Document:

Exhibit 10.2

 

THE COURIER CORPORATION EXECUTIVE
COMPENSATION PROGRAM

 

As amended and restated on December 5,
2005

 

 

THE COURIER CORPORATION EXECUTIVE
COMPENSATION PROGRAM

 

Introduction

 

The Executive Compensation Program of Courier Corporation (“Courier”
or the “Company”) is one of its most important means of motivating and
rewarding performance of our senior management team.  The Program is designed to support our
business strategy by linking your compensation to the achievement of key,
measurable performance objectives.  It
seeks to align your financial interests with those of shareholders by focusing
management efforts on enhancing the value of each shareholder’s
investment.  The Program also encourages
executive stock ownership and offers you the opportunity for wealth
accumulation.

 

Objectives

 

The focus of Company-wide performance goals and stock
ownership emphasizes the need and importance of teamwork.  The Program has been developed to complement
the strategic focus and organization. 
The Program is designed to:

 

•                  attract and
retain high quality management talent and to motivate them to build and sustain
value for shareholders;

•                  provide
aggregate compensation opportunities that, when performance goals are achieved,
will be comparable to those provided by other companies with revenues and
operating characteristics similar to Courier; and

•                  establish
for employees in management positions a significant risk/reward compensation
structure through incentive pay plans.

 

Additionally, the Program places more importance on the
performance-based variable pay components that, when combined with base salary,
provide a competitive total compensation package with an up-side potential that
may exceed average total compensation paid to executives of similar responsibility
in similar-sized companies, when performance is superior.

 

Overview of the Program

 

The total compensation you are eligible to earn may be
derived from four sources:

 

•                  Base Salary

 

•                  Annual Cash
Incentive

 

•                  Long-Term
Performance Incentive

 

•                  Long-Term
Stock Incentive

 

Base Salary

 

The first element of your total compensation is the base
salary you receive from Courier.  Your
base salary is reviewed periodically.  In
evaluating your base salary the following factors are considered:  individual performance, the level and scope
of responsibilities, experience, internal equity, and salaries relating to
executives of similar responsibility in similar-sized companies.  The primary considerations for determining
any increase in your base pay, however, are your individual performance and
growth in responsibilities.

 

i

 

Annual Cash Incentive

 

The second element of your total compensation is an annual
cash incentive, which is based upon the achievement of specified Company and
business unit performance targets.  The Company
and business unit performance targets are quantifiable targets which are
established at the beginning of a fiscal year.

 

Minimum performance targets are set below which no annual
cash incentive will be paid.  Exceeding
the minimum performance targets allows you to receive a percentage of your
overall annual cash incentive target.  If
you exceed your performance targets, you may earn as much as 200% of your
annual cash incentive target.

 

If performance targets are achieved for the fiscal year, the
annual cash incentive is paid as soon as practical following the close of the
fiscal year but normally no later than the January 31 of the new fiscal
year.

 

The annual cash incentive is normally based upon the
following performance targets, although other quantifiable earnings targets may
be used in individual cases:

 

	
  Company Performance

  	
   

  	
  Business Unit Performance

  
	
   

  	
   

  	
   

  
	
  Earnings Per Share

  	
   

  	
  Pre-Tax Profits; Total Sales

  

 

Your specific fiscal year Company and business unit
performance targets as well as your fiscal year cash incentive target are
contained in your Personalized Illustration.

 

In the event a Change in Control of the Company occurs, you
will receive a pro-rated cash incentive in an amount equal to your cash
incentive target multiplied by a fraction, the numerator of which is the number
of elapsed days in the fiscal year through and including the date on which the
Change in Control occurs and the denominator of which is 365.

 

Long Term Performance Incentive

 

Another element of your total compensation may be a long-term
performance incentive (“LTPI”) award, which is a performance-related incentive
based upon achievement of multi-year objectives.  The target amount of the LTPI is established
at the beginning of the performance cycle, which is a three-year period.  This award is earned by achieving specific
targets over the performance cycle.

 

Currently, the LTPI targets are specific Return on Assets
(ROA) goals.  The long-term performance
incentive that is earned for the performance cycle is paid as soon as practical
in the fiscal year following the end of the three-year performance cycle.  It is the intention of the Company to begin a
new three-year performance cycle every fiscal year.  New performance measures and/or targets will
be established at the beginning of each performance cycle by Courier’s
Compensation Committee of the Board of Directors.

