**Exhibit10**

 

 

AMENDED ANDRESTATED

 

REVOLVING CREDITAGREEMENT

 

Dated as ofMarch 31, 2003

 

Among

 

COURIERCORPORATION

COURIER COMPANIES,INC.

COURIER FOREIGNSALES CORPORATION LIMITED

COURIERKENDALLVILLE, INC.

COURIERPROPERTIES, INC.

NATIONALPUBLISHING COMPANY

COURIER NEW MEDIA,INC.

BOOK-MART PRESS,INC.

MASSACHUSETTSNATIONAL PUBLISHING BUSINESS TRUST

DOVERPUBLICATIONS, INC.

 

as Borrowers

 

and

 

FLEET NATIONALBANK

(f/k/a BankBoston,N.A.)

KEYBANK NATIONALASSOCIATION

CITIZENS BANK OFMASSACHUSETTS

 (successor to State Street Bank and TrustCompany)

SOVEREIGN BANK (afederal savings bank)

 

as Banks

 

and

 

CITIZENS BANK OFMASSACHUSETTS

(successor toState Street Bank and Trust Company)

 

as Agent

 

 

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TABLE OF CONTENTS

 

 
| SECTION | 1.     | DEFINITIONS AND RULES OF INTERPRETATION |
|---------|--------|-----------------------------------------|
|    |   | 1.1                                     | Definitions |
|    |   | 1.2                                     | Rules  of Interpretation |
|    |   |                                    |   |
| SECTION | 2.     | THE REVOLVING LOANS                     |
|    |   | 2.1                                     | Revolving Loans |
|    |   | 2.2                                     | Loan Account |
|    |   | 2.3                                     | Reduction  of Revolving Credit Commitment |
|    |   | 2.4                                     | Payment |
|    |   | 2.5                                     | Interest and  Fees |
|    |   | 2.6                                     | Swing  Line Commitment |
|    |   | 2.7                                     | Procedure  for Swing Line Borrowing; Interest on Swing Line Loans |
|    |   | 2.8                                     | Refunded  Swing Line Loans; Swing Line Loan Participations |
|    |   |                                    |   |
| SECTION | 3.     | REPRESENTATIONS AND  WARRANTIES         |
|    |   | 3.1                                     | Organization and  Qualification |
|    |   | 3.2                                     | Corporate  Authority |
|    |   | 3.3                                     | Valid  Obligations |
|    |   | 3.4                                     | Approvals  and Consents |
|    |   | 3.5                                     | Title to  Properties; Absence of Liens |
|    |   | 3.6                                     | Compliance |
|    |   | 3.7                                     | Financial  Statements |
|    |   | 3.8                                     | No  Events of Default |
|    |   | 3.9                                     | Taxes |
|    |   | 3.10                                    | Litigation |
|    |   | 3.11                                    | Margin Rules |
|    |   | 3.12                                    | Restrictions on the  Borrower |
|    |   | 3.13                                    | ERISA |
|    |   | 3.14                                    | Intellectual  Property; Franchises |
|    |   | 3.15                                    | Environmental  and Regulatory Compliance |
|    |   | 3.16                                    | Labor  Relations |
|    |   | 3.17                                    | Contracts with Affiliates, Etc. |
|    |   | 3.18                                    | Subsidiaries |
|    |   | 3.19                                    | Interdependence  of Borrowers |
|    |   | 3.20                                    | Solvency |
|    |   |                                    |   |
| SECTION | 4.     | CONDITIONS  OF   LOANS        |
|    |   | 4.1                                     | Conditions of Initial Loans  and Swing Line Loans |

 

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|    |   | 4.2                                 | Conditions  to all Revolving Loans and Swing Line Loans |
|---------|--------|-------------------------------------|---------------------------------------------------------|
|    |   |                                |                                                    |
| SECTION | 5.     | COVENANTS                           |
|    |   | 5.1                                 | Financial  Reporting                                    |
|    |   | 5.2                                 | Conduct  of Business                                    |
|    |   | 5.3                                 | Maintenance and Insurance                               |
|    |   | 5.4                                 | Taxes                                                   |
|    |   | 5.5                                 | Limitation of Indebtedness                              |
|    |   | 5.6                                 | Guaranties                                              |
|    |   | 5.7                                 | Restrictions  on Liens                                  |
|    |   | 5.8                                 | Merger,  Acquisitions and Purchase and Sale of Assets   |
|    |   | 5.9                                 | Investments  and Loans                                  |
|    |   | 5.10                                | Sale of Notes                                           |
|    |   | 5.11                                | Restricted  Payments                                    |
|    |   | 5.12                                | ERISA  Compliance                                       |
|    |   | 5.13                                | Pension Plans                                           |
|    |   | 5.14                                | Notification  of Default                                |
|    |   | 5.15                                | Notification of  Material Litigation                    |
|    |   | 5.16                                | Inspection by the  Agent and the Banks                  |
|    |   | 5.17                                | Maintenance of Books  and Records                       |
|    |   | 5.18                                | Use of Proceeds                                         |
|    |   | 5.19                                | Transactions with  Affiliates                           |
|    |   | 5.20                                | Environmental Regulations                               |
|    |   | 5.21                                | Fiscal Year                                             |
|    |   | 5.22                                | No Amendments to  Certain Documents                     |
|    |   | 5.23                                | No Termination of  Certain Documents                    |
|    |   | 5.24                                | Funded Debt  Ratio                                      |
|    |   | 5.25                                | Current Ratio                                           |
|    |   | 5.26                                | Debt  Service Coverage                                  |
|    |   | 5.27                                | Subsidiaries                                            |
|    |   | 5.28                                | Name Change                                             |
|    |   | 5.29                                | Capital  Expenditures                                   |
|    |   |                                |                                                    |
| SECTION | 6.     | EVENTS OF  DEFAULT; ACCELERATION    |
|    |   |                                |                                                    |
| SECTION | 7.     | SET-OFF                             |
|    |   |                                |                                                    |
| SECTION | 8.     | CONCERNING THE AGENT  AND THE BANKS |
|    |   | 8.1                                 | Appointment and  Authorization                          |
|    |   | 8.2                                 | Agent  and Affiliates                                   |
|    |   | 8.3                                 | Future Advances                                         |
|    |   | 8.4                                 | Payments                                                |
|    |   | 8.5                                 | Interest,  Fees and Other Payments                      |
|    |   | 8.6                                 | Action by Agent                                         |
|    |   | 8.7                                 | Consultation with Experts                               |

 

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|        |                                                      | 8.8                                 | Liability  of Agent                      |
|-------------|-----------------------------------------------------------|-------------------------------------|------------------------------------------|
|        |                                                      | 8.9                                 | Indemnification                          |
|        |                                                      | 8.10                                | Independent Credit Decision              |
|        |                                                      | 8.11                                | Successor Agent                          |
|        |                                                      |                                |                                     |
| SECTION     | 9.                                                        | COURIER AS AGENT FOR THE  BORROWERS |
|        |                                                      |                                |                                     |
| SECTION     | 10.                                                       | MISCELLANEOUS                       |
|        |                                                      | 10.1                                | Written Notices                          |
|        |                                                      | 10.2                                | Term of  Agreement                       |
|        |                                                      | 10.3                                | No Waivers                               |
|        |                                                      | 10.4                                | Further  Assurances                      |
|        |                                                      | 10.5                                | Governing Law                            |
|        |                                                      | 10.6                                | Payments in  Immediately Available Funds |
|        |                                                      | 10.7                                | Expenses, Taxes and  Indemnification     |
|        |                                                      | 10.8                                | Amendments, Waivers, Etc.                |
|        |                                                      | 10.9                                | Binding Effect of Agreement              |
|        |                                                      | 10.10                               | Assignment and  Participation            |
|        |                                                      | 10.11                               | Computation of  Interest and Fees        |
|        |                                                      | 10.12                               | Entire  Agreement                        |
|        |                                                      | 10.13                               | Captions                                 |
|        |                                                      | 10.14                               | Counterparts                             |
|        |                                                      | 10.15                               | Severability                             |
|        |                                                      | 10.16                               | Judgment  Currency                       |
|        |                                                      | 10.17                               | Waiver  of Jury Trial                    |
|        |                                                      |                                |                                     |
| EXHIBIT A-1 | Form of Amended and Restated Revolving  Credit Note       |
|        |                                                      |                                |                                     |
| EXHIBIT A-2 | Form of Swing Line Note                                   |
|        |                                                      |                                |                                     |
| EXHIBIT B   | Disclosure                                                |
|        |                                                      |                                |                                     |
| EXHIBIT C   | Existing Indebtedness                                     |
|        |                                                      |                                |                                     |
| EXHIBIT D   | Form of Certificate of Chief Financial  Officer           |
|        |                                                      |                                |                                     |
| EXHIBIT E   | Form of Legal Opinion of Goodwin, Procter  & Hoar LLP |
|        |                                                      |                                |                                     |
| EXHIBIT F   | List of Subsidiaries                                      |
|        |                                                      |                                |                                     |
| EXHIBIT G   | Form of Flash Report                                      |

 

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AMENDED ANDRESTATED

REVOLVING CREDITAGREEMENT

 

THIS AMENDED AND RESTATEDREVOLVING CREDIT AGREEMENT is amended and restated as ofMarch 31, 2003, among COURIER CORPORATION, a Massachusettscorporation (“Courier”), COURIER COMPANIES, INC., a Massachusetts corporation(“Companies”), COURIER FOREIGN SALES CORPORATION LIMITED, a Jamaica corporation(“FISC”), COURIER KENDALLVILLE, INC., an Indiana corporation (“Kendallville”),COURIER PROPERTIES, INC., a Massachusetts corporation (“Properties”), NATIONALPUBLISHING COMPANY, a Pennsylvania corporation (“Publishing”), COURIER NEWMEDIA, INC., a Massachusetts corporation (“New Media”), BOOK-MART PRESS,INC.,  a Delaware corporation(“Book-Mart”), MASSACHUSETTS NATIONAL PUBLISHING BUSINESS TRUST, aMassachusetts Business Trust (“Publishing Trust”), DOVER PUBLICATIONS, INC., aNew York corporation (“DOVER”), and DOVER BOOK STORE, INC., a New Yorkcorporation (“Dover Book”) (Courier, Companies, FISC, Kendallville, Properties,Publishing, New Media, Book-Mart, Publishing Trust, Dover, and Dover Book beingsometimes hereinafter referred to individually as a “Borrower” and collectivelyas the “Borrowers”), CITIZENS BANK OF MASSACHUSETTS (successor to State StreetBank and Trust Company), a Massachusetts chartered stock savings bank(“Citizens”), FLEET NATIONAL BANK (f/k/a BankBoston, N.A.), a national bankingassociation (“Fleet”), KEYBANK NATIONAL ASSOCIATION, a national bankingassociation (“Key”), and SOVEREIGN BANK (a federal savings bank) (“Sovereign”;and together with Citizens, Fleet, and Key the “Banks”), and CITIZENS BANK OF MASSACHUSETTS(successor to State Street Bank and Trust Company), executing this Agreement inthe capacity of Agent for the Banks (the “Agent”).

 

WHEREAS, the Borrowers,the Banks and the Agent are party to that certain Revolving Credit Agreementdated as of March 18, 1997 (as amended, the “Existing Loan Agreement”);

 

WHEREAS, the Borrowers,the Banks and the Agent desire to amend and restate the Existing Loan Agreementas set forth herein;

 

NOW, THEREFORE, inconsideration of the mutual covenants and agreements herein contained, theparties hereto hereby agree that the Existing Loan Agreement shall be amendedand restated effective as of March 31, 2003 to read in its entirety asfollows:

 

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SECTION 1.                                DEFINITIONSAND RULES OF INTERPRETATION.

 

1.1                                 Definitions. As used herein -

 

1.1.1                        “AdvantageInterest Payment Date” shall have the meaning set forth in Section 2.5.4(i)hereof.

 

1.1.2                        “AffectedAdvantage Loans” shall have the meaning set forth in Section 2.5.4(iii) hereof.

 

1.1.3                        “AffectedStandard LIBOR Loans” shall have the meaning set forth in Section 2.5.5(iv)hereof.

 

1.1.4                        “Affiliate”means, with reference to any Person, (i) any director, officer or employeeof that Person, (ii) any other Person controlling, controlled by or underdirect or indirect common control of that Person, (iii) any other Persondirectly or indirectly holding 5% or more of any class of the capital stock orother equity interests (including options, warrants, convertible securities andsimilar rights) of that Person and (iv) any other Person 5% or more of anyclass of whose capital stock or other equity interests (including options,warrants, convertible securities and similar rights) is held directly orindirectly by that Person; provided that the term “Affiliate” shall notinclude the Borrowers or any of their respective Subsidiaries.  For purposes of Sections 3.13, 5.12 and 5.13hereof, “Affiliate” shall mean, within the meaning of Section 414(b), (c), (m)or (o) of the Internal Revenue Code of 1986, as amended, (i) any member ofa controlled group of corporations which includes a Borrower, (ii) anytrade or business, whether or not incorporated, under common control with aBorrower, (iii) any member of an affiliated service group which includes aBorrower, and (iv) any member of a group treated as a single employer byregulation.

 

1.1.5                        “Agent”means Citizens acting in the capacity as Agent for the Banks under thisAgreement and the other Loan Documents, and includes (where the context soadmits) any other Person or Persons succeeding to the functions of the Agentunder those documents.

 

1.1.6                        “Agreement”means this Amended and Restated Revolving Credit Agreement, including theExhibits hereto, as originally executed, or if this Agreement is amended,varied or supplemented from time to time, as so amended, varied orsupplemented.

 

1.1.7                        “AnnualReport” means Courier’s Annual Report on Form 10-K for the fiscal year endedSeptember 28, 2002 as filed with the Securities and Exchange Commission.

 

1.1.8                        “Assignee”shall have the meaning set forth in Section 10.10 hereof.

 

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1.1.9                        “ApplicableCommitment Fee Margin” shall have the meaning set forth in Section 2.5.1(ii)hereof.

 

1.1.10                  “ApplicablePrime Rate Margin” shall have the meaning set forth in Section 2.5.1(ii)hereof.

 

1.1.11                  “ApplicableEuroloan Margin” shall have the meaning set forth in Section 2.5.1(ii) hereof.

 

1.1.12                  “Banks” means,collectively, (i) Citizens, (ii) Fleet, (iii) Key, (iv)Sovereign, and (v) each of the other financial institutions which may after thedate hereof become a party to this Agreement as a Bank hereunder.

 

1.1.13                  “Borrowers”shall have the meaning set forth in the preamble hereto.

 

1.1.14                  “Borrowers’Accountants” means independent certified public accountants reasonablyacceptable to the Banks.  The Bankshereby acknowledge and agree that the Borrowers’ Accountants may includeDeloitte & Touche LLP.

 

1.1.15                  “Business Day”means (i) for all purposes other than as covered by clause (ii) below, anyday on which banks in either Boston, Massachusetts or New York, New York areopen for the conduct of a substantial part of their commercial bankingbusiness; and (ii) with respect to all notices and determinations inconnection with, and payments of principal and interest on, Euroloan AdvantageLoans or Standard LIBOR Loans, any day which is a Business Day described inclause (i) and which is also a day for trading by and between banks in Dollardeposits in the interbank Eurocurrency market in which the Agent regularlyparticipates.

 

1.1.16                  “CapitalExpenditures” means any expenditure for fixed assets, leasehold improvements,capital leases under GAAP, installment purchases of machinery and equipment,acquisitions of real estate and other similar expenditures includingexpenditures from the construction in progress account of any Borrower thatwould be required to be capitalized and shown on the balance sheet of suchPerson in accordance with GAAP.  Forpurposes of the foregoing definition, Capital Expenditures shall be reduced bycash received from the disposition of a capital asset in accordance with GAAPso long as the proceeds of such disposition have been retained or reinvested bya Borrower.

 

1.1.17                  “Code” means theInternal Revenue Code of 1986, as amended.

 

1.1.18                  “CommitmentPercentage” means, with respect to the Revolving Credit Commitment and theSwing Line Commitment, (i) in relation to Citizens, 25%,

 

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(ii) in relation to Fleet, 25%, (iii) in relation to Key, 25%, and(iv) in relation to Sovereign, 25%.

 

1.1.19                  “Consolidated”means the relevant figures for the Borrowers and their respective Subsidiarieson a consolidated basis determined in accordance with GAAP.

 

1.1.20                  “Current Assets”means all assets of the Borrowers and their respective Subsidiaries reported ona Consolidated basis which should, in accordance with GAAP, be classified ascurrent assets, but in any event including the cash surrender value of lifeinsurance to the extent it is unencumbered and excluding any assets which arepledged or deposited as security for, or for the purpose of paying, anyIndebtedness which is not included in Current Liabilities; provided, however,that for the purpose of computing the Current Ratio in Section 5.25 hereof,inventories shall be valued at the lower of cost (as measured by the first-in,first-out (FIFO) method of accounting) or market.

 

1.1.21                  “CurrentLiabilities” means the aggregate amount of Indebtedness of the Borrowers andtheir respective Subsidiaries reported on a Consolidated basis which shouldproperly be classified as current liabilities in accordance with GAAP and inany event including, without limitation, any direct or indirect Indebtednessand other liabilities of the Borrowers and their respective Subsidiaries, ifany, which are payable on demand or within one year from the creation thereof.

 

1.1.22                  “Dollars” and“$” mean lawful money of the United States of America.

 

1.1.23                  “EBIT” means,for any period, an amount equal to Consolidated Net Income for such period,(i) plus, to the extent deducted in computing such Consolidated NetIncome, (a) interest on Indebtedness for borrowed money and(b) taxes, and (ii) to the extent included in computing suchConsolidated Net Income, minus all extraordinary gains or plus allextraordinary losses, in each case net of any tax effect caused by such gainsor losses (to the extent not already reflected in clause (i)(b) above).

 

1.1.24                  “EBITDA” meansfor any fiscal period, on a Consolidated basis, an amount equal to(i) EBIT for such period, and (ii) plus all depreciation,amortization and other non-cash charges of the Borrowers and their respectiveSubsidiaries taken in accordance with GAAP and deducted in computingConsolidated Net Income for such period.

 

1.1.25                  “Encumbrances”shall have the meaning set forth in Section 5.7 hereof.

 

1.1.26                  “EnvironmentalLaws” shall have the meaning set forth in Section 3.15 hereof.

 

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1.1.27                  “ERISA” shallhave the meaning set forth in Section 3.13 hereof.

 

1.1.28                  “EurocurrencyAdvantage Rate” means relative to any Interest Period for a Euroloan AdvantageLoan, the offered rate for delivery in two London Banking Days (as defined below)of deposits of U.S. Dollars which the British Bankers’ Association fixes as itsLIBOR rate and which appears on the Telerate Page 3750 as of 11:00 a.m. Londontime on the day on which the Interest Period commences, and for a periodapproximately equal to such Interest Period. If the first day of any Interest Period is not a day which is both a (i)Business Day, and (ii) a day on which US dollar deposits are transacted in theLondon interbank market (a “London Banking Day”), the Eurocurrency Advantage Rateshall be determined in reference to the next preceding day which is both aBusiness Day and a London Banking Day. If for any reason the LIBOR rate****is unavailable and/or the Bank is unableto determine the Eurocurrency Advantage Rate for any Interest Period, theEurocurrency Advantage Rate shall be deemed to be equal to the Prime Rate.

 

1.1.29                  “EuroloanAdvantage Loan” means any Loan bearing interest at a rate determined withreference to the Euroloan Advantage Rate.

 

1.1.30                  “EuroloanAdvantage Rate” shall have the meaning set forth in Section 2.5.4(i)hereof.

 

1.1.31                  “EuroloanAdvantage Rate Amount” means, in relation to any Interest Period for a EuroloanAdvantage Loan, any portions of the principal amount of such Loans on which theBorrowers elect pursuant to Section 2.5.4(i) hereof to pay interest at a ratedetermined by reference to the Euroloan Advantage Rate.

 

1.1.32                  “Event ofDefault” shall have the meaning set forth in Section 6.1 hereof.

 

1.1.33                  “Funded DebtRatio” shall have the meaning set forth in Section 5.24 hereof.

 

1.1.34                  “GAAP” meansgenerally accepted accounting principles (as in effect from time to time),consistently applied.

 

1.1.35                  “Indebtedness”with respect to any Person means and includes, without duplication,(i) all items which, in accordance with GAAP, would be included as aliability on the balance sheet of such Person, but excluding anything in thenature of capital stock, surplus capital and retained earnings, (ii) theface amount of all banker’s acceptances and of all letters of credit issued byany bank for the account of such Person and all drafts drawn thereunder,(iii) the total amount of all indebtedness secured by any Encumbrance towhich any property or asset of such Person is subject, whether or not theindebtedness secured thereby shall have been assumed, and (iv) the totalamount of all

 

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indebtedness and obligations of others which such Person has directlyor indirectly guaranteed, endorsed (otherwise than for collection or deposit inthe ordinary course of business), discounted with recourse or agreed(contingently or otherwise) to purchase or repurchase or otherwise acquire,including, without limitation, any agreement (a) to advance or supplyfunds to such other Person to maintain working capital, equity capital, networth or solvency, or (b) otherwise to assure or hold harmless such otherPerson against loss in respect of its obligations.

 

1.1.36                  “Insolvent”shall have the meaning set forth in Section 3.20 hereof.

 

1.1.37                  “InterestPeriod” means: (i) With respect to each Euroloan Advantage Loan,initially, the period commencing as of the date of election of such Loan (the“Start Date”) and ending on the numerically corresponding date one, three, orsix (as selected by the Borrowers) month(s) later, and thereafter each one,three, or six month period (corresponding to Borrowers’ initial selection)ending on the day of such month that numerically corresponds to the StartDate.  If an Interest Period is to endin a month for which there is no day which numerically corresponds to the StartDate, the Interest Period will end on the last day of such month.  (ii) With respect to each StandardLIBOR Loan, (1) initially, the period beginning on (and including) the date onwhich such Standard LIBOR Loan is made or continued as, or converted into, aStandard LIBOR Loan pursuant to Section 2.5.5 and ending on (but excluding) theday which numerically corresponds to such date one, two, three, or six monthsthereafter (or, if such month has no numerically corresponding day, on the lastBusiness Day of such month), in each case as the Borrowers may select in itsnotice pursuant to Section 2.5.5; and (2) thereafter, each period commencing onthe last day of the next preceding Interest Period applicable to such StandardLIBOR Loan and ending one, two, three, or six months thereafter, as selected bythe Borrowers by irrevocable notice to the Agent not less than two BusinessDays prior to the last day of the then current Interest Period with respectthereto; provided,****however, that (a) the Borrowersshall not be permitted to select Interest Periods to be in effect at any onetime which have expiration dates occurring on more than five (5) differentdates; (b) Interest Periods commencing on the same date for Standard LIBORLoans comprising part of the same advance under this agreement shall be of thesame duration; and (c) if such Interest Period would otherwise end on a daywhich is not a Business Day, such Interest Period shall end on the nextfollowing Business Day unless such day falls in the next calendar month, inwhich case such Interest Period shall end on the first preceding Business Day.

 

1.1.38                  “IRS” shall have the meaning setforth in Section 5.13 hereof.

 

1.1.39                  “LIBOR Rate”means relative to any Interest Period for Standard LIBOR Loans, the offeredrate for deposits of U.S. Dollars in an amount approximately equal to theamount of the requested Standard LIBOR Loan for a term coextensive with thedesignated Interest Period which the British Bankers’ Association fixes as itsLIBOR rate and which appears on the Telerate Page 3750 as of 11:00 a.m. Londontime on the day which is two London Banking Days prior to the beginning of suchInterest Period.

 

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1.1.40                  “Loan” and“Loans” means any of the Revolving Loans as defined in Section 2.1.1 hereof.

 

1.1.41                  “Loan Account”means the account or accounts on the books of the Agent in which will berecorded loans and advances made by the Banks to the Borrowers pursuant to thisAgreement, payments made on such loans and other appropriate debits and creditsas provided by this Agreement.

 

1.1.42                  “Loan Documents”means, collectively, this Agreement (including, without limitation, theagreements and other instruments listed or described in Section 4 hereof),the Notes, the Swing Line Note, the disclosure letter of even date referred toon Exhibit B attached hereto, and any other agreements, instruments ordocuments referred to herein (other than the Ancillary Documents) or thereinand delivered in connection herewith, and all schedules, exhibits and annexesthereto.

 

1.1.43                  “London BankingDay” shall have the meaning set forth in Section 1.1.28 hereof.

 

1.1.44                  “Majority Banks”shall have the meaning set forth in Section 10.8 hereof.

 

1.1.45                  “Net Income”means the Consolidated gross revenues of the Borrowers and their respectiveSubsidiaries for the period in question, less all expenses and other propercharges or credits (including taxes on income), all determined in accordancewith GAAP, but in any event, excluding from Net Income:  (i) any gain or loss arising from anywrite-up of assets, except to the extent inclusion thereof shall be approved inwriting by the Banks; (ii) earnings of any Subsidiary accrued prior to thedate it became a Subsidiary; (iii) the net earnings of any business entity(other than a Subsidiary, which term, for purposes of this clause (iii), shallbe deemed to include a business entity in which any Borrower or any Subsidiaryhas an ownership interest of more than 20% but not more than 50%) in which anyBorrower or any Subsidiary has an ownership interest, except to the extent suchnet earnings shall have actually been received by such Borrower or suchSubsidiary in the form of cash distributions; (iv) the proceeds of anylife insurance policy; (v) any deferred or other credit representing anyexcess of the equity of any Subsidiary at the date of acquisition thereof overthe amount invested in such Subsidiary; and (vi) any reversal of anycontingency reserve, except to the extent that provision for such contingencyreserve shall be made from income arising during such period.

 

1.1.46                  “Notes” shallhave the meaning set forth in Section 2.1 hereof.

 

1.1.47                  “Obligations”means any and all obligations of the Borrowers to the Agent or either Bank ofevery kind and description, direct or indirect, absolute or contingent, primaryor secondary, due or to become due, now existing or hereafter arising,

 

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regardless of how they arise or by what agreement or instrument theymay be evidenced or whether evidenced by any agreement or instrument, andincludes obligations to perform acts and to refrain from acting as well asobligations to pay money.

 

1.1.48                  “Participant”shall have the meaning set forth in Section 10.10 hereof.

 

1.1.49                  “PBGC” shallhave the meaning set forth in Section 3.13 hereof.

 

1.1.50                  “Pension Plan”and “Pension Plans” shall have the meanings set forth in Section 3.13 hereof.

 

1.1.51                  “Person”includes an individual, a company, a corporation, an association, apartnership, a limited liability company, a limited liability partnership, ajoint venture, an unincorporated trade or business enterprise, a trust, anestate, or a government (national, regional or local) or an agency,instrumentality or official thereof.

 

1.1.52                  “Plan” and“Plans” shall have the meanings set forth in Section 3.13 hereof.

 

1.1.53                  “Prime Rate”means that rate of interest announced from time to time by Citizens at its headoffice in Boston as its prime rate, it being understood that such rate is areference rate, not necessarily the lowest, which serves as the basis uponwhich effective rates of interest are calculated for obligations makingreference thereto.

 

1.1.54                  “Rate Period”means the period beginning on the day following delivery to the Agent and theBanks of the financial statements required to be delivered pursuant to Section5.1(ii) hereof (and pursuant to Section 5.1 (i) hereof in the case of the Borrowers’fiscal year- end) and ending one day after the day on which the next suchfinancial statements (as applicable) are delivered to the Agent and the Banks.

 

1.1.55                  “Refunded SwingLine Loans” shall have the meaning set forth in Section 2.8 hereof.

 

1.1.56                  “Release” shallhave the meaning set forth in Section 3.15 hereof.

 

1.1.57                  “Report” shallhave the meaning set forth in Section 5.1 hereof.

 

1.1.58                  “Reserve Charge”means, for each day on which any Standard LIBOR Rate Amount is outstanding, areserve charge in an amount equal to the product of:

 

(i)                                     theoutstanding principal amount of the Standard LIBOR Rate Amount, multiplied by

 

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(ii)                                  (a)the LIBOR Rate (expressed as a decimal) divided by one minus the Reserve Rate,minus (b) the LIBOR Rate (expressed as a decimal),

 

multiplied by

 

(iii)                               1/360.

