Document:

Exhibit 4.5

 

Execution
Copy

 

SHERIDAN
ACQUISITION CORP.

 

(to be merged with and into The Sheridan Group, Inc.)

 

$105,000,000
101⁄4% Senior Secured Notes due 2011

 

JOINDER TO THE REGISTRATION
RIGHTS AGREEMENT

 

August 21, 2003

 

 

JEFFERIES & COMPANY, INC.

11100 Santa Monica Boulevard

10th Floor

Los Angeles, California 90025

 

 

Ladies and Gentlemen:

 

Reference is made to the Registration Rights Agreement (the “Registration
Rights Agreement”) dated August 21, 2003, by and among Sheridan
Acquisition Corp., a Delaware corporation (the “Issuer”), on the one hand,
and Jefferies & Company, Inc. (the “Initial Purchaser”), on the other
hand.  Capitalized terms used herein but
not defined herein shall have the respective meanings assigned to such terms in
the Registration Rights Agreement.

 

The Issuer and each of the Guarantors listed on the signature pages
hereto agree that this letter agreement is being executed and delivered in
connection with the issue and sale of the Notes and the Guarantees pursuant to
the Purchase Agreement and to induce the Initial Purchase to purchase the Notes
and the Guarantees thereunder and is being executed concurrently with the
consummation of the Acquisition and effectiveness of the Merger.

 

1.             Joinder.  Each of the parties hereto hereby agrees to
become bound by the terms, conditions and other provisions of the Registration
Rights Agreement with all attendant rights, duties and obligations stated
therein, with the same force and effect as if originally named as a Guarantor
therein and as if such party executed the Registration Rights Agreement on the
date thereof.

 

2.             GOVERNING
LAW.  THIS LETTER AGREEMENT
SHALL BE CONSTRUED AND INTERPRETED, AND THE RIGHTS OF THE PARTIES SHALL BE
DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND RULE 327(b) OF NEW YORK CIVIL PRACTICE LAWS AND RULES.

 

 

3.             Counterparts.  This letter agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.

 

4.             Amendments.  No amendment or waiver of any provision of
this letter agreement, nor any consent or approval to any departure therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the parties hereto.

 

5.             Headings.  The headings in this letter agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

 

[signature pages follow]

 

2

 

If the foregoing is in accordance with your understanding of this
letter agreement, kindly sign and return to us a counterpart thereof, whereupon
this instrument will become a binding agreement among the Issuer, the
Guarantors parties hereto and the Initial Purchaser in accordance with its
terms

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Guarantors

  
	
   

  	
   

  
	
   

  	
  CAPITAL CITY PRESS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DARTMOUTH PRINTING
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: Treasurer

  

 

 

	
   

  	
  DARTMOUTH JOURNAL
  SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SHERIDAN BOOKS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE SHERIDAN GROUP
  HOLDING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE SHERIDAN PRESS,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: Treasurer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  UNITED LITHO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robert M. Jakobe

  	
   

  
	
   

  	
   

  	
  Name: Robert M. Jakobe

  
	
   

  	
   

  	
  Title: Treasurer

  
					

 

 

ACCEPTED AND AGREED TO:

 

JEFFERIES
& COMPANY, INC.

 

 

	
  By:

  	
  /s/ Brent Stevens

  	
   

  
	
   

  	
  Name: Brent Stevens

  
	
   

  	
  Title: Executive Vice PresidentExhibit
10.1

 

 

REVOLVING CREDIT AGREEMENT

 

 

Among

 

FLEET NATIONAL BANK

 

and

 

SHERIDAN ACQUISITION CORP.

 

and

 

THE SHERIDAN GROUP, INC.

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE 1

  	
  THE REVOLVING LOAN FACILITY

  
	
   

  	
   

  
	
  Section 1.01.

  	
  Commitment to Lend

  
	
   

  	
   

  
	
  Section 1.02.

  	
  Manner of Borrowing

  
	
   

  	
   

  
	
  Section 1.03.

  	
  Disbursements

  
	
   

  	
   

  
	
  Section 1.04.

  	
  Letters of Credit and Letter of Credit
  Fees

  
	
   

  	
   

  
	
  ARTICLE 2

  	
  SWING LOAN FACILITY

  
	
   

  	
   

  
	
  Section 2.01.

  	
  Swing Loan Availability

  
	
   

  	
   

  
	
  Section 2.02.

  	
  Terms of Swing Credit Loan Borrowings

  
	
   

  	
   

  
	
  Section 2.03.

  	
  Daily Repayment of Swing Loans

  
	
   

  	
   

  
	
  ARTICLE 3

  	
  BANKER’S ACCEPTANCE FACILITY

  
	
   

  	
   

  
	
  Section 3.01.

  	
  Issuance

  
	
   

  	
   

  
	
  Section 3.02.

  	
  Payment of Acceptances

  
	
   

  	
   

  
	
  Section 3.03.

  	
  Costs and Indemnity

  
	
   

  	
   

  
	
  Section 3.04.

  	
  Representations regarding Eligibility of
  Acceptances

  
	
   

  	
   

  
	
  Section 3.05.

  	
  Compliance with Laws

  
	
   

  	
   

  
	
  Section 3.06.

  	
  Power of Attorney

  
	
   

  	
   

  
	
  ARTICLE 4

  	
  PAYMENTS AND PREPAYMENTS

  
	
   

  	
   

  
	
  Section 4.01.

  	
  Reductions In Commitment

  
	
   

  	
   

  
	
  Section 4.02.

  	
  Optional Prepayments of Loans

  
	
   

  	
   

  
	
  Section 4.03.

  	
  Repayment of Loans In Connection with
  Reductions of Commitment

  
	
   

  	
   

  
	
  ARTICLE 5

  	
  INTEREST AND FEES

  
	
   

  	
   

  
	
  Section 5.01.

  	
  Interest

  
	
   

  	
   

  
	
  Section 5.02.

  	
  Election of Interest Rate

  
	
   

  	
   

  
	
  Section 5.03.

  	
  Interest Upon Default

  
	
   

  	
   

  
	
  Section 5.04.

  	
  Fees

  
	
   

  	
   

  
	
  Section 5.05.

  	
  Computation of Interest and Related Fees

  
	
   

  	
   

  
	
  ARTICLE 6

  	
  GENERAL MATTERS CONCERNING LOANS

  
	
   

  	
   

  
	
  Section 6.01.

  	
  Manner of Tendering Payments by Borrower

  
	
   

  	
   

  
	
  Section 6.02.

  	
  The Note

  
	
   

  	
   

  
	
  Section 6.03.

  	
  Loan Account

  
				

 

 

	
  Section 6.04.

  	
  Additional Provisions Concerning Certain
  Loans

  
	
   

  	
   

  
	
  Section 6.05.

  	
  Taxes

  
	
   

  	
   

  
	
  ARTICLE 7

  	
  CONDITIONS PRECEDENT

  
	
   

  	
   

  
	
  Section 7.01.

  	
  Conditions Precedent to Initial Loan

  
	
   

  	
   

  
	
  Section 7.02.

  	
  Payment of Fees and Costs

  
	
   

  	
   

  
	
  Section 7.03.

  	
  Conditions Precedent to Each Loan

  
	
   

  	
   

  
	
  Section 7.04.

  	
  Method of Satisfying Certain Conditions

  
	
   

  	
   

  
	
  ARTICLE 8

  	
  REPRESENTATIONS AND WARRANTIES OF BORROWER

  
	
   

  	
   

  
	
  Section 8.01.

  	
  Organization and Qualification

  
	
   

  	
   

  
	
  Section 8.02.

  	
  Capitalization and Ownership of Borrower

  
	
   

  	
   

  
	
  Section 8.03.

  	
  Capitalization and Ownership of
  Subsidiaries

  
	
   

  	
   

  
	
  Section 8.04.

  	
  Authorization and Execution

  
	
   

  	
   

  
	
  Section 8.05.

  	
  Enforceability; Consents

  
	
   

  	
   

  
	
  Section 8.06.

  	
  Security Interests in Collateral

  
	
   

  	
   

  
	
  Section 8.07.

  	
  Real Property of Borrower, Sheridan and
  its Subsidiaries

  
	
   

  	
   

  
	
  Section 8.08.

  	
  Absence of Conflict with other Agreements,
  Etc.

  
	
   

  	
   

  
	
  Section 8.09.

  	
  Business

  
	
   

  	
   

  
	
  Section 8.10.

  	
  Condition of Assets

  
	
   

  	
   

  
	
  Section 8.11.

  	
  Use of Proceeds

  
	
   

  	
   

  
	
  Section 8.12.

  	
  Litigation

  
	
   

  	
   

  
	
  Section 8.13.

  	
  Indebtedness

  
	
   

  	
   

  
	
  Section 8.14.

  	
  Financial Statements

  
	
   

  	
   

  
	
  Section 8.15.

  	
  Fiscal Year

  
	
   

  	
   

  
	
  Section 8.16.

  	
  Title to Assets

  
	
   

  	
   

  
	
  Section 8.17.

  	
  Patents, Trademarks, Licenses, Franchises,
  Etc.

  
	
   

  	
   

  
	
  Section 8.18.

  	
  Compliance with Law

  
	
   

  	
   

  
	
  Section 8.19.

  	
  Compliance with ERISA

  
	
   

  	
   

  
	
  Section 8.20.

  	
  Compliance with Regulations U and X

  
	
   

  	
   

  
	
  Section 8.21.

  	
  Investment Company Act

  
	
   

  	
   

  
	
  Section 8.22.

  	
  Public Utility Holding Company Act

  
	
   

  	
   

  
	
  Section 8.23.

  	
  Absence of Default, Etc.

  
			

 

 

	
  Section 8.24.

  	
  Agreements with Affiliates and Management
  Agreements

  
	
   

  	
   

  
	
  Section 8.25.

  	
  No Burdensome Agreements; Material
  Agreements.

  
	
   

  	
   

  
	
  Section 8.26.

  	
  Solvency

  
	
   

  	
   

  
	
  Section 8.27.

  	
  Taxes

  
	
   

  	
   

  
	
  Section 8.28.

  	
  Environmental Compliance

  
	
   

  	
   

  
	
  Section 8.29.

  	
  Labor Disputes and Acts of God

  
	
   

  	
   

  
	
  Section 8.30.

  	
  Related Transactions

  
	
   

  	
   

  
	
  Section 8.31.

  	
  Representations and Warranties
  Incorporated from Other Operative Documents

  
	
   

  	
   

  
	
  ARTICLE 9

  	
  FINANCIAL COVENANTS

  
	
   

  	
   

  
	
  Section 9.01.

  	
  Financial Covenants

  
	
   

  	
   

  
	
  Section 9.02.

  	
  Limitation on Capital Expenditures

  
	
   

  	
   

  
	
  ARTICLE 10

  	
  COVENANTS CONCERNING REPORTING REQUIREMENTS

  
	
   

  	
   

  
	
  Section 10.01.

  	
  Financial Statements

  
	
   

  	
   

  
	
  Section 10.02.

  	
  Officer’s Compliance Certificates

  
	
   

  	
   

  
	
  Section 10.03.

  	
  Auditors Reports

  
	
   

  	
   

  
	
  Section 10.04.

  	
  Notice of Default

  
	
   

  	
   

  
	
  Section 10.05.

  	
  Notice Concerning Representations and
  Warranties

  
	
   

  	
   

  
	
  Section 10.06.

  	
  Notice of Litigation

  
	
   

  	
   

  
	
  Section 10.07.

  	
  SEC Disclosure

  
	
   

  	
   

  
	
  Section 10.08.

  	
  Conditions Affecting Collateral

  
	
   

  	
   

  
	
  Section 10.09.

  	
  ERISA Notices

  
	
   

  	
   

  
	
  Section 10.10.

  	
  Miscellaneous

  
	
   

  	
   

  
	
  Section 10.11.

  	
  Authorization of Third Parties to Deliver
  Information

  
	
   

  	
   

  
	
  ARTICLE 11

  	
  BUSINESS COVENANTS

  
	
   

  	
   

  
	
  Section 11.01.

  	
  Indebtedness

  
	
   

  	
   

  
	
  Section 11.02.

  	
  Liens

  
	
   

  	
   

  
	
  Section 11.03.

  	
  Investments and Acquisitions

  
	
   

  	
   

  
	
  Section 11.04.

  	
  Restricted Payments

  
	
   

  	
   

  
	
  Section 11.05.

  	
  Affiliate Transactions

  
	
   

  	
   

  
	
  Section 11.06.

  	
  Disposition of Assets

  
	
   

  	
   

  
	
  Section 11.07.

  	
  Liquidation or Merger

  
				

 

 

	
  Section 11.08.

  	
  Change in Organizational Documents

  
	
   

  	
   

  
	
  Section 11.09.

  	
  Issuance of Equity

  
	
   

  	
   

  
	
  Section 11.10.

