. Accounting Terms. In each Operative Document, unless expressly
---------------- otherwise provided, accounting terms shall be construed and interpreted, and accounting determinations and computations shall be made, in accordance with GAAP.


C. Conflict in Operative Documents. If there is any conflict between any
------------------------------- Operative Documents, such Operative Document shall be interpreted and construed, so as to avoid or minimize such conflict but, to the extent (and only to the extent) of such conflict, the Participation Agreement shall prevail and control.


D. Legal Representation of the Parties. The Operative Documents were
----------------------------------- negotiated by the parties with the benefit of legal representation and any rule of construction or interpretation otherwise requiring the Operative Document to be construed or interpreted against any party shall not apply to any construction or interpretation hereof or thereof.


E. Material Adverse Effect. The term "Material Adverse Effect," as such
----------------------- ------------------------ term is defined in the Mail-Well Credit Agreement, shall, for purposes of all of the Operative Documents (including, without limitation, for purposes of Section
------- 16.1(i) of the Master Lease), be deemed to mean as such term is defined in this - ------- Appendix A below.


F. Defined Terms. Unless a clear contrary intention appears, terms
------------- defined herein have the respective indicated meanings when used in each Operative Document.


"Acceleration" is defined in Section 6.2(a) of the Loan Agreement.
------------ --------------


"Additional Costs" are defined in Section 11.1 of the Participation
---------------- ------------ Agreement.


"Advance" means an advance of funds to the Lessor pursuant to Article III
------- ----------- of the Participation Agreement.


"Adjusted Eurodollar Rate" is defined in Section 1.1 of the Mail-Well
------------------------ ----------- Credit Agreement.


"Affiliate" means, as to any Person, any other Person (i) that directly or
--------- indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with, such Person; (ii) that directly or indirectly beneficially owns or holds ten percent (10%) or more of any class of voting stock of such Person; or (iii) ten percent (10%) or more of the voting stock of which is directly or indirectly beneficially owned or held by the Person in question. The term "control" means the possession, directly or indirectly, of the power to direct or cause direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, however, in no event shall the Agent or any Lender be
-------- ------- deemed an Affiliate of the Borrower or any of its Subsidiaries.


"After Tax Basis" means, with respect to any payment to be received, the
--------------- amount of such payment increased so that, after deduction of the amount of all taxes required to be paid by the


2
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement


recipient (less any tax savings realized and the present value of any tax savings projected to be realized by the recipient as a result of the payment of the indemnified amount) with respect to the receipt by the recipient of such amounts, such increased payment (as so reduced) is equal to the payment otherwise required to be made.


"Agent" means Banque Paribas in its capacity as Agent for the Lenders, or
----- such successor agent as may be appointed by the Lenders pursuant to Section 10.9
------------ of the Loan Agreement, or in its capacity as Agent for Lessor or any successor agent as may be appointed by the Lessor pursuant to Section 2.6 of the Master Lease.


"Applicable Bankruptcy Law" means, with respect to any Guarantor, Title 11
------------------------- of the United States Code, as amended from time to time, and any other laws governing bankruptcy, suspension of payments, reorganization, arrangement, adjustment of debts, relief of debtors, dissolution, insolvency or other similar laws applicable to such Guarantor.


"Applicable Law" means all existing and future applicable laws, rules,
-------------- regulations (including Hazardous Materials Laws) statutes, treaties, codes, ordinances, permits, certificates, orders and licenses of and interpretations by, any Governmental Authority, and applicable judgments, decrees, injunctions, writs, orders or like action of any court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of competent jurisdiction (including those pertaining to health, safety or the environment (including, without limitation, wetlands) and those pertaining to the use of any Equipment) and any restrictive covenant or deed restriction or easement of record, in each case affecting the Lessee, any Subsidiary Guarantor, any Equipment or any material interests in any other kind of Equipment or asset, whether real, personal or mixed, or tangible or intangible, of the Lessee or any Subsidiary Guarantor.