 

1.1.59                  “Reserve Rate”means the rate in effect from time to time, expressed as a decimal, at whichthe Agent or the Banks would be required to maintain reserves under RegulationD of the Board of Governors of the Federal Reserve System (or any successor orsimilar regulation relating to such reserve requirements) against “EurocurrencyLiabilities” (as such term is used in such Regulation D) if such liabilities wereoutstanding.

 

1.1.60                  “RestrictedPayments” means (i) any dividend or other distribution, direct orindirect, on or account of any shares of any class of capital stock of anyBorrower except a dividend payable solely in shares of common stock or preferredstock of such Borrower; (ii) any redemption, retirement, purchase or otheracquisition, direct or indirect, of any shares of any class of capital stock ofany Borrower, or of any warrants, rights or options to acquire any such shares,except to the extent the consideration therefor consists of shares of commonstock or preferred stock of such Borrower; and (iii) any investment whichis not permitted pursuant to Section 5.9 of this Agreement (the amount involvedin any Restricted Payment made or committed for in property shall be the fairmarket value of such property on the date such Restricted Payment is made orcommitted for).

 

1.1.61                  “RevolvingCredit Commitment” means, in relation to either Bank, the maximum liabilityfrom time to time of such Bank to make Revolving Loans to the Borrowers uponthe terms and subject to the conditions contained in this Agreement.

 

1.1.62                  “RevolvingLoans” shall have the meaning set forth in Section 2.1.1 hereof.

 

1.1.63                  “Revolving Loan Maturity Date” meansMarch 31, 2006.

 

1.1.64                  “Revolving Loan Maximum Amount” means$60,000,000.

 

1.1.65                  “Standard LIBORLoan” means any Loan bearing interest at a rate determined with reference tothe Standard LIBOR Rate.

 

1.1.66                  “Standard LIBORRate” shall have the meaning set forth in Section 2.5.5(i) hereof.

 

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1.1.67                  “Standard LIBORRate Amount” means, in relation to any Interest Period for a Standard LIBORLoan, any portions of the principal amount of such Loans on which the Borrowerselect pursuant to Section 2.5.5(i) hereof to pay interest at a rate determinedby reference to the Standard LIBOR Rate.

 

1.1.68                  “Start Date”shall the meaning set forth in Section 1.1.37 hereof.

 

1.1.69                  “Subsidiary”means, with reference to any Person, any corporation, association, joint stockcompany, business trust or other similar organization of whose total capitalstock or voting stock such Person directly or indirectly owns or controls morethan 50% thereof (or such lesser proportion of such capital stock or votingstock as may from time to time constitute a controlling interest in accordancewith GAAP) or any partnership or other entity in which such Person directly orindirectly has more than a 50% interest or which is controlled directly orindirectly by such Person (or such lesser proportion of such shares ofbeneficial interest as may from time to time constitute a controlling interestin accordance with GAAP).

 

1.1.70                  “Swing LineCommitment” means $15,000,000.

 

1.1.71                  “Swing LineLender” shall have the meaning set forth in Section 2.6 hereof.

 

1.1.72                  “Swing LineLoans” shall have the meaning set forth in Section 2.6 hereof.

 

1.1.73                  “Swing LineNote” means the Swing Line Note substantially in the form of Exhibit A-2attached hereto.

 

1.1.74                  “Swing LineParticipation Amount” shall have the meaning set forth in Section 2.8(c)hereof.

 

1.1.75                  “Tangible NetWorth” means the amount which is equal to the Consolidated net worth of theBorrowers and their respective Subsidiaries computed in accordance with GAAPand with inventory and cost of goods sold determined on a “last in, first out”basis, minus (i) any writeup in the book value of any asset of anyBorrower or any Subsidiary of any Borrower resulting from revaluation thereofafter the date of the Annual Report, but only to the extent any such writeup isnot otherwise approved in advance by the Banks or not otherwise permitted byGAAP, (ii) the book value in accordance with GAAP, net of applicablereserves, of all intangible assets of the Borrowers and their respectiveSubsidiaries, if any, including, without limitation, goodwill, trademarks,trade names, copyrights, patents and any similar rights, and unamortized debtdiscount and expense, (iii) the value in accordance with GAAP, if any,attributable to any capital stock of any Borrower or any Subsidiary of anyBorrower held in treasury, (iv) the value in accordance with GAAP, if any,attributable to any notes or

 

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subscriptions receivable due from stockholders in respect of capitalstock, and (v) accounts with Affiliates (including receivables due fromAffiliates).

 

1.1.76                  “Total DebtService” means, in relation to the Borrowers and their respective Subsidiarieson a Consolidated basis for any period, all interest expense which has accruedin accordance with GAAP (whether actually paid or not), for such period, andall payments of principal scheduled to be paid during such period, on allobligations for borrowed money, capitalized leases or similar types of obligations,except for the principal amounts outstanding under the Revolving Loans.

 

1.1.77                  “Total FundedDebt” means, in relation to the Borrowers and their respective Subsidiaries ona Consolidated basis for any period, all Indebtedness for borrowed moneyoutstanding at the end of such period (including, without limitation, theObligations and obligations in respect of letters of credit and capitalleases).

 

1.1.78                  “Voting Shares”means, in relation to any particular corporation, any shares of any class inthe capital of such corporation having by the terms thereof ordinary votingpower to elect the majority of the board of directors of such corporation.

 

1.1.79                  “Year-EndFinancial Statements” shall have the meaning set forth in Section 3.7 hereof.

 

1.2                                 Rules of Interpretation.  For all purposes of this Agreement and theother Loan Documents, except as otherwise expressly provided herein or thereinor unless the context otherwise requires:

 

(i)                                     referencesto any Person defined in this Section 1 refer to such Person and its permittedsuccessor in title and assigns or (as the case may be) his permittedsuccessors, assigns, heirs, executors, administrators and other legalrepresentatives;

 

(ii)                                  referencesto any agreement, instrument or document defined in this Section 1 refer tosuch document as originally executed, or if subsequently amended, varied orsupplemented from time to time, as so amended, varied or supplemented and ineffect at the relevant time of reference thereto;

 

(iii)                               wordsimporting the singular only shall include the plural and vice versa, andthe words importing the masculine gender shall include the feminine gender and viceversa, and all references to dollars shall be United States dollars;

 

(iv)                              referencesto any law include any amendment or modification to such law;

 

(v)                                 thewords “include,” “includes” and “including” are not limiting;

 

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(vi)                              allterms not specifically defined herein or by GAAP, which terms are defined inthe Uniform Commercial Code as in effect in the Commonwealth of Massachusetts,have the meanings assigned to them therein;

 

(vii)                           thewords “herein,” “hereof,” “hereunder” and words of like import shall refer tothis Agreement as a whole and not to any particular section or subdivision ofthis Agreement;

 

(viii)                        accountingterms not otherwise defined in this Agreement or any of the other LoanDocuments have the meanings assigned to them in accordance with GAAP;

 

(ix)                                referencesto “either Bank” or “either of the Banks” shall be deemed to be references to“each Bank”, “each of the Banks”, “any Bank” or “any of the Banks”, as the casemay be;

 

(x)                                   referencesto “both Banks” or “both of the Banks” shall be deemed to be references to “allBanks” or “all of the Banks”, as the case may be; and

 

(xi)                                allof the obligations of the Borrowers under this Agreement or any other LoanDocument shall be the joint and several obligations of the Borrowers.

 

SECTION2.                                THEREVOLVING LOANS

 

2.1                                 Revolving Loans.

 

2.1.1                        Upon theterms and subject to the conditions of this Agreement, and in reliance upon thejoint and several representations, warranties and covenants of the Borrowersmade herein, each of the Banks severally agrees to make loans (the “RevolvingLoans”) to the Borrowers at the Borrowers’ request from time to time, from andafter the date hereof and prior to the Revolving Loan Maturity Date in suchamounts as requested by the Borrowers up to a maximum aggregate principalamount outstanding (after giving effect to all amounts requested) at any onetime equal to such Bank’s Commitment Percentage of the Revolving CreditCommitment; provided that the maximum aggregate principal amount ofRevolving Loans outstanding at any time (after giving effect to all amountsrequested) shall not exceed the aggregate Revolving Credit Commitments of bothof the Banks or the Revolving Loan Maximum Amount; and provided, further,that at the time the Borrowers request a Revolving Loan and after giving effectto the making thereof, there is not continuing any Event of Default or anyevent which, with the giving of notice or the passage of time, or both, wouldconstitute an Event of Default.  TheRevolving Loans shall be made prorata in accordance with eachBank’s Commitment Percentage.  If at anytime the aggregate principal amount of all Loans then outstanding exceeds theRevolving Credit Commitments, then the Borrowers shall, upon demand by theAgent, pledge, assign and transfer to the Agent for the respective accounts ofthe Banks, cash collateral in the amount of such excess or repay

 

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the amount of such excess by prepaying Loans then outstanding.  Any such prepayments of Standard LIBOR Loansshall be accompanied by any amounts required to be paid pursuant to Section2.5.5(v). Failure to pledge, assign and transfer such collateral or make suchpayment within two (2) days after demand therefor shall be an Event of Defaulthereunder.

 

2.1.2                        Allrequests for Revolving Loans shall be in such form and shall be made in suchmanner as is consistent with the Agent’s customary practices.  The Revolving Loans shall be evidenced byseparate Revolving Credit Notes of the Borrowers to each Bank substantially inthe form of Exhibit A-1 attached hereto (collectively, the “Notes”),with appropriate insertions.

 

2.1.3                        Each Bankand the Agent shall, and is hereby irrevocably authorized by the Borrowers to,enter on the schedule forming a part of the respective Notes or otherwise inits records appropriate notations evidencing the date and the amount of eachLoan, the interest rate applicable thereto and the date and amount of eachpayment of principal made by the Borrowers with respect thereto; and in theabsence of manifest error, such notations shall constitute conclusive evidencethereof.  Each Bank and the Agent ishereby irrevocably authorized by the Borrowers to attach to and make a part ofthe Notes a continuation of any such schedule as and when required.  No failure on the part of either Bank or theAgent to make any endorsement of a notation as provided in this subsection2.1.3 shall in any way affect any Loan, or the rights or obligations of theAgent, the Banks or the Borrowers with respect thereto.

 

2.2                                 Loan Account. The Agent shall enter Revolving Loans as debits in the LoanAccount.  The Agent shall also record inthe Loan Account all payments made by the Borrowers on account of RevolvingLoans, and may also record therein, in accordance with customary accountingpractices, other debits and credits, including customary banking charges andall interest, fees, charges and expenses chargeable to the Borrowers under thisAgreement.  The debit balance of theLoan Account shall reflect the amount of the Borrowers’ Obligations to theBanks and the Agent from time to time by reason of Revolving Loans and otherappropriate charges permitted hereunder. Periodically, the Agent shall render a statement of account showing asof its date the debit balance of the Loan Account which, unless within thirty(30) days of the Borrowers’ receipt of such statement notice to the contrary isreceived by the Agent from the Borrowers, shall be considered primafacieevidence that it is correct and accepted by Borrowers in the absence ofmanifest error.

 

2.3                                 Reduction of Revolving Credit Commitment.  The Borrowers shall have the right at anytime and from time to time upon five (5) Business Days’ prior written notice tothe Agent to reduce by $500,000 or an integral multiple thereof or terminateentirely the unborrowed portion of the Revolving Credit Commitment, whereuponthe Revolving Credit Commitments of the Banks shall be reduced pro ratain accordance with their respective Commitment Percentages of the amountspecified in such notice, or, as the case may be, terminated.  Promptly after receiving any notice of theBorrowers

 

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delivered pursuant to this Section 2.3, the Agent will notify the Banksof the substance thereof.  Upon theeffective date of any such reduction or termination, the Borrowers shall pay tothe Agent, for the ratable account of each Bank, the full amount of anycommitment fee then accrued pursuant to Section 2.5.2 hereof on the amount ofthe reduction.  If the Borrowers reducethe Revolving Credit Commitment hereunder, any commitment fee payablethereafter under Section 2.5.2 hereof shall be payable with respect to theRevolving Credit Commitment as so reduced or terminated.  No reduction of the Revolving CreditCommitment may be reinstated.

 

2.4                                 Payment.

 

2.4.1                        (i) Loansbearing interest at a rate determined by reference to the Prime Rate may beprepaid from time to time in whole or in part, without premium or penalty, providedthat interest accrued on the amounts so prepaid to the date of such payment andall (if any) outstanding fees and charges in respect thereof must be paid atthe time of any such prepayment. Amounts so paid and other amounts may be borrowed and reborrowed fromtime to time as provided in Section 2.1 hereof. (ii) No Loan bearinginterest at a rate determined by reference to the Standard LIBOR Rate may beprepaid by the Borrowers prior to the last day of any Interest Periodapplicable to such Loan.

 

2.4.2                        Notwithstandingthe foregoing, the Borrowers jointly and severally promise to pay on theRevolving Loan Maturity Date, and there shall become absolutely due and payableon the Revolving Loan Maturity Date, all outstanding Revolving Loans and theNotes, together with all unpaid interest accrued thereon and all fees and otheramounts due hereunder.  In the case ofany partial prepayment of the Notes, the total amount of such partialprepayment shall be allocable between or among the Notes proratain accordance with the Commitment Percentage of each Bank.

 

2.4.3                        TheRevolving Loan Maturity Date may be extended for one or more additionalone-year periods as follows:

 

(i)                                     notsooner than ninety (90) and not later than forty-five (45) days prior to eachanniversary of the date of this Agreement, the Borrowers may, by written noticeto the Agent, request a one-year extension of the Revolving Loan Maturity Date,and the Agent shall forthwith inform each Bank of such request;

 

(ii)                                  eachBank shall thereafter have thirty (30) days after notice from the Agentregarding the Borrowers’ request to extend the Revolving Loan Maturity Date, tonotify the Agent whether it will consent to the Borrowers’ request, and theAgent shall forthwith inform the Borrowers of each Bank’s decision;

 

(iii)                               ifthe Agent notifies the Borrowers that either Bank has elected not to consent tothe Borrowers’ request or has failed to respond within such thirty (30) dayperiod (such Bank a “Non-Consenting Bank”), then the Borrowers shall

 

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have the right torecommend to the Agent, within 5 days after notice from the Agent, areplacement for the Non-Consenting Bank with another bank acceptable to theremaining Bank(s);

 

(iv)                              ifthe Non-Consenting Bank is not replaced, or if both Banks have elected not toconsent to the Borrowers’ request, or if the replacement bank is not acceptableto the remaining Bank(s), in each case prior to the Revolving Loan MaturityDate, then the Agreement shall be terminated on the then current Revolving LoanMaturity Date;

 

(v)                                 ifthe Non-Consenting Bank is so replaced or if both Banks have consented to theBorrowers’ request, then the Revolving Loan Maturity Date shall be extended foran additional one-year period; and

 

(vi)                              itis acknowledged and agreed by the parties hereto that upon any request for anextension of the Revolving Loan Maturity Date made by the Borrowers after thefirst anniversary of the date of this Agreement, the Banks shall have the rightto review the interest rates and fees applicable to the Loans and require amodification thereof as a precondition to approving the requested extension ofthe Revolving Loan Maturity Date.

 

2.5                                 Interest and Fees.

 

2.5.1                        (i) Exceptto the extent the Borrowers are permitted and have chosen the alternatives setforth in Sections 2.5.4 and/or 2.5.5 hereof, the entire unpaid principal (notat the time overdue) of each Revolving Loan shall bear interest at a rate perannum equal to the Prime Rate plus the Applicable Prime Rate Margin in effectfrom time to time.  Upon and after theoccurrence of an Event of Default, and during the continuation thereof, theunpaid balance of the Revolving Loans shall bear interest, to the extentpermitted by law, at the annual rate of interest equal to three percent (3%)above the Prime Rate plus the Applicable Prime Rate Margin in effect on thefirst Business Day following the occurrence of such Event of Default, whichinterest shall be compounded monthly and payable on demand.  Any change in the Prime Rate shall result ina change on the same day in the rate of interest to accrue from and after suchday on the unpaid balance of principal of the Revolving Loans.  Except as provided in the second sentence ofthis Section 2.5.1, interest on Revolving Loans shall be payable monthly inarrears on the first Business Day of the next succeeding month, commencing onthe first such date following the date hereof, with the final payment atmaturity of the Revolving Loan.

 

(ii) For purposes of thisSection 2.5.1 and also Section 2.5.4 below, (x) the “Applicable Prime RateMargin” shall be equal to the annual percentage determined for each Rate Periodby reference to Table 1 below, (y) the “Applicable Euroloan Margin” shall beequal to the annual percentage determined for each Rate Period by reference toTable 1 below, and (z) the “Applicable

 

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Commitment Fee Margin”shall be equal to the annual percentage determined for each Rate Period byreference to Table 1 below:

 

Table 1

 

 
| **Funded Debt Ratio**                                                    |   | **Applicable  Prime Rate  Margin** |   | **Applicable  Euroloan  Margin** |   | **Applicable  Commitment  Fee Margin** |   |
|--------------------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------|--------|----------------------------------------|--------|
|                                                                     |   |                               |   |                             |   |                                   |   |
| a)  greater  than 2.5 to 1                                     |   | 0.00                               | %      | 1.500                            | %      | 0.375                                  | %      |
|                                                                     |   |                               |   |                             |   |                                   |   |
| b)  greater  than 2.0 to 1, but less than or equal to 2.5 to 1 |   | 0.00                               | %      | 1.125                            | %      | 0.325                                  | %      |
|                                                                     |   |                               |   |                             |   |                                   |   |
| c)  greater  than 1.5 to 1, but less than or equal to 2.0 to 1 |   | 0.00                               | %      | 0.875                            | %      | 0.250                                  | %      |
|                                                                     |   |                               |   |                             |   |                                   |   |
| d)  greater  than 1.0 to 1, but less than or equal to 1.5 to 1 |   | 0.00                               | %      | 0.750                            | %      | 0.200                                  | %      |
|                                                                     |   |                               |   |                             |   |                                   |   |
| e)  less  than or equal to 1.0 to 1                            |   | 0.00                               | %      | 0.500                            | %      | 0.175                                  | %      |

 

For purposes ofdetermining the Applicable Prime Rate Margin, the Applicable Euroloan Marginand the Applicable Commitment Fee Margin, the Funded Debt Ratio will be testedquarterly based on the financial statements required to be delivered pursuantto Section 5.1(ii) hereof (and pursuant to Section 5.1(i) hereof in the case ofthe Borrowers’ fiscal year-end).  Forpurposes of determining the interest rate for any Rate Period hereunder, anyinterest rate change shall be effective five (5) days after the date on whichthe financial statements required to be delivered pursuant to Sections 5.1(i)or 5.1(ii), as applicable, are delivered to the Agent and the Banks, togetherwith a notice to the Agent (which shall be verified by the Agent) specifyingany change in the Applicable Prime Rate Margin, the Applicable Euroloan Marginand the Applicable Commitment Fee Margin, and if the Borrowers have failed todeliver the financial statements required to be delivered by them pursuant toSections 5.1(i) or  5.1(ii), asapplicable, the Applicable Prime Rate Margin, the Applicable Euroloan Marginand the Applicable Commitment Fee Margin shall automatically be increased to0.50%, 1.50% and 0.375%, respectively, until such financial statements aredelivered.

 

2.5.2                        TheBorrowers jointly and severally agree to pay to the Agent for the account ofthe Banks, to be allocated between the Banks in accordance with theirCommitment Percentages, a fee on the daily average unused amount of theRevolving Credit Commitment from time to time available during the periodcommencing on the

 

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date hereof and ending on the Revolving Loan Maturity Date (as the samemay be extended pursuant to Section 2.4.3 hereof), in accordance with theApplicable Commitment Fee Margin, and payable quarterly in arrears on the lastday of each March, June, September and December in each year,commencing on the first such date following the date hereof, and also payableon the date on which such Revolving Credit Commitment shall terminate in fullhereunder.

 

2.5.3                        TheBorrowers jointly and severally agree to pay to the Agent for the account ofthe Banks, to be allocated between the Banks in accordance with theirCommitment Percentages,  any and allreasonable charges customarily made by banks against borrowers.

 

2.5.4                        (i)                                     Atthe option of the Borrowers, so long as there is not then continuing any Eventof Default or any event which, with the giving of notice or the passage oftime, or both, would constitute an Event of Default, the Borrowers may electfrom time to time prior to the Revolving Loan Maturity Date to request that allor a portion of the Revolving Credit Loans shall bear interest during anyparticular Interest Period at the Euroloan Advantage Rate; provided thatany such Revolving Credit Loan shall be in an integral multiple of $100,000with respect to any single Interest Period. Any election by the Borrowers to request that a Revolving Credit Loanbear interest at the Euroloan Advantage Rate shall be made by notice (which shallbe irrevocable) to the Agent on the date of borrowing such Euroloan AdvantageLoan, specifying the Euroloan Advantage Rate Amount and, with respect to theinitial request, the duration of the proposed Interest Period (which must befor one, three, or six months, which shall thereupon become the duration foreach subsequent Interest Period hereunder, and which shall expire not laterthan the Revolving Loan Maturity Date). Subject to expiration no later than the Revolving Loan Maturity Date,any such election of a Euroloan Advantage Rate shall be automatically extendedat the end of the expiring Interest Period for the same Interest Period asselected on the date of this Agreement. Except as otherwise provided herein, each Euroloan Advantage Rate Amountshall bear interest during each Interest Period relating thereto at an annualrate (the “Euroloan Advantage Rate”) equal to the Eurocurrency Advantage Rateplus the Applicable Euroloan Margin. Interest on each Euroloan Advantage Rate Amount shall be payable inDollars on the first Business Day of each month, as selected by the Borrowerson the date of this Agreement (the “Advantage Interest Payment Date”).  If a month does not contain a day thatnumerically corresponds to the date of the Advantage Interest Payment Date, theAdvantage Interest Payment Date shall be the last day of such month.

 

(ii)                                  TheAgent shall send a monthly billing notice to the Borrowers in accordance withits customary practice which also sets forth the applicable Euroloan AdvantageRate.  Each such notice shall, absentmanifest error, be conclusive and binding upon the Borrowers.

 

(iii)                               Ifon any date on which the Euroloan Advantage Rate would otherwise be set theAgent shall have determined in good faith (which

 

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determination shall be final and conclusive) that, by reason of changesaffecting the interbank Eurocurrency market for Dollar deposits, adequate andreasonable means do not exist for ascertaining the Eurocurrency Advantage Rate,or at any time the Agent shall have determined in good faith (whichdetermination shall be final and conclusive) that:

 

(a)                                  themaking of a Euroloan Advantage Loan has been made impracticable or unlawful by(1) the occurrence of a contingency that materially and adversely affectsthe interbank Eurocurrency market for Dollar deposits or (2) compliance bythe Agent or any Bank in good faith with any applicable law or governmentalregulation, guideline or order or interpretation or change thereof by anygovernmental authority charged with the interpretation or administrationthereof or with any request or directive of any such governmental authority(whether or not having the force of law); or

 

(b)                                 theEurocurrency Advantage Rate shall no longer represent the effective cost to theAgent for Dollar deposits in the interbank market for deposits in which theAgent regularly participates;

 

then, and in any suchevent, the Agent shall forthwith so notify the Borrowers thereof.  Until the Agent notifies the Borrowers thatthe circumstances giving rise to such notice no longer apply, the obligation ofthe Agent and the Banks to allow the selection by the Borrowers of the type ofLoans affected by the contingencies described in this Subsection 2.5.4(iii)(herein called “Affected Advantage Loans”) shall be suspended.  If at the time the Agent so notifies theBorrowers, the Borrowers have previously requested one or more AffectedAdvantage Loans but such Loans have not yet gone into effect, such notificationshall be deemed to be void and the Borrowers may request Loans at the rate ofinterest provided in Section 2.5.1(i) hereof.

 

Upon such date as shallbe specified in such notice (which shall not be earlier than the date suchnotice is given) the Borrowers shall, with respect to the outstanding AffectedAdvantage Loans, prepay the same, together with interest thereon and mayrequest a Loan of another type in accordance with Section 2.5.1(i) hereof.

 

(iv)                              Ifany Interest Period in respect of a Euroloan Advantage Rate Amount wouldotherwise end on a day which is not a Business Day for Euroloan Advantage Ratepurposes, that Interest Period shall end on the Business Day next preceding ornext succeeding such day as determined by the Agent in accordance with itsusual practices and of which the Agent notifies the Borrowers at the beginningof such Interest Period.

 

2.5.5                        (i)                                     Inaddition, at the option of the Borrowers, so long as there is not thencontinuing any Event of Default or any event which, with the giving of noticeor the passage of time, or both, would constitute an Event of Default, theBorrowers may elect from time to time prior to the Revolving Loan Maturity Dateto request that all or a

 

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portion of the Revolving Credit Loans shall bear interest during anyparticular Interest Period at the Standard LIBOR Rate; provided that anysuch Revolving Credit Loan shall be in an integral multiple of $100,000 withrespect to any single Interest Period. Any election by the Borrowers to request that a Revolving Credit Loanbear interest at the Standard LIBOR Rate shall be made by notice (which shallbe irrevocable) to the Agent at least three (3) Business Days prior to thefirst day of the proposed Interest Period, specifying the Standard LIBOR RateAmount and the duration of the proposed Interest Period (which must be for one,two, three, or six months and which shall expire not later than the RevolvingLoan Maturity Date).  Any such electionof a Standard LIBOR Rate shall lapse at the end of the expiring Interest Periodunless extended by a further election notice as hereinbefore provided .  Except as otherwise provided herein, eachStandard LIBOR Rate Amount shall bear interest during each Interest Periodrelating thereto at an annual rate (the “Standard LIBOR Rate”) equal to theLIBOR Rate plus the Applicable Euroloan Margin.  Interest on each Standard LIBOR Rate Amount shall be payable inDollars (a) on the last day of each Interest Period relating thereto, or(b) if any Interest Period is longer than three months, on the last day of eachthree-month period following the commencement of such Interest Period and onthe last day of such Interest Period.

 

(ii)                                  TheBorrowers shall pay to the Agent, for the account of the applicable Bank, theReserve Charge, if any, incurred by any Bank with respect to Standard LIBORRate Amounts of the Revolving Loans outstanding from time to time on the datesinterest is payable on such Standard LIBOR Rate Amounts.

 

(iii)                               TheAgent shall forthwith upon determining any Standard LIBOR Rate provide noticethereof to the Borrowers.  Each suchnotice shall, absent manifest error, be conclusive and binding upon theBorrowers.

 

(iv)                              Ifon any date on which the Standard LIBOR Rate would otherwise be set the Agentshall have determined in good faith (which determination shall be final andconclusive) that, by reason of changes affecting the interbank Eurocurrencymarket for Dollar deposits, adequate and reasonable means do not exist forascertaining the LIBOR Rate, or at any time the Agent shall have determined ingood faith (which determination shall be final and conclusive) that:

 

(a)                                  themaking of a Standard LIBOR Loan has been made impracticable or unlawful by(1) the occurrence of a contingency that materially and adversely affectsthe interbank Eurocurrency market for Dollar deposits or (2) compliance bythe Agent or any Bank in good faith with any applicable law or governmentalregulation, guideline or order or interpretation or change thereof by anygovernmental authority charged with the interpretation or administrationthereof or with any request or directive of any such governmental authority(whether or not having the force of law); or

 

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(b)                                 theLIBOR Rate shall no longer represent the effective cost to the Agent for Dollardeposits in the interbank market for deposits in which the Agent regularlyparticipates;

 

then, and in any suchevent, the Agent shall forthwith so notify the Borrowers thereof.  Until the Agent notifies the Borrowers thatthe circumstances giving rise to such notice no longer apply, the obligation ofthe Agent and the Banks to allow the selection by the Borrowers of the type ofLoans affected by the contingencies described in this Subsection 2.5.5(iv)(herein called “Affected Standard LIBOR Loans”) shall be suspended.  If at the time the Agent so notifies theBorrowers, the Borrowers have previously requested one or more AffectedStandard LIBOR Loans but such Loans have not yet gone into effect, suchnotification shall be deemed to be void and the Borrowers may request Loans atthe rate of interest provided in Section 2.5.1(i).