  	
  Environmental Violations

  
	
   

  	
   

  
	
  Section 11.11.

  	
  Preservation of Existence, Etc.

  
	
   

  	
   

  
	
  Section 11.12.

  	
  Permitted Businesses

  
	
   

  	
   

  
	
  Section 11.13.

  	
  Compliance with Law

  
	
   

  	
   

  
	
  Section 11.14.

  	
  Payment of Taxes and Claims

  
	
   

  	
   

  
	
  Section 11.15.

  	
  Tax Consolidation

  
	
   

  	
   

  
	
  Section 11.16.

  	
  Maintenance of Properties

  
	
   

  	
   

  
	
  Section 11.17.

  	
  Insurance

  
	
   

  	
   

  
	
  Section 11.18.

  	
  Compliance with ERISA

  
	
   

  	
   

  
	
  Section 11.19.

  	
  Maintenance of Records; Fiscal Year

  
	
   

  	
   

  
	
  Section 11.20.

  	
  Inspections & Field Examinations

  
	
   

  	
   

  
	
  Section 11.21.

  	
  Exchange of Notes

  
	
   

  	
   

  
	
  Section 11.22.

  	
  Compliance with Federal Reserve
  Regulations

  
	
   

  	
   

  
	
  Section 11.23.

  	
  Limitations on Certain Restrictive
  Provisions

  
	
   

  	
   

  
	
  Section 11.24.

  	
  Corporate Separateness

  
	
   

  	
   

  
	
  Section 11.25.

  	
  Deposit Accounts

  
	
   

  	
   

  
	
  Section 11.26.

  	
  Collateral; Lockbox

  
	
   

  	
   

  
	
  Section 11.27.

  	
  Joinder of Subsidiaries

  
	
   

  	
   

  
	
  Section 11.28.

  	
  Further Assurances

  
	
   

  	
   

  
	
  ARTICLE 12

  	
  DEFAULT

  
	
   

  	
   

  
	
  Section 12.01.

  	
  Events of Default

  
	
   

  	
   

  
	
  Section 12.02.

  	
  Remedies

  
	
   

  	
   

  
	
  Section 12.03.

  	
  Cash Collateral

  
	
   

  	
   

  
	
  ARTICLE 13

  	
  DEFINITIONS

  
	
   

  	
   

  
	
  Section 13.01.

  	
  Defined Terms

  
	
   

  	
   

  
	
  Section 13.02.

  	
  Accounting Terms

  
	
   

  	
   

  
	
  Section 13.03.

  	
  Other Definitional Provisions

  
	
   

  	
   

  
	
  ARTICLE 14

  	
  MISCELLANEOUS

  
	
   

  	
   

  
	
  Section 14.01.

  	
  Notices

  
			

 

 

	
  Section 14.02.

  	
  Duration; Survival

  
	
   

  	
   

  
	
  Section 14.03.

  	
  No Implied Waiver; Rights Cumulative

  
	
   

  	
   

  
	
  Section 14.04.

  	
  Entire Agreement and Amendments

  
	
   

  	
   

  
	
  Section 14.05.

  	
  Successors and Assigns

  
	
   

  	
   

  
	
  Section 14.06.

  	
  Descriptive Headings

  
	
   

  	
   

  
	
  Section 14.07.

  	
  Governing Law

  
	
   

  	
   

  
	
  Section 14.08.

  	
  Payments Due on Non-Business Days

  
	
   

  	
   

  
	
  Section 14.09.

  	
  Counterparts

  
	
   

  	
   

  
	
  Section 14.10.

  	
  Maximum Lawful Interest Rate

  
	
   

  	
   

  
	
  Section 14.11.

  	
  Set-off of Bank Accounts

  
	
   

  	
   

  
	
  Section 14.12.

  	
  Severability

  
	
   

  	
   

  
	
  Section 14.13.

  	
  Payment and Reimbursement of Costs and
  Expenses; Indemnification

  
	
   

  	
   

  
	
  Section 14.14.

  	
  Consent To Jurisdiction

  
	
   

  	
   

  
	
  Section 14.15.

  	
  Termination

  
	
   

  	
   

  
	
  Section 14.16.

  	
  Waiver of Right to Jury Trial

  
	
   

  	
   

  
	
  Section 14.17.

  	
  Confidentiality

  
	
   

  	
   

  
	
  Section 14.18.

  	
  Intercreditor

  

 

 

EXHIBITS

 

	
  EXHIBIT A

  	
   

  	
  Form of Revolving Loan Note

  
	
  EXHIBIT B

  	
   

  	
  Form of Request for Advance

  
	
  EXHIBIT C

  	
   

  	
  Bankers Acceptance Confirmation

  
	
  EXHIBIT D

  	
   

  	
  Form of Notice of Conversion

  
	
  EXHIBIT E

  	
   

  	
  Form of Borrowing Base Certificate

  
	
  EXHIBIT F

  	
   

  	
  Form of Compliance Certificate

  
	
  EXHIBIT G

  	
   

  	
  Form of Assignment and Acceptance Agreement

  
	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Schedule 8.01

  	
   

  	
  Jurisdictions Where Borrower and Each of
  Its Subsidiaries is Incorporated and Qualified

  
	
  Schedule 8.02

  	
   

  	
  Capital Stock of (or Other Equity
  Interests In) the Borrower

  
	
  Schedule 8.03

  	
   

  	
  Capital Stock of (or Other Equity
  Interests in) the subsidiaries of the Borrower

  
	
  Schedule 8.06

  	
   

  	
  Filing Locations for Financing Statements
  and Mortgages

  
	
  Schedule 8.07

  	
   

  	
  Real Property Owned or Leased by Borrower
  and Subsidiaries

  
	
  Schedule 8.13

  	
   

  	
  Indebtedness of Borrower and Its
  Subsidiaries

  
	
  Schedule 8.17

  	
   

  	
  List of Patents, Trademarks and
  Other Intangible Rights

  
	
  Schedule 8.19

  	
   

  	
  ERISA Disclosure

  
	
  Schedule 8.24

  	
   

  	
  Agreements With Affiliates

  
	
  Schedule 8.25

  	
   

  	
  Material Agreements

  
	
  Schedule 11.02

  	
   

  	
  Existing Liens

  
	
  Schedule 13.01

  	
   

  	
  Approved Account Debtors

  

 

 

REVOLVING
CREDIT AGREEMENT

 

REVOLVING CREDIT
AGREEMENT made as of the 21st day of August, 2003 by and among SHERIDAN
ACQUISITION CORP., a Delaware corporation (“Acquisition Co.”), THE SHERIDAN
GROUP, INC., a Maryland corporation (“Sheridan”), and FLEET NATIONAL BANK
(“Lender”).  Concurrently with the
execution and delivery of this Agreement, Acquisition Co. will merge with and
into Sheridan.  Acquisition Co. will be
the initial Borrower hereunder and concurrently with the consummation of such
merger, Sheridan will become the successor-in-interest of Acquisition Co.
hereunder and references herein to “Borrower” with respect to the period
commencing with consummation of the merger shall mean the surviving entity
thereof.

 

RECITALS:

 

WHEREAS, Acquisition Co.
was organized for the purpose of acquiring substantially all of the capital
stock of Sheridan (the “Sheridan Acquisition”);
and

 

WHEREAS, concurrently
with the execution and delivery hereof, the Acquisition is being consummated
pursuant to the terms of that certain Stock Purchase Agreement dated as of
August 1, 2003 among Acquisition Co., Sheridan and the stockholders of Sheridan
(as amended or otherwise modified to the date hereof, the “Purchase Agreement”); and

 

WHEREAS, concurrently
with the execution and delivery hereof, Acquisition Co. is being merged with
and into Sheridan, with Sheridan as the surviving corporation (the “Merger”); and

 

WHEREAS, Borrower desires
that Lender extend a revolving loan facility (with a letter of credit
sublimit), swing loan facility and banker’s acceptance facility to provide
funds necessary to consummate the Sheridan Acquisition in accordance with the
provisions of the Purchase Agreement, to provide working capital financing for
Sheridan and its Subsidiaries and to provide credit for other general business
purposes of Sheridan and its Subsidiaries; and

 

WHEREAS, the Borrower
desires to borrow, and the Lender is willing to extend credit from time to time
on a revolving credit basis until the Revolving Credit Termination Date (as
defined below), an aggregate principal amount not to exceed Eighteen Million
dollars ($18,000,000) outstanding at any time. 
The loans and credit are to be secured by the stock and assets of the
Borrower and its Subsidiaries.  Certain
terms used herein are defined in Article 13 below.

 

NOW THEREFORE, the
parties hereto, intending to be legally bound, agree as follows:

 

 

 

ARTICLE 1

 

THE
REVOLVING LOAN FACILITY

 

Section 1.01.                             Commitment to Lend.  The Lender agrees, upon the terms and
conditions set forth below, from time to time until the Revolving Credit
Termination Date, to make Revolving Credit Loans to the Borrower in such
amounts as the Borrower may request, subject to the limitation that at no time
shall Revolving Credit Outstandings exceed Revolving Credit Limit.  The amount of any single Base Rate Loan
shall be fifty thousand dollars ($50,000) or an integral multiple of ten
thousand dollars ($10,000) in excess thereof, and the amount of any single
LIBOR Loan shall be one hundred thousand dollars ($100,000) or an integral
multiple of ten thousand dollars ($10,000) in excess thereof.  Within such limitations and subject to the
terms and conditions set forth below, the Borrower may borrow, prepay and
reborrow, from time to time, on a revolving basis.  Lender shall have no obligation to make any Revolving Credit
Loans at any time that a Default exists.

 

Section 1.02.                             Manner of Borrowing.  To request a Revolving Credit Loan, the
Borrower shall, prior to 12:00 noon on the desired date of a Base Rate Loan or
at least two (2) Business Days prior to the desired date for a LIBOR Loan, (a)
deliver to the Lender a Request for Advance or (b) give the Lender telephonic
notice of the information specified in a Request for Advance followed
immediately by delivery of such a Request for Advance, provided, however,
that the Borrower’s failure to confirm any telephonic notice with a Request for
Advance shall not invalidate any notice so given if acted upon by the
Lender.  Any notice given to the Lender
pursuant to this Section shall be given prior to 11:00 a.m. (Philadelphia time)
on the requisite Business Day and shall be irrevocable once given.

 

Section 1.03.                             Disbursements.  Prior to 2:00 p.m. (Philadelphia time) on
the date of a Revolving Credit Loan, the Lender shall, subject to the
satisfaction of the conditions set forth in Article 7 below, disburse the funds
to the Borrower (a) by wire transfer pursuant to the Borrower’s instructions,
or (b) in the absence of such instructions, by crediting the account of the
Borrower maintained with the Lender.

 

Section 1.04.                             Letters of Credit and Letter of Credit Fees.

 

(a)                                  Letter
of Credit.  On the terms and subject
to the conditions set forth herein, Lender will prior to the Revolving Credit
Termination Date issue standby or documentary Letters of Credit so long as:

 

(i)                                     Lender
shall have received a Notice of LC Credit Event at least two (2) Business Days
before the relevant date of issuance; and

 

(ii)                                  After
giving effect to such issuance (A) the aggregate Letter of Credit Liabilities
under all Letters of Credit do not exceed $5,000,000 and (B) the Revolving
Credit Outstandings do not exceed the Revolving Credit Limit.

 

2

 

(b)                                 Letter
of Credit Fee.  Borrowers shall pay
to Lender a letter of credit fee with respect to the Letter of Credit
Liabilities for each Letter of Credit, computed for each day from the date of
issuance of such Letter of Credit to the date that is the last day a drawing is
available under such Letter of Credit, at a rate per annum equal to the
Applicable Margin then applicable to LIBOR Loans.  Such fee shall be payable in arrears on the first Business Day of
each fiscal quarter prior to the Revolving Credit Termination Date and on such
date.  In addition, Borrower agrees to
pay promptly to the Lender any standard fees that it may charge in connection
with any Letter of Credit.

 

(c)                                  Reimbursement
Obligations of Borrower.  If Lender
shall make a payment pursuant to a Letter of Credit, the Borrower shall
promptly reimburse Lender, following notice from Lender to Borrower of the
amount of such payment, for the amount of such payment and, to the extent that
so doing would not, to Lender’s knowledge, cause the Revolving Credit
Outstandings to exceed the Revolving Credit Limit, Borrower shall be deemed to
have requested a Revolving Credit Loan, the proceeds of which will be used to
satisfy such Reimbursement Obligations. 
The Borrower shall pay interest, on demand, on all amounts so paid by
Lender for each day until Borrower reimburses Lender therefor at a rate per
annum equal to the sum of two percent (2%) plus the interest rate applicable to
Revolving Credit Loans (which are Prime Rate Loans) for such day.