"Applicable Lending Office" means for each Lender and each Type of Loan,
------------------------- the Lending Office of such Lender (or of an Affiliate of such Lender) designated for such Type of Loan below its name on the signature pages hereof (or, with respect to a Lender that becomes a party to the Participation Agreement pursuant to an assignment made in accordance with Section 13.8 of the Participation
------------ Agreement) or such other office of such Lender (or of an Affiliate of such Lender) as such Lender may from time to time specify to the Borrower and the Agent as the office by which its Loans of such Type are to be made and maintained.


"Applicable Margin" means (i) with respect to the Financing Loans, from the
----------------- Effective Date until the first Calculation Date following the Effective Date, one-half percent (0.5%) for Prime Rate Loans and two percent (2%) for Eurodollar Loans, and (ii) with respect to the Equity Loans at all times, one and one- half percent (1.5%) for Prime Rate Loans and three percent (3%) for Eurodollar Loans. For periods from each Calculation Date following the Effective Date to the next Calculation Date, the Applicable Margin for Financing Loans shall mean the rate per annum set forth in the table below that corresponds to the ratio of: (i) Total Debt as of the date of the relevant financial statement referred to below to (ii) EBITDA for the four (4) fiscal quarters of the Lessee then most recently entered as of the date of such financial statement:


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Appendix A to Participation Agreement,
Master Lease, and Loan Agreement


Ratio of Total Debt Applicable Margin Applicable Margin
to EBITDA for Eurodollar Loans for Prime Rate Loans
------------------- -------------------- ---------------------
Greater than or equal to 3.25 to 1.00 2.5% 1.0%
Greater than or equal to 2.75 to 1.00
and less than 3.25 to 1.00 2.0% 0.5%
Less than 2.75 to 1.00 1.75% 0.25%


The Applicable Margin for Financing Loans shall change on each Calculation Date and be calculated on the basis of the financial statement delivered by the Lessee pursuant to Section 8.1(a) of the Mail-Well Credit Agreement and the
-------------- certificate to be delivered by Borrower by the Lessee pursuant to Section 8.1(e)
-------------- of the Mail-Well Credit Agreement; provided, that if the Lessee fails to deliver to the Agent such financial statements or certificate on or before the relevant Calculation Date, the Applicable Margin for Financing Loans shall be as set forth above for a period from such Calculation Date until the date such statements and certificate are received by the Agent, after which the Applicable Margin for Financing Loans shall be determined as otherwise provided herein.


"Appraisal" means, with respect to each item of Equipment, an appraisal,
--------- prepared by the Appraiser, of such Equipment, which Appraisal complies in all material respects with the applicable Requirements of Law, and will appraise the Fair Market Sales Value of such Equipment.


"Appraiser" means Valuation Research Corporation or, if such appraiser is
--------- not available, another reputable appraiser selected by the Lessor, with the consent of the Lessee (which consent shall not be unreasonably withheld).


"Appurtenant Rights" means, with respect to each item of Equipment, all
------------------ warranties, agreements, and other rights and benefits at any time belonging or pertaining to such Equipment, including, without limitation, all permits and licenses and all software and intellectual property rights.


"Assignment and Acceptance" means an assignment and acceptance entered into
------------------------- by a Lender and its Assignee and accepted by the Agent pursuant to Section
------- 13.8(e) of the Participation Agreement. - -------


"Assignment of Lease and Rent" means the Assignment of Lease and Rent dated
---------------------------- as of the Effective Date, from the Lessor, as assignor, to the Agent, as assignee.


"Bankruptcy Code" means the United States Code entitled "Bankruptcy," as
--------------- now or hereafter in effect, or any successor thereto.


"Basic Rent" means the sum of the Financing Lender Basic Rent and the
---------- Equity Lender Basic Rent, calculated as of the applicable date on which Basic Rent is due.


4
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement


"Basle Accord" means the proposals for risk-based capital framework
------------ described by the Basle Committee on Banking Regulations and Supervisory Practices in its paper entitled "International Convergence of Capital Measurement and Capital Standards" dated July 1988, as amended, supplemented and otherwise modified and in effect from time to time, or any replacement thereof.