 

Upon such date as shallbe specified in such notice (which shall not be earlier than the date suchnotice is given) the Borrowers shall, with respect to the outstanding AffectedStandard LIBOR Loans, prepay the same, together with interest thereon and anyamounts required to be paid pursuant to Section 2.5.5(v) and may request a Loanof another type in accordance with Section 2.5.1(i) hereof.

 

(v)                                 If,notwithstanding Section 2.4.1(ii) hereof, for any reason any payment orprepayment of principal of a Standard LIBOR Rate Amount is made on any dayother than the last day of an Interest Period, then the Borrowers shallreimburse the Agent or the applicable Bank for such amount as the Agent or suchBank certifies to be the amount that will compensate the Agent or such Bank forthe resulting loss, if any.

 

2.5.6                        If afterthe date hereof, either Bank shall have determined that the adoption of anyapplicable law, rule, regulation, guideline, directive or request (whether ornot having the force of law) regarding capital requirements for banks or bankholding companies, or any change therein, or any change in the interpretationor administration thereof by any governmental authority, central bank orcomparable agency charged with the interpretation or administration thereof, orcompliance by such Bank with any of the foregoing imposes or increases arequirement by such Bank to allocate capital resources to such Bank’scommitment to make Loans or Swing Line Loans hereunder which has or would havethe effect of reducing the return on such Bank’s capital to a level below thatwhich such Bank could have achieved (taking into consideration such Bank’s thenexisting policies with respect to capital adequacy and assuming fullutilization of such Bank’s capital) but for such adoption, change or complianceby any amount deemed by such Bank to be material, then:  (i) the Agent shall promptly after itsdetermination of such occurrence give notice thereof to the Borrowers; and(ii) the Borrowers shall pay to the Agent, for the account of theapplicable Bank, as an additional fee from time to time on demand such amountas such Bank certifies to be the amount that will compensate such Bank for suchreduction.  A certificate of theapplicable Bank claiming compensation under this Section shall be conclusive inthe absence of manifest error.  Such certificateshall set forth the nature of the occurrence giving rise to such

 

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compensation, the additional amount or amounts to be paid to ithereunder and the method by which such amounts were determined.  In determining such amount, such Bank mayuse any reasonable averaging and attribution methods.  The provisions of this Section 2.5.6 shall be applied to theBorrowers so as not to discriminate against the Borrower vis-a-vis othercustomers of the applicable Bank.

 

2.5.7                        Anythinghereinbefore to the contrary notwithstanding, if, after the date hereof, anypresent or future applicable law (which expression, as used in this Agreement,includes statutes and rules and regulations thereunder and interpretationsthereof by any competent court or by any governmental or other regulatory bodyor official charged with the administration or the interpretation thereof andrequests, directives, instructions and notices at any time or from time to timeheretofore or hereafter made upon or otherwise issued to the Agent or eitherBank by any central bank or other fiscal, monetary or other authority, whetheror not having the force of law) shall (i) subject the Agent or either Bankto any tax, levy, impost, duty, charge, fee, deduction or withholding of anynature with respect to this Agreement, the maximum amount of any Loan, anySwing Line Loan, any other Loan Document, including, without limitation, theNotes, the Swing Line Note or the payment to the Agent or either Bank of anyamounts due to it thereunder or hereunder, or (ii) materially change thebasis of taxation of payments to the Agent or either Bank of the principal orthe interest on or any other amounts payable to the Agent or either Bankhereunder, under the Notes, the Swing Line Note or under any other LoanDocument, or (iii) impose or increase or render applicable any special orsupplemental special deposit or reserve or similar requirements or assessmentagainst assets held by, or deposits in or for the account of, or anyliabilities of, or loans by an office of the Agent or either Bank in respect ofthe transactions contemplated herein, or (iv) impose on the Agent oreither Bank any other conditions or requirements with respect to thisAgreement, the maximum amount of any Loan, any Swing Line Loan, the Notes, theSwing Line Note or any other Loan Document, and the result of any of theforegoing is (a) to increase the cost to the Agent or either Bank ofmaking, funding or maintaining all or any part of the Loans or Swing Line Loansor the commitment thereto, or (b) to reduce the amount of principal,interest or other amount payable to the Agent or either Bank hereunder, underthe Notes, the Swing Line Note or under any other Loan Document or (c) torequire the Agent or either Bank to make any payment or to forgo any interestor other sum payable hereunder, under the Notes, the Swing Line Note or underany other Loan Document, the amount of which payment or foregone interest orother sum is calculated by reference to the gross amount of any sum receivableor deemed received by the Agent or either Bank from the Borrowers hereunder,under the Notes, the Swing Line Note or under any other Loan Document, then,and in each such case not otherwise provided for hereunder, the Borrowers will,upon demand made by the Agent or such Bank accompanied by calculations thereofin reasonable detail, pay to the Agent or such Bank such additional amounts aswill be sufficient to compensate the Agent or such Bank for such additionalcost, reduction, payment or foregone interest or other sum, provided that the foregoingprovisions of this sentence shall not apply in the case of any additional cost,reduction, payment or foregone

 

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interest or other sum resulting from any taxes charged upon or byreference to the overall net income, profits or gains of the Agent or suchBank.

 

2.5.8                        Anythinghereinbefore to the contrary notwithstanding, if at any time, whether as aresult of the application of any present or future law (which expression, asused in this Agreement, includes statutes and rules and regulations thereunderand interpretations thereof by any competent court or by any governmental bodyor official charged with the administration or the interpretation thereof andrequests, directives, instructions and notices at any time or from time to timeheretofore or hereafter made upon or issued to the Agent or either Bank by anycentral bank or any fiscal, monetary or other authority, whether or not havingthe force of law), changes in any present or future law, subsequenttransactions by the Borrowers, changes in the ratio of Indebtedness of theBorrowers to Tangible Net Worth or otherwise, the Agent or either Bank isdeemed to be involved in a so-called “highly leveraged transaction” by virtueof its having extended or its maintaining the Loans, then the Agent shallnotify the Borrowers thereof.  The Agentor such Bank and the Borrowers shall thereupon commence negotiations in goodfaith to agree on the extent to which fees, interest rates and/or marginshereunder should be increased so as to reflect the Agent’s or such Bank’sinvolvement in a “highly leveraged transaction.”  If the Borrowers and the Agent or such Bank agree on the amountof such increase or increases, this Agreement shall be promptly amended to giveeffect to such increase or increases. If the Borrowers and the Agent or such Bank fail so to agree withinthirty (30) days after the date on which the Borrowers receive notice from theAgent or such Bank as provided above, then the Agent and the Banks may, attheir option, at any time thereafter by notice to the Borrowers, terminate theRevolving Credit Commitment and the Swing Line Commitment, effective not lessthan one hundred and twenty (120) days after the giving of such notice oftermination, and on the effective date of such termination the commitment tomake Loans and Swing Line Loans hereunder shall terminate and the Notes and theSwing Line Note shall become due and payable in full.

 

2.5.9                        TheBorrowers authorize the Agent and each Bank to charge to the Loan Account or,without double-charging, to any deposit account which the Borrowers maymaintain with the Agent or such Bank, the interest, fees, charges, taxes andexpenses provided for in this Agreement or any other document executed ordelivered in connection herewith.

 

2.6                                 Swing Line Commitment.  Subject to the terms and conditions hereof,Citizens (in such capacity, the “Swing Line Lender”) agrees to make availableto the Borrowers a portion of the credit otherwise available to the Borrowershereunder from time to time prior to the Revolving Loan Maturity Date by makingswing line loans (“Swing Line Loans”) to the Borrowers, jointly and severally,in an aggregate principal amount not to exceed at any one time outstanding theSwing Line Commitment; provided that (a) the aggregate principal amountof Swing Line Loans outstanding at any time shall not exceed the Swing LineCommitment then in effect (notwithstanding that the Swing Line Loansoutstanding at any time, when aggregated with the Swing Line Lender’s other

 

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outstanding Loans hereunder, may exceed the Swing Line Commitment thenin effect) and (b) the Borrowers shall not request, and the Swing Line Lendershall not be obligated to make, any Swing Line Loan if, after giving effect tothe making of such Swing Line Loan, the aggregate amount of the Loans and theSwing Line Loans exceed the Revolving Loan Maximum Amount.  Prior to the Revolving Loan Maturity Date,the Borrowers may use the Swing Line Commitment by borrowing, repaying andreborrowing, all in accordance with the terms and conditions hereof.  Swing Line Loans shall bear interest solelyby reference to the Euroloan Advantage Rate. The Borrowers may use the proceeds of Revolving Loans from time to timeto repay any outstanding Swing Line Loans. The Borrowers, jointly and severally, shall repay all outstanding SwingLine Loans on the Revolving Loan Maturity Date.  On the date of this Agreement, the Borrowers shall deliver to theSwing Line Lender a Swing Line Note to evidence the Swing Line Loans from timeto time made by the Swing Line Lender to the Borrowers hereunder.

 

2.7.                              Procedure for Swing Line Borrowing;Interest on Swing Line Loans. Whenever the Borrowers desire that the Swing Line Lender make Swing LineLoans under Section 2.6 hereof, the Borrowers shall give the Swing Line Lenderirrevocable telephonic notice confirmed promptly in writing (which telephonicnotice must be received by the Swing Line Lender not later than 1:00 P.M.,Boston time, on the proposed borrowing date), specifying (a) the amount to beborrowed and, (b) the requested borrowing date (which shall be a Business Dayprior to the Revolving Loan Maturity Date); and not later than 3:00 P.M.,Boston time, on the borrowing date specified in the notice in respect of SwingLine Loans, the Swing Line Lender shall make the proceeds of such Swing LineLoan available to the Borrowers on such borrowing date in accordance with theinstructions of the Borrowers.  TheBorrowers, jointly and severally, shall pay interest on the unpaid balance ofthe Swing Line Loans from time to time outstanding at a per annum rate equal tothe Euroloan Advantage Rate.  Intereston the Swing Line Loans shall be payable monthly on the Advantage InterestPayment Date until all of the Indebtedness of the Borrowers to the Swing LineLender hereunder shall have been paid in full.

 

2.8                                 Refunded Swing Line Loans; Swing Line LoanParticipations.  (a) The Swing LineLender, at any time and from time to time in its sole and absolute discretion,but in any event on the last Business Day of each week, may, on behalf of theBorrowers (which hereby irrevocably direct the Swing Line Lender to act ontheir behalf) on one Business Day’s notice given by the Swing Line Lender nolater than 12:00 noon, Boston time, request each Bank to make, and each Bankhereby agrees to make, a Revolving Loan in an amount equal to such Bank’sCommitment Percentage of the aggregate amount of the Swing Line Loans (the“Refunded Swing Line Loans”) outstanding on the date of such notice, to repaythe Swing Line Lender.  Unless any ofthe events described in Section 6.1(vi), (vii) or (viii) shall have occurredand be continuing (in which case the procedures of Section 2.8(c) shall apply),each Bank shall make the amount of such Revolving Loan available to the Agentat its office in immediately available funds, not later than 10:00 A.M., Bostontime, one Business Day after the date

 

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of such notice.  The proceeds ofsuch Revolving Loan shall be immediately applied by the Swing Line Lender torepay the Refunded Swing Line Loans. Effective on the day such Revolving Loans are made, the portion of theSwing Line Loans so paid shall no longer be outstanding as Swing Line Loans andshall be outstanding as Revolving Loans and owed to the Banks in accordancewith their respective Commitment Percentages. The Borrowers irrevocably authorize the Swing Line Lender to charge theBorrowers’ accounts with the Agent (up to the amount available in each suchaccount) to immediately pay the amount of such Refunded Swing Line Loans to theextent amounts received from the Banks are not sufficient to repay all suchRefunded Swing Line Loans.

 

(b)                                 Themaking of any Swing Line Loan hereunder shall be subject to the satisfaction ofthe applicable conditions precedent thereto set forth in Section 4.2.  The Swing Line Lender shall notify theBorrowers of its election not to make Swing Line Loans hereunder as a result ofthe failure to satisfy such conditions precedent, unless an Event of Default ofthe type specified in Section 6.1(vi), (vii) or (viii) shall have occurred andbe continuing.

 

(c)                                  Ifprior to the time a Revolving Loan would have otherwise been made pursuant toSection 2.1.1 hereof one of the events described in Section 6.1(vi), (vii) or(viii) shall have occurred and be continuing, each Bank shall, on the date suchRevolving Loan was to have been made pursuant to the notice referred to inSection 2.8(a) (the “Refunding Date”), purchase an undivided participatinginterest in an amount equal to (i) its Commitment Percentage times (ii) theaggregate principal amount of Swing Line Loans then outstanding which were tohave been repaid with such Revolving Loans (the “Swing Line ParticipationAmount”).  On the Refunding Date, eachBank shall transfer to the Swing Line Lender, in immediately available funds,such Banks’ Swing Line Participation Amount, and upon receipt thereof the SwingLine Lender shall deliver to such Bank a Swing Line Loan participationcertificate dated the date of the Swing Line Lender’s receipt of such funds insuch Swing Line Participation Amount, and otherwise in form and substancesatisfactory to the Swing Line Lender and such Bank.

 

(d)                                 Whenever,at any time after the Swing Line Lender has received from any Bank such Banks’Swing Line Participation Amount, the Swing Line Lender receives any payment onaccount of the Swing Line Loans, the Swing Line Lender will distribute to suchBank its Swing Line Participation Amount (appropriately adjusted, in the caseof interest payments, to reflect the period of time during which such Bank’sparticipating interest was outstanding and funded and, in the case of principaland interest payments, to reflect such Bank’s pro rata portion of such paymentif such payment is not sufficient to pay the principal of and interest on allSwing Line Loans then due); provided, however, that in the eventthat such payment received by the Swing Line Lender is required to be returned,such Bank will return to the Swing Line Lender any portion thereof previouslydistributed to it by the Swing Line Lender.

 

(e)                                  EachBank’s obligation to make the Loans referred to in Section 2.8(a) and topurchase a participating interest pursuant to Section 2.8(c) shall be absoluteand

 

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unconditional and shall not be affected by any circumstance, including,without limitation, (i) any setoff, counterclaim, recoupment, defense or otherright which such Bank or the Borrowers may have against the Swing Line Lender,the Borrowers or any other Person for any reason whatsoever; (ii) theoccurrence or continuance of a default or an Event of Default or the failure tosatisfy any of the other conditions specified in Section 4.2; (iii) any adversechange in the condition (financial or otherwise) of the Borrowers; (iv) anybreach of this Agreement or any other Loan Document by the Borrowers or anyother Bank; or (v) any other circumstances, happening or event whatsoever,whether or not similar to any of the foregoing.

 

SECTION 3.                                REPRESENTATIONS AND WARRANTIES.

 

The Borrowers herebyjointly and severally represent and warrant to the Agent and each Bank asfollows:

 

3.1                                 Organization and Qualification.  Each of the Borrowers and its Subsidiaries(i) is a corporation duly organized, validly existing and in good standingunder the laws of the State of its incorporation as indicated on Exhibit Battached hereto; (ii) has all requisite corporate power and authority to ownits property and conduct its business as now conducted and as presentlycontemplated; and (iii) is duly qualified and in good standing in eachjurisdiction (which jurisdictions are listed on Exhibit B attachedhereto) where the nature of its properties or its business requires suchqualification, except where the failure to be so qualified would not have amaterial and adverse effect on the condition (financial or otherwise),properties, business or results of operations of the Borrowers and theirrespective Subsidiaries taken as a whole.

 

3.2                                 Corporate Authority.  The execution, delivery and performance ofthis Agreement, the Notes, the Swing Line Note and the other Loan Documents andthe transactions and other documents contemplated hereby and thereby are withineach Borrower’s corporate authority, have been authorized by all necessarycorporate proceedings on the part of such Borrower, and do not and will not(i) contravene any provision of law (except for any contravention as wouldnot materially and adversely affect the condition (financial or otherwise),properties, business or results of operations of the Borrowers and theirrespective Subsidiaries taken as a whole), or its or any of its Subsidiaries’charter documents or by-laws (each as in effect from time to time), or(ii) contravene any provisions of, or constitute an Event of Defaulthereunder or a default under, or an event which with the lapse of time or thegiving of notice, or both, would constitute an Event of Default hereunder or a defaultunder any other agreement, instrument, judgment, order, decree, permit, licenseor undertaking binding upon or applicable to such Borrower, any Subsidiary ofsuch Borrower or any of their respective properties, or result in the creationof any mortgage, pledge, security interest, lien, encumbrance or charge uponany of the properties or assets of such Borrower or any Subsidiary of suchBorrower, or (iii) require any waivers, consents or approvals by any ofthe creditors or trustees for creditors of such Borrower or any Subsidiary ofsuch Borrower, or (iv) require any consents or approvals by anyshareholders of such Borrower

 

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or any Subsidiary of such Borrower, or (v) require any approval,consent, order, authorization or license by, or giving notice to, or taking anyother action with respect to, any governmental or regulatory authority oragency, except those actions that have been taken or will be taken prior to thedate of this Agreement, under any provision of any applicable law.

 

3.3                                 Valid Obligations.  The agreements and obligations of each Borrower in thisAgreement, the Notes, the Swing Line Note and the other Loan Documents to whichsuch Borrower is a party constitute legal, valid and binding obligations ofsuch Borrower enforceable against such Borrower in accordance with theirrespective terms, except as limited by bankruptcy, insolvency, reorganization,moratorium or other laws affecting the enforcement of creditors’ rightsgenerally, and except as the remedy of specific performance or of injunctiverelief is subject to the discretion of the court before which any proceedingtherefor may be brought.

 

3.4                                 Approvals and Consents.  The execution, delivery and performance ofthis Agreement, the Notes, the Swing Line Note and the other Loan Documents andthe transactions and other documents contemplated hereby and thereby do notrequire any approval or consent of, or filing or registration with, anygovernmental or other agency or authority or any other Person, except asdisclosed on Exhibit B attached hereto.

 

3.5                                 Title to Properties; Absence of Liens.  As of the date of this Agreement, each ofthe Borrowers and its Subsidiaries has good and marketable title to all of itsrespective properties, assets and rights of every name and nature now purportedto be owned by it, including, without limitation, the properties, assets andrights reflected in the Year-End Financial Statement, in each case free fromall liens, charges and encumbrances whatsoever except for insubstantial defectsin title which do not materially detract from the value or impair the use ofthe affected properties and liens, charges or encumbrances permitted underSection 5.7 hereof, and as of the date of this Agreement its Obligations underthe Loan Documents rank at least pari passu as to the right of repaymentwith all its other Indebtedness for borrowed money except as set forth on ExhibitB attached hereto.  The rights,properties and other assets presently owned, leased or licensed by any of theBorrowers or any of their respective Subsidiaries and described elsewhere inthis Agreement include all rights, properties and other assets necessary topermit the Borrowers and their respective Subsidiaries to conduct theirrespective businesses in all material respects in the same manner as suchbusinesses are being conducted on the date of this Agreement.

 

3.6                                 Compliance. Except as set forth in Exhibit B attached hereto, each of theBorrowers and its Subsidiaries has all necessary permits, approvals,authorizations, consents, licenses, franchises, registrations and other rightsand privileges (including patents, trademarks, trade names and copyrights) toallow it to own and operate its business without any violation of law or therights of others (except for any such violation as would not materially andadversely affect the condition (financial or otherwise), properties, businessor results of operations of the Borrowers and their respective

 

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Subsidiaries taken as a whole); and each of the Borrowers and itsSubsidiaries is duly authorized, qualified and licensed under and in compliancewith all applicable laws, regulations, authorizations and orders of publicauthorities (except where the failure to comply would not materially andadversely affect the condition (financial or otherwise), properties, businessor results of operations of the Borrowers and their respective Subsidiariestaken as a whole).

 

3.7                                 Financial Statements.  The Borrowers have furnished to the Agentand the Banks the Consolidated balance sheet and statement of income of theBorrowers and their respective Subsidiaries as at September 28, 2002 andfor the fiscal year then ended certified by the Borrowers’ Accountants (the“Year-End Financial Statement”), which was prepared in accordance with GAAP andfairly presents the financial position of the Borrowers and their respectiveSubsidiaries as at the close of business on such date and the results ofoperations for the fiscal year period then ended, along with Courier’sQuarterly Report on Form 10-Q for the fiscal quarter ended December 28,2002 as filed with the Securities and Exchange Commission.  The Borrowers have also furnished to theAgent and the Banks projections of the Borrowers’ and their respectiveSubsidiaries’ results of operations for the fiscal year endedSeptember 27, 2003, all of which were made in good faith and based onassumptions which the Borrowers believed reasonable when made and continue tobe reasonable at the date hereof.  Atthe date hereof, the Borrowers and their respective Subsidiaries have noIndebtedness or other liabilities, debts or obligations involving amountsmaterial to the Borrowers and their respective Subsidiaries taken as a whole,whether accrued, absolute or, to the best knowledge of the Borrowers,contingent, and whether due or to become due, including, but not limited to,liabilities or obligations on account of taxes or other governmental charges,that are not set forth on Exhibit C attached hereto or reflected inthe Year-End Financial Statement or in such Form 10-Q.  Since the date of such Form 10-Q there havebeen no changes in the assets, liabilities, financial condition or business ofthe Borrowers and their respective Subsidiaries taken as a whole, the effect ofwhich has, in the aggregate, been materially adverse, except as set forth on Exhibit Battached hereto.

 

3.8                                 No Events of Default.  As of the date of this Agreement, no Eventof Default exists, and no event or condition exists which, with the passage oftime or the giving of notice, or both, would constitute an Event of Default.

 

3.9                                 Taxes.  Each ofthe Borrowers and its Subsidiaries has filed all federal, state and other taxreturns required to be filed and all material taxes, assessments and other suchgovernmental charges due from the Borrowers and their respective Subsidiarieshave been fully paid.  Except as setforth on Exhibit B attached hereto, neither any Borrower nor anySubsidiary of any Borrower has executed any waiver that would have the effectof extending the applicable statute of limitations in respect of taxliabilities involving amounts material to the Borrowers taken as a whole.  Each of the Borrowers and its Subsidiarieshas established on its books reserves in accordance with GAAP for the paymentof all federal, state and other tax liabilities.

 

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3.10                           Litigation. Except as set forth on Exhibit B attachedhereto, there is no litigation, proceeding or governmental investigation, civilor criminal, administrative or judicial, pending or, to the best knowledge ofthe Borrowers, threatened against any Borrower or any Subsidiary of anyBorrower which, if decided adversely to such Borrower or such Subsidiary wouldhave a materially adverse effect on the condition (financial or otherwise),properties, business or results of operations of the Borrowers and theirrespective Subsidiaries taken as a whole or on the ability of the Borrowers toperform their obligations hereunder, under the Notes, under the Swing LineNote, under the other Loan Documents to which any Borrower is a party or underany other agreement or document contemplated hereby, nor is any substantialbasis for any such litigation known to exist.

 

3.11                           Margin Rules. No portion of any Loan or Swing Line Loan is to be used for the purposeof purchasing or carrying any “margin security” or “margin stock” as such termsare used in Regulations G, U or X of the Board of Governors of the FederalReserve System.

 

3.12                           Restrictions on the Borrowers.  Neither any Borrower nor any Subsidiary ofany Borrower is party to or bound by any contract, agreement or instrument, norsubject to any charter or other corporate restriction, materially and adverselyaffecting the condition (financial or otherwise), properties, business orresults of operations of the Borrowers and their respective Subsidiaries takenas a whole.

 

3.13                           ERISA.  (i)Each “Employee Pension Benefit Plan” (as such term is defined in Section 3 ofthe Employee Retirement Income Security Act of 1974, as amended, and the rulesand regulations thereunder (“ERISA”)) now or heretofore maintained by anyBorrower or any Affiliate (as defined solely in the second sentence of Section1.2) (individually the “Pension Plan” and collectively the “Pension Plans”) andany “Employee Welfare Benefit Plan” (as such term is defined in Section 3 ofERISA) now or heretofore maintained by any Borrower or any Affiliate(individually the “Plan” and collectively the “Plans”) is listed on ExhibitB attached hereto and is in substantial compliance with ERISA (to theextent that ERISA is applicable); (ii) no Pension Plan, Plan or trustcreated thereunder, no trustee thereof, no administrator or fiduciary (otherthan an unrelated third party administrator or fiduciary) thereof, and neitherany Borrower nor any Affiliate has engaged in a “Prohibited Transaction” (assuch term is defined in Section 406 of ERISA and Section 4975 of the InternalRevenue Code of 1986, as amended (the “Code”) (“Prohibited Transaction”)) whichwould subject any such Pension Plan, Plan, trust created thereunder, trustee,administrator or fiduciary thereof or any Borrower or any Affiliate or anyparty dealing with any such Pension Plan, Plan or trust to a material tax orpenalty on a “Prohibited Transaction” imposed under Section 4975 of the Code orSection 502 of ERISA; (iii) except as set forth on Exhibit B attachedhereto, no Pension Plan or trust created thereunder has been the subject of aReportable Event (as such term is defined in Section 4043 of ERISA), including,without limitation, the termination of any Pension Plan or trust; (iv) if andto the extent that either any Borrower or any Affiliate is a party to amulti-employer plan (as defined in Section 4001 of

 

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ERISA), then neither any Borrower nor any Affiliate has incurredwithdrawal liability, within the meaning of Section 4201 of ERISA, with respectto any such multi-employer plan and neither any Borrower nor any Affiliate hasany knowledge that any such multi-employer plan to which any Borrower or anyAffiliate thereof is required to contribute is in reorganization or isinsolvent pursuant to Section 4241 or 4245 of ERISA; (v) no Pension Plan whichis not a multi-employer Plan is insolvent or in reorganization; (vi) neitherany Borrower nor any Affiliate has ceased operations at a facility with theresult that any Borrower or any Affiliate thereof is to be treated as asubstantial employer as provided in Section 4062(e) of ERISA, or has withdrawnfrom a Pension Plan with respect to which it was a “substantial employer”;(vii) neither any Borrower nor any Affiliate and no Pension Plan or trustcreated thereunder has incurred any “accumulated funding deficiency” (as suchterm is defined in Section 412 of the Code and Section 302 of ERISA) whether ornot waived, since the effective date of ERISA; (viii) no condition exists whichpresents a material risk to any Borrower or any Affiliate of incurring a liabilityto or on account of a Pension Plan or Plan pursuant to any of the foregoingsections of the Code and ERISA; (ix) the aggregate current value of all assetsof Pension Plans which are single-employer plans (i.e., plans which are notreferred to in clause (iv) hereof), based upon actuarial assumptions which arereasonable in general and in relation to the experience of such Pension Plans,is at least equal to the aggregate current value of all accrued benefits undersuch Pension Plans; and (x) no Pension Plan and neither any Borrower nor anyAffiliate has incurred any liability to the Pension Benefit GuarantyCorporation or any governmental authority succeeding to any and all of thefunctions of said corporation (the “PBGC”) over and above premiums required bylaw.

 

3.14                           Intellectual Property; Franchises.  Each of the Borrowers and its Subsidiaries,respectively, has all licenses, franchises, patents, patent applications,patent licenses, patent rights, trademark rights, trade names, trade namerights, copyrights, permits, authorizations and other rights as are necessaryfor the conduct of its business.  All ofthe foregoing are in full force and effect, and each of the Borrowers and itsSubsidiaries is in compliance with the foregoing without any known conflictwith the valid rights of others which would affect or impair in a materialmanner the condition (financial or otherwise), properties, business or resultsof operations of the Borrowers and their respective Subsidiaries taken as awhole.  No event has occurred whichpermits, or after notice of lapse of time or both would permit, the revocationor termination of any such license or other right, and materially and adverselyaffects the rights of any Borrower or any Subsidiary of any Borrower thereunder.  There is no litigation or other proceedingor dispute the result of which may materially and adversely affect the validityor the extension or renewal of any of the foregoing.

