**Exhibit 11**

 
|   | December 10, 2003 |
|--------|-------------------|

 

 

Perry Judd’s Incorporated575 West Madison StreetWaterloo, Wisconsin 53594

 

**Re: First Amendmentto the Agreement (the “First Amendment”) Revised**

 

Gentlemen:

 

**PerryJudd’s Incorporated,**a Delaware corporation (“**Borrower**”) and **LaSalle Business Credit, LLC**,a Delaware limited liability company, successor by merger to **LaSalleBusiness Credit, Inc.**, a Delaware corporation (“**Lender**”) have entered intothat certain Loan and Security Agreement dated August 19, 2002 (the “**Security Agreement**”).  From time to time thereafter, Borrower andLender may have executed various amendments (each an “**Amendment**” and collectivelythe “**Amendments**”)to the Security Agreement (the Security Agreement and the Amendmentshereinafter are referred to, collectively, as the “**Agreement**”).  Borrower and Lender now desire to furtheramend the Agreement as provided herein, subject to the terms and conditionshereinafter set forth.

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutualcovenants and agreements set forth herein and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged,the parties hereto hereby agree as follows:

 

**1.**             The Agreement hereby is amended as follows:

 

**(a)****          **The definitions of “**Account**”, “**AccountDebtor**”, “**Chattel Paper**”, “**Commercial Tort Claims**”, “**DepositAccounts**”, “**Documents**”, “**Electronic Chattel Paper**”, “**Equipment**”,“**GeneralIntangibles**”, “**Goods**”, “**Instruments**”, “**Inventory**”,“**InvestmentProperty**”, “**Letter-of-Credit Right**”, “**Proceeds**”and “**TangibleChattel Paper**” as set forth in Section 1 of the Agreement are herebyamended and restated in their entirety, as follows:

 

**“Account”, “AccountDebtor”, “Chattel Paper”, “Commercial Tort Claims”, “Deposit Accounts”,“Documents”, “Electronic Chattel Paper”, “General**

** **

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**Intangibles”,“Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of CreditRight”, “Proceeds” and “Tangible Chattel Paper”**shallhave the respective meanings assigned to such terms in the Illinois UniformCommercial Code, as the same may be in effect from time to time.

 

**(b)**           Section1 of the Agreement is amended to add the following definitions in their properalphabetical order:

 

###  “**Applicable Margin**” shall mean the marginset forth below with respect to Prime Rate Loans, LIBOR Rate Loans and theUnused Line Fee as in effect from time to time as applicable; provided that theApplicable Margin shall initially mean zero percent (0%) with respect to PrimeRate Loans, two hundred twenty-five (225) basis points with respect to LIBORRate Loans, and thirty-seven and one-half (371⁄2) basis points with respect toUnused Line Fee, provided further that the Applicable Margin shall be adjustedfive (5) Business Days after receipt of Borrower’s quarterly financial statementsfor each year commencing with the fiscal quarter ending December 31, 2003 basedon Borrower’s Leverage Ratio for the twelve month period ending on such date asshown on such financial statements, as set forth on the following chart:

###  

| **Leverage   Ratio**               |   | **Prime Rate   Margin** |   | **LIBOR Rate   Margin** |   | **Unused Line   Fee Margin** |
|------------------------------------|--------|-------------------------|--------|-------------------------|--------|------------------------------|
| > 2.75:1.0                      |   | 25  basis points        |   | +  250 basis  points    |   | 50  basis  points            |
|                               |   |                    |   |                    |   |                         |
| > 2.25:1.0  but  < 2.75:1.0  |   | 0  basis points         |   | +  225 basis  points    |   | 37.5  basis  points          |
|                               |   |                    |   |                    |   |                         |
| > 1.75:1.0   but <  2.25:1.0 |   | -25  basis points       |   | +  200 basis  points    |   | 37.5  basis  points          |
|                               |   |                    |   |                    |   |                         |
| <1.75:1.0                       |   | -25  basis points       |   | +  175 basis  points    |   | 37.5  basis  points          |

 

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“**Eligible Inventory**” shall mean Inventory ofBorrower consisting solely of raw materials and work in process which isacceptable to Lender in its Permitted Discretion for lending purposes (providedthat Lender shall give Borrower prior written notice of any eligibilitycriteria established by Lender and not set forth herein).  Without limiting Lender’s discretion, Lendershall, in general, consider Inventory to be Eligible Inventory if it meets, andso long as it continues to meet, the following requirements:(i) it is owned byBorrower, Borrower has the right to subject it to a security interest in favorof Lender and it is subject to a first priority perfected security interest infavor of Lender and to no other claim, lien, security interest or encumbrancewhatsoever, other than Permitted Liens;

 

(ii)           it is located on one of the premiseslisted on Exhibit A (or other locations of which Lender has been advisedin writing pursuant to subsection 12(b)(i) hereof) and is not intransit;

 

(iii)          ifheld for sale or lease or furnishing under contracts of service, it is (exceptas Lender may otherwise consent in writing) new and unused and free fromdefects which would, in Lender’s sole determination, affect its market value;

 

(iv)          it is not stored with a bailee,consignee, warehouseman, processor or similar party unless Lender has given itsprior written approval and Borrower has caused any such bailee, consignee,warehouseman, processor or similar party to issue and deliver to Lender, inform and substance acceptable to Lender, such Uniform Commercial Code financingstatements, warehouse receipts, waivers and other documents as Lender shallrequire;

 

(v)           Lender has determined in its PermittedDiscretion, in accordance with Lender’s customary business practices, that itis not unacceptable due to age, type, category or quantity; and

 

(vi)          it is not Inventory (A) with respectto which any of the representations and warranties contained in this Agreementare untrue; or (B) which violates any of the covenants of Borrowercontained in this Agreement.