 

Your specific three-year performance targets and your target
LTPI award, if any, are contained in your Personalized Illustration.

 

In the event a Change in Control of the Company occurs, for
each of your outstanding LTPI awards, you will receive a pro-rated amount in
cash equal to the target LTPI award multiplied by a fraction, the numerator of
which is the number of elapsed days in the performance period through and
including the date on which the Change in Control occurs and the denominator of
which is 1096.

 

Long Term Stock Incentive

 

Another element of your total compensation may be a long-term
stock incentive (“LTSI”). The long-term stock incentive for participants may
consist of a (1) stock option award, (2) a restricted stock grant or

 

ii

 

restricted stock unit (“RSU”), (3)  a cash award, or (4) a
combination of any of these elements. 
Your Personalized Illustration will indicate
what your LTSI, if any, for the fiscal year will be.

 

Stock option awards, restricted stock grants, or RSUs are
granted near the beginning of a fiscal year based on the fair market value of
Courier Common Stock as of the date of the award. The LTSI awards normally vest
over a period of years and are exercisable within a stated period.

 

The LTSI cash award is an amount that may be earned over a
period of time up to 5 years based upon the Company meeting or exceeding the
Total Shareholder Return (“TSR”) of our Peer Group.  (The Peer Group is comprised of the companies
selected as the Courier Peer Group as set forth in the Company’s annual proxy
statement for the purposes of comparing TSR over a 5-year period.)  The LTSI cash award may be earned as follows:

 

25% of the LTSI cash award would vest and be paid out
after Year 1 if the one-year average TSR of Courier meets or exceeds the
one-year average TSR of the Peer Group.

 

25% of the LTSI cash award would vest and be paid out
after Year 2 if the one-year average TSR of Courier meets or exceeds the
one-year average TSR of the Peer Group for that year.   Note: 
In year 2, if the first year TSR is missed but the two-year cumulative
TSR is achieved, 50% of the LTSI cash award would vest and be paid out after
Year 2.

 

25% of the LTSI cash award would vest and be paid out
after Year 3 if the one-year average TSR of Courier meets or exceeds the
one-year average TSR of the Peer Group for that year. The remaining unearned
amount of the LTSI cash award would be earned in Year 3 if the 3-year
cumulative TSR of Courier meets or exceeds the 3-year cumulative TSR of the
Peer Group and would be paid out after Year 3.

 

If the full amount of the LTSI cash award has not yet
been earned by Year 4, the remaining amount of the LTSI cash award may be
earned in Year 4 if the 4-year cumulative TSR of Courier meets or exceeds the 4-year
cumulative TSR of the Peer Group and would be paid out after Year 4.

 

If the full amount of the LTSI cash award has not yet
been earned by Year 5, the remaining amount of the LTSI cash award may be
earned in Year 5 if the 5-year cumulative TSR of Courier meets or exceeds the 5-year
cumulative TSR of the Peer Group and would be paid out after Year 5.

 

Earned amounts of the LTSI cash award are paid as soon as
practical following the close of the fiscal year but normally no later than the
January 31 of the new fiscal year.

 

In the event a Change in Control of the Company occurs, all
your outstanding stock option awards will vest and become fully exercisable and
all restricted stock grants and RSUs will become fully vested.  With respect to any outstanding LTSI cash
award, you will receive a pro-rated amount in cash equal to the unearned target
LTSI cash award multiplied by a fraction, the numerator of which is the number
of elapsed days in the three-year performance period through and including the
date on which the Change in Control of the Company occurs and the denominator
of which is 1096.

 

Important Information

 

1.  Participation - Employees recommended for participation in
the Executive Compensation Program are approved by the Compensation Committee
of the Board of Directors.

 

During the course of a fiscal year or within a given three-year
performance period, the Compensation Committee of the Board of Directors may
approve the addition or removal of participants from the various participating
groups.  In such cases, the Compensation
Committee will establish new performance targets and incentive award targets,
as appropriate.