 

3.15                           Environmental and RegulatoryCompliance.  Except as set forthon Exhibit B attached hereto, to the best knowledge of the Borrowers,each of the real properties owned or leased by any Borrower or any of theirrespective Subsidiaries, all as described on Exhibit B attached hereto,and any operations conducted thereon by any Borrower or any of their respectiveSubsidiaries, are presently in compliance with and have in full force andeffect all permits, licenses, or approvals required by all applicable building,

 

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zoning, environmental, health, safety or other laws, ordinances orregulations (collectively, “Environmental Laws”), and any judgment, decree ororder relating thereto, except for any non-compliance with respect to, or lackof possession of, the foregoing which does not have or will not have a materialand adverse effect on the condition (financial or otherwise), properties,business or results of operations of the Borrowers and their respectiveSubsidiaries taken as a whole, and neither any Borrower nor, to the best knowledgeof the Borrowers, any Subsidiary of any Borrower, has received notificationthat any of the foregoing properties or operations conducted by such Borroweror any such Subsidiary is in violation or alleged violation of any of theforegoing except for any violation which would not have a material and adverseeffect on the condition (financial or otherwise), properties, business orresults of operations of the Borrowers and their respective Subsidiaries takenas a whole.  Except as set forth on ExhibitB attached hereto, to the best knowledge of the Borrowers, neither anyBorrower nor any of its respective Subsidiaries has ever generated, stored,handled or disposed of any hazardous substances, hazardous materials or oil onany of such properties or any portion thereof or in connection with any of suchoperations except in compliance with all applicable Environmental Laws andneither any Borrower nor, to the best knowledge of the Borrowers, any of theirrespective Subsidiaries is aware of the disposal, spill or release orthreatened release of such substances on any of such properties or any portionthereof by any prior owner or prior occupant or prior user thereof or by anyoneelse, except for any such operation, storage, handling, disposal, spill,release or threatened release which, individually or in the aggregate, does nothave or will not have a material and adverse effect on the condition (financialor otherwise), properties, business or results of operations of the Borrowersand their respective Subsidiaries taken as a whole.  Except as set forth on Exhibit B attached hereto, noinquiry, notice or threat to give notice by any governmental authority or anyother third party has been received by any Borrower or, to the best knowledgeof the Borrowers, any of their respective Subsidiaries with respect to thegeneration, storage, handling or disposal or release or threat of release(collectively, a “Release”) or alleged Release thereof, or with respect to anyviolation or alleged violation of any Environmental Laws or any judgment,decree or order relating thereto, except for any such inquiry, notice, threatof notice, violation, alleged violation, judgment, decree or order which,individually or in the aggregate, does not have or will not have a material andadverse effect on the condition (financial or otherwise), properties, businessor results of operations of the Borrowers and their respective Subsidiariestaken as a whole.  Except as set forthon Exhibit B attached hereto, to the best knowledge of the Borrowers, nounderground storage tanks or surface impoundments are on any of the propertiesowned or leased or operated by any Borrower or any of their respectiveSubsidiaries, except for any such underground storage tanks or surfaceinpoundements which, individually or in the aggregate, do not have or will nothave a material and adverse effect on the condition (financial or otherwise),properties, business or results of operations of the Borrowers and theirrespective Subsidiaries taken as a whole. For the purposes of this Section, (i) ”hazardous substances” shallmean “hazardous substances” as defined in the Comprehensive EnvironmentalResponse, Compensation and Liability Act, as amended, 42 U.S.C. §9601, etseq., and regulations thereunder or under the provisions of any otherapplicable federal, state, county or municipal law, ordinance, rule orregulation,

 

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(ii) ”hazardous material” and “oil” shall mean “hazardousmaterial” and “oil,” respectively, as defined in the Massachusetts Oil andHazardous Material Release Prevention and Response Act, as amended, M.G.L.Chapter 21E, and regulations thereunder or under the provisions of any otherapplicable federal, state, county or municipal law, ordinance, rule orregulation, and (iii) ”release” or “threat of release” shall mean suchterms as they are defined in any of the foregoing laws, ordinances, rules orregulations, as applicable.

 

3.16                           Labor Relations.  Neither any Borrower nor, to the best knowledge of the Borrowers,any of their respective Subsidiaries is engaged in any unfair labor practicethat would have a material adverse effect on the Borrowers and their respectiveSubsidiaries taken as whole.  Except asset forth in Exhibit B, there is (i) no significant unfair laborpractice complaint pending against any Borrower or any Subsidiary of anyBorrower or, to the best knowledge of the Borrowers, threatened against any ofthem, before the National Labor Relations Board, and no significant grievanceor significant arbitration proceeding arising out of or under any collectivebargaining agreement is so pending against any Borrower or any of theirrespective Subsidiaries or, to the best knowledge of the Borrowers, threatenedagainst any of them, except for such complaints, grievances and arbitrationproceedings which, if adversely decided, would not have a material and adverseeffect on the Borrowers and their respective Subsidiaries taken as a whole,(ii) no significant strike, labor dispute, slowdown or stoppage pendingagainst any Borrower or any of their respective Subsidiaries or, to the bestknowledge of the Borrowers, threatened against any Borrower or any of theirrespective Subsidiaries, except for any such labor action as would not have amaterial and adverse effect on the Borrowers and their respective Subsidiariestaken as a whole, and (iii) to the best knowledge of the Borrowers, nosignificant union representation question existing with respect to theemployees of any Borrower or any of their respective Subsidiaries and, to thebest knowledge of the Borrowers, no union organizing activities are takingplace, except for any such question or activities as would not have a materialand adverse effect on the Borrowers and their respective Subsidiaries taken asa whole.

 

3.17                           Contracts with Affiliates, Etc.

 

(i)                                     Exceptas disclosed on Exhibit B attached hereto, and except for agreements ortransactions (in each case) in the ordinary course of business and on anarm’s-length basis, neither any Borrower nor any of their respectiveSubsidiaries is a party to or otherwise bound by any agreements, instruments orcontracts (whether written or oral) with any Affiliate other than the LoanDocuments, except for any such agreement, instrument or contract as would notmaterially and adversely affect the condition (financial or otherwise),properties, business or results of operations of the Borrowers and theirrespective Subsidiaries taken as a whole.

 

(ii)                                  Thereis no Indebtedness for borrowed money in excess of $25,000 owing by anyBorrower or any Subsidiary of any Borrower to any Affiliate.  Except as

 

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disclosed on Exhibit B attached hereto, there is noIndebtedness for borrowed money owing by any Affiliate to any Borrower or anySubsidiary of any Borrower.

 

3.18                           Subsidiaries. As of the date of this Agreement, all of the Subsidiaries of eachBorrower are as set forth on Exhibit F attached hereto.  Each Borrower is the owner, free and clearof all liens and encumbrances, of all of the issued and outstanding capitalstock of each of its Subsidiaries.  Allshares of such capital stock have been validly issued and are fully paid andnonassessable, and no rights to subscribe to any additional shares have beengranted, and no options, warrants or similar rights are outstanding.

 

3.19                           Interdependence of Borrowers.  In order to induce the Agent and each Bankto enter into this Agreement and the other Loan Documents to which it is aparty, and grant the Revolving Loans and Swing Line Loans hereunder, theBorrowers hereby jointly and severally represent and warrant that:  (i) the business of each Borrower shallbenefit from the successful performance of the business of each other Borrower,and all of the Borrowers as a group; (ii) each Borrower has cooperated tothe extent necessary and shall continue to cooperate with each other Borrowerto the extent necessary in the development and conduct of each other Borrower’sbusiness, and shall to the extent necessary share and participate in theformulation of methods of operation, distribution, leasing, inventory control,and other similar business matters essential to each Borrower’s business;(iii) the business of each Borrower shall continue to benefit from themaintenance with the other Borrowers of common facilities and the sharing withthe other Borrowers of officers, directors and staff personnel, and shallbenefit from reporting its financial results on a Consolidated basis with theother Borrowers; (iv) the failure of any Borrower to cooperate with theother Borrowers in the conduct of their respective businesses shall have anadverse impact on the business of each Borrower; and (v) the failure of anyBorrower to associate or cooperate with the other Borrowers is reasonably likelyto impair the goodwill of such Borrower and of all of the Borrowers as a group.

 

3.20                           Solvency. Both before and after giving effect to all indebtedness incurred by theBorrowers on the date of this Agreement, the Borrowers taken as a whole (i) arenot Insolvent (as hereinafter defined), and will not be rendered Insolvent bythe indebtedness incurred in connection therewith, (ii) will not be left withunreasonably small capital with which to engage in their businesses, evenallowing for a reasonable margin of error in the projections of the futureperformance of the Borrowers, (iii) will not have incurred indebtedness beyondtheir ability to pay such indebtedness as it matures, and (iv) will not fail tohave assets (both tangible and intangible) having a present fair salable valuein excess of the amount required to pay the probable liability on their thenexisting debts (whether matured or unmatured, liquidated or unliquidated,absolute fixed or contingent).

 

Asused herein, the term “Insolvent” means the occurrence of one or more of thefollowing events with respect to a Borrower: dissolution; termination of existence; insolvency within the meaning ofthe United States Bankruptcy Code or other applicable statutes; such Borrower’sinability to pay its debts as they come due; appointment of a

 

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receiver of any part of the property of, execution of a trust mortgageor an assignment for the benefit of creditors by, or the entry of an order forrelief or the filing of a petition in bankruptcy or the commencement of anyproceedings under any bankruptcy or insolvency laws, or any laws relating tothe relief of debtors, readjustment of indebtedness or reorganization ofdebtors, or the offering of a plan to creditors for composition or extension,except for an involuntary proceeding commenced against such Borrower which isdismissed within sixty (60) days after the commencement thereof without theentry or an order for relief or the appointment of a trustee.

 

SECTION 4.                                CONDITIONSOF LOANS.

 

4.1                                 Conditions of Initial Loans andSwing Line Loans.  The obligation ofeach Bank to make the initial Revolving Loan and of the Agent to make theinitial Swing Line Loan hereunder shall be subject to the satisfaction, priorthereto or concurrently therewith, of each of the following conditionsprecedent:

 

4.1.1                        Receipt bythe Agent of the following documents, certificates and opinions in form andsubstance satisfactory to the Agent and each Bank and duly executed anddelivered by the parties thereto:

 

(i)                                     ThisAgreement;

 

(ii)                                  TheNotes, substantially in the form of Exhibit A-1 attached hereto, and theSwing Line Note, substantially in the form of Exhibit A-2 attachedhereto;

 

(iii)                               Acertified copy of resolutions of each Borrower’s Board of Directors evidencingthe due authorization, execution and delivery of this Agreement, the Notes, theSwing Line Note, and the other Loan Documents to which such Borrower is a partyand the transactions contemplated hereby;

 

(iv)                              Certificatesas of the date hereof signed by each of the President and Clerk (or AssistantClerk) or Secretary (or Assistant Secretary) regarding the incumbency and truesignature of the officers authorized to sign the documents referred to in thisSection 4.1.1 and all other documents and instruments related to the Loans andthe transactions contemplated hereby; and

 

(v)                                 Thedisclosure letter referred to on Exhibit B attached hereto.

 

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4.1.4                        Therepresentations and warranties contained in Section 3 shall be true andaccurate on and as of the date of the initial Revolving Loan and Swing LineLoan, the Borrowers shall have performed and complied with all covenants andconditions required in this Agreement to be performed or complied with by themprior to the making of either such Loan, and no event shall have occurred andbe continuing and no condition shall exist, or would result from the Loans orSwing Line Loans to be made on the date hereof or the transactions contemplatedhereby, which would constitute, or with the passage of time or the giving ofnotice, or both, would constitute, an Event of Default.

 

4.1.5                        TheBorrowers shall have provided the Agent with such additional instruments,certificates, opinions and other documents as the Agent, any Bank or itscounsel shall reasonably request.

 

4.1.6                        No changein applicable law or regulation shall have occurred as a consequence of whichit shall have become and continue to be unlawful (i) for the Agent or anyBank to perform any of its agreements or obligations under any of the LoanDocuments to which it is a party on the date of the initial Revolving Loan orSwing Line Loan, or (ii) for any Borrower to perform any of its agreementsor obligations under any of the Loan Documents to which it is a party on thedate of the initial Revolving Loan or Swing Line Loan.

 

4.1.7                        Allcorporate, governmental and other proceedings in connection with thetransactions contemplated by the Loan Documents and all instruments anddocuments incidental thereto, shall be in form and substance reasonablysatisfactory to the Agent and each Bank, and the Agent shall have received allsuch counterpart originals or certified or other copies of all such instrumentsand documents as the Agent or any Bank shall have reasonably requested.

 

4.1.8                        The Agentand each Bank shall be satisfied that the financial statements referred to inSection 3.7 hereof fairly present the business and financial condition of theBorrowers and their respective Subsidiaries as at the close of business on thedate thereof and the results of operations for the periods then ended, and thatthere has been no material adverse change in the assets, business or financialcondition of the Borrowers or their respective Subsidiaries since the mostrecent financial statements referred to therein (except as described on Exhibit Battached hereto).

 

4.1.9                        TheBorrowers shall have reimbursed the Agent for all of the fees and disbursementsof Messrs. Goulston & Storrs, counsel to the Agent, which shall havebeen incurred by the Agent in connection with the preparation, negotiation,execution and delivery of the Loan Documents.

 

4.2                                 Conditions to all Revolving Loansand Swing Line Loans.  Theobligations of the Banks to make any Revolving Loan, and the obligation of theAgent to make any

 

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Swing Line Loan, shall be subject to the satisfaction, prior thereto orconcurrently therewith, of each of the following conditions precedent:

 

4.2.1                        The representationsand warranties contained in this Agreement or otherwise made in writing by oron behalf of the Borrowers or any of their respective Subsidiaries pursuanthereto or in connection with the transactions contemplated hereby shall be trueand correct in all material respects at the time of each such Revolving Loan(except for representations and warranties limited as to time or with respectto a specific event, which representations and warranties shall continue to belimited to such time or event) with and without giving effect to the RevolvingLoans or Swing Line Loans to be made at such time and the application of theproceeds thereof.  The Agent and theBanks may without waiving this condition consider it fulfilled, and arepresentation by the Borrowers to such effect made, if no written notice tothe contrary, dated the date of such Revolving Loan or Swing Line Loan, isreceived from the Borrowers.  In theevent that the Borrowers submit a written notice as contemplated by thepreceding sentence, the conditions set forth in this Section 4.2.1 will beconsidered fulfilled if such notice specifies in detail the exceptions to therepresentations and warranties as of the date of such Revolving Loan or SwingLine Loan, the exceptions as stated in such notice are satisfactory to theAgent and the Banks and the Agent so notifies the Borrowers.

 

4.2.2                        At thetime of each such Revolving Loan or Swing Line Loan:  (i) the Borrowers shall have performed and complied in allmaterial respects with all agreements and conditions contained in thisAgreement required to be performed or complied with by them prior to or at suchtime; and (ii) no condition or event that constitutes an Event of Defaultor that, after notice or lapse of time or both, would constitute an Event ofDefault shall have occurred and be continuing.

 

SECTION 5.                                COVENANTS.

 

The Borrowers herebyjointly and severally covenant with the Agent and each Bank and warrant that,from the date hereof and so long as any part of the Revolving Credit Commitmentand Swing Line Commitment remains in effect and until such later date as all ofthe Obligations under this Agreement are paid and satisfied in full:

 

5.1                                 Financial Reporting.  The Borrowers shall furnish to the Agent andeach Bank:

 

(i)                                     assoon as available to the Borrowers, but in any event within one hundred andtwenty (120) days after each fiscal year-end, the Consolidated balance sheet ofthe Borrowers and their respective Subsidiaries as at the end of, and relatedConsolidated statements of income, retained earnings and cash flow for, suchfiscal year, prepared in accordance with GAAP and certified by the Borrowers’Accountants; and concurrently with such financial statements, (a) a writtenstatement by the Borrowers’ Accountants that, in the making of the audit

 

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necessary for theirreport and opinion upon such Consolidated financial statements, they haveobtained no knowledge of any Event of Default, or knowledge of any event which,with the passage of time, will constitute such an Event of Default, or, if inthe opinion of such accountant such Event of Default or event exists, theyshall disclose in such written statement the nature and status thereof, and (b)a consolidating “flash report” of the Borrowers and their respectiveSubsidiaries in substantially the form of Exhibit G hereto (a “Report”) for thefiscal year then ended, certified by the chief financial officer of Courier;

 

(ii)                                  assoon as available to the Borrowers, but in any event within sixty (60) daysafter the end of each of the first three fiscal quarters of each fiscal year ofthe Borrowers and their respective Subsidiaries, the unaudited Consolidatedbalance sheet of the Borrowers and their respective Subsidiaries as at the endof, and related unaudited Consolidated statements of income, retained earningsand cash flow for, the portion of the fiscal year then ended and for the fiscalquarter then ended (all in reasonable detail), prepared in accordance with GAAP(subject to normal year-end adjustments), and certified by the chief financialofficer of Courier; and concurrently with such financial statements, aconsolidating Report of the Borrowers and their respective Subsidiaries for thefiscal quarter then ended, certified by the chief financial officer of Courier;

 

(iii)                               promptlyas they become available, copies of all such financial statements, proxymaterial and reports as Courier shall send to or make generally available tostockholders and of all regular and periodic reports filed by any Borrower orany of its Subsidiaries with any securities exchange or with the Securities andExchange Commission or any governmental authority succeeding to any or all ofthe functions of said Commission;

 

(iv)                              fromtime to time, such other financial data and information about any Borrower andany Subsidiary of any Borrower as the Agent or any Bank may reasonably request;

 

(v)                                 concurrentlywith each delivery of financial statements pursuant to clause (i) and clause(ii) of this Section 5.1, a report in substantially the form of Exhibit Dhereto signed by the chief financial officer of Courier; and

 

(vi)                              assoon as available to the Borrowers following the approval thereof by its Boardof Directors, but in any event prior to December 1 of each fiscal year,pro forma Consolidated projections for the Borrowers and their respectiveSubsidiaries for such fiscal year, including projected balance sheets, incomestatements, cash flow statements and such other statements as the Agent or anyBank may reasonably request and in form and substance reasonably satisfactoryto the Agent and the Banks, all prepared on a basis consistent with thefinancial statements required by clause (i) of this Section.

 

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For purposes of thisSection 5.1, each Borrower hereby acknowledges and agrees that each certificatesigned by the chief financial officer of Courier pursuant to this Section 5.1shall have the same effect as if signed by each individual Borrower.

 

5.2                                 Conduct of Business.  Each of the Borrowers will and will causeeach of its respective Subsidiaries to:

 

(i)                                     dulyobserve and comply with all applicable laws and all requirements of anygovernmental authorities relative to its corporate existence, rights andfranchises, to the conduct of its business and to its property and assets(except where the failure to observe and comply would not materially andadversely affect the condition (financial or otherwise), properties, businessor results of operations of the Borrowers and their respective Subsidiariestaken as a whole or the ability of the Borrowers to perform their respectiveobligations to the Agent and the Banks, and shall maintain and keep in fullforce and effect all licenses and permits necessary in any material respect tothe proper conduct of its business; and

 

(ii)                                  maintainits corporate existence, except as permitted by Section 5.8 hereof, and remainor engage in substantially the same business as that in which it is now engagedplus reasonable extensions and expansions thereof, except that any Borrower orany Subsidiary of any Borrower may, upon notice to the Agent, withdraw from anybusiness activity which its Board of Directors reasonably deems unprofitable orunsound.

 

5.3                                 Maintenance and Insurance.  Each of the Borrowers will and will causeits respective Subsidiaries to maintain and keep its properties in such repair,working order and condition as shall be in the best interests of its business,and from time to time make all needful and proper repairs, renewals,replacements, additions and improvements thereto as such Borrower, in theexercise of its reasonable judgment, deems necessary or advisable so that itsbusiness may be properly conducted at all times, and will comply with theprovisions of all material leases to which it is a party or under which itoccupies property so as to prevent any material loss or forfeiture thereof orthereunder; but nothing in this Section 5.3 shall prevent any Borrower or anySubsidiary of any Borrower from selling, abandoning or otherwise disposing ofany property or lease if such property or lease is no longer useful in thebusiness of such Borrower or such Subsidiary. Each of the Borrowers at all times will and will cause its Subsidiariesto maintain with financially sound and reputable insurance companies insurance,in such amounts (including, without limitation, so-called “all-risk” coverageat replacement value and “broad form” liability coverage), against such hazardsand liabilities and for such purposes as may be reasonable and is customary inthe industry for companies of established reputation engaged in the same orsimilar businesses and owning or operating similar properties.

 

5.4                                 Taxes.  Each ofthe Borrowers and its Subsidiaries will pay or cause to be paid all taxes,assessments or governmental charges on or against it or its properties prior

 

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to such taxes becoming delinquent, except for any tax, assessment orcharge which is being contested in good faith by proper legal proceedings (tothe extent legal proceedings are applicable) and with respect to which reservesrequired by GAAP have been established and are being maintained, providedthat no enforcement action to enforce a lien has been commenced against anyBorrower or its Subsidiaries with respect to any such tax, assessment or chargewhich is material in amount.

 

5.5                                 Limitation of Indebtedness.  Except with the prior written consent of theAgent and each Bank, no Borrower will, or will cause or permit any of itsSubsidiaries at any time to, create, incur, assume or suffer to exist, or inany manner become or be liable directly or indirectly with respect to, anyIndebtedness except:  (i) theObligations; (ii) Indebtedness for borrowed money existing on the date ofthis Agreement, listed and described, but only to the extent so listed anddescribed, on Exhibit C attached hereto; (iii) Indebtedness for thepurchase price of capital assets and capitalized leases incurred in theordinary course of business, subject, however, to the limitations set forth inSection 5.7 hereof; (iv) Indebtedness for taxes, assessments orgovernmental charges to the extent that payment therefor shall at the time notbe required to be made in accordance with Section 5.4 hereof; (v) Indebtednesson open account for the purchase price of services, materials and suppliesincurred by a Borrower in the ordinary course of business (not as a result ofborrowing), so long as all of such open account Indebtedness shall be promptlypaid and discharged when due or in conformity with customary trade terms andpractices, except for any such open account Indebtedness which is beingcontested in good faith by such Borrower, as to which adequate reservesrequired by GAAP have been established and are being maintained and as to whichno encumbrance has been placed on any property of such Borrower; (vi)Indebtedness for borrowed money of any Borrower to another Borrower; providedthat such Indebtedness for borrowed money is on normal and customary terms asto form, interest rate and covenants, and is unsecured by any liens, charges orencumbrances whatsoever; (vii) except as otherwise permitted in thisSection 5.5, Indebtedness for borrowed money of Courier; provided that(a) all such Indebtedness for borrowed money is on normal and customaryterms as to form, interest rate and covenants, (b) such Indebtedness forborrowed money is unsecured by any liens, charges or encumbrances whatsoever,and (c) on the date on which such Indebtedness for borrowed money isproposed to be incurred, (1) no event or condition which constitutes anEvent of Default, or which, with notice or the passage of time, or both, wouldconstitute an Event of Default, would occur by reason of the incurrencethereof, and (2) no breach of the covenants, agreements or obligationscontained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreementwould occur by reason of the incurrence thereof if such covenants were measuredas of the date such Indebtedness for borrowed money is proposed to be incurred;and (viii) Indebtedness for borrowed money of any Borrower resulting from itsborrowing against the cash surrender value of a key life insurance policy ownedby such Borrower.

 

5.6                                 Guaranties. No Borrower shall, or shall cause or permit any of its Subsidiaries atany time to, become or be liable by way of guaranty, surety or otherarrangement for the Indebtedness or obligations of any nature or kind of anyother Person

 

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(including any Subsidiary of any Borrower); except (i) forendorsement of instruments for collection in the ordinary course of business,(ii) guaranties by a Borrower of any Indebtedness or other obligations ofany of its Subsidiaries, so long as (a) such Indebtedness or otherobligation is not prohibited by this Agreement, and (b) on the date onwhich such guaranty is proposed to be given, (1) no event or conditionwhich constitutes an Event of Default, or which, with notice or the passage oftime, or both, would constitute an Event of Default, would occur by reason ofthe entering into thereof, and (2) no breach of the covenants, agreementsor obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 ofthis Agreement would occur by reason of the entering into thereof if suchcovenants were measured as of the date such guaranty is proposed to be given,and (iii) as set forth on Exhibit B attached hereto.

 

5.7                                 Restrictions on Liens.  No Borrower shall, or shall cause or permitany of its Subsidiaries at any time to, create, incur, assume or suffer toexist any mortgage, pledge, security interest, lien or other charge orencumbrance, including the lien or retained security title of a vendor,(“Encumbrances”) upon or with respect to any property or assets, real orpersonal, of such Borrower, or assign or otherwise convey any right to receiveincome, except:

 

(i)                                     Encumbrancesexisting on the date of this Agreement and set forth on Exhibit Battached hereto; or

 

(ii)                                  Inaddition to the Encumbrances referred to in clause (i) hereof, Encumbrancessecuring Indebtedness for the purchase price of capital assets and capitalizedleases to the extent such Indebtedness is permitted by Section 5.5(iii) hereof,provided that (a) each such Encumbrance is given solely to secure thepurchase price of such property, does not extend to any other property and isgiven at the time of acquisition of the property, and (b) the Indebtednesssecured thereby does not exceed the lesser of the cost of such property or itsfair market value at the time of acquisition; or

 

(iii)                               Liensfor taxes, fees, assessments and other governmental charges to the extent thatpayment of the same is not required in accordance with the provisions ofSection 5.4 hereof; or

 

(iv)                              Encumbrancesin favor of the Agent, for the ratable benefit of the Banks; or

 

(v)                                 Liensof mechanics, laborers, materialmen, carriers and warehousemen arising byoperation of law to secure payment for labor, materials, supplies or servicesincurred in the ordinary course of such Borrower’s business, but only if thepayment thereof is not at the time required, such liens are junior toEncumbrances in favor of the Agent and such liens do not, individually or inthe aggregate, materially detract from the value or limit the use of any propertysubject thereto; or

 

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(vi)                              Depositsmade in the ordinary course of such Borrower’s business in connection withworkmen’s compensation, unemployment insurance, social security and othersimilar laws.

 

In addition, theBorrowers shall not enter into or permit to exist any arrangement or agreementwhich directly or indirectly prohibits the Borrowers from creating or incurringany Encumbrance in favor of the Agent for the benefit of the Banks and the Agentunder the Loan Documents.

 

5.8                                 Merger,Acquisitions and Purchase and Saleof Assets.  No Borrower shall, or shall cause or permitany of its Subsidiaries at any time to, consolidate or merge with or into anyother corporation or other entity, liquidate and/or dissolve, acquire theassets or stock of any entity, or sell, lease, transfer or otherwise dispose ofall or any substantial part of its assets, either by or through a singletransaction or by or through a series of separate but related transactions, except:

 

(i)                                     that(a) a wholly-owned Subsidiary of such Borrower may be merged or consolidatedwith such Borrower or any other Borrower if a Borrower shall be the continuingor surviving corporation or with any one or more other wholly-ownedSubsidiaries of any Borrower if the successor formed or resulting from suchconsolidation or merger shall be a wholly-owned Subsidiary of a Borrower, and(b) a wholly-owned Subsidiary of such Borrower may be liquidated and dissolvedso long as all of its properties and assets have been (or, in connection withany such liquidation or dissolution, are) distributed to such Borrower; and

 

(ii)                                  inconnection with acquisitions of interests in other corporations or businessentities engaged in the same business in which such Borrower or Subsidiary isnow engaged or in a reasonable extension or expansion thereof (either throughthe purchase of assets or capital stock or otherwise), provided that(a) except as permitted by Section 5.7 hereof, the properties and assetsacquired in connection with such acquisitions shall be free from all liens,charges and encumbrances whatsoever, (b) in the case of an acquisition ofthe stock of any entity, such entity shall, immediately after such acquisition,become a wholly-owned Subsidiary of such Borrower (except to the extentotherwise permitted by Section 5.9(xi) hereof), and (c) on the date onwhich such acquisition is proposed to be made, (1) no event or conditionwhich constitutes an Event of Default, or which, with notice or the passage oftime, or both, would constitute an Event of Default, would occur by reason ofthe consummation thereof, and (2) no breach of the covenants, agreementsor obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 ofthis Agreement would occur by reason of the consummation thereof if suchcovenants were measured as of the date such acquisition is proposed to be made(it being agreed that the Borrowers shall have furnished to the Agent, on orbefore the 10th day preceding the consummation of the proposed

 

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acquisition, a pro formacalculation showing to the satisfaction of the Agent and the Banks theBorrowers’ compliance with such covenants); and

 

(iii)                               thesale or other disposition of assets of such Borrower or Subsidiary, so long as(a) all of the proceeds from such sale or disposition shall be retained bysuch Borrower or Subsidiary (as the case may be), and (b) on the date onwhich such sale or disposition is proposed to be made, (1) no event orcondition which constitutes an Event of Default, or which, with notice or thepassage of time, or both, would constitute an Event of Default, would occur byreason of the consummation of such sale or disposition, and (2) no breachof the covenants, agreements or obligations contained in Sections 5.24 through5.26, inclusive, or 5.29 of this Agreement would occur by reason of theconsummation thereof if such covenants were measured as of the date such saleor disposition is proposed to be made.