 

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**“Excess Availability”**shall mean, as of any date ofdetermination by Lender, the excess, if any, of the lesser of (i) the MaximumRevolving Loan Limit less the sum of the outstanding Revolving Loans and Letterof Credit Obligations and (ii) the Revolving Loan Limit less the sum of theoutstanding Revolving Loans and Letter of Credit Obligations, in each case asof the close of business on such date.

 

**(c)****          **Thedefinitions of Maximum Loan Limit and Permitted Liens as set forth in Section 1of the Agreement are deleted in their entirety and the following is substitutedin their place:

 

**“MaximumLoan Limit”**shall mean Forty Million and No/100Dollars ($40,000,000.00).

 

“**Permitted Liens**” shall mean(i) statutory liens of landlords, carriers, warehousemen, processors,mechanics, materialmen or suppliers incurred in the ordinary course of businessand securing amounts not yet due or declared to be due by the claimantthereunder or amounts which are being contested in good faith and byappropriate proceedings and for which Borrower has maintained adequatereserves; (ii) liens or security interests in favor of Lender;(iii) zoning restrictions and easements, licenses, covenants and otherrestrictions affecting the use of real property that do not individually or inthe aggregate have a material adverse effect on Borrower’s ability to use suchreal property for its intended purpose in connection with Borrower’s business;(iv) liens in connection with purchase money indebtedness and capitalizedleases otherwise permitted pursuant to this Agreement, provided, that suchliens attach only to the assets the purchase of which was financed by suchpurchase money indebtedness or which is the subject of such capitalized leases;(v) liens set forth on Schedule 1; (vi) liens specifically permitted byLender in writing; (vii) involuntary liens securing amounts less than$500,000.00 or involuntary liens which are released or for which a bondacceptable to Lender in its Permitted Discretion has been posted within ten (10)days of its creation, or which are covered by insurance to the reasonablesatisfaction of Lender; (viii) pledges or deposits in connection with worker’scompensation, unemployment insurance and other social security legislation, orto secure the performance of bids, tenders, contracts (other than for therepayment of borrowed money) or leases or to secure statutory obligations orsurety,

 

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appeal or staybonds, or to secure indemnity, performance or other similar bonds in theordinary course of business; (ix) liens for taxes not yet due or for taxeswhich are being contested in good faith and by appropriate proceedings and forwhich  reserves are being maintained onBorrower’s financial statements in such amount as is required under generallyaccepted accounting principles and a reserve is maintained by Lender againstthe amount which Borrower is permitted to borrow hereunder in an amount ofmoney which, in the sole judgment of Lender is sufficient to pay such taxes andany interest of penalties that may accrue thereon, and if Borrower fails toprosecute such contest, Lender may advance and pay such taxes, interest andpenalties and any amounts so advanced shall constitute Loans hereunder; (x)liens on assets of Borrower which are not part of the Collateral; provided thatthe granting of such liens shall not constitute a Default under and as definedin the Indenture; (xi) bankers’ liens or rights of recoupment or offset arisingin connection with investments permitted under subsection 13(f); and (xii)extensions and renewals of any of the foregoing so long as the aggregate amountof extended and renewed liens are not increased and are on terms and conditionsno more restricted than the terms and conditions of the liens extended andrenewed.

 

**(d)**           Section2(a) of the Agreement is deleted in its entirety and the following issubstituted in its place:

 

**(a)****          ****Revolving Loans.**

 

Subject to theterms and conditions of this Agreement and the Other Agreements, during the OriginalTerm and any Renewal Term, Lender shall, absent the occurrence of an Event ofDefault, make revolving loans and advances (the “**Revolving Loans**”) in anamount up to the sum of the following sublimits (the “**Revolving Loan Limit**”):

 

### (i)            Eighty-five percent (85%) of the face amount (lessmaximum discounts, credits and allowances which may be taken by or granted toAccount Debtors in connection therewith in the ordinary course of Borrower’sbusiness) of Borrower’s Eligible Accounts; plus

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(ii)           Sixtypercent (60%) of the lower of cost or market value of Borrower’s EligibleInventory (consisting solely of raw material paper and work in process); plus

 

(iii)          Sixtypercent (60%) of the lower of cost or market value of Borrower’s EligibleInventory (consisting solely of raw materials other than raw material paper) orSix Hundred Thousand and No/100 Dollars ($600,000.00), whichever is less; minus

 

### (iv) such reservesas Lender elects, in its Permitted Discretion, to establish from time to time;

###  

provided, that thesum of the advances with respect to clauses (ii) and (iii) above shall at notime exceed ** Fifteen Million Six HundredThousand and No/100 Dollars ($15,600,000.00)** and the Revolving LoanLimit shall in no event exceed **Forty Million and No/100 Dollars ($40,000,000.00)**(the “Maximum Revolving Loan Limit”).