"Bill of Sale" means each bill of sale and assignment executed by the
------------ Lessee or a Subsidiary Guarantor selling, assigning and transferring to the Lessor all or any portion of the Equipment.


"Break Costs" means an amount equal to the amount, if any, required to
----------- compensate the Lessor or any Participant for any loss, cost or expense incurred by it (including, without limitation, any loss, cost or expense incurred by reason of the liquidation or reemployment of deposits or funds acquired by the Lessor or such Participant to fund its obligations under the Operative Documents) as a result of (x) the Lessee's payment of Rent other than on a Payment Date, or (y) any Advance not being made on the date specified therefor in the applicable Funding Request (other than as a result of a breach by the Lessor or such Participant, as the case may be, of its obligation under Sections
-------- 3.1, 3.2 or 3.3, as the case may be, of the Participation Agreement to make - --- --- --- Advances to the Lessee or make Equity Loans or Loans available to the Lessor). A statement as to the amount of such loss, cost or expense, prepared in good faith and in reasonable detail and submitted by the Lessor or such Participant, as the case may be, to the Lessee, shall be presumed correct.


"Business Day" means (i) each Monday, Tuesday, Wednesday, Thursday and
------------ Friday which is not a day on which banks in New York, New York or Houston, Texas are generally authorized or obligated, by law or executive order, to close and (ii) relative to the payment of Rent determined by reference to the Eurodollar Rate, any day which is a Business Day under clause (i) and is also a day on
---------- which dealings in Dollars are carried on in the London interbank Eurodollar market.


"Calculation Date" means the date occurring in each calendar quarter during
---------------- the term of this Agreement which is fifteen (15) days after the date on which quarterly financial statements of the Lessee are required by Section 8.1 of the
----------- Mail-Well Credit Agreement to be delivered to the Agent; provided, however, that
-------- ------- the first Calculation Date shall be the Effective Date.


"Casualty" means any contamination, damage or destruction of all or any
-------- material portion of any item of the Equipment as a result of a fire or other casualty, or prohibition of use for more than 45 days (but in no event beyond the Expiration Date).


"CERCLA" means the Comprehensive Environmental Response, Compensation, and
------ Liability Act of 1980, 42 U.S.C. (S)(S) 9601 et. seq., as amended by the
-- ---- Superfund Amendments and Reauthorization Act of 1986.


"Certifying Party" is defined in Section 22.1 of the Master Lease.
---------------- ------------


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Appendix A Participation Agreement,
Master Lease, and Loan Agreement


"Change in Control" or "Change of Control" has the meaning given to "Change
----------------- ----------------- ------ of Control" in Section 1.1 of the Mail-Well Credit Agreement. - ---------- -----------


"Claims" means any and all allegations, notices, orders, threatened claims,
------ damages, obligations, liabilities, losses, actions, suits, judgments, penalties, fines, claims, demands, settlements, costs and expenses (including, without limitation, reasonable legal and consulting fees and expenses) of any nature whatsoever.


"Code" means the Internal Revenue Code of 1986, as amended from time to
---- time, or any successor statute thereto.


"Collateral" means all property and interests in property, presently owned
---------- or hereafter acquired or presently existing or hereafter created by the Guarantors, including any and all proceeds thereof, in which a security interest has been granted in favor of the Credit Facility Agent and the Agent for the ratable benefit of the Credit Facility Banks and the Financing Lenders, whether under the Security Documents or any other Operative Document.


"Commitment" means (i) as to any Lender, the obligation of such Lender to
---------- make Loans to the Lessor at the request of the Lessee in an aggregate principal amount not to exceed the amount set forth opposite such Lender's name on Schedule I to the Participation Agreement, as such Schedule may be amended from - ---------- time to time and (ii) with respect to the Lessor, the obligation of the Lessor to pay the Purchase Price (to the extent the Lessor receives Equity Loans and Loans).


"Commitment Amount" means an amount equal to $24,500,000 with respect to
----------------- the Financing Loans and $5,500,000 with respect to the Equity Loans.