 

5.9                                 Investments and Loans.  No Borrower shall, or shall cause or permitany of its Subsidiaries at any time to, make or have outstanding at any timeany investments in or loans to any other Person (including any Subsidiary ofsuch Person), whether by way of advance, guaranty, extension of credit, capitalcontribution, purchase of stocks, notes, bonds or other securities or evidencesof Indebtedness, or acquisition of limited or general partnership interests,other than:  (i) in obligations ofthe United States of America or any agency or instrumentality thereof, maturingwithin three years of their issuance; (ii) in time certificates ofdeposit, bankers’ acceptances or repurchase agreements, maturing within oneyear of their issuance, from banks in the United States having capital, surplusand undivided profits in excess of $100,000,000; (iii) in short termcommercial paper rated Prime-1 by Moody’s Investor Service, Inc. or A-1 byStandard and Poors Corporation rating services and issued by corporations headquarteredin the United States, in currency of the United States of America;(iv) advances to employees for business related expenses to be incurred inthe ordinary course of business and consistent with past practices in an amountnot to exceed $50,000 in the aggregate outstanding at any one time;(v) investments in addition to those permitted in this Section 5.9 whichdo not exceed in the aggregate $5,000,000, so long as such investments are notmade for the purpose specified in clause (vi) below, and so long as on the dateon which any such investment is proposed to be made, (1) no event orcondition which constitutes an Event of Default, or which, with notice or thepassage of time, or both, would constitute an Event of Default, would occur byreason of the making of such investment, and (2) no breach of thecovenants, agreements or obligations contained in Sections 5.24 through 5.26,inclusive, or 5.29 of this Agreement would occur by reason of the makingthereof if such covenants were measured as of the date such investment isproposed to be made; (vi) in connection with acquisitions of interests inother corporations or business entities to the extent permitted under Section5.8(ii) hereof; (vii) in any wholly-owned Subsidiary; provided,that immediately prior to and after giving effect to such investment, no Eventof Default shall exist; (viii) in marketable direct obligations issued byany state of the United States of America or any political subdivision of anysuch state or any public instrumentality thereof maturing not more than oneyear from the date of

 

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acquisition thereof and, at the time of acquisition, having the highestrating obtainable from Standard and Poors Corporation or Moody’s InvestorService, Inc.; (ix) in shares of money-market mutual funds having assetsin excess of $100,000,000 and substantially all of the assets of which consistof investments referred to in clauses (i) through (iii), inclusive, and clause(viii), above; (x) loans from a Borrower to another Borrower to the extentpermitted by Section 5.5(vi) hereof; and (xi) in any Subsidiary of a Borrowerwhich is not wholly-owned by such Borrower, provided that (a) theaggregate amount of all such investments by the Borrowers shall not exceed$10,000,000 at any time, and (b) immediately prior to and after giving effectto any such investment, no Event of Default shall exist.

 

5.10                           Sale of Notes. No Borrower shall, or shall cause or permit any of its Subsidiaries atany time to, sell, discount or dispose of any note, instrument, account, orother obligation owing to such Borrower or such Subsidiary in an amount that ismaterial to the Borrowers and their respective Subsidiaries taken as a whole,except to either of the Banks.

 

5.11                           Restricted Payments.  No Borrower shall, directly or indirectly(through any Affiliate or any Subsidiary or otherwise), declare, pay or makeany Restricted Payment, unless (i) no event or condition which constitutesan Event of Default, or which, with notice or the passage of time, or both,would constitute an Event of Default, would occur by reason of the taking ofsuch action, and (ii) no breach of the covenants, agreement or obligationscontained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreementwould occur by reason of the taking of such action if such covenants weremeasured as of the date such action is proposed to be taken.

 

5.12                           ERISA Compliance.  None of the Borrowers nor their respective Affiliates (as definedsolely in the second sentence of Section 1.2), no Pension Plan, Plan or trustcreated thereunder, and no trustee, administrator or fiduciary thereof shallengage in any Prohibited Transaction (provided that the foregoing shall notapply to actions of an unrelated institutional trustee, administrator orfiduciary to the extent the Agent and each Bank reasonably believes it willbear no liability, either directly or indirectly, through any Pension Plan,Plan or otherwise, for the actions of such institution); none of the Borrowersnor their respective Affiliates and no Pension Plan or trust created thereundershall incur any “accumulated funding deficiency” (as defined in Section 412(a)of the Code and Section 302 of ERISA) whether or not waived, or shall fail tosatisfy any additional funding requirements set forth in Section 412 of theCode and Section 302 of ERISA; none of the Borrowers nor  their Affiliates, no trustee thereof and noadministrator or fiduciary thereof shall terminate any Pension Plan in a mannerwhich could result in the imposition of a lien on any property of any Borroweror any of its Affiliates; and each Plan and Pension Plan shall comply in allmaterial respects with ERISA.

 

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5.13                           Pension Plans.

 

(a)                                  Withrespect to any Pension Plans, the Borrowers shall, or shall cause theirrespective Affiliates (as defined solely in the second sentence of Section 1.2)to:

 

(i)                                     fundon a timely basis each Pension Plan as required by the provisions of Section412 of the Code and Section 302 of ERISA;

 

(ii)                                  causeeach Pension Plan to pay all benefits when due in accordance with applicablelaw; and

 

(iii)                               furnishto the Agent (A) written notice of the occurrence of a Reportable Event(as such term is defined in Section 4043 of ERISA), such notice to be givenwithin thirty (30) days after such Borrower or any Affiliate knows or hasreason to know that a Reportable Event has occurred with respect to a PensionPlan; (B) a copy of any request for a waiver of the funding standards oran extension of the amortization periods required under Section 412 of the Codeand Section 302 of ERISA, such copy to be furnished no later than the date ofsubmission of the request to the Department of Labor or to the Internal RevenueService (the “IRS”), as the case may be; (C) a copy of any notice ofintent to terminate any Pension Plan such copy to be furnished no later thanthe date of submission to the PBGC or, if earlier, the date on which thoseparticipating in the Pension Plan are notified of the intended termination; and(D) notice that any Borrower or any Affiliate, will or may incur anyliability to or on account of a Pension Plan under Section 4062, 4063, 4064,4201 or 4204 of ERISA, such notice to be given within ten (10) days after such Borroweror any Affiliate knows or has reason to know thereof.  Any notice to be provided to the Agent under this Section shallinclude a certificate of the chief financial officer of such Borrower settingforth details as to such occurrence and the action, if any, which such Borroweror such Affiliate is required or proposes to take, together with any noticesrequired or proposed to be filed with or by such Borrower, such Affiliate, thePBGC, the IRS, the trustee or the plan administrator with respect thereto.

 

(b)                                 EachBorrower shall furnish to the Agent, promptly upon the request of the Agent oreither Bank, a copy of the annual report of each Pension Plan or Plan (Form5500 or comparable form) required to be filed with the IRS and/or theDepartment of Labor.

 

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(c)                                  Promptlyafter the adoption of any Plan (other than a Plan which is intended tosubstitute a Plan listed in Exhibit B attached hereto and issubstantially similar to such Plan listed in Exhibit B) or Pension Plan subjectto ERISA or of any amendment to any Pension Plan which results in a significantunder-funding within the meaning of Section 401(a)(29) of the Code and Section307 of ERISA, each Borrower shall notify the Agent of such adoption and of thevesting and funding schedules and other principal provisions thereof.

 

5.14                           Notification of Default.  Upon becoming aware of the existence of anycondition or event which would cause an Event of Default, or any condition orevent which would upon notice or passage of time, or both, constitute an Eventof Default, the Borrowers shall promptly give the Agent written notice thereofspecifying the nature and duration thereof and the action being or proposed tobe taken with respect thereto.

 

5.15                           Notification of Material Litigation.  The Borrowers shall promptly notify theAgent in writing of any litigation or of any investigative proceedings (civilor criminal) of a governmental agency or authority commenced or known to bethreatened against any of them or any of their respective Subsidiaries whichwould, if adversely decided, have a material and adverse effect on the businessor the financial condition of the Borrower and their respective Subsidiariestaken as a whole.

 

5.16                           Inspection by the Agent and the Banks.  Each Borrower shall and shall cause itsSubsidiaries to permit the Agent and each Bank or its designees, at anyreasonable time and from time to time, to visit and inspect the properties ofsuch Borrower and its Subsidiaries, to examine and make copies of and takeabstracts from the books and records of such Borrower and its Subsidiaries, andto discuss the affairs, finances and accounts of such Borrower and itsSubsidiaries, with appropriate officers. The Agent and each Bank agree to take all reasonable steps to keepconfidential any and all of the information obtained from such inspection,other than information contained in documents filed by any Borrower with anypublic agency which are generally available to the public or through the use ofthe Freedom of Information Act or any equivalent statute, and any otherinformation in any public record; provided that such information may bemade available for inspection and examination by (i) any governmentalregulatory authority having jurisdiction over the Agent or any Bank,(ii) any independent auditors of the Agent or any Bank, and(iii) upon receipt of the prior consent of the Borrowers, which consentmay not be unreasonably withheld, any potential Assignees and Participants.

 

5.17                           Maintenance of Books and Records.  Each Borrower shall and shall cause itsSubsidiaries to keep adequate books and records of account in which true andcomplete entries will be made reflecting all of its business and financialtransactions.  Such books and recordsshall form the basis for preparing the Consolidated financial statements ofCourier and its Subsidiaries in accordance with GAAP, and such entries will bemade in accordance with applicable law including, without limitation, laws withrespect to questionable, improper or corrupt payments.

 

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5.18                           Use of Proceeds. Each Borrower shall use the proceeds of the Revolving Loans and SwingLine Loans for the working capital needs of such Borrower and its Subsidiariesand for any other purpose permitted hereunder, including for purposes of makingacquisitions to the extent permitted by Section 5.8 hereof.

 

5.19                           Transactions with Affiliates. NoBorrower shall, or shall cause or permit any of its Subsidiaries at any timeto, directly or indirectly enter into any material purchase, sale, lease orother transaction with any Affiliate except in the ordinary course of businesson terms that are no less favorable to such Borrower or any such Subsidiarythan those which might be obtained at the time in a comparable arm’s lengthtransaction with any Person who is not an Affiliate.

 

5.20                           Environmental Regulations.

 

(a)                                  EachBorrower shall and shall cause its Subsidiaries to comply in all materialrespects with all applicable Environmental Laws (as such term is defined inSection 3.15 hereof), in all jurisdictions in which any of them operates now orin the future, and each Borrower shall, and shall cause its Subsidiaries tocomply in all material respects with all such laws and regulations that may inthe future be applicable to such Borrower, its Subsidiaries, and theirrespective properties and assets.

 

(b)                                 Ifany Borrower or any of its Subsidiaries shall (i) receive notice that anymaterial violation of any Environmental Law may have been committed by anyBorrower or any of their respective Subsidiaries, (ii) receive notice thatany administrative or judicial complaint or order has been filed against anyBorrower or any of their respective Subsidiaries alleging a violation of any EnvironmentalLaw or requiring any Borrower to take any action in connection with the releaseof toxic or hazardous wastes or materials into the environment, or(iii) receive any notice from a federal, state, or local governmentalagency alleging that any Borrower or any of their respective Subsidiaries maybe liable or responsible for any costs associated with a response to or cleanupof a release of hazardous wastes or materials into the environment or anydamages caused thereby, such Borrower shall provide the Agent with a copy ofsuch notice within ten (10) days after such Borrower’s or its Subsidiary’sreceipt thereof.  Within fifteen (15)days after any Borrower has learned of the enactment or promulgation of anyEnvironmental Law which may result in any material adverse change in thecondition (financial or otherwise), properties, business or results ofoperations of the Borrowers and their respective Subsidiaries taken as a whole,such Borrower shall provide the Agent with notice thereof.

 

5.21                           Fiscal Year.  The Borrowers and their respective Subsidiaries shall have fiscalyears ending on the last Saturday in September of each year and shall notchange such fiscal years without the prior written consent of each Bank; providedthat so long as Courier is required to file reports with the SecuritiesExchange Commission pursuant to the Securities Act of 1933 or the SecuritiesExchange Act of 1934, each as amended, the Borrowers and their Subsidiariesshall be permitted to change such fiscal years (all to the

 

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same date) upon thirty (30) days’ prior written notice thereof to theAgent (whereupon the Banks shall have the right to modify the timing of thefinancial covenants hereunder accordingly in order to correspond to any suchchange in the fiscal years of the Borrowers and their respective Subsidiaries).

 

5.22                           No Amendments to Certain Documents.  No Borrower shall at any time cause orpermit any of the charter or other incorporation documents or by-laws of such Borroweror any of its Subsidiaries to be modified, amended or supplemented in anyrespect whatever, without (in each case) the express prior written agreement,consent or approval of each Bank, except for any such modification, amendmentor supplement as would not, on the date on which proposed to be made, cause (a)an Event of Default or an event which, with notice or the passage of time, orboth, would constitute an Event of Default, or (b) a breach of the financialcovenants contained in Sections 5.24 through 5.26, inclusive, or 5.29 of thisAgreement if such covenants were measured as of the date such modification,amendment or supplement is proposed to be made.

 

5.23                           No Termination of Certain Documents.  No Borrower shall at any time directly orindirectly terminate, cancel or rescind, or cause or permit, or otherwise agreeor consent to or approve, the termination, cancellation or rescission of, anyof the Loan Documents without (in each case) the express prior writtenagreement, consent or approval of each Bank.

 

5.24                           Funded Debt Ratio.  At the end of each fiscal quarter, for the preceding fourconsecutive fiscal quarters commencing with the fiscal quarter endingMarch 29, 2003, the Borrowers shall not cause or permit the ratio of (i)Consolidated Total Funded Debt to (ii) Consolidated EBITDA to be greater than3.0 to 1 (the “Funded Debt Ratio”).

 

5.25                           Current Ratio. The Borrowers shall not cause or permit the ratio of (i) CurrentAssets to (ii) Current Liabilities at the end of any fiscal quarter of theBorrowers to be less than 1.20 to 1.

 

5.26                           Debt Service Coverage.  At the end of each fiscal quarter, for thepreceding four consecutive fiscal quarters commencing with the fiscal quarterending March 29, 2003, the Borrowers shall not cause or permit the ratioof (i) Consolidated EBITDA to (ii) Consolidated Total Debt Service to be lessthan 3.0 to 1.

 

5.27                           Subsidiaries. The Borrowers shall give the Agent written notice of the formation afterthe date hereof of any Subsidiary, and agree that they shall cause any suchSubsidiary to engage in the business of conducting branches or divisions of thebusiness now conducted by the Borrowers (or reasonable extensions or expansionsthereof) or holding any of the property of any Borrower.

 

5.28                           Name Change. The Borrowers shall give the Agent thirty (30) days’ prior writtennotice of any change in the name or corporate form of any Borrower or in thename under which its business is transacted.

 

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5.29                           Capital Expenditures.  The Borrowers shall not make any CapitalExpenditures in excess of $16,000,000 in the aggregate during any fiscal year(commencing with the fiscal year ending September 28, 2002).  Notwithstanding the foregoing provision ofthis Section 5.29, any unexpended portion of the amount permitted for CapitalExpenditures in any fiscal year may be carried forward and included in theaggregate amount permitted for Capital Expenditures in the following fiscalyear only.

 

SECTION 6.                                EVENTSOF DEFAULT; ACCELERATION.

 

6.1                                 Anyor all of the Obligations of the Borrowers to the Agent and the Banks shall, atthe option of the Banks (acting through the Agent) and notwithstanding theprovisions of any instrument evidencing an Obligation, be immediately due andpayable without notice or demand upon the occurrence and continuation of any ofthe following events of default (individually, an “Event of Default”):

 

(i)                                     anyprincipal payable under this Agreement or any Note or the Swing Line Note shallnot be paid within five (5) days after the date on which the same shall havefirst become due and payable; or

 

(ii)                                  anyinterest or any other sum (except principal) payable to the Agent or eitherBank under any of the Loan Documents shall not be paid punctually on the dateon which the same shall have first become due and payable, and such failure topay under this clause (ii) shall continue for more than one (1) day after theearlier of the date on which a principal officer of any Borrower shall havefirst become aware of such failure to pay or the Agent or either Bank shallhave first notified any Borrower of such failure to pay; or

 

(iii)                               (a) anyBorrower shall fail to perform, comply with or observe or shall otherwisebreach any one or more of its covenants, agreements or obligations contained inthe last paragraph of Section 2.5.1(ii) of this Agreement, or in Sections 5.5through 5.8, inclusive, 5.14, 5.20, 5.23 through 5.26, inclusive, and 5.29 ofthis Agreement; or (b) any Borrower shall fail to perform, comply with orobserve or shall otherwise breach any one or more of its covenants, agreementsor obligations contained in Sections 5.9, 5.22, and 5.27 of this Agreement andsuch failure under this clause (b) shall continue for more than five (5) daysafter the earlier of the date on which any Borrower shall have first becomeaware of such failure or breach or the Agent or either Bank shall have firstnotified any Borrower of such failure or breach; or (c) any Borrower shallfail to perform, comply with or observe or shall otherwise breach any one ormore of its covenants, agreements or obligations contained herein (other thanthose specified in clauses (a) and (b) hereof) or in any other Loan Document towhich such Borrower is a party and such failure under this clause (c) shallcontinue for more than thirty (30) days after the earlier of the date on whichany Borrower shall have first become aware of such failure or breach or theAgent or either Bank shall have first notified such Borrower of such failure orbreach; or

 

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(iv)                              anyrepresentation or warranty at any time made by or on behalf of any Borrower inany Loan Document or in any certificate, written report or statement furnishedto the Agent or either Bank pursuant thereto shall prove to have been false inany material respect upon the date when made or deemed to have been made; or

 

(v)                                 anyBorrower or any Subsidiary of any Borrower shall fail to pay when due, orwithin any applicable period of grace (not to exceed thirty (30) days),obligations for borrowed money, or fail to observe or perform any term,covenant or agreement contained in any agreement by which it is bound,evidencing or securing borrowed money, for such period of time as would permit(including the giving of appropriate notice if required) the holder or holdersthereof or of any obligations issued thereunder to accelerate the maturitythereof; excluding, however, from the operation of this clause,obligations for borrowed money, and agreements in connection therewith, notexceeding $500,000 in the aggregate; or

 

(vi)                              anyBorrower or any Subsidiary of any Borrower shall (a) apply for or consentto the appointment of, or the taking of possession by, a receiver, custodian,trustee or liquidator of itself or of all or a substantial part of itsproperty, (b) be generally not paying its debts as such debts become due,(c) make a general assignment for the benefit of its creditors,(d) commence a voluntary case under the Federal Bankruptcy Code (as now orhereafter in effect), (e) file a petition seeking to take advantage of anyother law providing for the relief of debtors, (f) consent to any petitionfiled against it seeking an order for relief under the Bankruptcy Code or ofany other law providing for the relief of debtors, (g) take any actionunder the laws of its jurisdiction of incorporation or organization similar toany of the foregoing, or (h) take any corporate action for the purpose ofeffecting any of the foregoing; or

 

(vii)                           aproceeding or case shall be commenced against any Borrower or any Subsidiary ofany Borrower in any court seeking (a) the liquidation, reorganization,dissolution, winding up, or composition or readjustment of its debts,(b) the appointment of a trustee, receiver, custodian, liquidator or thelike of it or of all or any substantial part of its assets, (c) an orderfor relief under the Bankruptcy Code, (d) similar relief in respect of it,under any law providing for the relief of debtors; and any such proceedingspecified in (a) through (d) hereinabove (A) shall not be dismissed withinthirty (30) days from the initiation thereof, or (B) shall not becontested by such Borrower or such Subsidiary in good faith and with duediligence; or action under the laws of the jurisdiction of incorporation ororganization of any Borrower or any Subsidiary of any Borrower similar to anyof the foregoing shall be taken with respect to any Borrower or any Subsidiaryof any Borrower and such action shall not be dismissed within thirty (30) daysfrom the initiation thereof, or during such thirty (30) day period suchBorrower or such Subsidiary shall not contest the same in good faith and withdue diligence; or

 

(viii)                        a courtshall with respect to any Borrower or any Subsidiary of any Borrower order or enter(a) the liquidation, reorganization, dissolution, or composition or

 

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readjustment of its debts, (b) the appointment of a trustee, receiver,custodian, liquidator or the like of it or of all or any substantial part ofits assets, (c) order for relief under the Bankruptcy Code, (d) similar reliefin respect of it, under any law providing for the relief of debtors, or (e)similar order under the laws of the jurisdiction of incorporation ororganization; or

 

(ix)                                judgmentsor orders for the payment of money shall be entered against any Borrower or anySubsidiary of any Borrower by any court, or warrants of attachment or executionor similar process shall be issued or levied against property of any Borroweror any Subsidiary of any Borrower, which in the aggregate exceeds $500,000 invalue, and the same shall continue unsatisfied and in effect for a period ofthirty (30) days without being vacated, discharged, satisfied or stayed pendingappeal, provided that the total out-of-pocket cost of any bond appliedin order to procure a stay of execution in any such litigation shall not exceed$50,000; or

 

(x)                                   anyBorrower or any member of the controlled group shall fail to pay when due amaterial amount which it shall have become liable to pay to the PBGC or to aPlan under Title IV of ERISA or to a Plan under Section 412 of the Code orSection 302 of ERISA; or notice of intent to terminate a Plan or Plans havingaggregate Unfunded Benefit Liabilities shall be filed under Title IV of ERISAby any Borrower or any member of the controlled group, any plan administratoror any combination of the foregoing; or the PBGC shall institute proceedingsunder Title IV of ERISA to terminate or to cause a trustee to be appointed toadminister any such Plan or Plans or a proceeding shall be instituted by afiduciary of any such Plan or Plans against any Borrower to enforce Section 515of ERISA and such proceedings shall not have been dismissed within thirty (30)days thereafter; or a condition shall exist by reason of which the PBGC wouldbe entitled to obtain a decree adjudicating that any such Plan or Plans must beterminated; or

 

(xi)                                anyLoan Document shall be cancelled, terminated, revoked or rescinded otherwisethan in accordance with the express prior written agreement, consent orapproval of each Bank; or any action at law, suit in equity or other legalproceeding to cancel, revoke or rescind any Loan Document shall be commenced byor on behalf of any Borrower or any other Person (other than the Agent or anyBank) bound thereby, or by any court or any other governmental or regulatoryauthority or agency of competent jurisdiction; or any court or any othergovernmental or regulatory authority or agency of competent jurisdiction shallmake a determination that, or shall issue a judgment, order, decree or rulingto the effect that, any one or more of the Loan Documents, or any one or moreof the obligations of any Borrower or any other Person under any one or more ofthe Loan Documents, are illegal, invalid or unenforceable in any materialrespect in accordance with the terms thereof; or

 

(xii)                             atany time after the date hereof, any Borrower shall own, both legally andbeneficially, less than one hundred percent (100%) of all the issued andoutstanding Voting Shares of each of its Subsidiaries, which Subsidiaries areset forth in

 

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Exhibit F hereto, or such lesserpercentage as such Borrower may be permitted to own pursuant to Section 5.8 ofthis Agreement.

 

6.2                                 Uponthe occurrence of any Event of Default and at any time thereafter (unless suchEvent of Default shall theretofore have been remedied or waived), at the optionof the Banks (acting through the Agent): (i) the Revolving Credit Commitment and the Swing Line Commitmentshall terminate in full, and each of the Banks shall thereupon be relieved ofall of its obligations to make any Revolving Loans hereunder and the Agentshall thereupon be relieved of all of its obligations to make Swing Line Loanshereunder; (ii) the unpaid principal amount of the Notes and the SwingLine Note together with accrued interest thereon and all other Obligationsshall become immediately due and payable without presentment, demand, protestor notice of any kind, all of which are hereby expressly waived; and(iii) the Agent and each of the Banks may exercise any and all rights ithas under this Agreement, the Notes, the Swing Line Note, the other LoanDocuments or any other documents or agreements executed in connection with thetransactions contemplated by this Agreement, or by law or equity, and proceedto protect and enforce the Agent’s and each Bank’s rights by any action at law,suit in equity or other appropriate proceeding, whether for specific performanceor for an injunction against a violation of any covenant contained herein or inany Loan Document or in aid of the exercise of any power granted hereby orthereby or by law.

 

SECTION 7.  SET-OFF

 

7.1                                 Anydeposits or other sums at any time credited by or due from any Bank to anyBorrower, without notice (any such notice being expressly waived hereby) and tothe fullest extent permitted by law and without regard to any collateral orother source of payment whatsoever, may at any time after the occurrence andduring the continuance of an Event of Default, be applied to or set off againstObligations on which any Borrower is primarily liable and may at or after thematurity thereof be applied to or set off against Obligations on which anyBorrower is secondarily liable, and in furtherance of the foregoing eachBorrower grants the Agent and each Bank a lien on and security interest in allsuch deposits to secure payment of the Obligations.  Such amounts that may be applied to or set off against Obligationsare to be ratably applied to all Obligations owed to the Agent and each Bankunder this Agreement with reasonable promptness.

 

7.2                                 Anydeposits or other sums which at any time may be credited to any Borrower by ordue to it from any Participant may at any time after the occurrence and duringthe continuance of an Event of Default, without notice (any such notice beingexpressly waived hereby) and to the fullest extent permitted by law and withoutregard to any collateral or other source of payment whatsoever, be applied toor set off by such Participant against the then outstanding indebtedness of anyBorrower hereunder.

 

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SECTION 8.                                CONCERNING THE AGENT AND THE BANKS.

 

8.1                                 Appointment and Authorization.  Each of the Banks hereby appoints Citizens,acting through its head office, to serve as Agent under this Agreement and theother Loan Documents and irrevocably authorizes the Agent to take such actionas Agent on such Bank’s behalf under this Agreement and the other LoanDocuments and to exercise such powers and to perform such duties under thisAgreement, the other Loan Documents and the other documents and instrumentsexecuted and delivered in connection with the consummation of the transactionscontemplated hereby as are delegated to the Agent by the terms hereof orthereof, together with all such powers as are reasonably incidental thereto.

 

8.2                                 Agent and Affiliates.  Citizens shall have the same rights andpowers under this Agreement and the other Loan Documents as each other Bank andmay exercise or refrain from exercising the same as though it were not theAgent, and Citizens and its Affiliates may accept deposits from, lend money to,and generally engage in any kind of business with any Borrower or Affiliate ofany Borrower as if it were not the Agent hereunder and under the other LoanDocuments.  Except as otherwise providedby the terms of this Agreement, nothing herein shall prohibit any of the Banksfrom accepting deposits from, lending money to or generally engaging in anykind of business with any Borrower or Affiliate of any Borrower.