 

The aggregate unpaid principal balance of theRevolving Loans shall not at any time exceed the lesser of the (i) RevolvingLoan Limit minus the Letter of Credit Obligations and (ii) the MaximumRevolving Loan Limit minus the Letter of Credit Obligations.  If at any time the outstanding RevolvingLoans exceeds either the Revolving Loan Limit or the Maximum Revolving LoanLimit, in each case minus the Letter of Credit Obligations, or any portion ofthe Revolving Loans and Letter of Credit Obligations exceeds any applicablesublimit within the Revolving Loan Limit, Borrower shall immediately, andwithout the necessity of demand by Lender, pay to Lender such amount as may benecessary to eliminate such excess and Lender shall apply such payment to theRevolving Loans to eliminate such excess.

 

Borrower hereby authorizes Lender, in its PermittedDiscretion, to charge any of Borrower’s accounts or advance Revolving Loans tomake any payments of principal, interest, fees, costs or expenses required tobe made under this Agreement or the Other Agreements.

 

A request for a Revolving Loan shall be made or shallbe deemed to be made, each in the following manner: Borrower shall give Lendersame day notice, no later than 1:00 P.M. (determined based on the local time ofBorrower at its principal place of business) for such day, of its request for aRevolving Loan as a Prime Rate Loan, and at least two (2) Business Days priornotice of its request for a Revolving Loan as a LIBOR Rate Loan, in whichnotice Borrower shall specify the amount of the proposed borrowing and theproposed borrowing date; provided, however, that no such request may be made,unless with

 

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Lender’s consent, at a time when there exists an Eventof Default or an event which, with the passage of time or giving of notice,will become an Event of Default.  In theevent that Borrower maintains a controlled disbursement account at LaSalleBank, each check presented for payment against such controlled disbursementaccount and any other charge or request for payment against such controlleddisbursement account shall constitute a request for a Revolving Loan as a PrimeRate Loan.  As an accommodation toBorrower, Lender may permit telephone requests for Revolving Loans andelectronic transmittal of instructions, authorizations, agreements or reportsto Lender by Borrower.  Unless Borrowerspecifically directs Lender in writing not to accept or act upon telephonic orelectronic communications from Borrower, Lender shall have no liability toBorrower for any loss or damage suffered by Borrower as a result of Lender’shonoring, in good faith, of any requests, execution of any instructions,authorizations or agreements or reliance on any reports communicated to ittelephonically or electronically and purporting to have been sent to Lender byBorrower and Lender shall have no duty to verify the origin of any such communicationor the authority of the Person sending it.

 

Borrower hereby irrevocably authorizes Lender todisburse the proceeds of each Revolving Loan requested by Borrower, or deemedto be requested by Borrower, as follows: the proceeds of each Revolving Loanrequested under Section 2(a) shall be disbursed by Lender in lawfulmoney of the United States of America in immediately available funds, in thecase of the initial borrowing, in accordance with the terms of the writtendisbursement letter from Borrower, and in the case of each subsequentborrowing, by wire transfer or Automated Clearing House (ACH) transfer to suchbank account as may be agreed upon by Borrower and Lender from time to time, orelsewhere if pursuant to a written direction from Borrower.

 

**(e)****          **Subsections4(a), 4(b) and 4(c) of the Agreement are deleted in their entirety and thefollowing is substituted in their place:

 

4.             **INTEREST,FEES AND CHARGES.**

 

(a)           **InterestRate.**

 

Subject to theterms and conditions set forth below, the Loans shall bear interest at the perannum rate of interest set forth in subsection (i), (ii) or (iii) below:

 

### (i)            The Prime Rate in effect from time to time, plus the“Applicable Margin” with respect to Prime Rate Loans payable on the lastBusiness Day of each month in arrears. Said rate

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### of interest shallincrease or decrease by an amount equal to each increase or decrease in thePrime Rate effective on the effective date of each such change in the PrimeRate.

###  

### (ii)           The LIBOR Rate in effect from time to time, plus theApplicable Margin with respect to LIBOR Rate Loans, such rate to remain fixedfor the applicable Interest Period.  “**InterestPeriod**” shall mean any continuous period of thirty (30), sixty (60),ninety (90), or one hundred eighty (180) days as selected from time to time byBorrower by irrevocable notice (in writing, by telecopy, telex, electronic mailor cable) given to Lender not less than two (2) Business Days prior to thefirst day of each respective Interest Period; provided that:  (A) each such period occurring after suchinitial period shall commence on the day on which the immediately precedingperiod expires; (B) the final Interest Period shall be such that its expirationoccurs on or before the end of the Original Term or any Renewal Term; and (C)if for any reason Borrower shall fail to timely select a period, then suchLoans shall continue as, or revert to, Prime Rate Loans.  Interest shall be payable on the lastBusiness Day of each month in arrears and on the last Business Day of suchInterest Period.

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### (iii)          Upon the occurrence of an Event of Default and duringthe continuance thereof, the Loans shall bear interest at the rate of twopercent (2.0%) per annum in excess of the interest rate otherwise payablethereon, which interest shall be payable on demand.  All interest shall be calculated on the basis of a 360-day year.