 

iii

 

2.  Definitions

 

a.  Pretax Profit (Loss) means the revenues of the Company (on a
consolidated basis) or business unit less all expenses (except income taxes)
determined in accordance with generally accepted accounting principles (GAAP)
consistently applied for the fiscal year or performance period, except for
Adjustments for Unusual Transactions (as defined below).  Expenses include cost of sales, selling,
administrative and interest expenses. 
Each business unit will be charged an allocation of expenses including,
but not limited to, corporate overhead, real estate and interest so that pretax
profit for each business unit is “fully allocated” consistent with the business
plan financial statements and annual budgets.

 

b.  Net Income means Pretax Profit of the Company (on a
consolidated basis)  less a provision for
income taxes in accordance with GAAP except for Adjustments for Unusual
Transactions (as defined below).

 

c.  Earnings Per Diluted Share (EPS) means Net Income of the
Company (on a consolidated basis) divided by the weighted average number of
shares of Courier’s Common Stock outstanding, as well as the dilutive effect of
stock options.

 

d.  Assets include cash, accounts receivables (net of reserve
for uncollectible accounts), inventories (net of related reserves), other
current assets, fixed assets such as land, building, machinery and equipment
(net of accumulated depreciation), and other assets including, but not limited
to, long-term investments and goodwill, all accounted for in accordance with
GAAP on a consistent basis.

 

e.  Adjustments for Unusual Transactions - The impact of certain
transactions or events which may occur during the fiscal year or the performance
period and which are deemed by the Company to be unusual and non-recurring will
be excluded from Pretax Profit (Loss) and Net Income.  For example, a gain or loss on the sale of
real estate, the impact of a change in the method of accounting for inventories,
or earnings or losses from discontinued operations would be deemed to be
unusual transactions and therefore excluded from income.  Adjustments for Unusual Transactions will be
made by the Compensation Committee of the Company’s Board of Directors in its
sole discretion.

 

f.  Return on Assets (ROA) is Net Income (after Adjustments for
Unusual Transactions) divided by Assets (average of beginning and end of the
fiscal year) after Adjustments for Unusual Transactions deemed appropriate by
the Compensation Committee.

 

g.  Total Shareholder Return  (TSR) is the
return earned by a shareholder on his or her investment in the Company’s Common
Stock, assuming the reinvestment of quarterly dividends at the monthly closing
stock price.  Thus, TSR is based on both
the change in the price of the Company’s Common Stock and the value of
dividends paid, assuming that such dividends were used to purchase more of the
Company’s Common Stock.

 

h.  Peer Group is the peer group of companies selected by the Company
for purposes of comparison in the Company’s annual proxy statement.  The Peer Group of companies as of November 2005
is Banta Corporation; Bowne & Co.; Cadmus Communications Corporation;
Ennis Business Forms, Inc.; Thomas Nelson, Inc.; The Standard
Register Company; and John Wiley & Sons, Inc.  The Compensation Committee of the Company’s
Board of Directors may change the Peer Group at any time in its sole
discretion.

 

i.  Peer Group TSR is the return earned by a shareholder assuming
such shareholder simultaneously invests in the common stock of all the Peer
Group companies, assuming the reinvestment of quarterly dividends at the
monthly closing stock price.  In
computing Peer Group TSR, the returns of the Peer Group companies are weighted
annually by their respective stock market capitalizations.

 

j.  Change in Control of the Company shall be deemed to have
occurred if there is (i) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company’s Common Stock would be converted into cash,
securities or other property, other than a consolidation or merger of the
Company in which the holders of the Company’s Common Stock immediately prior to
the consolidation or merger have the same

 

iv

 

proportionate ownership of the common stock of the surviving
corporation immediately after the consolidation or merger, or (ii) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company.

 

k.   Affiliate means any person or entity which is controlled by
or under common control with the Company.

 

3.  Additional Information - The Compensation Committee of the
Board of Directors reserves the right to amend or terminate the Executive
Compensation Program, and participants would be provided with timely written
notice of any amendments or of the termination of the Program.   The Compensation Committee sets the rules and
interprets the Executive Compensation Program, and its rulings and decisions
are final.

 

An individual must be an employee of the Company or one of
its participating Affiliates and a participant in the Executive Compensation
Program as of the date payment is made in order to be eligible to receive the
annual cash incentive award and any of the LTPI and LTSI cash awards.  The Compensation Committee of the Board of
Directors of the Company may, at its sole discretion, determine a participant’s
eligibility to receive the LTPI and LTSI awards if a participant dies, becomes
disabled, or retires during the performance period.