 

8.3                                 Future Advances. In order to more convenientlyadminister the Revolving Loans, Fleet, Key and Sovereign do hereby authorizethe Agent and Citizens to make all Revolving Loans and advances, subject to theterms and conditions of this Agreement, to the Borrowers, which are requestedby the Borrowers on any Business Day. Fleet, Key and Sovereign do hereby further irrevocably agree, whether ornot this Agreement has been terminated, an Event of Default has occurred, theAgent has accelerated the Obligations or the Agent is proceeding to liquidateany collateral, to transfer to the Agent on the last Business Day of each week,if not already transferred, sufficient immediately available federal funds toreimburse Citizens for Fleet, Key and Sovereign’s respective CommitmentPercentages of all Revolving Loans and other advances made during such weeklyperiod after taking into account payments received by the Agent; provided,however, that upon the request of the Agent, such reimbursement shallalso be required to be made by Fleet, Key and Sovereign at the end of anyfiscal quarter and fiscal year of the Borrowers.  Any payments made by the Agent on behalf of any Borrower shallconstitute Revolving Loans or other advances initially made by the Agent atsuch time as such funds are actually provided, or such payments are made, bythe Agent.  All Revolving Loans andother advances made by the Agent on behalf of Fleet, Key and Sovereign shallbe, for purposes of interest income and other charges, considered loans fromFleet, Key and Sovereign to the Borrowers at such time as the Agent receivesfrom Fleet, Key and Sovereign funds as provided in this Section 8.3, and prior tosuch time such Revolving Loans and advances shall be considered, for purposesof interest income and other charges, loans from Citizens.  The Agent may at any time upon notice toFleet, Key and Sovereign (i) refuse to make Revolving Loans and advanceson behalf of Fleet, Key and Sovereign unless Fleet, Key and Sovereign shallhave provided to the Agent immediately

 

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available federal funds sufficient to cause the outstanding RevolvingLoans to equal each of the Banks’ respective Commitment Percentage;(ii) require Fleet, Key and Sovereign to fund such Revolving Loans andadvances before making such Revolving Loans and advances to the Borrowerrequesting the same; or (iii) require that Fleet, Key and Sovereignimmediately transfer to the Agent on each Business Day immediately availablefederal funds sufficient to cause the outstanding Revolving Loans to equal eachof the Banks’ respective Commitment Percentage.  Notwithstanding the provisions hereof, the obligations to makeRevolving Loans and advances under the terms of this Agreement shall be theseveral and not joint obligation of Fleet, Key, Sovereign and Citizens, and anyadvances made by the Agent on behalf of Fleet, Key and Sovereign are strictlyfor the administrative convenience of the parties and shall in no way diminishFleet, Key and Sovereign’s liability to the Agent and Citizens to repay theAgent for such Revolving Loans and advances.

 

8.4                                 Payments.  Allpayments and prepayments of principal of Revolving Loans received by the Agentshall be paid to each of the Banks prorata in accordance withtheir respective Commitment Percentage. All such payments from the Borrowers received by the Agent shall be heldin trust for the benefit of the Banks. As each such payment is received by the Agent, the Agent shall promptlycharge or credit each of the Banks to the extent necessary to ensure that asbetween them, each of the Banks holds its respective Commitment Percentage ofoutstanding Revolving Loans, based on the then unpaid aggregate principalamounts of the Revolving Loans outstanding.

 

8.5                                 Interest,Fees and Other Payments.  (i) All payments of interest received by the Agent inrespect of Revolving Loans, except as otherwise provided by the terms of thisAgreement, and all other fees and premiums received by the Agent hereunder orin respect of Revolving Loans shall be shared by the Banks proratain accordance with their respective Commitment Percentages.  (ii) All payments received by the Agentpursuant to Section 10.7 of this Agreement shall be applied by the Agent toreimburse itself, Citizens, Fleet, Key or Sovereign as the case may be, onaccount of the Obligation, tax, charge or expense in respect of which suchpayment is made.

 

8.6                                 Action by Agent.

 

(i)                                     Theobligations of the Agent hereunder are only those expressly set forthherein.  The Agent shall have no duty toexercise any right or power or remedy hereunder, under any other Loan Document,or under any other document or instrument executed and delivered in connectionwith or as contemplated by this Agreement or to take any affirmative actionhereunder or thereunder.

 

(ii)                                  TheAgent shall keep records of the Revolving Loans and Swing Line Loans andpayments hereunder, and shall give and receive notices and other communicationsto be given or received by the Agent hereunder on behalf of the Banks.

 

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(iii)                               Uponthe occurrence of an Event of Default, the Agent shall exercise, if so directedby the Banks, the option of the Banks pursuant to Section 6.2 hereof to declareall Obligations immediately due and payable and take such action as may benecessary or desirable to collect the Obligations and enforce the rights andremedies of the Agent or the Banks with respect to any collateral or otherwise.

 

(iv)                              Whetheror not an Event of Default shall have occurred, the Agent may from time to timeexercise the rights of the Agent and Banks hereunder, under the other LoanDocuments, or under the other documents or instruments executed or delivered inconnection with or as contemplated by this Agreement as it reasonably may deemnecessary or desirable to protect any collateral and the interests of the Agentand the Banks.

 

8.7                                 Consultation with Experts.  The Agent shall be entitled to retain andconsult with legal counsel, independent public accountants and other expertsselected by it and shall not be liable to the Banks for any action taken,omitted to be taken or suffered in good faith by it in accordance with theadvice of such counsel, accountants or experts.  The Agent may employ agents and attorneys-in-fact and shall notbe liable to the Banks for the default or misconduct of any such agents orattorneys.

 

8.8                                 Liability of Agent.  The Agent shall exercise the same care to protect the interestsof each of the Banks as it does to protect its own interests, so that so longas the Agent exercises such care it shall not be under any liability to any ofthe Banks, except for the Agent’s gross negligence or willful misconduct withrespect to anything it may do or refrain from doing.  Subject to the immediately preceding sentence, neither the Agentnor any of its directors, officers, agents or employees shall be liable for anyaction taken or not taken by it in connection herewith in its capacity asAgent.  Without limiting the generalityof the foregoing, neither the Agent nor any of its directors, officers, agentsor employees shall be responsible for or have any duty to ascertain, inquireinto or verify:  (i) any statement,warranty or representation made in connection with this Agreement, any otherLoan Document, or any borrowing hereunder; (ii) the performance orobservance of any of the covenants or agreements of any Borrower;(iii) the satisfaction of any condition specified in Sections 4.1 or 4.2hereof, except receipt of items required to be delivered to the Agent; or(iv) the validity, effectiveness, enforceability or genuineness of thisAgreement, the Notes, the Swing Line Note, the other Loan Documents or anyother document or instrument executed and delivered in connection with or ascontemplated by this Agreement.  TheAgent shall not incur any liability by acting in reliance upon any notice,consent, certificate, statement or other writing (which may be a bank wire,telex or similar writing) believed by it to be genuine or to be signed by theproper party or parties.

 

8.9                                 Indemnification.  Each Bank agrees to indemnify the Agent (to the extent the Agentis not reimbursed by any Borrower), ratably in accordance with its CommitmentPercentage, from and against any cost, expense (including attorneys’ fees anddisbursements), claim, demand, action, loss or liability which the Agent maysuffer or

 

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incur in connection with this Agreement or any other Loan Document, orany action taken or omitted by the Agent hereunder or thereunder, or theAgent’s relationship with the Borrowers hereunder, including, withoutlimitation, the costs and expenses of defending itself against any claim orliability in connection with the exercise or performance of any of its powersand duties hereunder and of taking or refraining from taking any actionhereunder.  No payment by any Bank underthis Section shall in any way relieve any Borrower of its obligations underthis Agreement with respect to the amounts so paid by any Bank, and the Banksshall be subrogated to the rights of the Agent, if any, in respect thereto.

 

8.10                           Independent Credit Decision.  Each of the Banks represents and warrants tothe Agent that it has, independently and without reliance upon the Agent or theother Banks and based on the financial statements referred to in Section 3.7and such other documents and information as it has deemed appropriate, made itsown independent credit analysis and decision to enter into this Agreement.  Each of the Banks acknowledges that it hasnot relied upon any representation by the Agent and that the Agent shall not beresponsible for any statements in or omissions from any documents orinformation concerning the Borrowers, this Agreement, the Notes, the Swing LineNote, the other Loan Documents or any other document or instrument executed anddelivered in connection with or as contemplated by this Agreement.  Each of the Banks acknowledges that it will,independently and without reliance upon the Agent or the other Banks and basedon such documents and information as it shall deem appropriate at the time,continue to make its own credit decisions in taking or not taking action underthis Agreement.

 

8.11  Successor Agent.  Citizens, or any successor Agent, may resignas Agent at any time by giving written notice thereof to the Banks, and Courieron behalf of the Borrowers.  Upon anysuch resignation, the Banks shall have the right to appoint a successorAgent.  If no successor Agent shall havebeen so appointed by the Banks, and shall have accepted such appointment,within thirty (30) days after the retiring Agent’s giving of notice of resignation,then the retiring Agent may, on behalf of the Banks, appoint a successor Agent,which shall be a commercial bank (or Affiliate thereof) or savings and loanassociation organized under the laws of the United States of America or anyState thereof or under the laws of another country which is doing business inthe United States of America or any State thereof and having a combinedcapital, surplus and undivided profits of at least $100,000,000.  Upon the acceptance of any appointment asAgent hereunder by a successor Agent, such successor Agent shall thereuponsucceed to and become vested with all the rights, powers, privileges and dutiesof the retiring Agent, and the retiring Agent shall be discharged from allfurther duties and obligations under this Agreement.  After any retiring Agent’s resignation or removal hereunder asAgent, the provisions of this Section 8 shall inure to its benefit as to anyactions taken or omitted to be taken by it while it was Agent under thisAgreement.

 

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SECTION 9.  COURIERAS AGENT FOR BORROWERS.

 

Each Borrower (other thanCourier) hereby appoints Courier as its agent with respect to the receiving andgiving of any notices, requests, instructions, reports, schedules, revisions,financial statements or any other written or oral communicationshereunder.  The Agent and each Bank ishereby entitled to rely on any communications given or transmitted by Courieras if such communication were given or transmitted by each and every Borrower; provided,however, that any communication given or transmitted by any Borrowerother than Courier shall be binding with respect to such Borrower.  Any communication given or transmitted bythe Agent or any Bank to Courier shall be deemed given and transmitted to eachand every Borrower.

 

SECTION 10.                          MISCELLANEOUS.

 

10.1                           Written Notices.  Any notices, expressly required by this Agreement to be inwriting, to any party hereto shall be deemed to have been given when deliveredby hand, when sent by telex or facsimile transmission, one (1) day after beingdelivered to any overnight delivery service freight pre-paid or three (3) daysafter deposit in the mails, postage prepaid, and addressed to such party at itsaddress given at the beginning of this Agreement or at any other address specifiedin writing.  Written notices to theBorrowers shall be sent to the attention of Robert P. Story, Jr., SeniorVice President and Chief Financial Officer, or to such other officer as may bedesignated by the Borrowers, with a copy to Goodwin, Procter & Hoar LLP,Exchange Place, Boston, Massachusetts 02109, Attention:  F. Beirne Lovely, Jr. P.C.; and writtennotices to the Agent and Citizens shall be sent to the attention of suchofficer as may be designated by the Agent and Citizens, with a copy to Goulston& Storrs, 400 Atlantic Avenue, Boston, Massachusetts 02110-3333,Attention:  Philip A. Herman, Esq.,written notices to Fleet shall be sent to the attention of such officer as maybe designated by Fleet, with a copy to Goulston & Storrs, 400 AtlanticAvenue, Boston, Massachusetts 02110-3333, Attention:  Philip A. Herman, Esq., written notices to Key shall be sent tothe attention of such officer as may be designated by Key, with a copy toPreti, Flaherty, Beliveau, Pachios and Haley, LLC, 45 Memorial Circle, P.O. Box1058, Augusta, Maine  04332-1058,Attention:  James C. Pitney, Jr., Esq.,and written notices to Sovereign shall be sent to Sovereign Bank, 19 PleasantStreet, Woburn, MA  01801, Attention:Michael S. Tager, Vice President, with a copy to Sovereign Bank, 75 StateStreet, Boston, MA  02109, Attention:Legal Department.  Any notice, unlessotherwise specified, may be given orally or in writing.

 

10.2                           Term of Agreement.  This Agreement shall continue in force and effect so long as theRevolving Credit Commitment, the Swing Line Commitment, any portion of theLoans or Swing Line Loans or any Obligation of any Borrower for any interest,fee, charge or expense shall be outstanding.

 

10.3                           No Waivers. No failure or delay by the Agent or any Bank in exercising any right,power or privilege hereunder shall operate as a waiver thereof; nor shall any

 

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single or partial exercise thereof preclude any other or furtherexercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided arecumulative and not exclusive of any rights or remedies otherwise provided bylaw.

 

10.4                           Further Assurances.  Each Borrower shall do, make, execute and deliver all suchadditional and further acts, things, assurances, and instruments as the Agentor any Bank may reasonably require more completely to vest in and assure to theAgent and the Banks its rights hereunder and under the other Loan Documents,and to carry into effect the provisions and intent of this Agreement and theother Loan Documents.

 

10.5                           Governing Law. This Agreement and the other Loan Documents shall be deemed to becontracts made under seal and shall be construed in accordance with andgoverned by the laws of the Commonwealth of Massachusetts (without regard toconflicts of laws rules).  Any legalaction or proceeding arising out of or relating to this Agreement or anyObligation may be instituted in the courts of the Commonwealth of Massachusettsor of the United States of America for the District of Massachusetts, and theBorrowers hereby irrevocably submit to the jurisdiction of each such court inany such action or proceeding; provided, however, that theforegoing shall not limit the Agent’s or any Bank’s rights to bring any legalaction or proceeding in any other appropriate jurisdiction.

 

10.6                           Payments in Immediately AvailableFunds.  All payments required ofthe Borrowers hereunder or under the Notes or under the Swing Line Note shallbe made in lawful money of the United States of America in federal or otherfunds immediately available to the recipient thereof at the prescribed place ofpayment.

 

10.7                           Expenses,Taxes and Indemnification.

 

(a)                                  TheBorrowers shall pay all taxes (other than taxes on the income of the Banks),charges and expenses of every kind or description, including, withoutlimitation, (i) attorneys’ fees and expenses, reasonably incurred orexpended by the Agent or the Banks in connection with or in any way related tothe Agent’s or the Banks’ relationship with the Borrowers, whether hereunder orotherwise, including, without limitation, those incurred or expended inconnection with the preparation, execution, delivery, interpretation oramendment of this Agreement, the Notes, the Swing Line Note, the other LoanDocuments and any related agreement, instrument or document, the making of theLoans, and the protection or enforcement of the Agent’s or the Banks’ rightshereunder and (ii) fees and expenses reasonably incurred, expended orcharged by the Agent or the Banks in connection with any examination of thebusiness, assets or properties of the Borrowers, conducted after and during thecontinuance of an Event of Default, whether or not conducted by employees ofthe Agents or either Bank.  The Borrowersauthorize the Agent and the Banks to charge the Loan Account or any depositaccount which the Borrowers may maintain with the Agent or any Bank for any ofthe foregoing; provided that prior to an Event of Default only principaland interest shall be charged against the deposit accounts of the Borrowerswith the Agent or any Bank.

 

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(b)                                 TheBorrowers shall, jointly and severally, absolutely and unconditionallyindemnify and hold the Agent and each Bank harmless against any and all claims,demands, suits, actions, causes of action, damages, losses, settlementpayments, obligations, costs, expenses and all other liabilities whatsoeverwhich shall at any time or times be incurred or sustained by the Agent oreither Bank or by any of their respective shareholders, directors, officers,employees, subsidiaries, affiliates or agents (except any of the foregoingincurred or sustained as a result of the gross negligence or willful misconductof the Agent or such Bank) on account of or in relation to any of thearrangements or transactions contemplated by, associated with or ancillary toeither this Agreement, or any of the other documents executed or delivered inconnection herewith (including, without limitation, those arising as a resultof a breach by the Borrowers of any Environmental Laws, whether or notdisclosed in Exhibit B attached hereto), whether or not all or anyof the transactions contemplated by, associated with or ancillary to thisAgreement, or any of such documents, are ultimately consummated.

 

10.8                           Amendments,Waivers, Etc. Except as otherwise expressly provided in this Agreement or any of theother Loan Documents:  (i) each of theLoan Documents may be modified, amended or supplemented in any respect whateveronly with the prior written consent or approval of the Majority Banks and theBorrowers; and (ii) the performance or observance by the Borrowers of any oftheir covenants, agreements or obligations under any of the Loan Documents maybe waived only with the written consent of the Majority Banks; provided,however, that the following changes shall require the written consent,agreement or approval of all of the Banks: (A) any decrease in the amount or postponement of the due date of any ofthe Obligations; (B) any decrease in the interest rates prescribed in any ofthe Notes or the Swing Line Note; (C) any increase in the Revolving CreditCommitment or Commitment Percentage of any of the Banks, except as permitted bySection 10.10; (D) any change in the definition of Majority Banks; and (E) anychange in the terms of this Section 10.8. Any change to Section 8 or any other provision of this Agreementaffecting the rights or obligations of the Agent shall not be amended ormodified without the prior written consent of the Agent.

 

Without limitation of theforegoing, it is agreed that any requirement in any Loan Document of theconsent or waiver of the Banks shall be deemed to require the consent or waiverof the Majority Banks.

 

As used herein, the term“Majority Banks” means those Banks whose aggregate Revolving Credit Commitmentsconstitute at least fifty-one percent (51%) of the Revolving Credit MaximumAmount in effect at the relevant time of reference.

 

10.9                           Binding Effect of Agreement.  This Agreement shall be binding upon andinure to the benefit of the Borrowers, the Agent, the Banks and theirrespective successors and assigns.  TheBanks may, in accordance with the provisions of Section 10.10 hereof, sell,assign or otherwise transfer all or any portion of their respective right,title and interest in, and their respective Obligations under, this Agreementand the Loans and Swing Line Loans made and to be made hereunder, or grantparticipations in their

 

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respective right, title and interest herein and therein.  No Borrower may assign or transfer any ofits rights or obligations hereunder.

 

10.10                     Assignment and Participation.

 

(i)                                     Assignmentsby the Banks.  From and after thedate hereof, any Bank may at any time assign all, or a proportionate part ofall, of its rights, interests and duties with respect to its Revolving CreditCommitment and Swing Line Commitment, and its Note and Swing Line Note, asapplicable, to one or more banks or other financial institutions (each, an“Assignee”) on such terms, as between such Bank and each of its Assignees, assuch Bank may think fit, and such Assignee shall assume such rights, interestsand duties pursuant to an instrument executed by such Assignee and such Bank,and for this purpose such Bank may make available to each of its potentialAssignees such information relating to the Borrowers, this Agreement and thetransactions contemplated hereby as such Bank may think necessary or desirable,which information shall be held by each potential Assignee strictly inconfidence; provided, however, that (a) prior to assigning anyinterest to any Assignee hereunder, (1) such Bank shall notify the Agentand the Borrowers in writing identifying the proposed Assignee and stating theaggregate principal amount of the proposed interest to be assigned, and(2) receive the prior written consent of the Agent and the Borrowers,which consent may not be unreasonably withheld, and (b) no Bank will assign toany Assignee less than an aggregate amount equal to $5,000,000 of such Bank’sRevolving Credit Commitment and Loans and interest in its Note, or Swing LineCommitment and Swing Line Loans and interest in its Swing Line Note, or, ifless, the remaining amount of such Bank’s Revolving Credit Commitment or SwingLine Commitment, as applicable.  It isunderstood and agreed that the proviso contained in the immediately precedingsentence shall not be applicable in the case of, and this paragraph (i) shallnot restrict, (a) an assignment or other transfer by such Bank to anAffiliate of such Bank or to any other Bank or (b) a collateral assignmentor other similar transfer to any of the twelve Federal Reserve Banks organizedunder Section 4 of the Federal Reserve Act, 12 U.S.C. §341.  Upon execution and delivery of such aninstrument and payment by such Assignee to such Bank of an amount equal to thepurchase price agreed between such Bank and such Assignee, such Assignee shallbe a Bank party to this Agreement and shall have all the rights, interests andduties of a Bank with a Revolving Credit Commitment and a Revolving Loan, or aSwing Line Commitment and a Swing Line Loan, as set forth in such instrument ofassumption, and such assigning Bank shall be released from its obligationshereunder to a corresponding extent, and no further consent or action by anyparty shall be required.  Upon theconsummation of any assignment pursuant to this paragraph (i), such assigningBank and the Borrowers shall make appropriate arrangements so that, ifrequired, a new Note is issued to the Assignee.

 

(ii)                                  Participationsby the Banks.  From and after thedate hereof, any Bank shall be at liberty to offer participations in itsRevolving Credit Commitment and its Note to one or more banks or otherfinancial institutions (each, a “Participant”) on such terms as such Bank maythink fit, provided that each participation must be for an amount

 

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equal to at least $5,000,000 of such Bank’s Revolving Credit Commitmentand Loans.  For this purpose such Bankmay make available to each of its potential Participants such informationrelating to the Borrowers, this Agreement and the transactions contemplatedhereby as such Bank may think necessary or desirable, which information shallbe held by each potential Participant strictly in confidence.  It is agreed that such Bank offering suchparticipation shall retain the sole right to consent to amendments to, orwaivers of, the provisions of this Agreement and its Note and the sole rightand responsibility to enforce the obligations of the Borrowers hereunder andunder the Notes; provided that such Bank may agree with each of itsParticipants that such Bank will not agree, without the consent of theParticipant, to any amendment or waiver of any provision of this Agreementwhich would increase or otherwise change such Revolving Credit Commitment orreduce the principal of or rate of interest on the Loans subject to suchparticipation, or postpone the date fixed for any payment of principal or ofinterest on any Loans.

 

(iii)                               NoAssignee, Participant or other transferee of any Bank’s rights shall beentitled to receive any greater payment under Sections 2.5.6 through 2.5.8,inclusive, hereof than such Bank would have been entitled to receive withrespect to the rights transferred, unless such transfer is made with theBorrowers’ prior written consent or at a time when the circumstances givingrise to such greater payment did not exist.

 

(iv)                              Assignmentsrequire a fee payable by the transferor Bank or its transferee to the Agent,solely for the account of the Agent, of $1,500.

 

10.11                     Computation of Interest and Fees.  Interest, fees and charges shall be computeddaily on the basis of a year of 360 days and paid for the actual number of daysfor which due.  If the due date for anypayment of principal is extended by operation of law, interest shall be payablefor such extended time.  Except asotherwise expressly provided in this Agreement, if any payment required by thisAgreement becomes due on a day on which banks in Boston, Massachusetts arerequired or permitted by law or an appropriate authority to remain closed, suchpayment may be made on the next succeeding day on which such banks are open,and such extension shall be included in computing interest in connection withsuch payment.

 

10.12                     Entire Agreement.  This Agreement (including the exhibits hereto) and the other LoanDocuments set forth the entire agreement and understanding of the partieshereto in respect of the subject matter contained herein, and supersedes allprior agreements, promises, covenants, arrangements, communications,representations, warranties, whether oral or written, by any officer, employeeor representative of any party hereto.

 

10.13                     Captions.  Thecaptions for the sections of this Agreement are for ease of reference only andare not an integral part of this Agreement.

 

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10.14                     Counterparts. This Agreement may be signed in any number of counterparts with the sameeffect as if the signatures hereto and thereto were upon the same instrument.

 

10.15                     Severability.  The provisions of this Agreement are severable, and if any ofthese provisions shall be held by any court of competent jurisdiction to beunenforceable, such holdings shall not affect or impair any other provisionhereof.

 

10.16                     Judgment Currency.  If for the purposes of obtaining a judgment in any court orobtaining an order enforcing a judgment it is necessary to convert any amountdue from the Borrowers hereunder or under the Notes or under the Swing LineNote in the currency expressed to be payable herein or under the Notes (the“specified currency”) into another currency, then the conversion shall be madeat the Agent’s spot rate of exchange for buying the specified currency withsuch other currency, in accordance with normal banking procedures, prevailingat the Agent’s close of business on the business day next preceding the day onwhich the judgment is given or the order is made.  In the event that there is a difference between the rate ofexchange on the basis of which the amount of such judgment or order isdetermined and the rate of exchange prevailing on the date of payment, theBorrowers shall pay such additional amount as may be necessary to ensure thatthe amount paid is the amount of such other currency which permits the Agent topurchase the amount of the specified currency due when such judgment or orderis issued at the Agent’s spot rate of exchange for buying the specifiedcurrency with such other currency, in accordance with normal bankingprocedures, prevailing at the Agent’s opening of business on the date ofpayment.

 

10.17                     WAIVER OF JURY TRIAL.  THE BORROWERS HEREBY IRREVOCABLY WAIVE TRIALBY JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO, IN CONNECTIONWITH, OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, OR ANY INSTRUMENT ORDOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY CLAIM OR DISPUTE   HOWSOEVER ARISING, BETWEEN ANY OF THEBORROWERS AND THE AGENT AND/OR THE BANKS. THIS WAIVER OF JURY TRIAL SHALL BE EFFECTIVE FOR EACH AND EVERY DOCUMENTEXECUTED BY THE BORROWERS, THE AGENT AND/OR THE BANKS AND DELIVERED TO THEAGENT, THE BANKS OR THE BORROWERS, AS THE CASE MAY BE, WHETHER OR NOT SUCHDOCUMENT SHALL CONTAIN A WAIVER OF JURY TRIAL. THE BORROWERS FURTHER ACKNOWLEDGE THAT ALL DOCUMENTS DELIVERED BY THEAGENT, THE BANKS OR THE BORROWERS ARE SUBJECT TO THIS WAIVER OF JURY TRIAL ASTO ANY ACTION THAT MAY BE BROUGHT AS TO ANY OF SUCH DOCUMENTS, INSTRUMENTSOR LETTERS OR THE LIKE.  THE BORROWERSFURTHER CONFIRM THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE.

 

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WITNESS the executionhereof under seal on the day and year first above written.

 
|   | The Borrowers:                             |
|--------|--------------------------------------------|
|   |                                       |
|   |                                       |   |
|   | COURIER CORPORATION                        |
|   |                                       |
|   |                                       |   |
|   | By:                                        |   | /s/ Lee Cochrane |   |
|   |                                       | Title: V. P. &  Treasurer |
|   |                                       |   |
|   |                                       |   |
|   | COURIER COMPANIES, INC.                    |
|   |                                       |
|   |                                       |   |
|   | By:                                        |   | /s/ Lee Cochrane |   |
|   |                                       | Title:  Asst. Treasurer |
|   |                                       |   |
|   |                                       |   |
|   | COURIER FOREIGN SALES  CORPORATION LIMITED |
|   |                                       |   |
|   |                                       |   |
|   | By:                                        |   | /s/ Lee Cochrane |   |
|   |                                       | Title:  Treasurer |
|   |                                       |   |
|   |                                       |   |
|   | COURIER KENDALLVILLE,  INC.                |
|   |                                       |
|   |                                       |   |
|   | By:                                        |   | /s/ Lee Cochrane |   |
|   |                                       | Title:  Asst. Treasurer |
|   |                                       |   |
|   |                                       |   |
|   | COURIER PROPERTIES,  INC.                  |
|   |                                       |
|   |                                       |   |
|   | By:                                        |   | /s/ Lee Cochrane |   |
|   |                                       | Title:  Asst. Treasurer |

 

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|   | NATIONAL PUBLISHING  COMPANY                      |
|--------|---------------------------------------------------|
|   |                                              |
|   |                                              |   |
|   | By:                                               |   | /s/ Lee Cochrane |   |
|   |                                              | Title:  Asst. Treasurer |
|   |                                              |   |
|   |                                              |   |
|   | COURIER NEW MEDIA, INC.                           |
|   |                                              |
|   |                                              |   |
|   | By:                                               |   | /s/ Lee Cochrane |   |
|   |                                              | Title:  Asst. Treasurer |
|   |                                              |   |
|   |                                              |   |
|   | BOOK-MART PRESS, INC.                             |
|   |                                              |
|   |                                              |   |
|   | By:                                               |   | /s/ Lee Cochrane |   |
|   |                                              | Title:  Asst. Treasurer |
|   |                                              |   |
|   |                                              |   |
|   | MASSACHUSETTS NATIONAL  PUBLISHING BUSINESS TRUST |
|   |                                              |
|   |                                              |   |
|   | By:                                               |   | /s/ Lee Cochrane |   |
|   |                                              | Title:  Asst. Treasurer |
|   |                                              |   |
|   |                                              |   |
|   | DOVER PUBLICATIONS,  INC.                         |
|   |                                              |
|   |                                              |   |
|   | By:                                               |   | /s/ Lee Cochrane |   |
|   |                                              | Title:  Asst. Treasurer |

 

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|   | The Banks:                                   |
|--------|----------------------------------------------|
|   |                                         |
|   | CITIZENS BANK OF  MASSACHUSETTS              |
|   |   (successor  to State Street Bank |
|   |   & Trust  Company)            |
|   |                                         |
|   |                                         |
|   | By:                                          |   | /s/ S. F. Foley |   |
|   |                                         | Title: S. F. Foley,  Vice President |
|   |                                         |
|   |                                         |
|   | FLEET NATIONAL BANK                          |
|   |   (f/k/a  BankBoston, N.A.)        |
|   |                                         |
|   | By:                                          |   | /s/ Elise M. Russo |   |
|   |                                         | Title:  S.V.P. |
|   |                                         |
|   |                                         |
|   | KEYBANK NATIONAL  ASSOCIATION                |
|   |                                         |
|   |                                         |
|   | By:                                          |   | /s/ Mitchell B. Feldman |   |
|   |                                         | Title:  S.V.P. |
|   |                                         |
|   |                                         |
|   | SOVEREIGN BANK (a  federal savings bank)     |
|   |                                         |
|   | By:                                          |   | /s/ Michael S. Tager  S.V.P. |   |
|   |                                         | Title: Sr. Vice  President |
|   |                                         |
|   | The Agent:                                   |
|   |                                         |
|   | CITIZENS BANK OF  MASSACHUSETTS              |
|   |   (successor  to State Street Bank |
|   |   & Trust  Company)            |
|   |                                         |
|   |                                         |
|   | By:                                          |   | /s/ S. F. Foley |   |
|   |                                         | Title: S. F. Foley,  Vice President |

 

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EXHIBIT A-1

 

Amended andRestated

Revolving CreditNote

 
| $15,000,000 |   | Boston, Massachusetts |
|-------------|--------|-----------------------|
|        |   | March 31, 2003   |

 

FOR VALUE RECEIVED, theundersigned (hereinafter, together with their respective successors in titleand assigns, collectively called the “Borrowers”), by this promissory note(hereinafter, called “this Note”), absolutely and unconditionally promise topay to the order of FLEET NATIONAL BANK (f/k/a BankBoston, N.A.) (hereinafter,together with its successors in title and assigns, called the “Bank”), theprincipal sum of FIFTEEN MILLION DOLLARS ($15,000,000), or so much thereof asshall have been advanced by the Bank to the Borrowers by way of revolving loansunder the Credit Agreement (as hereinafter defined) and shall remain outstanding,such payment to be made as hereinafter provided, and to pay interest on theprincipal sum outstanding hereunder from time to time from the date hereofuntil the said principal sum or the unpaid portion thereof shall have becomedue and payable as hereinafter provided.