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**(b)****          ****Other LIBOR Provisions.**

 

### **(i)**            Subjectto the provisions of this Agreement, Borrower shall have the option (A) as ofany date, to convert all or any part of the Prime Rate Loans to, or requestthat new Loans be made as, LIBOR Rate Loans of various Interest Periods, (B) asof the last day of any Interest Period, to continue all or any portion of therelevant LIBOR Rate Loans as LIBOR Rate Loans; (C) as of the last day of anyInterest Period, to convert all or any portion of the LIBOR Rate Loans to PrimeRate Loans; and (D) at any time, to request new Loans as Prime Rate Loans;provided, that Loans may not be continued as or converted to LIBOR Rate Loans,if the continuation or conversion thereof would violate the provisions 

###  

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### of subsections4(b)(ii) or 4(b)(iii) of this Agreement or if an Event of Defaulthas occurred.

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### **(ii)**           Lender’sdetermination of the LIBOR Rate as provided above shall be conclusive, absentmanifest error.  Furthermore, if Lenderdetermines, in good faith (which determination shall be conclusive, absentmanifest error), prior to the commencement of any Interest Period that (A) U.S.Dollar deposits of sufficient amount and maturity for funding the Loans are notavailable to Lender in the London Interbank Eurodollar market in the ordinarycourse of business, or (B) by reason of circumstances affecting the London InterbankEurodollar market, adequate and fair means do not exist for ascertaining therate of interest to be applicable to the Loans requested by Borrower to beLIBOR Rate Loans or the Loans bearing interest at the rates set forth in subsection4(a)(ii) of this Agreement shall not represent the effective pricing toLender for U.S. Dollar deposits of a comparable amount for the relevant period(such as for example, but not limited to, official reserve requirementsrequired by Regulation D to the extent not given effect in determining therate), Lender shall promptly notify Borrower and (1) all existing LIBOR RateLoans shall convert to Prime Rate Loans upon the end of the applicable InterestPeriod, and (2) no additional LIBOR Rate Loans shall be made until such circumstancesare cured.

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### **(iii)**         If,after the date hereof, the introduction of, or any change in any applicablelaw, treaty, rule, regulation or guideline or in the interpretation oradministration thereof by any governmental authority or any central bank orother fiscal, monetary or other authority having jurisdiction over Lender orits lending offices (a “**Regulatory Change**”), shall, in the opinionof counsel to Lender, make it unlawful for Lender to make or maintain LIBORRate Loans, then Lender shall promptly notify Borrower and (A) the LIBOR RateLoans shall immediately convert to Prime Rate Loans on the last Business Day ofthe then existing Interest Period or on such earlier date as required by lawand (B) no additional LIBOR Rate Loans shall be made until such circumstance iscured.

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### **(iv)**          If,for any reason, a LIBOR Rate Loan is paid prior to the last Business Day of anyInterest Period or if a LIBOR Rate Loan does not occur on a date specified byBorrower in its request (other than as a result of a default by Lender),

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### Borrower agrees toindemnify Lender against any loss (including any loss on redeployment of thedeposits or other funds acquired by Lender to fund or maintain such LIBOR RateLoan) cost or expense incurred by Lender as a result of such prepayment.

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### **(v)**            Ifany Regulatory Change (whether or not having the force of law) shall (A)impose, modify or deem applicable any assessment, reserve, special deposit orsimilar requirement against assets held by, or deposits in or for the accountof or loans by, or any other acquisition of funds or disbursements by, Lender;(B) subject Lender or the LIBOR Rate Loans to any Tax or change the basis oftaxation of payments to Lender of principal or interest due from Borrower toLender hereunder (other than a change in the taxation of the overall net incomeof Lender); or (C) impose on Lender any other condition regarding the LIBORRate Loans or Lender’s funding thereof, and Lender shall determine (which determinationshall be conclusive, absent any manifest error) that the result of theforegoing is to increase the cost to Lender of making or maintaining the LIBORRate Loans or to reduce the amount of principal or interest received by Lenderhereunder, then Borrower shall pay to Lender, on demand, such additionalamounts as Lender shall, from time to time, determine are sufficient tocompensate and indemnify Lender from such increased cost or reduced amount.

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### **(vi)**          Lendershall receive payments of amounts of principal of and interest with respect tothe LIBOR Rate Loans free and clear of, and without deduction for, anyTaxes.  If (A) Lender shall be subjectto any Tax in respect of any LIBOR Rate Loans or any part thereof or, (B)Borrower shall be required to withhold or deduct any Tax from any such amount,the LIBOR Rate applicable to such LIBOR Rate Loans shall be adjusted by Lenderto reflect all additional costs incurred by Lender in connection with thepayment by Lender or the withholding by Borrower of such Tax and Borrower shallprovide Lender with a statement detailing the amount of any such Tax actuallypaid by Borrower. Determination by Lender of the amount of such costs shall beconclusive, absent manifest error.  Ifafter any such adjustment any part of any Tax paid by Lender is subsequentlyrecovered by Lender, Lender shall reimburse Borrower to the extent of theamount so recovered.  A certificate ofan officer of Lender setting forth

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### the amount of suchrecovery and the basis therefor shall be conclusive, absent manifest error.

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**(vii)**         Eachrequest for LIBOR Rate Loans shall be in the amount not less than One Millionand No/100 Dollars ($1,000,000.00), and in integral multiples of One HundredThousand and No/100 Dollars ($100,000.00).

 

### **(viii)**        Unlessotherwise specified by Borrower, all Loans shall be Prime Rate Loans.

 

### **(ix)**          Nomore than four (4) Interest Periods may be in effect with respect tooutstanding LIBOR Rate Loans at any one time.