 

Details of the Annual Cash Incentive, LTPI, and LTSI
Incentive are contained in the Personalized Illustration to each participant.  This summary, the Personalized Illustration,
and/or any other documents contained within or about the Executive Compensation
Program do not constitute a contract between any employee and the Company.  Neither the Program nor any action taken
thereunder shall be construed as giving any employee or other person any right
to be retained as an employee of the Company or any Affiliate.

 

vExhibit 10.3

 

COURIER CORPORATION

 

SENIOR EXECUTIVE SEVERANCE PROGRAM

 

As Amended and Restated December 5, 2005

 

1.                                       Purpose.  The Corporation’s Board of
Directors has determined that it is appropriate to reinforce and encourage the
continued attention and dedication of senior members of the Corporation’s
management to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a change in control of
the Corporation.  This Program sets forth
the severance compensation which the Corporation agrees it will pay to an
executive named herein (an “Executive,” and collectively, the “Executives”), in
the event that his employment with the Corporation terminates under the
circumstances described in Section 6 hereof following a Change in Control
of the Corporation, as defined herein.

 

2.                                       Change in Control.  No
compensation shall be payable under this Program to any Executive unless and
until his employment with the Corporation has terminated after a Change in
Control of the Corporation that occurs during his employment with the
Corporation.  For purposes of this
Program, a Change in Control of the Corporation shall be deemed to have
occurred if:

 

(i)                                     there is (x) any
consolidation or merger of the Corporation in which the Corporation is not the
continuing or surviving corporation or pursuant to which shares of the
Corporation’s Common Stock would be converted into cash, securities or other
property, other than a consolidation or merger of the Corporation in which the
holders of the Corporation’s Common Stock immediately prior to the consolidation
or merger have the same proportionate ownership of common stock of the
surviving corporation immediately after the consolidation or merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation, or

 

(ii)                                  the stockholders of
the Corporation approve any plan or proposal for the liquidation or dissolution
of the Corporation, or

 

(iii)                               any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”)) other than a trust related to an
employee benefit plan maintained by the Corporation becomes the beneficial
owner (within the meaning of Rule 13d-d under the Exchange Act) of 20% or
more of the Corporation’s outstanding Common Stock, and within the period of 24
consecutive months immediately thereafter the conditions of paragraph (iv) are
fulfilled, or

 

(iv)                              during any period of 24
consecutive months, individuals other than (x) individuals who at the beginning
of such period constitute the entire Board of Directors or (y) individuals
whose election, or nomination for election by the

 

 

Corporation’s stockholders, was approved by a vote of at least
two-thirds of the directors then still in office who were directors at the
beginning of the period, become a majority of the Board of Directors.

 

3.                                       Termination Following Change in Control.  If a
Change in Control of the Corporation occurs while an Executive is an employee
of the Corporation, he shall be entitled to the compensation and benefits
provided in Sections 6 and 7 hereof upon the subsequent termination of his
employment with the Corporation resulting from any reason other than the
Executive’s death, Disability, termination by the Corporation for Cause, or the
Executive’s decision to terminate his employment other than for Good Reason
(all as defined below).

 

(a)                                  Disability.  If as a result of incapacity due to physical
or mental illness an Executive is absent from his duties with the Corporation
on a full-time basis for six months, and does not return to the full-time
performance of his duties within 30 days after a Notice of Termination is
delivered to him by the Corporation in accordance with Section 4 hereof,
the Corporation may terminate his employment for Disability.

 

(b)                                 Cause.  The Corporation may terminate an Executive’s
employment for Cause only in the event that there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the entire membership of the Corporation’s
Board of Directors, at a meeting of the Board called and held for the purpose
(after reasonable notice to the Executive and an opportunity for the Executive,
together with his counsel, to be heard before the Board), finding that in the
good faith opinion of the Board the Executive was guilty of fraud,
misappropriation or embezzlement involving the Corporation, and specifying the
particulars thereof in detail.