 

(d)                                 Reimbursement
and Other Payments by Borrower.  The
obligations of Borrower to reimburse Lender pursuant to Section 1.04(c) shall
be absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under all circumstances
whatsoever, including the following:

 

(i)                                     any
lack of validity or enforceability of, or any amendment or waiver of or any
consent to departure from, any Letter of Credit or any related document;

 

(ii)                                  the
existence of any claim, set-off, defense or other right which Borrower may have
at any time against the beneficiary of any Letter of Credit, the Lender
(including any claim for improper payment), or any other Person, whether in
connection with any Loan Document or any unrelated transaction, provided, that
nothing herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;

 

(iii)                               any
statement or any other document presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever; or

 

(iv)                              to
the extent permitted under applicable law, any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.

 

(e)                                  Deposit
Obligations of Borrower.  In the
event any Letters of Credit are outstanding at the time that Borrower prepays
or is required to repay the Obligations or the Commitment is terminated,
Borrower shall (i) deposit with Lender cash in an amount equal to one hundred
and two percent (102%) of the aggregate outstanding Letter of Credit

 

3

 

Liability to be available
to Lender to reimburse payments of drafts drawn under such Letters of Credit
and pay any fees and expenses related thereto and (ii) prepay the fee payable
under Section 1.04(b) with respect to such Letters of Credit for the full
remaining terms of such Letters of Credit. 
Upon termination of any such Letter of Credit, the unearned portion of
such prepaid fee attributable to such Letter of Credit shall be refunded to
Borrower, together with the deposit described in the preceding clause (i) to
the extent not previously applied by Lender in the manner described herein.

 

ARTICLE 2

 

SWING
LOAN FACILITY

 

Section 2.01.                             Swing Loan Availability.

 

(a)                                  Subject
to subsection (c), upon the terms and subject to the conditions of this
Agreement, Lender agrees to make, from time to time, until the Revolving Credit
Termination Date, one or more loans (“Swing Loans”) to the Borrower, in an
aggregate principal amount not exceeding at any time $3,000,000 (the “Swing
Loan Limit”), provided that the Revolving Credit Outstandings shall at no time
exceed the Revolving Credit Limit (the “Swing Loan Facility”).

 

(b)                                 Borrower
has executed and delivered to the Lender on the date hereof an Automated Credit
Sweep Service Agreement, and has accepted all of the terms and conditions of
all other client or account agreements referenced in, and executed in
connection with such agreement.

 

(c)                                  This
Article 2 shall become effective when Borrower and the Lender have established
a link between (i) a demand deposit account of Borrower with Lender (the “Swing
Loan Account”) and (ii) the Swing Loan Facility, in order to provide for, among
other things, automatic advances under the Swing Loan Facility to fund debits
to the Swing Loan Account that are not otherwise covered by available funds
(“Debits”) and automatic repayment of principal and interest on the Swing Loan
on a daily basis from funds in the Swing Loan Account.

 

Section 2.02.                             Terms of Swing Credit Loan Borrowings.  Swing Loans shall be made by the Lender as
follows:

 

(a)                                  Subject
to Section 2.01(a), and provided that the Lender has not terminated the linkage
to the Swing Loan Account, Swing Loans shall be made by the Lender on an
automatic basis to fund Debits to the Swing Loan Account (that otherwise would
result in an overdraft), and to maintain any applicable target balance set by
Lender and Borrower (the “Target Balance”). Such Loans shall not require the
specific authorization of the Borrower. Any Swing Loans affirmatively desired
by the Borrower may be initiated only by accessing the Swing Loan Account
directly via check or other method deemed appropriate by the Lender.

 

4

 

(b)                                 A
Swing Loan shall not occur if the credit availability is insufficient to cover
the full amount necessary to maintain the applicable Target Balance.  The Borrower agrees that the Lender has the
right to decline, at any time in the exercise of its sole discretion, to make
an automatic Swing Loan to the Borrower.

 

Section 2.03.                             Daily Repayment of Swing Loans.

 

(a)                                  All
Swing Loans, plus accrued interest and any late fees or other amounts due to
the Lender, shall be automatically debited from the Swing Loan Account and
repaid on a daily basis, provided that there are available funds in the Swing
Loan Account and subject to any applicable Target Balance.  If the funds available in the Swing Loan
Account are less than the amount necessary to repay all outstanding Swing
Loans, a partial repayment shall be debited from available funds in the Swing Loan
Account, subject to any applicable Target Balance. Partial repayments will
continue as funds become available until repayment is made in full.  If there are insufficient funds available in
the Swing Loan Account to cover the daily repayment of all outstanding Swing
Loans, a Revolving Credit Loan shall not automatically occur to fund such
repayment.

 

(b)                                 The
Borrower agrees to maintain sufficient funds on deposit in the Swing Loan
Account to provide for the daily repayment of all outstanding Swing Loans, plus
accrued interest and any late fees or other amounts due to the Lender.  Upon receipt of a late payment notification
(“Payment Notification’), the Borrower agrees to make an immediate deposit to
the Swing Loan Account of sufficient funds to repay all outstanding Swing
Loans.  If full repayment is not
received within ten (10) days of the date of receipt by Borrower of the Payment
Notification (which shall be deemed to be three calendar days from the date on
the Payment Notification), the Default Rate of interest shall be due to the
Lender in accordance with the terms of the Loan Documents.

 

(c)                                  Subject
to Section 2.03(d), repayment of amounts due under this Article may be made
only by deposit to the linked Swing Loan Account and automatic debit by the
Lender of available funds in the Swing Loan Account to satisfy the amounts
due.  Items on deposit include wire
transfers to the Swing Loan Account, electronic items, cash and check deposits
and any other credit items deemed to be on deposit by the Lender.

 

(d)                                 Notwithstanding
anything herein to the contrary, the Lender reserves the right to mail an
invoice to the Borrower, at any time and from time to time, for the entire
unpaid principal balance of the Swing Loans and accrued interest plus any late
fees or other amounts due under this Agreement with respect thereto.  In addition, the Lender reserves the right
to collect payment of the Swing Loans from the Borrower by check or any other
payment method at the Revolving Credit Termination Date, whether such termination
is voluntary or the result of demand by the Lender or an Event of Default, or
at the time the Borrower requests payoff information in anticipation of paying
all Obligations and terminating the Commitment, or any other time deemed
appropriate by the Lender.

 

5

 

(e)                                  The
Borrower acknowledges and agrees that the Lender may sever the link between the
Swing Loan Facility and the Swing Loan Account at any time upon three (3) days’
prior written notice to the Borrower. 
If the link is severed, no Swing Loans will be made under the Swing Loan
Facility to fund Debits in the Account. The Lender may continue to
automatically debit the Swing Loan Account for amounts due to it for principal,
interest and late fees in accordance with the terms of the Loan Documents.

 

ARTICLE 3

 

BANKER’S
ACCEPTANCE FACILITY

 

Section 3.01.                             Issuance.  The Lender may from time to time receive from the Borrower drafts
for Acceptance by the Lender in U.S. Dollars, provided that, at no time shall
the Revolving Credit Outstandings exceed the Revolving Credit Limit.  In consideration of the Acceptance by the
Lender, at the Lender’s option, of any such drafts, the Borrower hereby
unconditionally agrees with the Lender as set forth in this Article 3.

 

Section 3.02.                             Payment of Acceptances.  The Borrower agrees to pay to the Lender or
to its order the face amount of any such Acceptance in U.S. Dollars on the
maturity date of such Acceptance.

 

Section 3.03.                             Costs and Indemnity.  The Borrower also agrees to indemnify the
Lender and its correspondents from, and hold them harmless against, any and all
claims, losses, liabilities or damages, including reasonable attorney fees,
howsoever arising from or in connection with any Acceptance or this
Agreement.  The agreements in this
paragraph shall survive any payment under or termination of this Agreement.

 

Section 3.04.                             Representations regarding Eligibility of Acceptances.  The Borrower represents, warrants and
covenants that (a) all Acceptances hereunder shall arise out of one or more
transactions involving (i) the importation or exportation of Goods between two
countries or (ii) the domestic shipment of Goods within the United States, (b)
each Acceptance outstanding hereunder shall not exceed the amount reasonably
required to effect the importation, exportation or domestic shipment within the
United States of the relevant Goods, (c) each Acceptance hereunder shall arise
out of current shipments occurring within 45 days of the creation of such
Acceptance, (d) the proceeds of the sale of the underlying Goods will be used
to repay the Borrower’s obligations to the Lender in respect of the relevant
Acceptance, (e) each Acceptance hereunder shall set forth as its maturity date
the estimated date by which the underlying Goods are expected to be sold and liquidated
but, in any event, shall be no later than six calendar months from the date of
its creation, (f) no other financing will be outstanding or obtained with
respect to the Goods, and (g) the Borrower will deliver to the Lender
documentation evidencing its compliance with the foregoing as the Lender may
reasonably request from time to time.

 

Section 3.05.                             Compliance with Laws.  The Borrower will promptly procure any
necessary documentation, permits or licenses for the import, export or shipment
of the Goods,

 

6

 

will comply with all
foreign and domestic governmental requirements and regulations relating to the
shipment or financing of the Goods, and will furnish to the Lender such
evidence that the above requirements have been fulfilled as the Lender may
require.  The Borrower hereby certifies
that transactions involving the Goods are not prohibited under the Foreign
Assets Control Regulations of the United States Treasury Department or the
Anti-Boycott Regulations of the United States Department of Commerce.

 

Section 3.06.                             Power of Attorney.

 

(a)                                  Borrower
hereby authorizes Lender to accept written requests for the creation of
Acceptances in Borrower’s name. 
Borrower agrees that all written instructions are sent at Borrower’s
risk and that, subject to the other terms and conditions of this Article,
Lender may act upon written instructions which Lender believes in good faith to
have been given or sent by one of Borrower’s Authorized Signatories).  Borrower understands that Lender is under no
obligation to issue any Acceptance when requested to do so by Borrower.  Lender agrees, however, that in the event
Lender is not willing or able to accept an Acceptance when requested to do so
that Lender will notify Borrower of such fact as promptly as practicable.  Borrower agrees that Borrower will provide
to Lender, by fax, the written confirmation in the form of Exhibit C hereto (a
“Confirmation”) for each request to create and discount an Acceptance by no
later than noon on the Business Day on which Borrower has made such request.

 

(b)                                 Upon
receipt of a request for the creation of an Acceptance, Lender will verify that
the request has come from someone who is currently listed as an Authorized
Signatory on the most recent borrowing resolution that is in Lender’s
possession.  Borrower acknowledges that
all changes to such list must have been actually received by the Lender account
officer handling Borrower’s relationship with Lender in order to be effective.
In the event Lender is unable to verify that the person who provided the
Confirmation is an Authorized Officer, then Lender will notify Borrower of such
fact and, in such case, Lender will take no further action in respect of such
Acceptance until Lender receives a Confirmation from someone Lender is able to
verify is an Authorized Officer.

 

(c)                                  In
the event that Borrower has requested the creation and discount of an
Acceptance, and Lender has not notified Borrower that Lender is unwilling or
unable to accept such Acceptance, then Lender is hereby authorized to create
such Acceptance in Borrower’s name by completing and executing in Borrower’s
name such Acceptance in accordance with the written Confirmation if received by
the relevant Lender personnel prior to the time of discount.  For purposes of the foregoing, Borrower
hereby appoints Lender, as Borrower’s true and lawful attorney-in-fact, to
complete and execute each such Acceptance in Borrower’s name, place and stead,
for Borrower’s account and at Borrower’s risk, in accordance with the written
Confirmation received from Borrower. 
The power of attorney given hereby is effective until expressly revoked,
and is in addition to any other power of attorney now or hereafter in existence.  No such revocation shall be effective
against Lender until the Lender account officer handling Borrower’s
relationship with Borrower has received written notice of such fact from one of
Borrower’s Authorized Officers.

 

7

 

(d)                                 Borrower
irrevocably agrees to indemnify and hold Lender and its officers, directors,
employees and agents (together, the “Indemnified Parties”) harmless from and
against any and all losses, costs, damages and expenses (“Liabilities”) that
any of them may incur as a result of, arising out of, or relating to the
creation and discount of Acceptances, Lender’s acting as Borrower’s
attorney-in-fact, and/or Lender acting upon telephone and fax instructions as
described above, provided that such Liabilities do not result from the gross
negligence or willful misconduct of the relevant Indemnified Party and that
such Indemnified Party has complied with the terms of this letter.

 

ARTICLE 4

 

PAYMENTS
AND PREPAYMENTS

 

Section 4.01.                             Reductions In Commitment.  The Borrower may, at any time and from time
to time upon one (1) Business Day’s prior irrevocable written notice, reduce or
terminate the Commitment without premium or penalty, provided, however,
that each partial reduction shall be in an amount equal to Five Hundred
Thousand Dollars ($500,000) or an integral multiple of One Hundred Thousand
Dollars ($100,000) in excess thereof and provided  further, that
the Commitment shall not be reduced or terminated at any time that would
require the prepayment of a LIBOR Loan on a day other than the last day of the
relevant Interest Period.  Once so
reduced, the Commitment shall not be increased and once so terminated, the
Commitment shall not be reinstated.