 

**(c)****          ****FeesAnd Charges.**

 

### **(i)**            **Closing Fee****:**Borrower shall pay to Lender a closingfee of one hundred thirty seven thousand five hundred dollars ($137,500.00),which fee shall be fully earned as of the date of the First Amendment of thisAgreement and shall be payable on the date the First Amendment of thisAgreement becomes effective.

 

### **(ii)****          ****Unused Line Fee****:**Borrower shall pay to Lender an unused line fee equal to the product of (A) theApplicable Margin with respect to the Unused Line Fee times (B) the differencebetween the Maximum Revolving Loan Limit and the average daily balance of theRevolving Loans, plus the Letter of Credit Obligations for each month, whichfee shall be fully earned by Lender and payable monthly in arrears on the firstBusiness Day of each month.  Such feeshall be calculated on the basis of a 360 day year.

 

### **(iii)****        ****Costs and Expenses****:**Borrower shall reimburse Lender for all costs and expenses, including, withoutlimitation, legal expenses and reasonable attorneys’ fees, incurred by Lenderin connection with the (i) documentation and consummation of thistransaction and any other transactions between Borrower and Lender, including,without limitation, Uniform Commercial Code and other public record searchesand filings, overnight courier or other express or messenger delivery,appraisal costs, surveys, title insurance and environmental audit or reviewcosts; (ii) collection, protection or enforcement of any rights in or tothe Collateral;

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### (iii) collection ofany Liabilities; and (iv) administration and enforcement of any ofLender’s rights under this Agreement or any Other Agreement.  Borrower shall also pay all normal servicecharges with respect to all deposit accounts maintained by Borrower with Lenderand LaSalle Bank and any additional services requested by Borrower from Lenderand LaSalle Bank.  All such costs,expenses and charges shall, if owed to LaSalle Bank, be reimbursed by Lenderand in such event or in the event such costs and expenses are owed to Lender,shall constitute Liabilities****hereunder, shall be payable by Borrower toLender on demand, and, until paid, shall bear interest at the highest rate thenapplicable to Loans hereunder.

 

### **(iv)****         ****Capital Adequacy Charge****. **If Lender shall have determined that theadoption of any law, rule or regulation regarding capital adequacy, or anychange therein or in the interpretation or application thereof, or complianceby Lender with any request or directive regarding capital adequacy (whether ornot having the force of law) from any central bank or governmental authorityenacted after the date hereof, does or shall have the effect of reducing therate of return on such party’s capital as a consequence of its obligationshereunder to a level below that which Lender could have achieved but for suchadoption, change or compliance (taking into consideration Lender’s policieswith respect to capital adequacy) by a material amount, then from time to time,after submission by Lender to Borrower of a written demand therefor (“**CapitalAdequacy Demand**”) together with the certificate described below,Borrower shall pay to Lender such additional amount or amounts (“**CapitalAdequacy Charge**”) as will compensate Lender for such reduction, suchCapital Adequacy Demand to be made with reasonable promptness following suchdetermination.  A certificate of Lenderclaiming entitlement to payment as set forth above shall be conclusive in theabsence of manifest error.  Suchcertificate shall set forth the nature of the occurrence giving rise to suchreduction, the amount of the Capital Adequacy Charge to be paid to Lender, andthe method by which such amount was determined.  In determining such amount, Lender may use any reasonable averagingand attribution method, applied on a non-discriminatory basis.

 

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**(f)**            Subsection5(a) of the Agreement is deleted in its entirety and the following issubstituted in its place:

 

## **(a) Grant of Security Interest to Lender.**

 

As security for the payment of all Loans now or in the future made byLender to Borrower hereunder and for the payment or other satisfaction of allother Liabilities, Borrower hereby assigns to Lender and grants to Lender acontinuing security interest in the following property of Borrower, whether nowor hereafter owned, existing, acquired or arising and wherever now or hereafterlocated:  (a) all Accounts (whetheror not Eligible Accounts) and all Inventory whose sale, lease or otherdisposition by Borrower has given rise to Accounts and have been returned to,or repossessed or stopped in transit by, Borrower; (b) all Chattel Paper,Instruments, Documents and General Intangibles (including, without limitation,all patents, patent applications, trademarks, trademark applications, tradenames, trade secrets, goodwill, copyrights, copyright applications,registrations, licenses, software, franchises, customer lists, tax refundclaims, claims against carriers and shippers, guarantee claims, contractrights, payment intangibles, security interests, security deposits and rightsto indemnification); (c)  all Inventory (whether or not EligibleInventory); (d) all Investment Property; (e) all Deposit Accounts, bankaccounts, deposits and cash; (f) all Letter-of-Credit Rights; (g)  CommercialTort Claims listed on Exhibit C hereto; (h) any other property ofBorrower (other than Equipment, Fixtures and real property) now or hereafter in the possession, custodyor control of Lender or any agent or any parent, affiliate or subsidiary ofLender or any participant with Lender in the Loans, for any purpose (whetherfor safekeeping, deposit, collection, custody, pledge, transmission orotherwise) and (i) all Proceeds of the foregoing property, including,without limitation, proceeds of all insurance policies insuring the foregoingproperty, and all of Borrower’s books and records relating to any of theforegoing and to Borrower’s business.