"Commitment Percentage" means, as to any Lender, the percentage of the
--------------------- Equity Loans, the Financing Loans or all Loans, as may be applicable based upon the context in which such term is used, set forth opposite such Lender's name under the heading "Commitment Percentage" on Schedule I to the Participation
---------- Agreement, as such Schedule may be amended from time to time.


"Commonly Controlled Entity" means a Person that is under common control
-------------------------- with the Lessee within the meaning of subsection 414(b), (c), (m), (n) or (o) of the Code.


"Condemnation" means with respect to any item of Equipment, any
------------ condemnation, reacquisition, confiscation, seizure or other taking or sale of the use, access, possession, rights or title to such Equipment, or any part thereof, wholly or partially (temporarily or permanently) by or on account of any actual or threatened eminent domain proceeding or other taking of action by any Person having the power of eminent domain, including an action by a Governmental Authority, with respect to any real property of which such Equipment may be deemed to be a fixture or is otherwise adversely affected by any such taking. A Condemnation shall be deemed to have occurred on the earliest of the dates that the use or title vests in the condemning authority or a claim to condemnation proceeds arises with respect to the Equipment.


6
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement


"Credit Agreements" means, collectively, the Supremex Credit Agreement and
----------------- the Mail-Well Credit Agreement.


"Credit Documents" means each Credit Agreement, the notes executed and
---------------- delivered pursuant thereto, the Security Documents and all other documents, instruments and agreements now or hereafter executed or delivered pursuant thereto or in connection therewith.


"Credit Facility Agent" means Banque Paribas, as agent for the Credit
--------------------- Facility Banks, or such successor administrative agent as may be appointed by the Credit Facility Banks pursuant to the Credit Agreements.


"Credit Facility Banks" means, collectively, each lender party to the
--------------------- Supremex Credit Agreement or the Mail-Well Credit Agreement.


"Credit Facility Financing Statement" means any Uniform Commercial Code
----------------------------------- financing statement, on Form UCC-1 or otherwise, executed pursuant to the provisions of the Credit Agreements or any other Credit Document.


"Credit Facility Loans" means "Loans" under, and as defined in, the Credit
--------------------- Agreements.


"Default" means any Event of Default or any condition, occurrence or event
------- which, after notice or lapse of time or both, would constitute an Event of Default.


"Default Rate" means, with respect to any Loan, the Prime Rate or
------------ Eurodollar Rate for such Loan, as the case may be, plus the Applicable Margin
---- plus two percent (2%) per annum. - ----


"Dollars" and "$", mean dollars in lawful currency of the United States of
------- - America.


"EBITDA" has the meaning given to such term in Section 1.1 of the Mail-Well
------ ----------- Credit Agreement.


"Effective Date" means November ____, 1996.
--------------


"Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
----------------- commercial bank, savings and loan association, savings bank, finance company, insurance company, pension fund, mutual fund or other financial institution (whether a corporation, partnership or other entity) acceptable to the Agent and approved by the Lessee, which approval by the Lessee and Agent shall not be unreasonably withheld, conditioned or delayed.


"End of the Term Report" is defined in Section 12.2(a) of the Participation
---------------------- --------------- Agreement.


7
Appendix A to Participation Agreement,
Master Lease, and Loan Agreement


"Environmental Audit" means, with respect to each item of Equipment, an
------------------- environmental assessment (the scope and performance of which meets or exceeds the then most current ASTM Standard Practice E1527 for Environmental Assessments).


"Environmental Certificate" means the Environmental Certificate required by
------------------------- the Agent in accordance with the provisions of Section 14.2 of the Master Lease.
-------------


"Environmental Violation" means any activity, omission, occurrence or
----------------------- condition that violates or results in non-compliance with any Hazardous Materials Law.


"Equipment" means equipment, apparatus, Modifications, Substituted
--------- Equipment, furnishings, fittings and personal property of every kind and nature whatsoever purchased by the Lessor using the proceeds of the Loans, including but without limiting the generality of the foregoing, all the envelope and commercial printing equipment and other equipment specifically described in the Master Lease, together with all Appurtenant Rights relating thereto.


"Equipment Balance" means, with respect to any Equipment, an amount equal
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