 

Section 4.02.                             Optional Prepayments of Loans.

 

(a)                                  Subject
to the provisions of paragraph (c) below, the Borrower may, at any time and
from time to time, without penalty, prepay any or all Base Rate Loans or Swing
Loans.

 

(b)                                 Subject
to the provisions of paragraph (c) below, the Borrower may, at any time and
from time to time, prepay any or all LIBOR Loans upon giving three (3) Business
Days irrevocable notice, but if any such payment shall be made on a day other
than the last day of the applicable Interest Period, such payment shall be
accompanied by the breakage payments referred to in Section 6.04(d) (Additional
Provisions Concerning Certain Loans) below.

 

(c)                                  The
foregoing prepayment rights are subject to the following: (i) any prepayment of
less than all the outstanding Loans shall be in an amount equal to Fifty
Thousand Dollars ($50,000) or an integral multiple of ten thousand dollars
($10,000) in excess thereof, (ii) no prepayment may be made in an amount that
would cause the amount of any outstanding LIBOR Loan to be less than One
Hundred Thousand Dollars ($100,000); and (iii) any prepayment in full of all
outstanding Loans shall be accompanied by the payment of all Obligations
accrued or payable as of the date of such prepayment.

 

8

 

Section 4.03.                             Repayment of Loans In Connection with Reductions of
Commitment.  On or before
the effective date of any reduction in the Commitment (whether scheduled,
mandatory, voluntary or otherwise), the Borrower shall repay such of the
outstanding Loans, together with accrued interest thereon, and/or pay to the
Lender as cash collateral an amount equal to all Letter of Credit Liabilities
and Acceptance Liabilities, so as to reduce the Revolving Credit Outstandings
to the Revolving Credit Limit, giving effect to the amount of the Commitment as
so reduced, provided, however, any prepayment of a LIBOR Loan on
a day that is not the last day of the relevant Interest Period shall be
accompanied by the amounts provided for in Section 6.04(d) (Additional
Provisions Concerning Certain Loans) below.

 

ARTICLE 5

 

INTEREST
AND FEES

 

Section 5.01.                             Interest.  Subject to the provisions of Sections 5.02 (Election of Interest
Rate) and 6.04 (Additional Provisions Concerning Certain Loans) below and to
the conditions set forth in this Section, the Loans shall bear interest at the
Borrower’s option, as follows:

 

(a)                                  Base
Rate Loans and Swing Loans.  The
interest rate on each Base Rate Loan and Swing Loan shall equal the sum of the
Base Rate plus the Applicable Margin for such Loans, each as in effect from
time to time.  Changes in the rate of
interest resulting from changes in the Base Rate shall take place immediately
without notice or demand of any kind. 
Interest on all Base Rate Loans and Swing Loans is payable in arrears on
the first day of each month and on the maturity of such Loans, whether by
acceleration or otherwise.

 

(b)                                 LIBOR
Loans.  During any period that a
Loan is a LIBOR Loan, Borrower shall pay interest on such Loan at a rate equal
to the LIBOR Rate for the applicable Interest Period plus the Applicable Margin
for LIBOR Loans, as in effect from time to time.  Interest on LIBOR Loans shall be payable in arrears on the last
day of the applicable Interest Period relating to such Loan, provided
that if the Interest Period is longer than 90 days, interest shall be payable
90 days after the relevant Loan is made and on each 90-day anniversary thereof,
if applicable, and on the last day of the Interest Period.  All payments are due on or prior to the
Revolving Credit Termination Date.

 

(c)                                  Applicable
Margin.  With respect to any Base
Rate Loan or Swing Loan, the Applicable Margin shall be zero (0.0).  With respect to any LIBOR Loan, the
Applicable Margin shall be one and three-quarters percent (1.75%).

 

Section 5.02.                             Election of Interest Rate.  Subject to the provisions of Section 6.04
(Additional Provisions Concerning Certain Loans) below, the Borrower may elect
the interest rate applicable to each Revolving Credit Loan as follows:

 

9

 

(a)                                  Rate
in Absence of Election.  Unless
otherwise elected by the Borrower, each Revolving Credit Loan shall bear
interest at the Base Rate plus the Applicable Margin.

 

(b)                                 Election
of LIBOR Loans. The Borrower may elect to request an advance hereunder as a
LIBOR Loan by so specifying the amount and the desired Interest Period on the
Request for Advance delivered pursuant to Section 1.02 (Manner of Borrowing)
above.

 

(c)                                  Conversion
to Different Type of Loan.  All or
any part of the principal amount of Revolving Credit Loans of any Type may, on
any Business Day, be converted into any other Type or Types of Revolving Credit
Loans, except that (i) a LIBOR Loan may be converted only on the last day of
the applicable Interest Period therefor and (ii) a Base Rate Loan may be
converted into a LIBOR Loan only on a Business Day for LIBOR Loans.

 

(d)                                 Notice
of Election to Convert.  The
Borrower shall give the Lender notice (which shall be irrevocable) of each
conversion of a Base Rate Loan into a LIBOR Loan or each conversion of a LIBOR
Loan at the end of the relevant Interest Period into another LIBOR Loan, no
later than 11:00 a.m. (Philadelphia time) three (3) Business Days prior to the
requested date of such conversion.  Each
notice of conversion shall be (i) in writing in substantially the form of
Exhibit D attached hereto or (ii) by telephone specifying the information
set forth in Exhibit D attached hereto, followed immediately by delivery
of such notice, provided, however, that the Borrower’s failure to
confirm any telephonic notice in writing shall not invalidate any telephonic
notice if acted upon by the Lender.

 

(e)                                  Presumption
In Absence of Election to Convert. 
Base Rate Loans shall continue as Base Rate Loans unless and until such
Revolving Credit Loans are converted into Revolving Credit Loans of another
Type pursuant to the preceding paragraph (d). 
LIBOR Loans of any Type shall continue as Revolving Credit Loans of such
Type until the end of the then current Interest Period therefor, at which time
they shall be automatically converted into Base Rate Loans unless the Borrower
shall have given the Lender notice in accordance with the preceding paragraph
(d).

 

(f)                                    Limitations
on Election of LIBOR Loans.  The
Borrower may not elect to borrow, continue or convert a Revolving Credit Loan
to a LIBOR Loan if such election would (i) require the Lender to administer
concurrently more than six (6) Types of Revolving Credit Loans or (ii) require
the Borrower to make any scheduled or required payment of principal prior to
the last day to the Interest Period or Interest Periods selected as a result of
a reduction of the Available Commitment, a mandatory repayment or otherwise
hereunder.

 

Section 5.03.                             Interest Upon Default.  Anything in this Agreement to the contrary
notwithstanding, upon the occurrence of an Event of Default (whether or not the
Lender has accelerated payment of the Note), or after maturity or judgment has
been rendered on the Note, the Borrower’s right to select interest rate options
shall cease and the unpaid principal of the Loans shall, at the option of the
Lender, bear interest at the Base Rate plus two percent (2%) (the “Default Rate”).  Such interest shall be payable on the
earlier of (i) demand or (ii) the next

 

10

 

Payment Date.  Interest at the Default Rate shall continue
to accrue (both before and after judgment) until the earlier of (i) the waiver
or cure of the applicable Event of Default or (ii) the payment in full of the
Obligations.  Furthermore, at the
election of Agent or Required Lenders during any period in which any Event of
Default is continuing (x) as the Interest Periods for LIBOR Loans then in
effect expire, such Loans shall be converted into Base Rate Loans and (y) the
LIBOR election will not be available to Borrower.

 

Section 5.04.                             Fees.

 

(a)                                  Commitment
Fee.  On each Payment Date and on
the Revolving Credit Termination Date, the Borrower shall pay a commitment fee
equal to the product of  0.35% per annum
times the average daily unused portion of the Commitment during the period
commencing on the date following the preceding commitment fee payment date (or,
if none, on the date hereof) and ending on such commitment fee payment date.

 

(b)                                 Other
Fees.  The Borrower shall pay the
Lender such other fees as the Borrower and Lender may mutually determine.

 

Section 5.05.                             Computation of Interest and Related Fees.  All interest and fees under each Loan
Document shall be calculated on the basis of a 360-day year for the actual
number of days elapsed.  The date of
funding of a Base Rate Loan and the first day of an Interest Period with
respect to a LIBOR Loan shall be included in the calculation of interest.  The date of payment of a Base Rate Loan and
the last day of an Interest Period with respect to a LIBOR Loan shall be
excluded from the calculation of interest. 
If a Loan is repaid on the same day that it is made, one (1) day’s
interest shall be charged.

 

ARTICLE 6

 

GENERAL
MATTERS CONCERNING LOANS

 

Section 6.01.                             Manner of Tendering Payments by Borrower.

 

(a)                                  Time
of Payments.  Each payment
(including any prepayment) by the Borrower on account of the principal of, or
interest on, the Loans, commitment fees and any other amount owed to the Lender
under any Loan Document shall be made not later than 1:00 p.m. (Philadelphia
time) on the date specified for payment under such Loan Document in lawful
money of the United States of America in immediately available funds.  Any payment received by the Lender after
1:00 p.m. (Philadelphia time) shall be deemed received on the next Business
Day.  If any payment hereunder becomes
due and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day and, with respect to payments of
principal, interest thereon shall be payable at the then applicable rate during
such extension.

 

(b)                                 Location
of Payments.  All payments shall be
made by the Borrower to the Lender at Fleet National Bank, Mail Stop:  PA RP 08301G, 7111 Valley Green

 

11

 

Road, Fort Washington, PA
19034 or such other place as the Lender may from time to time specify in
writing, in United States dollars in immediately available funds, without
counterclaim or setoff and free and clear of, and without any deduction or
withholding for, any taxes or other payments.

 

(c)                                  Lender
Authorized to Take Action for Borrower. 
If any payment is not made when due, the Borrower authorizes the Lender
to (i) deduct the amount of such payment from any deposit account maintained by
the Borrower with the Lender, and/or (ii) whether or not there is then any
unused Commitment, cause the aforesaid payments to be made by drawing under the
loan facility provided under this Agreement, any such Loan being subject to
interest at the Default Rate; provided, however, that
notwithstanding the making by the Lender of any of the aforesaid payments as
set forth in this sentence, the failure of the Borrower to make any of the
aforesaid payments when due shall constitute a Default or Event of Default, as
the case may be, and, provided, further, the failure of the
Lender to take any of the aforesaid action shall not affect any of its rights
hereunder or under any other Loan Document or under law.

 

(d)                                 No
Set-Off.  The Borrower agrees to pay
principal, interest, fees, expenses, indemnities, reimbursements and all other
amounts due under any Loan Document, without set-off or counterclaim or any
deduction whatsoever.

 

(e)                                  Presumptions.  Except as expressly set forth to the
contrary in this Agreement or by the Borrower with respect to any payment, all
payments shall be applied first to the payment of all fees, expenses and other
amounts due to the Lender (excluding principal and interest), then to accrued
interest, and the balance on account of outstanding principal; provided,
however, that after an Event of Default which is continuing, payments
will be applied to the obligations of Borrower to Lender as Lender determines
in its sole discretion.

 

Section 6.02.                             The Note.  The Loans and Reimbursement Obligations shall be evidenced by the
Revolving Credit Note, which shall be duly executed by one or more Authorized
Signatories of the Borrower and delivered to the Lender pursuant to
Section 7.01 (Conditions Precedent to Initial Loan) below.  Upon receipt of an affidavit of an officer
of a Lender as to the loss, theft, destruction or mutilation of the Note, and
in the case of any such loss, theft, destruction or mutilation, upon
cancellation of the Note, the Borrower will issue, in lieu thereof, a
replacement Note in the same principal amount and otherwise of like tenor.

 

Section 6.03.                             Loan Account.  The Lender may open and maintain on its books in the name of the
Borrower a loan account with respect to the Loans and interest thereon.  If the Lender opens such an account, it
shall debit such loan account for the principal amount of each Loan made by it
and accrued interest thereon, and, subject to Section 1.03 (Disbursements)
above, shall credit such loan account for each payment on account of principal
or interest.  The records of the Lender
with respect to the loan account maintained by it shall be prima facie
evidence of the Loans and accrued interest thereon, but the failure of the
Lender to make any such notations or any error or mistake in such notations
shall not affect the Borrower’s repayment obligations with respect to such
Loans.

 

12

 

Section 6.04.                             Additional Provisions Concerning Certain Loans.