 

**(g)****          **Section7 of the Agreement is hereby amended and restated as follows:

 

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# **7. POSSESSION OF COLLATERAL ANDRELATED MATTERS****.**

 

Until otherwise notified by Lender following the occurrence of an Eventof Default, Borrower shall have the right, except as otherwise provided in thisAgreement, in the ordinary course of Borrower’s business, to (a) sell,lease or furnish under contracts of service any of Borrower’s Inventorynormally held by Borrower for any such purpose; and (b) use and consumeany raw materials, work in process or other materials normally held by Borrowerfor such purpose; and (c) dispose of obsolete or unuseful Equipment; provided,however, that a sale in the ordinary course of business shall not include anytransfer or sale in satisfaction, partial or complete, of a debt owed byBorrower.

 

**(h)**           Subsection9 (a) of the Agreement is hereby amended and restated restated as follows:

 

## (a)   **Monthly Reports**.

 

(i)Borrower shall deliver to Lender, in addition to any other reports, as soon aspracticable and in any event: within ten (10) days after the end of each month,(A) a detailed trial balance of Borrower’s Accounts aged per invoice date, inform and substance reasonably satisfactory to Lender including, withoutlimitation, the names and upon the occurrence and during the continuance of anEvent of Default, addresses of all Account Debtors of Borrower, and (B)notwithstanding the foregoing, and only upon the request of Lender, a summaryand detail of accounts payable (such Accounts and accounts payable divided intosuch time intervals as Lender may require in its Permitted Discretion),including a listing of any held checks; and (ii) Borrower shall deliver toLender an executed loan report and certificate in Lender’s then current form onor prior to the tenth (10th ) Business Day of each month, whichshall be accompanied by copies (but only if specifically requested by Lender)of Borrower’s sales journal, cash receipts journal and credit memo journal forthe relevant period.  Such report shallreflect the activity of Borrower with respect to Accounts for the immediatelypreceding month, and shall be in a form and with such specificity as issatisfactory to Lender and shall contain such additional information concerningAccounts as may be requested by Lender including, without limitation, but onlyif specifically requested by Lender, copies of all invoices prepared inconnection with such Accounts.

 

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**(i)           **Section10 of the Agreement is deleted in its entirety and the following is substitutedin its place:

 

# **10.****         ****TERMINATION; AUTOMATIC RENEWAL****.**

 

**THISAGREEMENT SHALL BE IN EFFECT FROM THE DATE HEREOF UNTIL December 31, 2008 (THE“ORIGINAL TERM”) AND SHALL AUTOMATICALLY RENEW ITSELF FROM YEAR TO YEARTHEREAFTER (EACH SUCH ONE-YEAR RENEWAL BEING REFERRED TO HEREIN AS A “RENEWALTERM”) UNLESS (A)  THE DUE DATE OF THE LIABILITIES IS ACCELERATED PURSUANTTO SECTION 16 HEREOF; OR (B) BORROWER OR LENDER ELECTS TO TERMINATETHIS AGREEMENT AT THE END OF THE ORIGINAL TERM OR AT THE END OF ANY RENEWALTERM BY GIVING THE OTHER PARTY WRITTEN NOTICE OF SUCH ELECTION AT LEAST NINETY(90) DAYS PRIOR TO THE END OF THE ORIGINAL TERM OR THE THEN CURRENT RENEWALTERM IN WHICH CASE BORROWER SHALL PAY ALL OF THE LIABILITIES IN FULL ON THELAST DAY OF SUCH TERM.**  If the term of this Agreement expires or oneor more of the events specified in clauses (A) and (B) occurs, then(i) Lender shall not make any additional Loans on or after the dateidentified as the date on which the Liabilities are to be repaid; and(ii) this Agreement shall terminate on the date thereafter that theLiabilities are paid in full.  At suchtime as Borrower has repaid all of the Liabilities and this Agreement hasterminated, if Borrower is obtaining new financing from another lender,Borrower shall deliver such lender’s indemnification of Lender, in form andsubstance satisfactory to Lender, for checks which Lender has credited toBorrower’s account, but which subsequently are dishonored for any reason or forautomatic clearinghouse or wire transfers not yet posted to Borrower’s account.

 

**(j)**            Subsection11 (d) of the Agreement is hereby amended and restated as follows:

 

## **(d)****          ****Accounts and Inventory**.

 

Each Account or item of Inventory which Borrower shall, expressly or byimplication, request Lender to classify as an Eligible Account or EligibleInventory, respectively, shall, as of the time

 

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when such request is made, conform in all respects tothe requirements of such classification as set forth in the respectivedefinitions of “Eligible Account” and “Eligible Inventory” as set forth hereinand as otherwise established by Lender from time to time.

 

**(k)**           Subsection12 (b)(ii) of the Agreement is hereby amended and restated as follows:

 

### (ii)           Eligible Accounts and Inventory. Promptly upon becoming aware thereof, notify Lender if any Account orInventory identified by Borrower to Lender as an Eligible Account or EligibleInventory becomes ineligible for any reason, provided that, unless an Event ofDefault has occurred and is continuing, Borrower may notify Lender of suchevent with respect to Eligible Accounts with a face amount of less than$500,000.00 in the aggregate in its ordinary monthly reporting pursuant tosubsection 9(a) of this Agreement.