 

The entire unpaidprincipal (not at the time overdue) of this Note shall bear interest at therate or rates from time to time in effect under the Credit Agreement.  Accrued interest on the unpaid principalunder this Note shall be payable on the dates specified in the CreditAgreement.

 

On March 31, 2006,the date of the final maturity of this Note, there shall become absolutely dueand payable by the Borrowers hereunder, and the Borrowers hereby jointly andseverally promise to pay to the holder hereof, the balance (if any) of theprincipal hereof then remaining unpaid, all of the unpaid interest accruedhereon and all (if any) other amounts payable on or in respect of this Note orthe indebtedness evidenced hereby.

 

Each overdue amount(whether of principal, interest or otherwise) payable on or in respect of thisNote or the indebtedness evidenced hereby shall (to the extent permitted byapplicable law) bear interest at the rates and on the terms provided by theCredit Agreement.  The unpaid interestaccrued on each overdue amount in accordance with the foregoing terms of thisparagraph shall become and be absolutely due and payable by the Borrowers tothe holder hereof on demand by the holder of this Note.  Interest on each overdue amount willcontinue to accrue as provided by the foregoing terms of this paragraph, andwill (to the extent permitted by applicable law) be compounded monthly untilthe obligations of the Borrowers in respect of the payment of such overdueamount shall be discharged (whether before or after judgment).

 

1

----

 

Each payment ofprincipal, interest or other sum payable on or in respect of this Note or theindebtedness evidenced hereby shall be made by the Borrowers directly to theAgent in U.S. Dollars, at the Agent’s Head Office (as hereinafter defined), onthe due date of such payment, and in immediately available and freelytransferable funds.  All payments on orin respect of this Note or the indebtedness evidenced hereby shall be madewithout set-off or counterclaim and free and clear of and without anydeductions, withholdings, restrictions or conditions of any nature.

 

This Note is made anddelivered by the Borrowers to the Bank pursuant to an Amended and RestatedRevolving Credit Agreement, dated as of March 31, 2003, among theBorrowers, the Banks and the Agent (hereinafter, as originally executed, or, ifvaried or supplemented or amended and restated, called the “Credit Agreement”).  This Note evidences the joint and severalobligations of the Borrowers (a) to repay the principal amount of eachRevolving Loan (as defined in the Credit Agreement) made by the Bank to theBorrowers pursuant to the Credit Agreement; (b) to pay interest, as hereinand therein provided, on the principal amount hereof remaining unpaid from timeto time; and (c) to pay other amounts which may become due and payablehereunder as herein provided.  Referenceis hereby made to the Credit Agreement (including the Exhibits annexedthereto) for a complete statement of the terms thereof.

 

No reference herein tothe Credit Agreement or to any provisions thereof shall impair the obligationsof the Borrowers, which are absolute, unconditional and irrevocable, to pay theprincipal of and the interest on this Note and to pay all (if any) otheramounts which may become due and payable on or in respect of this Note or theindebtedness evidenced hereby, strictly in accordance with the terms and thetenor of this Note.

 

For all purposes of thisNote, the following terms shall have the respective meanings set forth below:

 

(a)                                  “Agent”means Citizens Bank of Massachusetts (successor to State Street Bank and TrustCompany), acting in its capacity as Agent for the Banks under the CreditAgreement.

 

(b)                                 “Agent’sHead Office” means the head office of Agent located at 28 State Street, Boston,Massachusetts 02109.

 

(c)                                  “Banks”shall have the meaning ascribed to such term in the Credit Agreement.

 

(d)                                 “holder”means the Bank in possession of this Note or any other Person who is at thetime the lawful holder in possession of this Note.

 

The Borrowers will havethe right to prepay the unpaid principal of this Note in full or in part uponthe terms contained in the Credit Agreement. The Borrowers will

 

2

----

 

have an obligation to prepay principal of this Note upon the termscontained in the Credit Agreement.  Anypartial payment of the indebtedness evidenced by this Note shall be applied inaccordance with the terms of the Credit Agreement.

 

Pursuant to, and upon theterms contained in, Section 6 of the Credit Agreement, the entire unpaidprincipal of this Note, all of the interest accrued on the unpaid principal ofthis Note and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby may be declared to be immediately due andpayable, whereupon the entire unpaid principal of this Note, all of theinterest accrued on the unpaid principal of this Note and all (if any) otheramounts payable on or in respect of this Note or the indebtedness evidencedhereby shall (if not already due and payable) forthwith become and be due andpayable to the holder of this Note without presentment, demand, protest or anyother formalities of any kind, all of which are hereby expressly andirrevocably waived by the Borrowers.

 

All computations ofinterest payable as provided in this Note shall be made by the Agent on thebasis of the actual number of days elapsed divided by 360.  The Prime Rate (as defined in the CreditAgreement) in effect from time to time shall be determined in accordance withthe terms of the Credit Agreement.

 

Should all or any part ofthe indebtedness represented by this Note be collected by action at law, or inbankruptcy, insolvency, receivership or other court proceedings, or should thisNote be placed in the hands of attorneys for collection after default, theBorrowers hereby jointly and severally promise to pay to the holder of thisNote, upon demand by the holder hereof at any time, in addition to principal,interest and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby, all court costs and attorneys’ fees andall other collection charges and expenses reasonably incurred or sustained bythe holder of this Note.

 

The Borrowers herebyirrevocably waive notice of acceptance, presentment, notice of nonpayment,protest, notice of protest, suit and all other conditions precedent inconnection with the delivery, acceptance, collection and/or enforcement of thisNote.  The Borrowers hereby absolutelyand irrevocably consent and submit to the jurisdiction of the Courts of theCommonwealth of Massachusetts and of any Federal Court located in the saidCommonwealth in connection with any actions or proceedings brought against theBorrowers by the holder hereof arising out of or relating to this Note.

 

This Note is intended totake effect as a sealed instrument. This Note and the obligations of the Borrowers hereunder shall begoverned by and interpreted and determined in accordance with the laws of theCommonwealth of Massachusetts.

 

Each of the Borrowersshall be jointly and severally liable for the full amount owing under thisNote.

 

3

----

 

IN WITNESS WHEREOF, thisAMENDED AND RESTATED REVOLVING CREDIT NOTE has been duly executed by theundersigned on the day and in the year first above written in Boston,Massachusetts.

 
| The Borrowers:                  |
|---------------------------------|
|                            |   |
| WITNESS:                        | COURIER CORPORATION |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title: V. P. &  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER COMPANIES, INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER FOREIGN SALES  CORPORATION LIMITED |
|                            |   |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER KENDALLVILLE,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER PROPERTIES,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | NATIONAL PUBLISHING  COMPANY |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |

 

4

----

 
| WITNESS:                        | COURIER NEW MEDIA, INC.                           |
|---------------------------------|---------------------------------------------------|
|                            |                                              |   |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | BOOK-MART PRESS, INC.                             |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | MASSACHUSETTS NATIONAL  PUBLISHING BUSINESS TRUST |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | DOVER PUBLICATIONS,  INC.                         |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |

 

5

----

 

EXHIBIT A-1

 

Amended andRestated

Revolving CreditNote

 
| $15,000,000 |   | Boston, Massachusetts |
|-------------|--------|-----------------------|
|        |   | March 31, 2003   |

 

FOR VALUE RECEIVED, theundersigned (hereinafter, together with their respective successors in titleand assigns, collectively called the “Borrowers”), by this promissory note(hereinafter, called “this Note”), absolutely and unconditionally promise topay to the order of KEYBANK NATIONAL ASSOCIATION (hereinafter, together withits successors in title and assigns, called the “Bank”), the principal sum ofFIFTEEN MILLION DOLLARS ($15,000,000), or so much thereof as shall have beenadvanced by the Bank to the Borrowers by way of revolving loans under theCredit Agreement (as hereinafter defined) and shall remain outstanding, suchpayment to be made as hereinafter provided, and to pay interest on theprincipal sum outstanding hereunder from time to time from the date hereofuntil the said principal sum or the unpaid portion thereof shall have becomedue and payable as hereinafter provided.

 

The entire unpaidprincipal (not at the time overdue) of this Note shall bear interest at therate or rates from time to time in effect under the Credit Agreement.  Accrued interest on the unpaid principalunder this Note shall be payable on the dates specified in the CreditAgreement.

 

On March 31, 2006,the date of the final maturity of this Note, there shall become absolutely dueand payable by the Borrowers hereunder, and the Borrowers hereby jointly andseverally promise to pay to the holder hereof, the balance (if any) of theprincipal hereof then remaining unpaid, all of the unpaid interest accruedhereon and all (if any) other amounts payable on or in respect of this Note orthe indebtedness evidenced hereby.

 

Each overdue amount(whether of principal, interest or otherwise) payable on or in respect of thisNote or the indebtedness evidenced hereby shall (to the extent permitted byapplicable law) bear interest at the rates and on the terms provided by theCredit Agreement.  The unpaid interestaccrued on each overdue amount in accordance with the foregoing terms of thisparagraph shall become and be absolutely due and payable by the Borrowers to theholder hereof on demand by the holder of this Note.  Interest on each overdue amount will continue to accrue asprovided by the foregoing terms of this paragraph, and will (to the extentpermitted by applicable law) be compounded monthly until the obligations of theBorrowers in respect of the payment of such overdue amount shall be discharged(whether before or after judgment).

 

1

----

 

Each payment ofprincipal, interest or other sum payable on or in respect of this Note or theindebtedness evidenced hereby shall be made by the Borrowers directly to theAgent in U.S. Dollars, at the Agent’s Head Office (as hereinafter defined), onthe due date of such payment, and in immediately available and freelytransferable funds.  All payments on orin respect of this Note or the indebtedness evidenced hereby shall be madewithout set-off or counterclaim and free and clear of and without anydeductions, withholdings, restrictions or conditions of any nature.

 

This Note is made anddelivered by the Borrowers to the Bank pursuant to an Amended and RestatedRevolving Credit Agreement, dated as of March 31, 2003, among theBorrowers, the Banks and the Agent (hereinafter, as originally executed, or, ifvaried or supplemented or amended and restated, called the “CreditAgreement”).  This Note evidences thejoint and several obligations of the Borrowers (a) to repay the principalamount of each Revolving Loan (as defined in the Credit Agreement) made by theBank to the Borrowers pursuant to the Credit Agreement; (b) to payinterest, as herein and therein provided, on the principal amount hereofremaining unpaid from time to time; and (c) to pay other amounts which maybecome due and payable hereunder as herein provided.  Reference is hereby made to the Credit Agreement (including the Exhibitsannexed thereto) for a complete statement of the terms thereof.

 

No reference herein tothe Credit Agreement or to any provisions thereof shall impair the obligationsof the Borrowers, which are absolute, unconditional and irrevocable, to pay theprincipal of and the interest on this Note and to pay all (if any) otheramounts which may become due and payable on or in respect of this Note or theindebtedness evidenced hereby, strictly in accordance with the terms and thetenor of this Note.

 

For all purposes of thisNote, the following terms shall have the respective meanings set forth below:

 

(a)                                  “Agent”means Citizens Bank of Massachusetts (successor to State Street Bank and TrustCompany), acting in its capacity as Agent for the Banks under the CreditAgreement.

 

(b)                                 “Agent’sHead Office” means the head office of Agent located at 28 State Street, Boston,Massachusetts 02109.

 

(c)                                  “Banks”shall have the meaning ascribed to such term in the Credit Agreement.

 

(d)                                 “holder”means the Bank in possession of this Note or any other Person who is at thetime the lawful holder in possession of this Note.

 

The Borrowers will havethe right to prepay the unpaid principal of this Note in full or in part uponthe terms contained in the Credit Agreement. The Borrowers will

 

2

----

 

have an obligation to prepay principal of this Note upon the termscontained in the Credit Agreement.  Anypartial payment of the indebtedness evidenced by this Note shall be applied inaccordance with the terms of the Credit Agreement.

 

Pursuant to, and upon theterms contained in, Section 6 of the Credit Agreement, the entire unpaidprincipal of this Note, all of the interest accrued on the unpaid principal ofthis Note and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby may be declared to be immediately due andpayable, whereupon the entire unpaid principal of this Note, all of theinterest accrued on the unpaid principal of this Note and all (if any) otheramounts payable on or in respect of this Note or the indebtedness evidencedhereby shall (if not already due and payable) forthwith become and be due andpayable to the holder of this Note without presentment, demand, protest or anyother formalities of any kind, all of which are hereby expressly andirrevocably waived by the Borrowers.

 

All computations ofinterest payable as provided in this Note shall be made by the Agent on thebasis of the actual number of days elapsed divided by 360.  The Prime Rate (as defined in the CreditAgreement) in effect from time to time shall be determined in accordance withthe terms of the Credit Agreement.

 

Should all or any part ofthe indebtedness represented by this Note be collected by action at law, or inbankruptcy, insolvency, receivership or other court proceedings, or should thisNote be placed in the hands of attorneys for collection after default, theBorrowers hereby jointly and severally promise to pay to the holder of this Note,upon demand by the holder hereof at any time, in addition to principal,interest and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby, all court costs and attorneys’ fees andall other collection charges and expenses reasonably incurred or sustained bythe holder of this Note.

 

The Borrowers herebyirrevocably waive notice of acceptance, presentment, notice of nonpayment,protest, notice of protest, suit and all other conditions precedent inconnection with the delivery, acceptance, collection and/or enforcement of thisNote.  The Borrowers hereby absolutelyand irrevocably consent and submit to the jurisdiction of the Courts of theCommonwealth of Massachusetts and of any Federal Court located in the saidCommonwealth in connection with any actions or proceedings brought against theBorrowers by the holder hereof arising out of or relating to this Note.

 

This Note is intended totake effect as a sealed instrument. This Note and the obligations of the Borrowers hereunder shall begoverned by and interpreted and determined in accordance with the laws of theCommonwealth of Massachusetts.

 

Each of the Borrowersshall be jointly and severally liable for the full amount owing under thisNote.

 

3

----

 

IN WITNESS WHEREOF, thisAMENDED AND RESTATED REVOLVING CREDIT NOTE has been duly executed by theundersigned on the day and in the year first above written in Boston,Massachusetts.

 
| The Borrowers:                  |
|---------------------------------|
|                            |   |
| WITNESS:                        | COURIER CORPORATION |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title: V. P. &  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER COMPANIES, INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER FOREIGN SALES  CORPORATION LIMITED |
|                            |   |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER KENDALLVILLE,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER PROPERTIES,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | NATIONAL PUBLISHING  COMPANY |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |

 

4

----

 
| WITNESS:                        | COURIER NEW MEDIA, INC.                           |
|---------------------------------|---------------------------------------------------|
|                            |                                              |   |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | BOOK-MART PRESS, INC.                             |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | MASSACHUSETTS NATIONAL  PUBLISHING BUSINESS TRUST |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | DOVER PUBLICATIONS,  INC.                         |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |

 

5

----

 

EXHIBIT A-1

 

Amended andRestatedRevolving Credit Note

 
| $15,000,000 |   | Boston, Massachusetts |
|-------------|--------|-----------------------|
|        |   | March 31, 2003   |

 

FOR VALUE RECEIVED, the undersigned(hereinafter, together with their respective successors in title and assigns,collectively called the “Borrowers”), by this promissory note (hereinafter,called “this Note”), absolutely and unconditionally promise to pay to the orderof CITIZENS BANK OF MASSACHUSETTS (successor to State Street Bank and TrustCompany) (hereinafter, together with its successors in title and assigns,called the “Bank”), the principal sum of FIFTEEN MILLION DOLLARS ($15,000,000),or so much thereof as shall have been advanced by the Bank to the Borrowers byway of revolving loans under the Credit Agreement (as hereinafter defined) andshall remain outstanding, such payment to be made as hereinafter provided, andto pay interest on the principal sum outstanding hereunder from time to timefrom the date hereof until the said principal sum or the unpaid portion thereofshall have become due and payable as hereinafter provided.

 

The entire unpaidprincipal (not at the time overdue) of this Note shall bear interest at the rateor rates from time to time in effect under the Credit Agreement.  Accrued interest on the unpaid principalunder this Note shall be payable on the dates specified in the CreditAgreement.

 

On March 31, 2006,the date of the final maturity of this Note, there shall become absolutely dueand payable by the Borrowers hereunder, and the Borrowers hereby jointly andseverally promise to pay to the holder hereof, the balance (if any) of theprincipal hereof then remaining unpaid, all of the unpaid interest accruedhereon and all (if any) other amounts payable on or in respect of this Note orthe indebtedness evidenced hereby.

 

Each overdue amount(whether of principal, interest or otherwise) payable on or in respect of thisNote or the indebtedness evidenced hereby shall (to the extent permitted byapplicable law) bear interest at the rates and on the terms provided by theCredit Agreement.  The unpaid interestaccrued on each overdue amount in accordance with the foregoing terms of thisparagraph shall become and be absolutely due and payable by the Borrowers tothe holder hereof on demand by the holder of this Note.  Interest on each overdue amount willcontinue to accrue as provided by the foregoing terms of this paragraph, andwill (to the extent permitted by applicable law) be compounded monthly untilthe obligations of the Borrowers in respect of the payment of such overdueamount shall be discharged (whether before or after judgment).

 

6

----

 

Each payment of principal,interest or other sum payable on or in respect of this Note or the indebtednessevidenced hereby shall be made by the Borrowers directly to the Agent in U.S.Dollars, at the Agent’s Head Office (as hereinafter defined), on the due dateof such payment, and in immediately available and freely transferablefunds.  All payments on or in respect ofthis Note or the indebtedness evidenced hereby shall be made without set-off orcounterclaim and free and clear of and without any deductions, withholdings, restrictionsor conditions of any nature.

 

This Note is made anddelivered by the Borrowers to the Bank pursuant to an Amended and RestatedRevolving Credit Agreement, dated as of March 31, 2003, among theBorrowers, the Banks and the Agent (hereinafter, as originally executed, or, ifvaried or supplemented or amended and restated, called the “CreditAgreement”).  This Note evidences thejoint and several obligations of the Borrowers (a) to repay the principalamount of each Revolving Loan (as defined in the Credit Agreement) made by theBank to the Borrowers pursuant to the Credit Agreement; (b) to payinterest, as herein and therein provided, on the principal amount hereofremaining unpaid from time to time; and (c) to pay other amounts which may becomedue and payable hereunder as herein provided. Reference is hereby made to the Credit Agreement (including the Exhibitsannexed thereto) for a complete statement of the terms thereof.

 

No reference herein tothe Credit Agreement or to any provisions thereof shall impair the obligationsof the Borrowers, which are absolute, unconditional and irrevocable, to pay theprincipal of and the interest on this Note and to pay all (if any) otheramounts which may become due and payable on or in respect of this Note or theindebtedness evidenced hereby, strictly in accordance with the terms and thetenor of this Note.

 

For all purposes of thisNote, the following terms shall have the respective meanings set forth below:

 

(a)                                  “Agent”means Citizens Bank of Massachusetts (successor to State Street Bank and TrustCompany), acting in its capacity as Agent for the Banks under the CreditAgreement.

 

(b)                                 “Agent’sHead Office” means the head office of Agent located at 28 State Street, Boston,Massachusetts 02109.

 

(c)                                  “Banks”shall have the meaning ascribed to such term in the Credit Agreement.

 

(d)                                 “holder”means the Bank in possession of this Note or any other Person who is at thetime the lawful holder in possession of this Note.

 

7

----

 

The Borrowers will havethe right to prepay the unpaid principal of this Note in full or in part uponthe terms contained in the Credit Agreement. The Borrowers will have an obligation to prepay principal of this Noteupon the terms contained in the Credit Agreement.  Any partial payment of the indebtedness evidenced by this Noteshall be applied in accordance with the terms of the Credit Agreement.

 

Pursuant to, and upon theterms contained in, Section 6 of the Credit Agreement, the entire unpaid principalof this Note, all of the interest accrued on the unpaid principal of this Noteand all (if any) other amounts payable on or in respect of this Note or theindebtedness evidenced hereby may be declared to be immediately due andpayable, whereupon the entire unpaid principal of this Note, all of theinterest accrued on the unpaid principal of this Note and all (if any) otheramounts payable on or in respect of this Note or the indebtedness evidencedhereby shall (if not already due and payable) forthwith become and be due andpayable to the holder of this Note without presentment, demand, protest or anyother formalities of any kind, all of which are hereby expressly andirrevocably waived by the Borrowers.

 

All computations ofinterest payable as provided in this Note shall be made by the Agent on thebasis of the actual number of days elapsed divided by 360.  The Prime Rate (as defined in the CreditAgreement) in effect from time to time shall be determined in accordance withthe terms of the Credit Agreement.

 

Should all or any part ofthe indebtedness represented by this Note be collected by action at law, or inbankruptcy, insolvency, receivership or other court proceedings, or should thisNote be placed in the hands of attorneys for collection after default, theBorrowers hereby jointly and severally promise to pay to the holder of thisNote, upon demand by the holder hereof at any time, in addition to principal,interest and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby, all court costs and attorneys’ fees andall other collection charges and expenses reasonably incurred or sustained bythe holder of this Note.

 

The Borrowers herebyirrevocably waive notice of acceptance, presentment, notice of nonpayment,protest, notice of protest, suit and all other conditions precedent inconnection with the delivery, acceptance, collection and/or enforcement of thisNote.  The Borrowers hereby absolutelyand irrevocably consent and submit to the jurisdiction of the Courts of theCommonwealth of Massachusetts and of any Federal Court located in the saidCommonwealth in connection with any actions or proceedings brought against theBorrowers by the holder hereof arising out of or relating to this Note.

 

This Note is intended totake effect as a sealed instrument. This Note and the obligations of the Borrowers hereunder shall begoverned by and interpreted and determined in accordance with the laws of theCommonwealth of Massachusetts.

 

Each of the Borrowers shallbe jointly and severally liable for the full amount owing under this Note.

 

8

----

 

IN WITNESS WHEREOF, thisAMENDED AND RESTATED REVOLVING CREDIT NOTE has been duly executed by theundersigned on the day and in the year first above written in Boston,Massachusetts.

 
| The Borrowers:                  |
|---------------------------------|
|                            |   |
| WITNESS:                        | COURIER CORPORATION |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title: VP &  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER COMPANIES, INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER FOREIGN SALES  CORPORATION LIMITED |
|                            |   |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER KENDALLVILLE,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER PROPERTIES,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | NATIONAL PUBLISHING  COMPANY |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |

 

9

----

 
| WITNESS:                        | COURIER NEW MEDIA, INC.                           |
|---------------------------------|---------------------------------------------------|
|                            |                                              |   |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | BOOK-MART PRESS, INC.                             |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | MASSACHUSETTS NATIONAL  PUBLISHING BUSINESS TRUST |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |

 

10

----

 
| WITNESS:                        | DOVER PUBLICATIONS,  INC. |
|---------------------------------|---------------------------|
|                            |                      |
|                            |                      |   |
|   s/  Elaine Imbrogna |                      | By: |   s/ Lee  Cochrane |   |
| Title:                          |                      | Title:  Asst. Treasurer |
|                                 |                           |  |  |  |

 

11

----

 

EXHIBIT A-1

 

Amended andRestatedRevolving Credit Note

 
| $15,000,000 |   | Boston, Massachusetts |
|-------------|--------|-----------------------|
|        |   | March 31, 2003   |

 

FOR VALUE RECEIVED, theundersigned (hereinafter, together with their respective successors in titleand assigns, collectively called the “Borrowers”), by this promissory note(hereinafter, called “this Note”), absolutely and unconditionally promise topay to the order of SOVEREIGN BANK (hereinafter, together with its successorsin title and assigns, called the “Bank”), the principal sum of FIFTEEN MILLIONDOLLARS ($15,000,000), or so much thereof as shall have been advanced by theBank to the Borrowers by way of revolving loans under the Credit Agreement (ashereinafter defined) and shall remain outstanding, such payment to be made ashereinafter provided, and to pay interest on the principal sum outstandinghereunder from time to time from the date hereof until the said principal sumor the unpaid portion thereof shall have become due and payable as hereinafterprovided.

 

The entire unpaidprincipal (not at the time overdue) of this Note shall bear interest at therate or rates from time to time in effect under the Credit Agreement.  Accrued interest on the unpaid principalunder this Note shall be payable on the dates specified in the Credit Agreement.

 

On March 31, 2006,the date of the final maturity of this Note, there shall become absolutely dueand payable by the Borrowers hereunder, and the Borrowers hereby jointly andseverally promise to pay to the holder hereof, the balance (if any) of the principalhereof then remaining unpaid, all of the unpaid interest accrued hereon and all(if any) other amounts payable on or in respect of this Note or theindebtedness evidenced hereby.

 

Each overdue amount(whether of principal, interest or otherwise) payable on or in respect of thisNote or the indebtedness evidenced hereby shall (to the extent permitted byapplicable law) bear interest at the rates and on the terms provided by theCredit Agreement.  The unpaid interestaccrued on each overdue amount in accordance with the foregoing terms of thisparagraph shall become and be absolutely due and payable by the Borrowers tothe holder hereof on demand by the holder of this Note.  Interest on each overdue amount willcontinue to accrue as provided by the foregoing terms of this paragraph, andwill (to the extent permitted by applicable law) be compounded monthly untilthe obligations of the Borrowers in respect of the payment of such overdueamount shall be discharged (whether before or after judgment).

 

12

----

 

Each payment ofprincipal, interest or other sum payable on or in respect of this Note or theindebtedness evidenced hereby shall be made by the Borrowers directly to theAgent in U.S. Dollars, at the Agent’s Head Office (as hereinafter defined), onthe due date of such payment, and in immediately available and freelytransferable funds.  All payments on orin respect of this Note or the indebtedness evidenced hereby shall be madewithout set-off or counterclaim and free and clear of and without anydeductions, withholdings, restrictions or conditions of any nature.