 

(a)                                  Mandatory
Suspension and Conversion of LIBOR Loans. 
The Lender’s obligation to make, continue or convert into LIBOR Loans of
any Type shall be suspended, all Lender’s outstanding Loans of such Type shall
be converted into Base Rate Loans on the last day of their applicable Interest
Periods (or, if earlier, in the case of clause (iii) below, on the last day
Lender may lawfully continue to maintain Loans of such Type or, in the case of
clause (iv) below, on the day determined by the Lender to be the last Business
Day before the effective date of the applicable restriction) into, and all
pending requests for the making or continuation of or conversion into Loans of
such Type by the Lender shall be deemed requests for Base Rate Loans, if:

 

(i)                                     on
or prior to the determination of an interest rate for a LIBOR Loan for any
Interest Period, the Lender reasonably determines that for any reason
appropriate information is not available to it for purposes of determining the
LIBOR Rate for such Interest Period;

 

(ii)                                  on
or prior to the first day of any Interest Period for a LIBOR Loan of such Type,
the Lender reasonably determines that the LIBOR Rate as determined by the
Lender for such Interest Period would not accurately reflect the cost to the
Lender of making, continuing or converting into a LIBOR Loan of such Type for
such Interest Period;

 

(iii)                               at
any time the Lender determines that any Regulatory Change makes it unlawful or
impracticable for the Lender or its applicable lending office to make, continue
or convert into a LIBOR Loan of such Type, or to comply with its obligations
hereunder in respect thereof; or

 

(iv)                              the
Lender determines that, by reason of any Regulatory Change, the Lender or its
applicable lending office is restricted, directly or indirectly, in the amount
that it may hold of (A) a category of liabilities that includes deposits by
reference to which, or on the basis of which, the interest rate applicable to
LIBOR Loans of such Type is directly or indirectly determined or (B) the
category of assets that includes LIBOR Loans of such Type.

 

(b)                                 Regulatory
Changes.  If in the determination of
the Lender:

 

(i)                                     any
Regulatory Change shall directly or indirectly (A) reduce the amount of any sum
received or receivable by the Lender with respect to the Revolving Credit
Facility, (B) impose a cost on the Lender or any Affiliate of the Lender that
is attributable to the making available or maintaining of, or the Lender’s
commitment to make available, the Revolving Credit Facility, (C) require the
Lender or any Affiliate of the Lender to make any payment on, or calculated by
reference to, the gross amount of any amount received by the Lender under any
Loan Document or (D) reduce, or have the effect of reducing, the rate of return
on any capital of the Lender or any Affiliate of the Lender that the Lender or
such Affiliate is

 

13

 

required to maintain on
account of the Revolving Credit Facility, or the Lender’s Commitment and

 

(ii)                                  such
reduction, increased cost or payment shall not be fully compensated for by an
adjustment in the applicable rates of interest payable under the Loan
Documents;

then the Borrower shall pay to the Lender such additional amounts as the Lender
reasonably determines will, together with any adjustment in the applicable
rates of interest payable hereunder, fully compensate it for such reduction,
increased cost or payment.  Such
additional amounts shall be payable, in the case of those applicable to prior
periods, within 15 Business Days after request by the Lender for such payment
and, in the case of those applicable to future periods, on the date specified,
or determined in accordance with a method specified, by the Lender.  The Lender will promptly notify the Borrower
of any determination made by it referred to in clauses (i) and (ii) above and
provide to Borrower a reasonably detailed calculation of all amounts required
to be paid by the Borrower, but the failure to give such notice shall not
affect the Lender’s right to such compensation.

 

(c)                                  Capital
Requirements.  If, in the
determination of the Lender, the Lender or any Affiliate of the Lender is
required, as a result of a Regulatory Change, to maintain capital on account of
the Revolving Credit Facility or the Lender’s Commitment, then, upon request by
the Lender, the Borrower shall from time to time thereafter pay to the Lender
such additional amounts as the Lender reasonably determines will fully
compensate it for any reduction in the rate of return on the capital that the
Lender or such Affiliate is so required to maintain on account of the Revolving
Credit Facility or Commitment suffered as a result of such capital
requirement.  Such additional amounts
shall be payable, in the case of those applicable to prior periods, within 15
Business Days after request by the Lender and in the case of those relating to
future periods, on the date specified, or determined in accordance with a
method specified by the Lender.  The
Lender will promptly notify the Borrower of any determination made by it
referred to in this paragraph (c), but the failure to give such notice shall
not affect the Lender’s right to such compensation.

 

(d)                                 Funding
Losses.  The Borrower shall pay to
the Lender, from time to time, upon request, such amount as the Lender
reasonably determines is necessary to compensate it for any loss, cost or
expense, including, without limitation, loss of the Applicable Margin incurred
by it as a result of (a) any payment, prepayment or conversion of a LIBOR Loan
on a date other than the last day of an Interest Period for such LIBOR Loan or
(b) a LIBOR Loan for any reason not being made or converted, or any payment of
principal thereof or interest thereof not being made, on the date therefor
determined in accordance with the applicable provisions of this Agreement.  At the election of the Lender, and without
limiting the generality of the foregoing, but without duplication, such
compensation on account of losses may include an amount equal to the excess of
(i) the interest that would have been received from the Borrower under this
Agreement including the Applicable Margin on any amounts to be reemployed
during an Interest Period or its remaining portion over (ii) the interest
component of the return that the Lender determines it could have obtained had
it placed such amount on deposit in the London Interbank Eurodollar Market
selected by it for a period equal to such Interest Period or remaining portion.

 

14

 

 

(e)                                  Determinations.  In making the determinations contemplated by
this Section, the Lender may make such estimates, assumptions, allocations and the
like that the Lender in good faith determines to be appropriate, and the
Lender’s selection thereof in accordance with this Section, and the
determinations made by the Lender on the basis thereof, shall be final, binding
and conclusive upon the Borrower. 
Notwithstanding any other provision of this Section, the Lender shall
not apply the provisions of subsections (b) or (c) of this Section with respect
to the Borrower if it shall not at the time be the general policy or practice
of the Lender to apply provisions of subsections (b) or (c) of this Section to
other borrowers in substantially similar circumstances under substantially
comparable provisions of other credit agreements.

 

(f)                                    Rate
Quotations.  The Borrower may call
the Lender on or before the date on which a Request for Advance or notice of
conversion is to be delivered to receive an indication of the rates then in
effect, but it is acknowledged that such projection shall not be binding on the
Lender nor affect the rate of interest which thereafter is actually in effect
when the election is made.

 

Section 6.05.                             Taxes.

 

(a)                                  Payments
Free and Clear.

 

(i)                                     Any
and all payments by the Borrower hereunder or under the Note shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholding, and all liabilities with
respect thereto excluding, in the case of the Lender, (A) income and franchise
taxes imposed by the jurisdiction under the laws of which the Lender is
organized or is or should be qualified to do business or any political
subdivision thereof, and (B) income and franchise taxes imposed by the
jurisdiction of the Lender’s lending office or any political subdivision
thereof, and (C) United States federal income taxes imposed by reason of
failure or the inability of a Lender to comply with Section 6.05(e) (unless
such compliance is precluded as a result of a change in any law, rule,
regulation or treaty or in the administrative interpretation or application
thereof after the date hereof (or, in the case of a Participant or Assignee,
the date on which such Participant or Assignee receives its interest in the
Loans) (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as “Taxes”).

 

(ii)                                  If
the Borrower shall be required by law to deduct any Taxes from or in respect of
any sum payable hereunder or under the Note to the Lender, (A) the sum payable
shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section) the Lender receives an amount equal to the amount the Lender
would have received had no such deductions been made, (B) the Borrower
shall make such deductions, (C) the Borrower shall pay the full amount deducted
to the relevant taxing authority or other authority in accordance with
applicable law, and (D) the Borrower shall deliver to the Lender evidence of
such payment to the relevant taxing authority or other authority in the manner
provided in Section 6.05(d).

 

15

 

(b)                                 Stamp
and Other Taxes.  In addition, the
Borrower shall pay any present or future stamp, registration, recordation or
documentary taxes or any other similar fees or charges or excise or property
taxes, levies of the United States or any state or political subdivision
thereof or any applicable foreign jurisdiction which arise from any payment
made hereunder or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement, the Loans, the other Loan Documents, or the
perfection of any rights or security interest in respect thereto (hereinafter
referred to as “Other Taxes”).

 

(c)                                  Indemnity.  The Borrower shall indemnify the Lender for
the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes and Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Lender and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted.  Such indemnification shall be made within
thirty (30) days from the date the Lender makes written demand therefor.

 

(d)                                 Evidence
of Payment.  Within thirty (30) days
after the date of any payment of Taxes or Other Taxes, the Borrower shall
furnish to the Lender, at its address referred to in Section 14.01, the
original or a certified copy of a receipt evidencing payment thereof or other
evidence of payment satisfactory to the Lender.

 

(e)                                  Non-US
Lender.  On or prior to the date on
which any Participant or Assignee that is not a United States person as defined
in Section 7701(a)(30) of the Code (each a “Non-US Lender”) receives its interest in the Loans, each
Non-US Lender that is entitled at such time to an exemption from United States
of America withholding tax, or that is subject to such tax at a reduced rate
under an applicable tax treaty, shall provide Lender and the Borrower with two
duly completed copies of the appropriate United States Internal Revenue Service
Form W-8, or other applicable successor form prescribed by the Internal Revenue
Service of the United States, certifying that such Non-US Lender is entitled to
receive payments under this Agreement without deduction or withholding of any
United States federal income taxes.

 

(f)                                    Survival.  Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements and obligations
contained in this Section shall survive the payment in full of the Obligations
and the termination of the Commitment.

 

ARTICLE 7

 

CONDITIONS
PRECEDENT

 

Section 7.01.                             Conditions Precedent to Initial Loan.  The obligation of the Lender to make the
initial Loan is subject to the condition that the Lender shall have received
each of the following, in form and substance satisfactory to it:

 

16

 

7.01.1                  Loan Documents.

 

(a)                                  a
duly executed Revolving Loan Note and Swing Loan Note;

 

(b)                                 a
Guaranty Agreement, duly executed by each Subsidiary of Sheridan;

 

(c)                                  the
Automated Credit Sweep Service Agreement required by Section 2.01(b).

 

7.01.2                  UCC Collateral Documents.

 

(a)                                  (i)
a Security Agreement (also constituting a pledge agreement), duly executed by
Sheridan, its Subsidiaries and Borrower, together with such Uniform Commercial
Code financing statements as are necessary or, in the opinion of the Lender,
desirable to perfect the security interests created by such Security Agreement,
and (ii) such landlord waivers as Lender shall request;

 

(b)                                 A
perfection questionnaire duly completed by Sheridan as to itself and its
Subsidiaries;

 

(c)                                  insurance
policies or certificates designating the Lender as lender loss payee or
mortgagee as its interests may appear, as appropriate, as required by Section
11.17 of this Agreement or as required by any other Loan Document;

 

(d)                                 a
Pledge Agreement, duly executed by Parent, which owns all shares of capital
stock of Sheridan, together with (i) the stock certificates representing all
such shares, (ii) duly executed, undated stock powers respecting such shares
and (iii) duly executed Uniform Commercial Code financing statement(s) naming
Parent as debtor to be filed in the appropriate jurisdictions;

 

(e)                                  an
IP Collateral Agreement executed by Sheridan and its Subsidiaries as
appropriate as to all registered or pending patents, trademarks and copyrights,
in appropriate form to file of record; and

 

(f)                                    the
results of tax, judgments and other lien searches in form and substance
satisfactory to the Lender, and from such jurisdictions as may be satisfactory
to the Lender, together with U.S. Patent and Trademark Office and Copyright
Office searches of a recent date, in each case, with respect to the Borrower,
Sheridan and each of Sheridan’s Subsidiaries, showing no Liens except Permitted
Liens.

 

7.01.3                  Real Estate Collateral Documents.

 

(a)                                  Mortgage(s)
duly executed by Sheridan covering all real property owned by Sheridan;

 

17

 

(b)                                 Mortgage(s)
duly executed by each Subsidiary of Sheridan covering all real property owned
by each such Subsidiary; and

 

(c)                                  for
each property subject to a Mortgage, (i) title insurance insuring the priority
of the Mortgage, (ii) a Phase I Environmental Audit, (iii) zoning
certification, (iv) a flood certification, and (v) a survey; in each case
satisfactory to the Lender.

 

7.01.4                  Financial Documents.

 

(a)                                  audited
financial statements of Sheridan and its Subsidiaries on a Consolidated and
consolidating  basis for the fiscal
year ended December 31, 2002 and unaudited financial statements of Sheridan and
its Subsidiaries on a Consolidated and consolidating basis for the quarter
ending June 30, 2003 certified by the chief financial officer of Sheridan
together with projections of financial statements respecting each fiscal year
through the fiscal year 2007, which projections shall be approved by the chief
financial officer of Sheridan and based on reasonable assumptions; and

 

(b)                                 pro
forma consolidated financial statements of Sheridan and its Subsidiaries,
giving effect to the transactions contemplated hereby.