###  

**(l)**            Subsection12(d) of the Agreement is deleted in its entirety and the following issubstituted in its place:

 

## **(d)****          ****Inspection and Audits**.

##  

Borrower shall permit Lender, or any Personsdesignated by it, to call at Borrower’s places of business at any reasonabletimes, and, without hindrance or delay, to inspect the Collateral and toinspect, audit, check and make extracts from Borrower’s books, records,journals, orders, receipts and any correspondence and other data relating toBorrower’s business, the Collateral or any transactions between the partieshereto, and shall have the right to make such verification concerningBorrower’s business as Lender may consider reasonable under thecircumstances.  Borrower shall furnishto Lender such information relevant to Lender’s rights under this Agreement andthe Other Agreements as Lender shall at any time and from time to timereasonably request.  Lender, through itsofficers, employees or agents shall have the right, at any reasonable time andfrom time to time, in Lender’s name, to verify the validity, amount or anyother matter relating to any of Borrower’s Accounts, by mail, telephone,telecopy, electronic mail, or otherwise, provided that prior to the occurrenceof an Event of Default, Lender shall conduct such verification in Borrower’sname.  Borrower authorizes Lender todiscuss the affairs, finances and 

 

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business of Borrower with any officers, employees or directors ofBorrower or with its Parent or any Affiliate or the officers, employees ordirectors of its Parent or any Affiliate, and to discuss the financialcondition of Borrower with Borrower’s independent public accountants.  Any such discussions shall be withoutliability to Lender or to Borrower’s independent public accountants. Borrowershall pay to Lender all customary fees and all costs and out-of-pocket expensesincurred by Lender in the exercise of its rights under this subsection 12(d),and all of such fees, costs and expenses shall constitute Liabilitieshereunder, shall be payable on demand and, until paid, shall bear interest atthe highest rate then applicable to Loans hereunder; provided, that, prior tothe occurrence and continuance of an Event of Default, the maximum amountBorrower shall be required to pay Lender with respect to the foregoing shall beThirty Thousand and No/100 Dollars ($30,000.00) per Fiscal Year of Borrower,plus all costs and out-of-pocket expenses incurred by Lender in the exercise ofits rights under this subsection 12(d).

 

**(m) **Subsections13(b), 13(e) and 13(f) of the Agreement are deleted in their entirety and thefollowing is substituted in its place:

 

## **(b)****          ****Indebtedness**.

##  

Borrower shall notcreate, incur, assume or become obligated (directly or indirectly), for anyloans or other indebtedness for borrowed money other than the Loans, exceptthat Borrower may (i) borrow money from a Person other than Lender on anunsecured and subordinated basis if a subordination agreement in favor ofLender and in form and substance satisfactory to Lender is executed anddelivered to Lender relative thereto; (ii) maintain its present indebtednesslisted on Schedule 11(n) hereto and may refinance such indebtedness solong as the aggregate principal amount of the indebtedness so refinanced shallnot be increased and the refinancing shall be on terms and conditions no morerestrictive than the terms and conditions of the indebtedness to be refinanced;(iii) incur unsecured indebtedness to trade creditors in the ordinary course ofbusiness; (iv) incur purchase money indebtedness or capitalized leaseobligations in connection with Capital Expenditures; ^(v) incur operating leaseobligations; (vi) enter into Interest Rate Swap Obligations, as defined in theIndenture, provided, that such

 

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Interest Rate SwapObligations are entered into to protect the Borrower from fluctuations ininterest rates on indebtedness incurred to the extent the notional principalamount of such Interest Rate Swap Obligations does not exceed the principalamount of the indebtedness to which such Interest Rate Swap Obligations relate;(vii) incur indebtedness under Currency Agreements, as defined in theIndenture, provided that such Currency Agreements do not increase theindebtedness of Borrower outstanding other than as a result of fluctuations inforeign currency exchange rates or by reason of fees, indemnities andcompensation payable thereunder; (viii) incur indebtedness  to Holdings, for so long as suchindebtedness is held by Holdings subject to no lien being held by a Personother than Holdings; (ix) incur additional indebtedness in an aggregateprincipal amount not to exceed $40,000,000.00 at any one time outstanding; (x)so long as no Event of Default shall have occurred and be continuing at thetime of or would occur as a consequence of the incurrence of such indebtedness,additional indebtedness if on the date of the incurrence thereof, after givingeffect to the incurrence thereof and the application of the proceeds therefrom,the fixed charge coverage ratio set forth in subsection 14(b) hereof isgreater than 2.0 to 1.0.

 

## **(e)****          ****Dividends andDistributions**.

##  

Borrower shall notdeclare or pay any dividend or other distribution in cash on any class of itsstock (if Borrower is a corporation), provided, that (i) so long as suchdividend is permitted under all applicable laws; and (ii) no Event of Defaultshall have occurred prior to the time of, or would occur as a result of suchdividend, Borrower may (V) pay cash dividends or make other intercompanytransfers to Holdings in an aggregate amount sufficient to permit Holdings tomake interest payments with respect to the Notes under and as defined in theIndenture but only to the extent permitted by the subordination provisionscontained in the Indenture; (W) pay cash dividends or make other intercompanytransfers to Holdings in an amount not to exceed $1,000,000.00 in any FiscalYear of Holdings; (X) pay cash dividends to Holdings to the extent suchproceeds are promptly used by Holdings to make payments in respect ofrepurchased shares of Holdings common stock from employees provided that suchpayments are not greater than or equal to $750,000.00 in any year,  (Y)

 

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pay the regularlyscheduled dividends on its Series A Preferred Stock and (Z) pay cashdividends or make other intercompany transfers to Holdings to make optionalredemptions, repayments and repurchases of the Notes to the extent notprohibited by the Indenture.