 

This Note is made anddelivered by the Borrowers to the Bank pursuant to an Amended and RestatedRevolving Credit Agreement, dated as of March 31, 2003, among theBorrowers, the Banks and the Agent (hereinafter, as originally executed, or, ifvaried or supplemented or amended and restated, called the “CreditAgreement”).  This Note evidences thejoint and several obligations of the Borrowers (a) to repay the principalamount of each Revolving Loan (as defined in the Credit Agreement) made by theBank to the Borrowers pursuant to the Credit Agreement; (b) to payinterest, as herein and therein provided, on the principal amount hereofremaining unpaid from time to time; and (c) to pay other amounts which maybecome due and payable hereunder as herein provided.  Reference is hereby made to the Credit Agreement (including the Exhibitsannexed thereto) for a complete statement of the terms thereof.

 

No reference herein tothe Credit Agreement or to any provisions thereof shall impair the obligationsof the Borrowers, which are absolute, unconditional and irrevocable, to pay theprincipal of and the interest on this Note and to pay all (if any) other amountswhich may become due and payable on or in respect of this Note or theindebtedness evidenced hereby, strictly in accordance with the terms and thetenor of this Note.

 

For all purposes of thisNote, the following terms shall have the respective meanings set forth below:

 

(a)                                  “Agent”means Citizens Bank of Massachusetts (successor to State Street Bank and TrustCompany), acting in its capacity as Agent for the Banks under the CreditAgreement.

 

(b)                                 “Agent’sHead Office” means the head office of Agent located at 28 State Street, Boston,Massachusetts 02109.

 

(c)                                  “Banks”shall have the meaning ascribed to such term in the Credit Agreement.

 

(d)                                 “holder”means the Bank in possession of this Note or any other Person who is at thetime the lawful holder in possession of this Note.

 

The Borrowers will havethe right to prepay the unpaid principal of this Note in full or in part uponthe terms contained in the Credit Agreement. The Borrowers will

 

13

----

 

have an obligation to prepay principal of this Note upon the termscontained in the Credit Agreement.  Anypartial payment of the indebtedness evidenced by this Note shall be applied inaccordance with the terms of the Credit Agreement.

 

Pursuant to, and upon theterms contained in, Section 6 of the Credit Agreement, the entire unpaidprincipal of this Note, all of the interest accrued on the unpaid principal ofthis Note and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby may be declared to be immediately due andpayable, whereupon the entire unpaid principal of this Note, all of theinterest accrued on the unpaid principal of this Note and all (if any) otheramounts payable on or in respect of this Note or the indebtedness evidencedhereby shall (if not already due and payable) forthwith become and be due andpayable to the holder of this Note without presentment, demand, protest or anyother formalities of any kind, all of which are hereby expressly and irrevocablywaived by the Borrowers.

 

All computations ofinterest payable as provided in this Note shall be made by the Agent on thebasis of the actual number of days elapsed divided by 360.  The Prime Rate (as defined in the CreditAgreement) in effect from time to time shall be determined in accordance withthe terms of the Credit Agreement.

 

Should all or any part ofthe indebtedness represented by this Note be collected by action at law, or inbankruptcy, insolvency, receivership or other court proceedings, or should thisNote be placed in the hands of attorneys for collection after default, theBorrowers hereby jointly and severally promise to pay to the holder of thisNote, upon demand by the holder hereof at any time, in addition to principal,interest and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby, all court costs and attorneys’ fees andall other collection charges and expenses reasonably incurred or sustained bythe holder of this Note.

 

The Borrowers herebyirrevocably waive notice of acceptance, presentment, notice of nonpayment,protest, notice of protest, suit and all other conditions precedent inconnection with the delivery, acceptance, collection and/or enforcement of thisNote.  The Borrowers hereby absolutelyand irrevocably consent and submit to the jurisdiction of the Courts of theCommonwealth of Massachusetts and of any Federal Court located in the saidCommonwealth in connection with any actions or proceedings brought against theBorrowers by the holder hereof arising out of or relating to this Note.

 

This Note is intended totake effect as a sealed instrument. This Note and the obligations of the Borrowers hereunder shall begoverned by and interpreted and determined in accordance with the laws of theCommonwealth of Massachusetts.

 

Each of the Borrowersshall be jointly and severally liable for the full amount owing under thisNote.

 

14

----

 

IN WITNESS WHEREOF, thisAMENDED AND RESTATED REVOLVING CREDIT NOTE has been duly executed by theundersigned on the day and in the year first above written in Boston,Massachusetts.

 
| The Borrowers:                  |
|---------------------------------|
|                            |   |
| WITNESS:                        | COURIER CORPORATION |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title: VP & Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER COMPANIES, INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER FOREIGN SALES  CORPORATION LIMITED |
|                            |   |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER KENDALLVILLE,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER PROPERTIES,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | NATIONAL PUBLISHING  COMPANY |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          |   | Title:  Asst. Treasurer |

 

15

----

 
| WITNESS:                        | COURIER NEW MEDIA, INC.                           |
|---------------------------------|---------------------------------------------------|
|                            |                                              |   |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | BOOK-MART PRESS, INC.                             |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | MASSACHUSETTS NATIONAL  PUBLISHING BUSINESS TRUST |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | DOVER PUBLICATIONS,  INC.                         |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |

 

16

----

 

EXHIBIT A-2

 

Swing Line Note

 
| $15,000,000 |   | Boston, Massachusetts |
|-------------|--------|-----------------------|
|        |   | March 31, 2003   |

 

FOR VALUE RECEIVED, theundersigned (hereinafter, together with their respective successors in titleand assigns, collectively called the “Borrowers”), by this promissory note(hereinafter, called “this Note”), absolutely and unconditionally promise topay to the order of CITIZENS BANK OF MASSACHUSETTS (successor to State StreetBank & Trust Company) (hereinafter, together with its successors in titleand assigns, called the “Bank”), the principal sum of FIFTEEN MILLION DOLLARS($15,000,000), or so much thereof as shall have been advanced by the Bank tothe Borrowers by way of swing line loans under the Credit Agreement (ashereinafter defined) and shall remain outstanding, such payment to be made ashereinafter provided, and to pay interest on the principal sum outstandinghereunder from time to time from the date hereof until the said principal sumor the unpaid portion thereof shall have become due and payable as hereinafterprovided.

 

The entire unpaidprincipal (not at the time overdue) of this Note shall bear interest at therate or rates from time to time in effect under the Credit Agreement.  Accrued interest on the unpaid principalunder this Note shall be payable on the dates specified in the CreditAgreement.

 

On March 31, 2006,the date of the final maturity of this Note, there shall become absolutely dueand payable by the Borrowers hereunder, and the Borrowers hereby jointly andseverally promise to pay to the holder hereof, the balance (if any) of theprincipal hereof then remaining unpaid, all of the unpaid interest accruedhereon and all (if any) other amounts payable on or in respect of this Note orthe indebtedness evidenced hereby.

 

Each overdue amount(whether of principal, interest or otherwise) payable on or in respect of thisNote or the indebtedness evidenced hereby shall (to the extent permitted byapplicable law) bear interest at the rates and on the terms provided by the CreditAgreement.  The unpaid interest accruedon each overdue amount in accordance with the foregoing terms of this paragraphshall become and be absolutely due and payable by the Borrowers to the holderhereof on demand by the holder of this Note. Interest on each overdue amount will continue to accrue as provided bythe foregoing terms of this paragraph, and will (to the extent permitted byapplicable law) be compounded monthly until the obligations of the Borrowers inrespect of the payment of such overdue amount shall be discharged (whetherbefore or after judgment).

 

17

----

 

Each payment ofprincipal, interest or other sum payable on or in respect of this Note or theindebtedness evidenced hereby shall be made by the Borrowers directly to theAgent in U.S. Dollars, at the Agent’s Head Office (as hereinafter defined), onthe due date of such payment, and in immediately available and freelytransferable funds.  All payments on orin respect of this Note or the indebtedness evidenced hereby shall be madewithout set-off or counterclaim and free and clear of and without anydeductions, withholdings, restrictions or conditions of any nature.

 

This Note is made anddelivered by the Borrowers to the Bank pursuant to an Amended and RestatedRevolving Credit Agreement, dated as of March 31, 2003 among theBorrowers, the Banks and the Agent (hereinafter, as originally executed, or, ifvaried or supplemented or amended and restated, called the “Credit Agreement”).  This Note evidences the joint and severalobligations of the Borrowers (a) to repay the principal amount of eachSwing Line Loan (as defined in the Credit Agreement) made by the Bank to theBorrowers pursuant to the Credit Agreement; (b) to pay interest, as hereinand therein provided, on the principal amount hereof remaining unpaid from timeto time; and (c) to pay other amounts which may become due and payablehereunder as herein provided.  Referenceis hereby made to the Credit Agreement (including the Exhibits annexedthereto) for a complete statement of the terms thereof.

 

No reference herein tothe Credit Agreement or to any provisions thereof shall impair the obligationsof the Borrowers, which are absolute, unconditional and irrevocable, to pay theprincipal of and the interest on this Note and to pay all (if any) otheramounts which may become due and payable on or in respect of this Note or theindebtedness evidenced hereby, strictly in accordance with the terms and thetenor of this Note.

 

For all purposes of thisNote, the following terms shall have the respective meanings set forth below:

 

(a)                                  “Agent”means Citizens Bank of Massachusetts (successor to State Street Bank and TrustCompany), acting in its capacity as Agent for the Banks under the Credit Agreement.

 

(b)                                 “Agent’sHead Office” means the head office of Citizens Bank of Massachusetts located at28 State Street, Boston, Massachusetts 02109.

 

(c)                                  “Banks”shall have the meaning ascribed to such term in the Credit Agreement.

 

(d)                                 “holder”means the Bank in possession of this Note or any other Person who is at thetime the lawful holder in possession of this Note.

 

The Borrowers will havethe right to prepay the unpaid principal of this Note in full or in part uponthe terms contained in the Credit Agreement. The Borrowers will

 

18

----

 

have an obligation to prepay principal of this Note upon the termscontained in the Credit Agreement.  Anypartial payment of the indebtedness evidenced by this Note shall be applied inaccordance with the terms of the Credit Agreement.

 

Pursuant to, and upon theterms contained in, Section 6 of the Credit Agreement, the entire unpaidprincipal of this Note, all of the interest accrued on the unpaid principal ofthis Note and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby may be declared to be immediately due andpayable, whereupon the entire unpaid principal of this Note, all of theinterest accrued on the unpaid principal of this Note and all (if any) otheramounts payable on or in respect of this Note or the indebtedness evidencedhereby shall (if not already due and payable) forthwith become and be due andpayable to the holder of this Note without presentment, demand, protest or anyother formalities of any kind, all of which are hereby expressly andirrevocably waived by the Borrowers.

 

All computations ofinterest payable as provided in this Note shall be made by the Agent on thebasis of the actual number of days elapsed divided by 360.  The Prime Rate (as defined in the CreditAgreement) in effect from time to time shall be determined in accordance withthe terms of the Credit Agreement.

 

Should all or any part ofthe indebtedness represented by this Note be collected by action at law, or inbankruptcy, insolvency, receivership or other court proceedings, or should thisNote be placed in the hands of attorneys for collection after default, theBorrowers hereby jointly and severally promise to pay to the holder of this Note,upon demand by the holder hereof at any time, in addition to principal,interest and all (if any) other amounts payable on or in respect of this Noteor the indebtedness evidenced hereby, all court costs and attorneys’ fees andall other collection charges and expenses reasonably incurred or sustained bythe holder of this Note.

 

The Borrowers herebyirrevocably waive notice of acceptance, presentment, notice of nonpayment,protest, notice of protest, suit and all other conditions precedent inconnection with the delivery, acceptance, collection and/or enforcement of thisNote.  The Borrowers hereby absolutelyand irrevocably consent and submit to the jurisdiction of the Courts of theCommonwealth of Massachusetts and of any Federal Court located in the saidCommonwealth in connection with any actions or proceedings brought against theBorrowers by the holder hereof arising out of or relating to this Note.

 

This Note is intended totake effect as a sealed instrument. This Note and the obligations of the Borrowers hereunder shall begoverned by and interpreted and determined in accordance with the laws of theCommonwealth of Massachusetts.

 

Each of the Borrowersshall be jointly and severally liable for the full amount owing under thisNote.

 

19

----

 

IN WITNESS WHEREOF, thisSWING LINE NOTE has been duly executed by the undersigned on the day and in theyear first above written in Boston, Massachusetts.

 
| The Borrowers:                  |
|---------------------------------|
|                            |   |
| WITNESS:                        | COURIER CORPORATION |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title: | VP & Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER COMPANIES, INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title: | Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER FOREIGN SALES  CORPORATION LIMITED |
|                            |   |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title: | Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER KENDALLVILLE,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title: | Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | COURIER PROPERTIES,  INC. |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title: | Asst. Treasurer |
|                            |   |   |
|                            |   |   |
| WITNESS:                        | NATIONAL PUBLISHING  COMPANY |
|                            |   |
|                            |   |   |
|   s/  Elaine Imbrogna |   | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title: | Asst. Treasurer |
|                                 |  |  |  |  |  |  |

 

20

----

 

 
| WITNESS:                        | COURIER NEW MEDIA, INC.                           |
|---------------------------------|---------------------------------------------------|
|                            |                                              |   |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | BOOK-MART PRESS, INC.                             |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | MASSACHUSETTS NATIONAL  PUBLISHING BUSINESS TRUST |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          |                                              | Title:  Asst. Treasurer |
|                            |                                              |   |
|                            |                                              |   |
| WITNESS:                        | DOVER PUBLICATIONS,  INC.                         |
|                            |                                              |
|                            |                                              |   |
|   s/  Elaine Imbrogna |                                              | By: |   s/ Lee  Cochrane |   |
| Title:                          | Title:                                            | Asst. Treasurer |
|                                 |                                                   |  |  |  |  |

 

21

----

 

EXHIBIT B

 

DISCLOSURESTATEMENT

 
| Revolving  Credit Agreement Section, andInformation Requested                        |                                                       | Disclosure                                                              |
|--------------------------------------------------------------------------------------|------------------------------------------------------------|-------------------------------------------------------------------------|
|                                                                                 |                                                       |                                                                    |
| 3.1 Organization and  Qualification                                                  |                                                       |                                                                    |
| •Borrower information                                                           |                                                       | •Courier  Corporation: incorporated and qualified in Massachusetts |
|                                                                                 |                                                       |                                                                    |
| •Subsidiary information                                                         |                                                       | •Refer  to Exhibit F                                               |
|                                                                                 |                                                       |                                                                    |
| 3.4  Approvals and Consents                                                     |                                                       | •No  exceptions                                                    |
|                                                                                 |                                                       |                                                                    |
| 3.5  Title to Properties: Absence of Liens                                      |                                                       | •No  exceptions                                                    |
|                                                                                 |                                                       |                                                                    |
|                                                                                 |                                                       |                                                                    |
| 3.6  Compliance                                                                 |                                                       | •No  exceptions                                                    |
|                                                                                 |                                                       |                                                                    |
| 3.7  Financial Statements                                                       |                                                       | •No  exceptions                                                    |
| •Material adverse changes to  financial statement dated September 28, 2002 |                                                       |                                                                    |
|                                                                                 |                                                       |                                                                    |
|                                                                                 |                                                       |                                                                    |
| 3.9                                                                                  | Taxes                                                      |                                                                    |   |
|                                                                                 | •Waivers  extending applicable statute of limitations |                                                                    | •No  exceptions |
|                                                                                 |                                                       |                                                                    |
| 3.10                                                                                 | Litigation                                                 |                                                                    | •No  exceptions |

 

1

----

 
| Revolving  Credit Agreement Section, andInformation Requested |                     | Disclosure |
|---------------------------------------------------------------|--------------------------|------------|
|                                                          |                     |       |
| 3.13                                                          | ERISA                    |       |   |
|                                                          | •List  of plans     |       |   |
|                                                          |                     |       |   |
|                                                          |                     |       | Retirement Plans: |
|                                                          |                     |       |   |
|                                                          |                     |       | Courier Profit Sharing  and Savings Plan |
|                                                          |                     |       | Dover Publications Inc.  Retirement Income Plan |
|                                                          |                     |       | Dover Publications Inc.  401k Profit Sharing Plan |
|                                                          |                     |       |   |
|                                                          |                     |       | Multi-Employer Union  Retirement Plans |
|                                                          |                     |       |   |
|                                                          |                     |       | Graphic Communications  International Union |
|                                                          |                     |       |   | •  Employer Retirement Fund |
|                                                          |                     |       | Graphic Communications  International Union |
|                                                          |                     |       |   | •  Supplemental Retirement and |
|                                                          |                     |       |   | Disability Fund |
|                                                          |                     |       |   |   | Bindery Industry |
|                                                          |                     |       |   | Employers/GCIU Pension  Fund |
|                                                          |                     |       | Graphic Communications  International Local 2B 401k Plan |
|                                                          |                     |       |   |
|                                                          |                     |       | Welfare Plans |
|                                                          |                     |       |   |
|                                                          |                     |       | Courier Corporation  Group Life Insurance Plan |
|                                                          |                     |       | Courier Corporation  Health Insurance Plan |
|                                                          |                     |       | Courier Corporation  Group Weekly Indemnity Benefit Plan |
|                                                          |                     |       | Courier Corporation  Long-Term Disability Plan |
|                                                          |                     |       | Courier Stoughton Delta  Dental Plan |
|                                                          |                     |       | National Publishing  Company Keystone Health Plan East |
|                                                          |                     |       | National Publishing  Company Medical Insurance Plan |
|                                                          |                     |       | Dental Insurance Plan  of National Publishing Company |
|                                                          |                     |       | Courier Corporation  Travel Accident Insurance Plan |
|                                                          | •Reportable  events |       |   |
|                                                               |                          |            |  |  |  |  |  |

 

2

----

 
| None; last reportable  event was in 1988 when former defined  benefit plans of the Borrower  Revolving Credit Agreement Section, and |                                     | and its Affiliates were  terminated. |
|--------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------------------------------------|
|                                                                                                                                 |                                     |                                 |
| Information  Requested                                                                                                               |                                     | Disclosure                           |
|                                                                                                                                 |                                     |                                 |   |   |
| 3.15                                                                                                                                 | Environmental and  Regulatory Compliance |                                 |   |   |
|                                                                                                                                 | •Real  Properties owned or leased   |                                 |   | •Refer  to Borrower’s Form 10-K for the fiscal year |
|                                                                                                                                 |                                     |                                 | ended  September 28, 2002, and Exhibit B-1 attached hereto. |
|                                                                                                                                 |                                     |                                 |   | Additional properties  leased: |
|                                                                                                                                 |                                     |                                 |   | New York, NY, 60 East  42nd Street |
|                                                                                                                                 |                                     |                                 |   | Hayward, CA, 22320  Foothill Blvd. |
|                                                                                                                                 |                                     |                                 |   |   |
|                                                                                                                                 |                                     |                                 |   |   |
|                                                                                                                                 |                                     |                                 | •Despite the provisions of Section 3.15, the following  information is being provided although the Company believes that it is  unlikely that any liability it may incur in respect of the following matters  would have a material and adverse effect on the condition (financial or  other), properties, business or results of operations of the Company and its  subsidiaries taken as a whole. |
|                                                                                                                                 |                                     |                                 |
|                                                                                                                                 | •Underground  storage tanks         |                                 |
|                                                                                                                                 |                                     |                                 |
|                                                                                                                                 |                                     |                                 |
|                                                                                                                                 |                                     |                                 |
|                                                                                                                                 |                                     |                                 |
|                                                                                                                                 |                                     |                                 |   | Kendallville, Ind. |
|                                                                                                                                 |                                     |                                 |   |   | •one  20,000 gallon fuel oil tank |
|                                                                                                                                 |                                     |                                 |   | Philadelphia, PA |
|                                                                                                                                 |                                     |                                 |   |   | •two  10,000 gallon fuel oil tanks |
|                                                                                                                                 |                                     |                                 |   | Westford, MA |
|                                                                                                                                 |                                     |                                 |   |   | •two  30,000 gallon fuel oil tanks |
|                                                                                                                                 |                                     |                                 |   |   | •one  12,000 gallon fuel oil tank |

 

3

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|       |                             | Revolving Credit  Agreement Section, and Information Requested                                                                                                                                                                                                                      |
|------------|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|       |                             |                                                                                                                                                                                                                                                                                |
|       |                             |                                                                                                                                                                                                                                                                                |
| 3.16       | Labor Relations                  |
|       |                             |                                                                                                                                                                                                                                                                                |
| 3.17       | Contracts with  Affiliates, Etc. |
|       |                             |                                                                                                                                                                                                                                                                                | •Agreements  or transactions not in the ordinary course of business with Affiliates |
|       |                             |                                                                                                                                                                                                                                                                                | •No  indebtedness owing by any Affiliate to the Borrower or any Subsidiary |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             | 5.6                                                                                                                                                                                                                                                                                 | Guaranties |
|       |                             |                                                                                                                                                                                                                                                                                | •No  guaranties |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             | 5.7                                                                                                                                                                                                                                                                                 | Restrictions and Liens |
|       |                             | •Listed  encumbrances                                                                                                                                                                                                                                                          |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             |                                                                                                                                                                                                                                                                                |   |
| Disclosure |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             | •No  exceptions                                                                                                                                                                                                                                                                |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             |                                                                                                                                                                                                                                                                                | •Refer  to Borrower’s Form 10-K for the fiscal year ended September 28, 2002 |
|       |                             |                                                                                                                                                                                                                                                                                | •No  exceptions |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             |                                                                                                                                                                                                                                                                                | •No  exceptions |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             | Installment Sales  Agreement between PIDC Financing (“PIDC”) and Courier Properties, Inc. dated  April 24, 1996 with respect to a portion of the premises located at  11311 Roosevelt Boulevard, Philadelphia PA, the indebtedness under which  totalled $1,200,000. |
|       |                             |                                                                                                                                                                                                                                                                                |   |
|       |                             | PIDC retains title to  the land and a portion of the buildings until final payment, which is  anticipated to be May 1, 2011.                                                                                                                                                   |

 

4

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EXHIBIT C

 

EXISTINGINDEBTEDNESS

 

Refer to Courier Corporation’s 12/28/02 Form 10-Q

 

Long term debt of the Company and its consolidatedsubsidiaries consisted of the following:

 
|                                                                                                                     |   | **Balance@ 12/28/02** |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------|--------|
|                                                                                                                     |   |                  |   |
| Obligation under industrial development bond   arrangement at 3%, payable in monthly installments  through May 2011 |   | 654,000               |   |

 

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EXHIBIT D

 

[Form ofCertificate of Chief Financial Officer of Courier]

 

CERTIFICATE OFCHIEF FINANCIAL OFFICER OF COURIER

 

(Pursuant to Section5.1(v) of the Amended and Restated Revolving Credit Agreement dated as ofMarch 31, 2003.)

 

The undersigned chieffinancial officer of Courier Corporation (“Courier”) HEREBY CERTIFIES THAT:

 

This Certificate isfurnished pursuant to Section 5.1(v) of the Amended and Restated RevolvingCredit Agreement, dated as of March 31, 2003, among Courier and the otherBorrowers named therein (collectively, the “Borrowers”), the Banks partythereto (collectively, the “Banks”), and Citizens Bank of Massachusetts(successor to State Street Bank and Trust Company), as Agent (the“Agreement”).  Unless otherwise definedherein, the terms used in this Certificate and Schedule 1 annexed heretohave the meanings described in the Agreement.

 

As required by Section5.1(i) or (ii) of the Agreement, Consolidated financial statements of theBorrowers and their respective Subsidiaries for the (year) (quarter) ended               ,19    (the “Financial Statements”) prepared in accordance withGAAP (subject, in the case of quarterly statements, to normal year-end auditadjustments) accompany this Certificate. The Financial Statements present fairly the Consolidated financialposition of the Borrowers and their respective Subsidiaries as at the datethereof and the Consolidated results of operations of the Borrowers and theirrespective Subsidiaries for the period covered thereby.

 

As required by Section5.1(i) or (ii) of the Agreement, the Report for the (year) (quarter) ended                ,19    accompanies this Certificate.  The Report reasonably reflects the results of operations of eachBorrower and each of its Subsidiaries (subject, in the case of quarterlystatements, to normal year-end audit adjustments) on a consistent basis and, inthe aggregate, agrees with the Consolidated Financial Statements for the sameperiod.

 

Schedule 1attached hereto sets forth financial data and computations evidencing theBorrowers’ compliance with the covenants of the Agreement set forth in Sections5.24 through 5.26, inclusive, and 5.29, all of which data and computations, tothe best of the knowledge and belief of the chief financial officer of Courier(the “Chief Financial Officer”) executing and delivering this Certificate, aretrue, complete and correct.

 

1

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The activities of theBorrowers during the period covered by the Financial Statements have beenreviewed by the Chief Financial Officer of Courier and/or by employees oragents under his or her supervision. Based on such review, to the best knowledge and belief of the ChiefFinancial Officer, during the period covered by the Financial Statements, andas of the date of this Certificate, (a) the Borrowers have, or have causedto have, kept, observed, performed and fulfilled each and every covenant andcondition of the Agreement and the other Loan Documents, and (b) no Eventof Default and no event which with notice or the passage of time, or both,would become an Event of Default, has occurred or is continuing. (1)

 

Witness my hand this                dayof                   ,19      .

 
|   | COURIER CORPORATION |
|--------|---------------------|
|   |                |
|   |                |
|   | By:                 |   |   |
|   |                | Title:  Chief Financial Officer |

 

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(1) If an Event of Default or an event which withnotice or the lapse of time, or both, would become an Event of Default, hasoccurred or is occurring, this paragraph is to be modified by an appropriatestatement as to the nature thereof, the period of existence thereof, and whataction the Borrowers have taken, are taking, or propose to take with respectthereto.

 

2

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Schedule 1 to theForegoingCertificate of Chief Financial Officer of Courier

 

 

1

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EXHIBIT E

 

[IntentionallyOmitted]

 

 

1

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EXHIBIT F

 

LIST OfSUBSIDIARIES

 

 
| **NAME**                                           |   | **PLACE OF  INCORPORATION** |   | **ADDRESS**                                   |   | **JURISDICTIONS**       |
|----------------------------------------------------|--------|-----------------------------|--------|-----------------------------------------------|--------|-------------------------|
|                                               |   |                        |   |                                          |   |                    |
| Courier Companies, Inc.                            |   | Massachusetts               |   | 15 Wellman Ave.  No. Chelmsford, MA  01863    |   | CA, IL, IN, MA,  PA, NY |
|                                               |   |                        |   |                                          |   |                    |
| Courier  Foreign Sales  Corporation Limited        |   | Jamaica                     |   | 21 East St.  Kingston, Jamaica                |   | Jamaica                 |
|                                               |   |                        |   |                                          |   |                    |
| Courier  Kendallville, Inc.                        |   | Indiana                     |   | 2500 Marion Drive  Kendallville, IN 46755     |   | IN                      |
|                                               |   |                        |   |                                          |   |                    |
| National  Publishing  Company                      |   | Pennsylvania                |   | 11311 Roosevelt Blvd.  Philadelphia, PA 19154 |   | PA                      |
|                                               |   |                        |   |                                          |   |                    |
| Courier New Media, Inc.                            |   | Massachusetts               |   | 15 Wellman Ave.  No. Chelmsford, MA  01863    |   | MA                      |
|                                               |   |                        |   |                                          |   |                    |
| Book-Mart Press, Inc.                              |   | Delaware                    |   | 2001 Forty Second St.  North Bergen, NJ 07047 |   | NJ                      |
|                                               |   |                        |   |                                          |   |                    |
| Courier Properties,  Inc.                          |   | Massachusetts               |   | 15 Wellman Ave.  No. Chelmsford, MA  01863    |   | MA                      |
|                                               |   |                        |   |                                          |   |                    |
| Massachusetts  National  Publishing Business Trust |   | N/A                         |   | 15 Wellman Ave.  No. Chelmsford, MA  01863    |   | MA                      |
|                                               |   |                        |   |                                          |   |                    |
| Dover  Publications, Inc.                          |   | NY                          |   | 31 East 2nd  St.  Mineola, NY 11501           |   | NY                      |

 

1

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