 

7.01.5                  Consents, Certificates and Opinions.

 

(a)                                  any
required governmental consents or other required consents to the closing of
this Agreement or to the execution, delivery and performance of this Agreement
and the other Loan Documents, each of which shall be in form and substance
satisfactory to the Lender;

 

(b)                                 a
certificate of each Loan Party to which is attached each of the following certified
as such by a duly authorized officer of such Loan Party:

 

(i)                                     a
certificate of incumbency with respect to each Authorized Signatory thereof
that signs any Loan Documents,

 

(ii)                                  a
copy of the charter or other organizational documents of such Loan Party
certified by the Secretary of State or similar state official of the
jurisdiction of formation of such Loan Party,

 

(iii)                               a
copy of the bylaws or other constituent documents of such Loan Party,

 

(iv)                              a
certificate of good standing or subsistence, as the case may be, for such Loan
Party issued as of a recent date by the Secretary of State or similar state
official in the jurisdiction of its organization and in each state in which
such Loan Party is qualified to do business as set forth on Schedule 8.01,

 

18

 

(v)                                 a
copy of the resolutions duly adopted by the Board of Directors or other
governing body of such Loan Party authorizing it to execute, deliver and
perform each Loan Document to which it is, or is to be, a party, and

 

(vi)                              a
copy of any shareholders agreement or similar agreement respecting such Loan
Party, if any such agreement exists;

 

(c)                                  a
legal opinion of Dechert LLP, counsel to each of the Loan Parties;

 

(d)                                 a
legal opinion of special local counsel for the Borrower and its Subsidiaries in
the states of Maryland, Virginia, Michigan, New Hampshire and Vermont; and

 

(e)                                  a
certificate of the chief financial officer or Treasurer of the Borrower and
Sheridan with respect to the solvency and adequacy of capital of Sheridan after
giving effect to the Merger, the initial Loan and the application of the
proceeds thereof.

 

7.01.6                  Third Party Agreements.

 

(a)                                  evidence
that, prior to or substantially simultaneously with the making of the initial
Loan, except as reflected in subsection (b) below, (A) the Predecessor
Indebtedness shall have been repaid, (B) all commitments to lend in respect of
the Predecessor Indebtedness shall have been effectively terminated and (C) all
UCC-3 termination statements and all other documents necessary in the
determination of the Lender to effectively terminate of record all security
interests related to the Predecessor Indebtedness shall have been duly executed
by the proper parties and shall have been delivered to the Lender, all pledged
instruments shall have been returned to the proper parties, and other
arrangements with respect thereto satisfactory to the Lender shall have been
made;

 

(b)                                 evidence
that (i) at least $ 5,200,000 have been placed in a cash collateral account
held by Wachovia Bank, N.A. securing payment in full of the $8,600,000 Loudoun
County (Virginia) Variable Rate Industrial Development Revenue Bonds for United
Litho, Inc. and the $3,000,000 Michigan Strategic Fund Limited Obligation
Variable Rate Industrial Development Revenue Bonds for Sheridan Books, Inc. and
the reimbursement obligations with respect to the respective letters of credit
securing such bonds issued by Wachovia Bank, N.A. and (ii) such indebtedness
and obligations are secured by no other collateral; Borrower hereby agrees that
on or before September 5, 2003, such indebtedness and reimbursement obligations
shall be paid and satisfied in full, the cash collateral account shall be
disbursed and closed, all liens shall be released, and such letters of credit
shall be terminated;

 

(c)                                  copies
of the Operative Documents, duly certified by an Authorized Signatory of the
Borrower, in form and substance satisfactory to the Lender;

 

(d)                                 evidence
that the Sheridan Acquisition and the Merger have been validly and effectively
consummated (or concurrently with the making of the Initial Loan will be

 

19

 

consummated) and evidence
that the sum of the purchase price paid to consummate the Acquisition and all
related fees, expenses and other transaction costs do not exceed $150 million;

 

(e)                                  evidence
that the transactions (other than the Sheridan Acquisition and the funding of
the Initial Loan) contemplated by the Operative Documents, including without
limitation the funding of any and all investments contemplated by the Equity
Documents and the Senior Secured Note Documents have been consummated (or
concurrently with the making of the initial Loan on the Closing Date will be
consummated); and consents and agreements sufficient to permit the Lender to
rely upon and be the beneficiary of the representations, warranties, covenants,
agreements and opinions contained in the Operative Documents;

 

(f)                                    a
Subordination Agreement in form and substance satisfactory to the Lender as to
any management, consulting or similar agreement binding upon the Borrower or
any Subsidiary; and

 

(g)                                 an
Intercreditor Agreement duly executed by the Trustee, in form and content
satisfactory to the Lender.

 

Section 7.02.                             Payment of Fees and Costs.  In addition to the conditions specified in
Section 7.01 (Conditions Precedent to Initial Loan) above, prior to making the
initial Loan, the Lender shall receive payment of all accrued costs and fees
and (if then ascertainable) expenses arising out of attorneys’ fees for the
preparation of the Loan Documents and related services.

 

Section 7.03.                             Conditions Precedent to Each Loan.  The obligation of the Lender to make each
Loan (including the initial Loan) is subject to the fulfillment of each of the
following conditions:

 

(a)                                  All
of the representations and warranties of the Borrower in this Agreement and all
representations and warranties of each Loan Party in each other Loan Document
shall be true and correct in all material respects at such time, both before
and after giving effect to the application of the proceeds of such Loan;

 

(b)                                 No
Default or Event of Default hereunder shall then exist or be caused thereby;

 

(c)                                  No
Material Adverse Change shall have occurred and no event shall have occurred
which could reasonably be expected to result in a Material Adverse Change; and

 

(d)                                 With
respect to each Revolving Credit Loan, the Lender shall have received a duly
executed Request for Advance.

 

Section 7.04.                             Method of Satisfying Certain Conditions.  The request for, and acceptance of, each
Loan by the Borrower shall be deemed a representation and warranty by the

 

20

 

Borrower that the
conditions specified in subparts (a), (b) and (c) of Section 7.03 (Conditions
Precedent to Each Loan) have been satisfied.

 

ARTICLE
8

 

REPRESENTATIONS AND WARRANTIES OF BORROWER

 

In order to induce the
Lender to enter into this Agreement, the Borrower and Sheridan jointly and
severally make the following representations, covenants and warranties:

 

Section 8.01.                             Organization and Qualification.  The
Borrower, Sheridan, Parent and each Subsidiary of Sheridan are corporations,
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of organization. 
The Borrower, Sheridan, Parent and each Subsidiary of Sheridan have the
lawful power to own or lease their respective properties and to engage in the
respective business they presently conduct or propose to conduct.  Sheridan and each Subsidiary of Sheridan are
duly licensed or qualified and in good standing in each jurisdiction where the
property owned or leased by them, or the nature of the business transacted by
them, or both, makes such licensing or qualification necessary, except where
the failure to be so qualified could not reasonably be expected to result in a
Material Adverse Change.  Schedule
8.01 hereto shows as of the date hereof each state in which Borrower,
Sheridan and each of its Subsidiaries are qualified and their respective
jurisdictions of incorporation.

 

Section 8.02.                             Capitalization and Ownership of Borrower.  The authorized capital stock of the Borrower
and Sheridan, the number of issued and outstanding shares and the owners of
such shares, as of the date hereof, are set forth on Schedule 8.02
hereto.  All such outstanding shares are
duly authorized, validly issued, fully paid and nonassessable and are owned
free and clear by the owners thereof except as pledged pursuant to the Loan
Documents and except for Permitted Liens to the extent arising by operation of
law.  As of the date hereof, there are
no options, warrants or other rights outstanding to purchase any such shares
except as indicated on said Schedule 8.02.

 

Section 8.03.                             Capitalization and Ownership of Subsidiaries.  The name of each of Sheridan’s Subsidiaries,
their authorized capital stock, the number of issued and outstanding shares and
the owners thereof as of the date hereof are set forth on Schedule 8.03
attached hereto.  All outstanding shares
of capital stock of Sheridan’s Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and are owned free and clear by Sheridan
except as pledged pursuant to the Loan Documents and except for Permitted Liens
to the extent arising by operation of law. 
As of the date hereof, there are no options, warrants or other rights
outstanding to purchase any such shares except as indicated on said Schedule
8.03.  Sheridan has the unrestricted
right to vote the issued and outstanding shares of the Subsidiaries owned by
it.  Sheridan’s ownership interest in
each of its Subsidiaries represents a direct controlling interest of such
Subsidiary for purposes of directing or causing the direction of the management
and policies of each Subsidiary.

 

21

 

Section 8.04.                             Authorization and Execution.  The execution, delivery and performance of
this Agreement, and each other Loan Document to which the Borrower, or Sheridan
is, or will be, a party are within the Borrower’s and Sheridan’s corporate
powers and have been duly authorized by all necessary corporate action.  The execution, delivery and performance of
each Loan Document to which each other Loan Party is, or will be, a party are
within each such Loan Party’s corporate powers and have been duly authorized by
all necessary corporate action.  This
Agreement has been, and each other Loan Document when delivered hereunder will
be, duly executed by each Loan Party which is a party hereto or thereto, as the
case may be.

 

Section 8.05.                             Enforceability; Consents.  This Agreement is, and each of the other
Loan Documents when delivered hereunder will be, a legal, valid and binding
obligation of each of the Loan Parties which is, or will then be, a party
hereto or thereto, as the case may be, enforceable against each such Loan Party
in accordance with its terms.  No
recording, filing, registration, notice, consent (governmental or otherwise) or
other similar action including, without limitation, any action involving any
federal, state or local regulatory body, is required in order to insure the
legality, validity, binding effect or enforceability of this Agreement or the
other Loan Documents as against all Persons, except the filing of UCC-1
financing statements and the recording of the Mortgages as contemplated by this
Agreement.

 

Section 8.06.                             Security Interests in Collateral.

 

(a)                                  As
of the date hereof, upon the filing of the UCC-1 financing statements in the
jurisdictions listed on Schedule 8.06 attached hereto and the delivery
of the stock certificates listed on Schedules 8.02 and 8.03 attached
hereto, no further action, including without limitation, any filing or
recording of any document or the obtaining of any consent, is necessary in
order to establish, perfect and maintain the Lender’s first priority security
interests in the Lender Priority Collateral and second priority security
interests in the Note Priority Collateral subject to Permitted Liens to the
extent taking priority by operation of law, except for the periodic filing of
continuation statements with respect to such UCC-1 financing statements.  As of the date hereof, the perfection
questionnaire delivered to the Lender by Borrower and Sheridan is true and
correct and there have been no changes thereto since the date of delivery.

 

(b)                                 The
Mortgages when duly filed in the offices listed on Schedule 8.06
attached hereto, will create perfected Liens on the real property described in
the Mortgages subject to no Liens of equal or greater priority except for those
securing the Senior Secured Notes and Permitted Liens to the extent taking
priority by operation of law, and no further action, including, without
limitation, the filing or recording of any document, is necessary to maintain
such perfected Liens.

 

Section 8.07.                             Real Property of Borrower, Sheridan and its
Subsidiaries.  As of the
date hereof, Schedule 8.07 attached hereto is a complete and correct
list of all real property owned or leased by Sheridan and each of its
Subsidiaries, specifying, in each case, whether such property is owned or leased
and specifying the owner/lessee thereof.

 

22

 

Section 8.08.                             Absence of Conflict with other Agreements, Etc.  The execution, delivery and performance by
the Borrower and Sheridan of this Agreement and the other Loan Documents to
which it is, or will be, a party do not and will not (a) require any consent or
approval, governmental or otherwise, not already obtained, (b) violate any
Applicable Law respecting the Borrower, Sheridan or any Subsidiary of Sheridan,
(c) conflict with, result in a breach of, or constitute a default under, the
charter documents or bylaws of Sheridan or any Subsidiary of Sheridan,  or under any indenture, agreement, license
or other instrument to which Sheridan or any of the Subsidiaries of Sheridan is
a party or by which any of them or their respective properties may be bound, or
(d) result in, or require the creation or imposition of, any Lien upon or with
respect to any property now owned or hereafter acquired by the Borrower, Sheridan
or any of its Subsidiaries other than as contemplated hereby.

 

Section 8.09.                             Business.  Sheridan (together with its Subsidiaries) is engaged in the
business of providing specialty printing and value-added support services for
the journal, magazine, book and article reprint markets, and in businesses that
in the reasonable good faith judgment of the Board of Directors of Sheridan are
related, complementary or ancillary businesses, and no other business or
activity.