 

(c)                                  Good
Reason.  An Executive may terminate
his employment for Good Reason, which term shall mean the occurrence of any of
the following without the Executive’s express written consent:

 

(i)                                     the assignment to
the Executive by the Corporation of duties inconsistent with and inferior to
his position, duties, responsibilities and status with the Corporation
immediately before a Change in Control of the Corporation; or a deleterious
change in the Executive’s titles or offices as in effect immediately before a
Change in Control of the Corporation; or any removal of the Executive from, or
failure to reelect the Executive to, any of such positions, except in
connection with the termination of his employment for Disability, or Cause, or
as a result of the Executive’s death, or by the Executive other than for Good
Reason;

 

(ii)                                  a reduction by the
Corporation in the Executive’s base salary as in effect on the date hereof or
as the same may be increased from time to time hereafter, or the Corporation’s
failure after a Change in Control of the Corporation to increase the Executive’s
base salary, within 12 months of the Executive’s last increase in base salary,
in an amount which is at least 50% of the average percentage increase in base
salary for all officers of the Corporation effected in the preceding 12 months;

 

2

 

(iii)                               any failure by the
Corporation to continue in effect any benefit plan or arrangement (including,
without limitation, its Profit Sharing and Savings Plan, Employee Stock
Ownership Plan, Group Health Program, Basic Life Insurance Plan, Supplemental
Life Insurance Plan, Accidental Death and Dismemberment Insurance Plan,
Business Travel Accident Insurance Plan, Long Term Disability Plan, and Salary
Continuation Plan) in which the Executive is participating at the time of a
Change in Control of the Corporation, or any other plans providing the
Executive with substantially similar benefits (“Benefit Plans”), or the taking
of any action by the Corporation which would adversely affect the Executive’s
participation in or materially reduce his benefits under any Benefit Plan, or
deprive him of any material fringe benefit enjoyed by him at the time of a
Change in Control of the Corporation;

 

(iv)                              any failure by the
Corporation to continue in effect any incentive plan or arrangement (including,
without limitation, its Executive Compensation Program) in which the Executive
is participating at the time of a Change in Control of the Corporation, or any
other plans or arrangements providing him with substantially similar benefits (“Incentive
Plans”), or the taking of any action by the Corporation which would adversely
affect the Executive’s participation in any Incentive Plan or reduce his
benefits under any Incentive Plan, expressed as a percentage of the total
benefits awarded under the Incentive Plans as a group, by more than 10
percentage points in any fiscal year as compared to the immediately preceding
fiscal year;

 

(v)                                 any failure by the
Corporation to continue in effect any plan or arrangement to receive securities
of the Corporation (including, without limitation, the Corporation’s 1983 Stock
Option Plan and any other plan or arrangement to receive and exercise stock
options, stock appreciation rights, restricted stock or grants thereof) in
which the Executive is participating at the time of a Change in Control of the
Corporation, or plans or arrangements providing him with substantially similar
benefits (“Securities Plans”), or the taking of any action by the Corporation
which would adversely affect the Executive’s participation in or materially
reduce his benefits under any Securities Plan;

 

(vi)                              a relocation of the
Corporation’s principal executive offices to a location outside of North
Chelmsford, Massachusetts, or the Executive’s relocation to any place other
than the location at which he performed his duties immediately before a Change
in Control of the Corporation, except for required travel on the Corporation’s
business to an extent substantially consistent with the Executive’s business
travel obligations at the time of a Change in Control of the Corporation;

 

(vii)                           any failure by the
Corporation to provide the Executive with the number of annual paid vacation
days to which he is entitled at the time of a Change in Control of the
Corporation;

 

(viii)                        any material breach by the
Corporation of any agreement pursuant to this Program;

 

3

 

(ix)                                any failure by the Corporation
to obtain the assumption of this Program by any successor or assign of the
Corporation; or

 

(x)                                   any purported
termination of the Executive’s employment which is not effected pursuant to a
Notice of Termination satisfying the requirements of Section 4;

 

provided that
no such occurrence may be asserted as Good Reason for an Executive’s
termination of his employment more than six months after the earlier of (y) the
last event constituting such occurrence, or (z) the second anniversary of the
last event constituting the Change in Control.

 

Notwithstanding
anything herein to the contrary, termination of employment by an Executive for
any reason during the 30-day window commencing one (1) year after the date
of a Change in Control shall be deemed to constitute Good Reason.

 

4.                                       Notice of Termination.  Any
termination of an Executive’s employment by the Corporation pursuant to Section 3(a) or
(b) hereof shall be communicated by a written notice indicating the
specific termination provisions in this Program relied upon, and setting forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under the provision so indicated (a “Notice
of Termination”).  For purposes of this
Program, no purported termination by the Corporation shall be effective without
a Notice of Termination.