 

## **(f)****           ****Investments;Loans**.

##  

Borrower shall notpurchase or otherwise acquire, or contract to purchase or otherwise acquire,the obligations or stock of any Person, other than direct obligations of theUnited States, obligations insured by the Federal Deposit Insurance Corporationand obligations unconditionally guaranteed by the United States; nor shallBorrower lend or otherwise advance funds to any Person except for advances madeto employees, officers and directors for travel and other expenses arising inthe ordinary course of business and loans to employees, officers and directorsof Borrower in the ordinary course of business for bona fide business purposesnot exceeding Two Hundred Fifty Thousand and No/100 Dollars ($250,000.00) inthe aggregate outstanding for all Persons at any one time and loans describedon Schedule 13(f). Notwithstanding the foregoing, Borrower may (i)invest in any Person that is or will immediately after such investment merge orconsolidate into Borrower; (ii) invest in Holdings provided that any indebtednessevidencing such investment is unsecured and subordinated pursuant to asubordination agreement executed in favor of Lender in form and substancesatisfactory to Lender and delivered to Lender relative thereto; (iii) makeloans to employees, officers and directors of Borrower to finance the purchaseof the Qualified Capital Stock, as defined in the Indenture, not to exceed$500,000.00 at any one time outstanding; (iv) enter into Currency Agreements,as defined in the Indenture, and Interest Rate Swap Obligations, as defined inthe Indenture, entered into in the ordinary course of Borrower’s business andotherwise in compliance with this Agreement; (v) make investments in securitiesof trade creditors or customers received pursuant to any plan of reorganizationor similar arrangement upon bankruptcy or insolvency of such trade creditors orcustomers; and (vi) make investments as a result of consideration received inconnection with a sale of assets permitted hereunder.

 

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**(n)**  Subsection 14(a) of the Agreement is deletedin its entirety and the following is substituted in its place:

 

## **(a)****          ****Tangible Net Worth****.**

##  

Borrower’sTangible Net Worth shall not at any time be less than the Minimum Tangible NetWorth; “**MinimumTangible Net Worth**” being defined for purposes of this subsection as(i) $13,000,000.00 at all times from the date hereof through December 31,2004 and (ii) thereafter, commencing March 31, 2005, from the****firstday of each fiscal quarter of Borrower through the last day of such fiscalquarter of Borrower, the Minimum Tangible Net Worth during the immediatelypreceding period plus $375,000.00; and “**Tangible Net Worth**” being defined forpurposes of this subsection as Borrower’s shareholders’ equity (includingretained earnings) less the book value of all intangible assets(excluding good will) as determined by Lender in its Permitted Discretion on aconsistent basis plus the amount of any LIFO reserve plus theamount of any debt subordinated to Lender, all as determined under generallyaccepted accounting principles applied on a basis consistent with the financialstatement dated March 31, 2003 except as set forth herein;

 

**(o)**           Schedule11(n) of the Agreement entitled “Indebtedness” is amended and restated asattached hereto and made a part hereof.

 

**(p)****           CHANGEOF LENDER’S NAME:** All references to LaSalle Business Credit, Inc. containedin this Agreement and the Other Agreements are hereby deemed to read “LaSalleBusiness Credit, LLC”.

 

2.             This Amendment shall not become effectiveuntil (i) fully executed by all parties hereto; and (ii) Lender shall havedetermined that as of the date of this First Amendment to the Agreement,immediately after giving effect to (A) the making of the Revolving Loans, if any,requested to be made on such date, (B) the issuance of the Letter of Credit, ifany, requested to be made on such date, (C) the payment of all fees due uponsuch date and (D) the payment or reimbursement by Borrower to Lender for allclosing costs and expenses incurred in connection with the transactionscontemplated hereby,****Borrower has Excess Availability of notless than Eight Million and No/100 Dollars ($8,000,000.00).

 

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3.             Except as expressly amended hereby and byany other supplemental documents or instruments executed by either party heretoin order to effectuate the transactions contemplated hereby, the Agreement isratified and confirmed by the parties hereto and remain in full force and effectin accordance with the terms thereof.

 
|   | **LASALLE BUSINESS  CREDIT, LLC,**                            |
|--------|---------------------------------------------------------------|
|   | a Delaware limited liability company,  successor by merger to |
|   | **LASALLE BUSINESS  CREDIT, INC.**                            |
|   |                                                          |
|   | By                                                            |   |
|   | Title                                                         |   |
|        |                                                               |  |  |

 

ACKNOWLEDGED AND AGREED TO this      day of December, 2003:

 
| **PERRY JUDD’S  INCORPORATED** |
|-------------------------------------|
| By                                  |   |   |
|                                |
| Title                               |   |   |
|                                     |  |  |  |

 

Consented and agreed to by the followingguarantor(s) of the obligations of **Perry Judd’s Incorporated**to **LaSalleBusiness Credit, LLC, a Delaware limited liability company, successor by mergerto LaSalle Business Credit, Inc.**

 
| **PERRY JUDD’S  HOLDINGS, INC.**                                |
|----------------------------------------------------------------------|
|                                                                 |
| By:                                                                  |   |   |
|                                                                 |   |
| Title:                                                               |   |   |
|                                                                 |
| Date: December        , 2003 |
|                                                                      |  |  |  |

 

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**SCHEDULE 11(n)-INDEBTEDNESS**

 

**$70,010,000.00 under the Indenture**

 

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