 

Section 8.10.                             Condition of Assets.  All of the material properties, equipment
and systems of Sheridan and each of its Subsidiaries are in good repair,
working order and condition and are and will be in material compliance with all
standards or rules imposed by any governmental agency or authority (including,
without limitation, any federal or state or local governments or
instrumentalities) or otherwise under Applicable Law.

 

Section 8.11.                             Use of Proceeds.  The proceeds of the Loans will be used to
finance the acquisition and for working capital purposes.  No proceeds of any Loan shall be used for
any illegal purposes.

 

Section 8.12.                             Litigation.  There is no action, suit, proceeding or investigation pending
against, or, to the best of Sheridan’s knowledge, threatened against or in any
other manner relating to, Sheridan or any of its Subsidiaries or any of their
respective properties, in any court or before any arbitrator of any kind or
before or by any governmental body, which individually or in the aggregate,
could (if adversely determined) reasonably be expected to result in a Material
Adverse Change, nor is the Borrower, Sheridan or any Subsidiary of the Borrower
in violation of any order, writ, injunction or decree of any such governmental
body which could reasonably be expected to result in a Material Adverse Change.

 

Section 8.13.                             Indebtedness.  As of the date hereof, Schedule 8.13 attached hereto
correctly describes all outstanding Indebtedness of the Borrower, Sheridan and
each of the Subsidiaries of Sheridan, and any commitments of any such Person to
incur additional Indebtedness (other than Indebtedness pursuant to this
Agreement), and shows the Indebtedness to be paid off on the date hereof.

 

23

 

Section 8.14.                             Financial Statements.

 

(a)                                  The
audited financial statements for Sheridan and its Subsidiaries on a
Consolidated basis for the fiscal year ended December 31, 2002, and unaudited
financial statements for the fiscal quarter ended June 30, 2003 together with
any other financial statements furnished to the Lender are complete and correct
in all material respects and present fairly in accordance with GAAP the
financial position of Sheridan and its Subsidiaries on a Consolidated basis on
and as at such dates and the results of operations for the periods then ended
(subject, in the case of unaudited financial statements, to normal year-end
adjustments). Neither Sheridan nor any of its Subsidiaries has any material
liabilities, contingent or otherwise, other than as disclosed in the financial
statements referred to in the preceding sentence and there are not now and not
anticipated any material unrealized losses of Sheridan or any of its
Subsidiaries.  Since December 31, 2002,
there has been no Materially Adverse Change in the condition or operations of
Sheridan or its Subsidiaries.

 

(b)                                 The
projections delivered to the Lender pursuant to Section 7.01 (Conditions
Precedent to Initial Loan) above and Section 10.01 (Financial Statements) below
are made in good faith, based on reasonable assumptions by the Borrower and
Sheridan.

 

(c)                                  The
pro forma balance sheet of Sheridan and its Consolidated Subsidiaries as of
June 30, 2003, copies of which have been delivered to Lender, fairly presents,
in conformity with GAAP applied on a basis consistent with the financial
statements referred to in Section 8.14(a) (subject to normal year-end
adjustments and the lack of footnotes) the consolidated financial position of
Sheridan and its Consolidated Subsidiaries as of such date, adjusted to give
effect (as if such events had occurred on such date) to (i) the transactions
contemplated by the Operative Documents, (ii) the making of the Loans, (iii)
the application of the proceeds therefrom as contemplated by the Operative
Documents and (iv) the payment of all legal, accounting and other fees related
thereto to the extent known at the time of the preparation of such balance
sheet.  As of the date of such balance
sheet and the date hereof, no Loan Party had or has any material liabilities,
contingent or otherwise, including liabilities for taxes, long-term leases or
forward or long-term commitments, which are not properly reflected on such
balance sheet.

 

(d)                                 The
information contained in the most recently delivered Request for Advance and
Borrowing Base Certificate is complete and correct and the amounts shown
therein as “Eligible Receivables” and “Eligible Inventory” have been determined
as provided in the Loan Documents, in each case, as of the date thereof.

 

(e)                                  Since
December 31, 2002, there has been no material adverse change in the business,
operations, properties, prospects or condition (financial or otherwise) of
Sheridan and its Consolidated Subsidiaries, taken as a whole.

 

(f)                                    Acquisition
Co. was formed solely to effect the Acquisition, and except in connection therewith
(and as contemplated by this Agreement) has no significant assets or
liabilities.

 

24

 

Section 8.15.                             Fiscal Year.  The fiscal year of the Borrower and Sheridan ends on December 31.

 

Section 8.16.                             Title to Assets.  Sheridan has good, legal and marketable
title to, or a valid leasehold interest in, all of its assets included on the
last balance sheet previously delivered to the Lender except for assets
disposed of in the ordinary course of business or as permitted hereby.  Each of Sheridan’s Subsidiaries has good,
legal and marketable title to, or a valid leasehold interest in, all of its
assets included on the last balance sheet previously delivered to the Lender
except for assets disposed of in the ordinary course of business.  None of such properties or assets is subject
to any Liens, except for Permitted Liens and liens to be released on the
Closing Date.  No financing statement
under the Uniform Commercial Code as in effect in any jurisdiction and no other
filing which names the Borrower, Sheridan or any of the Subsidiaries of
Sheridan as debtor or which covers or purports to cover any of the assets of
the Borrower, Sheridan or any of its Subsidiaries is currently effective and on
file in any state or other jurisdiction, and neither the Borrower, Sheridan nor
any of its Subsidiaries has signed any such financing statement or filing or
any security agreement authorizing any secured party thereunder to file any
such financing statement or filing except with respect to Permitted Liens and
Liens to be released on the Closing Date.

 

Section 8.17.                             Patents, Trademarks, Licenses, Franchises, Etc.  Sheridan and each of its Subsidiaries holds
or has the rights to use all patents, trademarks, service marks, trade names,
copyrights, franchises, licenses and authorizations, governmental or otherwise,
(the “rights”) necessary for the conduct of its business as now conducted,
without any known material conflict with the rights of others which could
reasonably be expected to result in a Material Adverse Change.  As of the date hereof Schedule 8.17
attached hereto correctly lists all patents, trademarks and copyrights
registered to the Loan Parties as well as all material governmental licenses,
authorizations and similar rights.  Each
license agreement necessary to the Borrower’s or any Subsidiary’s business
under which the Borrower, Sheridan or any Subsidiary of Sheridan is the
licensee is a valid and binding license agreement, enforceable against the
Licensee and, to Borrower’s knowledge, the licensor.

 

Section 8.18.                             Compliance with Law.  Each of Sheridan and its Subsidiaries is in
material compliance with all Applicable Law.

 

Section 8.19.                             Compliance with ERISA.

 

(i)                                     As
of the closing date, none of Sheridan, Sheridan’s Subsidiaries or any ERISA
Affiliate maintains or contributes to any Plan or other employee benefit plan,
except as disclosed on Schedule 8.19 attached hereto.

 

(ii)                                  Each
Plan, which is intended to be qualified within the meaning of Section 401(a) of
the Code, is the subject of a favorable determination by the Internal Revenue
Service with respect to its qualification under Section 401(a) of the
Code.  Sheridan has furnished to the
Lender a copy of the most recent actuarial report for each Plan which is a

 

25

 

defined benefit plan as
defined in Section 3(35) of ERISA or is a funded employee welfare benefit plan,
and each such report is accurate in all material respects.

 

(iii)                               Sheridan,
its Subsidiaries and their respective ERISA Affiliates have operated each Plan
in all material respects in compliance with the requirements of the Code and
ERISA.

 

(iv)                              Except
as specifically disclosed on Schedule 8.19 attached hereto, (1) no Plan
has engaged in any transaction in connection with which Sheridan or any of its
Subsidiaries or ERISA Affiliates could be subject to either a material civil
penalty assessed pursuant to Section 502(i) of ERISA or a material tax penalty
imposed pursuant to Section 4975 of the Code, (2) there is no Accumulated
Funding Deficiency with respect to any Plan, whether or not waived, or an
unfulfilled obligation to contribute to any Multiemployer Plan or withdrawal
from any Multiemployer Plan, (3) no Plan has been terminated under conditions
which resulted, or could result in any material liability to the PBGC, (4) no
material liability to the PBGC has been or is expected by the Borrower to be
incurred with respect to any Plan by Sheridan or any of Sheridan’s Subsidiaries
or ERISA Affiliates except for required premium payments to the PBGC, (5) there
has been no Reportable Event with respect to any Plan (except to the extent
that the PBGC has waived such reporting requirement with respect to any such
event), and no event or condition exists which presents a material risk of
termination of any Plan by the PBGC, (6) none of Sheridan or any of Sheridan’s
Subsidiaries or any ERISA Affiliate has incurred or anticipates incurring
Withdrawal Liability with respect to any Multiemployer Plan, (7) no Multiemployer
Plan is in Reorganization, (8) Sheridan and Sheridan’s Subsidiaries and ERISA
Affiliates have complied in all material respects with the requirements of
COBRA and HIPAA, (9) there are no unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA) in respect of any Plan, (10) there is no
violation of the Code or ERISA with respect to the filing of applicable
reports, documents and notices regarding any Plan with the Secretary of Labor,
the Secretary of the Treasury, the PBGC or any other governmental entity or the
furnishing of documents as required to participants and/or beneficiaries, and
(11) there is no Plan providing for retiree health and/or life insurance or
other death benefits or any welfare plan having unfunded liabilities, except for
any event described in the foregoing clauses (1)-(11) which could not
reasonably be expected to have a Material Adverse Effect.

 

(v)                                 No
liability (whether or not such liability is being litigated) has been asserted
against Sheridan,  any Sheridan Subsidiaries
or any ERISA Affiliate in connection with any Plan or any Multiemployer Plan by
the PBGC other than for required premium payments to the PBGC, by a trustee
appointed pursuant to Section 4042(b) or (c) of ERISA, or by a sponsor or an
agent of a sponsor of a Multiemployer Plan, and no Lien has been attached and
no Person has threatened to attach a Lien on any property of Sheridan,  its Subsidiaries or ERISA Affiliates as a
result of failure to comply with ERISA or as a result of the termination of any
Plan.

 

Section 8.20.                             Compliance with Regulations U and X.  Neither Sheridan nor any of Sheridan’s
Subsidiaries is engaged principally or as one of its important activities in
the business of extending credit for the purpose of purchasing or carrying, any
“margin security” or “margin

 

26

 

stock” as defined in
Regulations U and X of the Board of Governors of the Federal Reserve
System.  No portion of the proceeds of
the loan shall be used, in whole or in part, for the purpose of purchasing or
carrying any “margin stock” as such term is defined in Regulation U of the
Board of Governors of the Federal Reserve System.  If requested by the Lender, the Borrower, Sheridan shall complete
and sign Part I of a copy of the Federal Reserve Form U-1 referred to in
Regulation U of the Board of Governors of the Federal Reserve System and
deliver such copy to the Lender. 
Neither the Borrower nor any of its Subsidiaries, nor any bank acting on
any of their behalf, has taken or will take any action which might cause this
Agreement or the Note to violate Regulation U or X or any other regulation of
the Board of Governors of the Federal Reserve System, as now or hereafter in
effect.

 

Section 8.21.                             Investment Company Act.  Neither Sheridan nor any of its Subsidiaries
is an “investment company” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

 

Section 8.22.                             Public Utility Holding Company Act.  Neither Sheridan nor any Subsidiary of
Sheridan is a “holding company”, or a “subsidiary company” or “affiliate” of a
“holding company”, as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.

 

Section 8.23.                             Absence of Default, Etc.  No event has occurred which constitutes a
Default or an Event of Default.

 

Section 8.24.                             Agreements with Affiliates and Management Agreements.  Except for agreements or arrangements with
Affiliates in which Sheridan or one or more of its Subsidiaries provides services
to such Affiliates or vice versa for fair consideration and which are set forth
on Schedule 8.24 attached hereto, as of the date hereof neither Sheridan
nor any of its Subsidiaries has any contracts or written agreements or binding
arrangements of any kind with any Affiliate.

 

Section 8.25.                             No Burdensome Agreements; Material Agreements.  Neither Sheridan nor any of its Subsidiaries
is a party to any agreement or instrument or subject to any corporate or other
restrictions which, assuming compliance by such Persons with the terms of such
agreements or instruments, could result in a Material Adverse Change.  Schedule 8.25 hereto lists all
material agreements as of the date hereof (the “Material Agreements”) of
Sheridan and each of its Subsidiaries. 
Neither Sheridan nor any Subsidiary of Sheridan is in material default
of any of the Material Agreements. 
Except where Sheridan or one of its Subsidiaries has allowed a Material
Agreement to terminate because such termination was in the best interests of
Sheridan or applicable Subsidiary, each of the Material Agreements remains in
full force and effect.