 

5.                                       Date of Termination.  If an
Executive’s employment is terminated by the Corporation for Disability, the
Date of Termination of his employment shall be deemed to occur 30 days after
Notice of Termination is delivered to him, provided that he does not return to
the performance of his duties on a full-time basis during such 30-day period.  In the case of Disability, a Notice of
Termination may not be delivered to the Executive before the expiration of the
period of six months described in Section 3(a).  If an Executive’s employment is terminated by
the Corporation for any other reason, the Date of Termination of his employment
shall be deemed to occur on the date on which Notice of Termination is
delivered; provided that if within 30 days after any Notice of Termination is
given, the Executive notifies the Corporation in writing that a dispute exists
concerning the termination, the Date of Termination shall be the date 14 days
after delivery of such written notification, and the Executive’s duties shall
in any event cease on the date of delivery of the Notice of Termination.

 

6.                                       Severance Pay.

 

(a)                                  If
the Corporation terminates an Executive’s employment other than pursuant to Section 3(a) or
(b) hereof, or if the Executive terminates his employment for Good Reason,
then the Corporation shall pay to the Executive as severance pay in a lump sum
an amount equal to the product of (i) the average of the aggregate annual salary
and bonus paid (including any amounts deferred), during the five calendar years
preceding the Change in Control of the Corporation, to the Executive by the
Corporation and any of its subsidiaries subject to United States or Canadian
income taxes, and (ii) the factor applicable to the Executive in the
following chart:

 

4

 

	
   Name

   	
    

   	
   Factor

   
	
  J. Conway

  	
   

  	
  3.0

  
	
  R. Story

  	
   

  	
  3.0

  
	
  G. Nichols

  	
   

  	
  3.0

  
	
  P. Folger

  	
   

  	
  3.0

  

 

Any Vice
President of the Corporation with at least ten years of service with the
Corporation or one of its subsidiaries (but only during a period in which the
subsidiary is wholly-owned by the Corporation) shall also be eligible to
receive severance hereunder on the same terms and conditions except that the
factor shall be 2.0 instead of 3.0.  Such
amount shall be paid no later than the fifth day following the Date of
Termination; provided, however, that in the event that the severance payable
hereunder constitutes deferred compensation within the meaning of Section 409A
of the Internal Revenue Code of 1986, as amended, payment shall be delayed
until the first day of the seventh month following the Date of Termination.

 

(b)                                 Additional
Limitation.

 

(i)                                     Anything in this
Agreement to the contrary notwithstanding, in the event that any compensation,
payment or distribution by the Corporation to or for the benefit of Executive,
whether paid or payable or distributed or distributable pursuant to the terms
of this Agreement or otherwise (the “Severance Payments”), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of
1986, as amended (the “Code”), the following provisions shall apply:

 

(A)                              If
the Severance Payments, reduced by the sum of (1) the Excise Tax and (2) the
total of the Federal, state, and local income and employment taxes payable by
Executive on the amount of the Severance Payments which are in excess of the
Threshold Amount, are greater than or equal to the Threshold Amount, Executive
shall be entitled to the full benefits payable under this Agreement.

 

(B)                                If
the Threshold Amount is less than (x) the Severance Payments, but greater than
(y) the Severance Payments reduced by the sum of (1) the Excise Tax and (2) the
total of the Federal, state, and local income and employment taxes payable by
Executive on the amount of the Severance Payments which are in excess of the
Threshold Amount, then the benefits payable under this Agreement shall be
reduced (but not below zero) to the extent necessary so that the maximum
Severance Payments shall not exceed the Threshold Amount.  To the extent that there is more than one
method of reducing the payments to bring them within the Threshold Amount,
Executive shall determine which method shall be followed; provided that if
Executive fails to make such determination within 15 days after the Corporation
has sent Executive written notice of the need for such reduction, the
Corporation may determine the amount of such reduction in its sole discretion.

 

For the purposes of this Paragraph, “Threshold
Amount” shall mean three times Executive’s “base amount” within the meaning of Section 280G(b)(3) of
the Code

 

5

 

and the regulations promulgated thereunder
less one dollar ($1.00); and “Excise Tax” shall mean the excise tax imposed by Section 4999
of the Code, and any interest or penalties incurred by Executive with respect
to such excise tax.

 

(ii)                                  The determination as
to which of the alternative provisions of Subparagraph (i) above shall
apply to Executive shall be made by a nationally recognized accounting firm
selected by the Corporation (the “Accounting Firm”), which shall provide
detailed supporting calculations both to the Corporation and Executive within
15 business days of the Date of Termination, if applicable, or at such earlier
time as is reasonably requested by the Corporation or Executive.  For purposes of determining which of the
alternative provisions of Subparagraph (i) above shall apply, Executive
shall be deemed to pay Federal income taxes at the highest marginal rate of
Federal income taxation applicable to individuals for the calendar year in
which the determination is to be made, and state and local income taxes at the
highest marginal rates of individual taxation in the state and locality of Executive’s
residence on the Date of Termination, net of the maximum reduction in Federal
income taxes which could be obtained from deduction of such state and local
taxes.  Any determination by the
Accounting Firm shall be binding upon the Corporation and Executive.

 

7.                                       Continued Benefits.  In the
case of an Executive who becomes entitled to severance pay in accordance with Section 6
hereof, the Corporation shall also provide, at its own expense until December 31
of the second calendar year following the calendar year containing the Date of
Termination, continued coverage for the Executive (and, to the extent that
coverage existed for the Executive’s family members on the Date of Termination,
coverage for the Executive’s family members) under the Corporation’s Group
Health Program.  Notwithstanding the
preceding sentence, no such coverage shall continue after the date on which the
Executive becomes eligible for substantially similar coverage on account of his
employment by an enterprise other than the Corporation or any subsidiary of the
Corporation.

 

8.                                       No Obligation to Mitigate Damages; No Effect on
Other Contractual Rights.  No Executive shall
be required to mitigate damages or the amount of any payment provided for under
this Program by seeking other employment or otherwise, nor shall the amount of
any payment provided under this Program be reduced by any compensation earned
by an Executive as the result of employment by another employer after the Date
of Termination, except as specifically set forth in Section 7 hereof.  No payment provided for hereunder shall
reduce any amounts otherwise payable to the Executive, or in any way diminish
the Executive’s existing rights, or rights which would accrue solely as a
result of the passage of time, under any Benefit Plan, Incentive Plan or
Securities Plan, employment agreement or other contract, plan or arrangement
with the Corporation.

 

9.                                       Successor to the Corporation.  The
Corporation will require any successor or assign (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business or assets of the Corporation expressly, absolutely and
unconditionally to assume and agree to perform this Program in the same manner
and to the same extent that the Corporation would be required to perform it if
no such succession or assignment had taken place.  Any failure of the Corporation to obtain such
assumption before the effectiveness of any such succession or assignment shall
entitle an Executive to terminate his

 

6

 

employment
for Good Reason.  The benefits of this
program shall inure to the benefit of and be enforceable by an Executive’s
personal and legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees. 
If an Executive should die while any amounts are still payable to him
hereunder, all such amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Program to the Executive’s devisee, legatee,
or other designee or, if there be no such designee, to the Executive’s estate.

 

10.                                 Notice.  For purposes of this Program,
notices and all other communications provided for herein shall be in writing
and shall be deemed to have been duly given when delivered or mailed by United
States registered mail, return receipt requested, postage prepaid, as follows:

 

	
  If to the
  Corporation:

  	
   

  	
  Courier
  Corporation

  
	
   

  	
   

  	
  15 Wellman
  Avenue

  
	
   

  	
   

  	
  N.
  Chelmsford, MA  01863

  
	
   

  	
   

  	
   

  
	
  If to the
  Executive:

  	
   

  	
  To his
  address indicated on the Corporation’s records

  

 

or such other
address as either party may have furnished to the other in writing in
accordance herewith, except that notices of change of address shall be
effective only upon receipt.

 

11.                                 Amendment or Termination.  No provision of this Program may be amended or terminated
without the written consent of the Corporation and the Executives.

 

12.                                 Funding of Severance
Obligations.  At the sole discretion of the
Board of Directors, the Corporation may establish a rabbi trust with an independent
bank trustee and may make a contribution to such trust to satisfy the
Corporation’s severance obligations hereunder.

 

7

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