 

Section 8.26.                             Solvency.  After giving effect to the transactions contemplated by the Loan
Document:  (i) the property of Sheridan,
at a fair valuation, will exceed its debt; (ii) the capital of Sheridan will
not be unreasonably small to conduct its business; (iii) Sheridan will not have
incurred debts, or have intended to incur debts, beyond its ability to pay such
debts as they mature; and (iv) the present fair salable value of the assets of
Sheridan will be materially greater

 

27

 

than the amount that will
be required to pay its probable liabilities (including debts) as they become
absolute and matured.  The representations
set forth in the preceding sentence are equally true of Sheridan and its
Subsidiaries on a Consolidated basis and of each Subsidiary in a Consolidating
basis.  For purposes of this Section,
“debt” means any liability on a claim, and “claim” means (i) the right to
payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, undisputed, legal,
equitable, secured or unsecured, or (ii) the right to an equitable remedy for
breach of performance if such breach gives rise to a right to payment, whether
or not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured, unmatured, undisputed, secured or unsecured.

 

Section 8.27.                             Taxes. 
All federal, state and other tax returns of Sheridan and each of its
Subsidiaries required by law to be filed have been duly filed and all federal,
state and other taxes, including, without limitation, withholding taxes,
assessments and other governmental charges or levies required to be paid by
Sheridan or any of its Subsidiaries, which are due and payable, have been paid,
provided that there shall not be deemed to be a violation of this
representation if any such tax is being diligently contested in good faith by
appropriate proceedings promptly initiated and diligently conducted and for
which adequate reserves shall have been set aside on the appropriate books, but
only if no foreclosure, distraint, sale or similar proceeding shall have been
commenced.  The charges, accruals and
reserves on the books of Sheridan and each of its Subsidiaries in respect of
taxes are adequate.

 

Section 8.28.                             Environmental Compliance.  Except as would not reasonably be expected
to result in a Material Adverse Change or as scheduled in Schedule 8.28:

 

(i)                                     None
of the real property currently owned or occupied by Sheridan or any of its
Subsidiaries has ever been used by Sheridan or any of its Subsidiaries during
its or their ownership or occupancy, or, to the best of Sheridan’s knowledge,
by previous owners or occupiers to treat, produce, store, handle, transfer,
process, transport, dispose of or otherwise release any Hazardous Substances in
violation of any Environmental Law.

 

(ii)                                  There
is no condition which exists on the real property owned or occupied by Borrower,
Sheridan or any of its Subsidiaries which requires Remedial Action and which
was caused by Borrower or its Subsidiaries or, to Borrower’s knowledge, any
other Person.

 

(iii)                               Neither
Sheridan nor any of its Subsidiaries has been notified of, or has actual
knowledge of any notification having been filed with regard to, a Release on or
into any real property owned or occupied by Sheridan or any of its
Subsidiaries.

 

(iv)                              Neither
Sheridan nor any of its Subsidiaries has received a summons, citation, notice
of violation, administrative order, directive, letter or other communication,
written or oral, from any governmental or quasi-governmental authority
concerning any Release or need for Remedial Action.

 

28

 

(v)                                 Except
as set forth in the Environmental Review of The Sheridan Group prepared by
Environ International Corporation, dated July 2003, a copy of which was
provided to Lender, there are no “friable” (as that term is defined in
regulations under the Federal Clean Air Act) asbestos or friable
asbestos-containing materials which have not been encapsulated as required by
Environmental Laws in accordance with accepted guidelines promulgated by the
United States Environmental Protection Agency existing in or on any real
property owned and/or in the portion of any other property occupied by
Borrower, Sheridan or any of its Subsidiaries.

 

(vi)                              Except
as set forth in the Environmental Review of The Sheridan Group prepared by
Environ International Corporation, dated July 2003, a copy of which was
provided to Lender, no equipment for which Sheridan or any of its Subsidiaries
is responsible containing polychlorinated biphenyls, including electrical
transformers, are located on any real property owned or occupied by Sheridan or
any of its Subsidiaries in levels which exceed those permitted by any and all
governmental authorities with jurisdiction over such premises or which are not
properly labeled in accordance with requisite standards.

 

(vii)                           Except
as set forth in the Environmental Review of The Sheridan Group prepared by
Environ International Corporation, dated July 2003, a copy of which was
provided to Lender, there are no tanks on any real property owned or occupied
by Sheridan or any of its Subsidiaries that have been used for the storage of
petroleum products or any other substance, nor, to the knowledge of the
Borrower, have any such tanks been located on such property at any time.

 

Section 8.29.                             Labor Disputes and Acts of God.  Neither the business nor the properties of
Sheridan or any Subsidiary are affected by any fire, explosion, accident,
strike, lockout or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance) which could reasonably be expected to result in a
Material Adverse Change.

 

Section 8.30.                             Related Transactions.  The Acquisition has been consummated in all
material respects pursuant to the provisions of the Acquisition Documents, true
and complete copies of which have been delivered to Lender, and in compliance
in all material respects with all applicable provisions of law.  The transactions contemplated by the Equity
Documents and the Senior Secured Note Documents to be consummated on or prior
to the date hereof have been so consummated (including without limitation the
disbursement and transfer of all funds in connection therewith) in all material
respects pursuant to the provisions of the applicable Operative Documents, true
and complete copies of which have been delivered to Lender, and in compliance
with all applicable provisions of law.

 

Section 8.31.                             Representations and Warranties Incorporated from Other
Operative Documents.  As of the Closing Date, each of
the representations and warranties made in the Operative Documents by any Loan
Party and to Borrower’s knowledge by any other party is true and correct in all
material respects, and such representations and warranties are hereby
incorporated herein by reference with the same effect as though set forth in
their entirety herein,

 

29

 

as qualified therein,
except to the extent that such representation or warranty relates to a specific
date, in which case such representation and warranty shall be true as of such
earlier date.

 

 

ARTICLE 9

 

FINANCIAL
COVENANTS

 

Section 9.01.                             Financial Covenants.  The Borrower shall, and shall cause each of
its Subsidiaries to, maintain compliance with the following financial
covenants:

 

(a)                                  Minimum
EBITDA.  The Borrower and its
Subsidiaries, on a Consolidated basis, shall have EBITDA for each period of
four consecutive fiscal quarters measured on the last day at each fiscal
quarter beginning September 30, 2003, of no less than the amount specified
below for the periods specified below:

 

	
  Minimum EBITDA

  	
   

  	
  Four Quarter Periods Ending

  	
   

  
	
  $

  	
  21,000,000

  	
   

  	
  Closing through 9/30/06

  	
   

  
	
  $

  	
  23,000,000

  	
   

  	
  12/31/06 through the
  Maturity Date

  	
   

  

 

(b)                                 Interest
Coverage Ratio.  As of the last day
of each fiscal quarter, the Borrower and its Subsidiaries on a Consolidated
basis shall maintain a ratio of EBITDA to Interest Expense, for the period of
four preceding consecutive fiscal quarters ending on such day, of at least 2.00
to 1.00.

 

Section 9.02.                             Limitation on Capital Expenditures.

 

(a)                                  During
each one year period beginning on a Capex Trigger Date or any anniversary
thereof, the Borrower and its Subsidiaries shall not make any Capital
Expenditures in excess of (a) $12,000,000, if the Capex Trigger Date is on or
before December 31, 2003, or (b) $10,000,000, if the Capex Trigger Date is
after December 31, 2003; provided  that additional Capital
Expenditures may be made in such period up to an amount equal to 25% of the
applicable limit for such period, but in the following period the applicable
limit shall be reduced by an amount equal to the excess expenditures made.

 

(b)                                 There
shall be no cumulation or carryover of unused Capital Expenditure capacity,
except that an amount up to 25% of the applicable limit which is not expended
in any full one year period during which Section 9.02 (a) applies, may be
expended in the following one year period.

 

(c)                                  If
on any date after a Capex Trigger Date, there is a date which is the last day
of a period of 90 consecutive days during which the Revolving Credit Outstandings
(without regard to the presumption in the definition thereof) have been less
than $10,000,000, Section 9.02(a) shall cease to apply on such date, unless and
until another Capex Trigger Date occurs.

 

30

 

(d)                                 “Capex
Trigger Date” shall mean the last day of any period of 90 consecutive days
during which the Revolving Credit Outstandings (without regard to the
presumption in the definition thereof) equal or exceed $10,000,000.

 

 

ARTICLE
10

 

COVENANTS CONCERNING REPORTING REQUIREMENTS

 

Section 10.01.                       Financial Statements. 
So long as any of the Obligations is unpaid or the Lender has any
commitment to make Loans hereunder, the Borrower shall, from time to time,
furnish (or cause to be furnished, as the case may be) the Lender with the
following information:

 

(a)                                  Annual
Financial Statements.  As soon as
available and in any event within ninety (90) calendar days after the end of
each fiscal year of the Borrower, the Borrower shall deliver to the Lender
audited Consolidated financial statements, together with any notes thereto of
the Borrower and its Subsidiaries, consisting of a balance sheet as at the end
of such fiscal year and related statements of income, cash flows, and changes
in retained earnings for the fiscal year then ended, all in reasonable detail
and setting forth in comparative form the respective consolidated financial
statements as at the end of and for the preceding fiscal year, prepared in
accordance with GAAP and Unqualifiedly Certified by independent certified
public accountants of nationally recognized standing satisfactory to the
Lender.  The Borrower shall also deliver
a letter signed by such accountants stating that, having conducted an ordinary
and customary examination of the affairs of the Borrower in connection with the
preparation of the respective Consolidated financial statements, they are not
aware of the existence of any condition or event which constitutes a Default or
an Event of Default hereunder, and, promptly upon receipt, a copy of any
management letter.

 

(b)                                 Quarterly
Financial Statements.  As soon as
available and in any event within sixty (60) calendar days after the end of
each fiscal quarter in each fiscal year of the Borrower, the Borrower shall
deliver to the Lender Consolidated financial statements of the Borrower and its
Subsidiaries, consisting of a balance sheet as at the end of such fiscal
quarter and related statements of income, cash flows, and changes in retained
earnings for the fiscal quarter then ended and the fiscal year through that
date, all in reasonable detail and setting forth in comparative form the
respective Consolidated financial statements of the corresponding date and
period in the previous fiscal year and certified (subject to normal year-end
audit adjustments) by the President or chief financial officer of the Borrower
as (i) having been prepared in accordance with GAAP and (ii) presenting fairly
the financial position of the Borrower and its Subsidiaries as at the end of
each fiscal quarter.

 

(c)                                  Subsidiary
Financial Statements.  At the same
time as the financial statements delivered under subsections (a) and (b) above,
a balance sheet, statement of income and a statement of cash flows for each
Subsidiary of Borrower in form reasonably satisfactory to Lender.

 

31

 

(d)                                 Borrowing
Base Certificate and Agings.  As
soon as available and in any event within twenty (20) days after the end of
each calendar month, agings of accounts receivable and accounts payable and
inventory listings in form reasonably satisfactory to Lender, and a completed
Borrowing Base Certificate in the form attached hereto as Exhibit E.

 

(e)                                  Business
Plan.  Prior to January 31 of each
year, the Borrower shall deliver to the Lender the annual budget for the
Borrower and its Subsidiaries, including forecasts of the income statement, the
balance sheet, cash flow report and an EBITDA statement for such year on a
quarter by quarter basis.  Such Business
Plan shall be accompanied by a certification of the President or Chief
Financial Officer of the Borrower that such Business Plan is reasonable, made
in good faith, consistent with the Loan Documents, and represent the Borrower’s
best judgment as to such matters.

 

Section 10.02.                       Officer’s Compliance Certificates.  Each time that the financial statements are
furnished to the Lender pursuant to Section 10.01 above, the Borrower shall
deliver to the Lender a certificate of the President or chief financial officer
of the Borrower, in substantially the form of Exhibit F attached hereto,
containing the following information:

 

(a)                                  a
statement that no Default or Event of Default exists and is continuing on the
date of such certificate; and

 

(b)                                 calculations
in sufficient detail to demonstrate compliance as of the date of the relevant
financial statements with all of the financial covenants contained in Article 9
(Financial Covenants) hereof.

 

Section 10.03.                       Auditors Reports. 
Promptly upon receipt, the Borrower shall deliver to the Lender copies
of all financial reports or written recommendations, if any, submitted to the
Borrower or any of its Subsidiaries by its auditors in connection with each
annual or interim auditor examination of its books by such auditors.

 

Section 10.04.                       Notice of Default. 
Promptly after any officer of the Borrower has learned of the occurrence
of a Default or an Event of Default, the Borrower shall deliver to the Lender a
notice of such Default or Event of Default. 
Each such notice pursuant to this Section shall set forth details of the
matter referred to therein and state what action the Borrower or the affected
Subsidiary has taken, is taking and proposes to take, with respect thereto, and
shall be certified by the President or Chief Financial Officer of the Borrower
as true and correct in all material respects.

 

Section 10.05.                       Notice Concerning Representations and Warranties.  The Borrower shall give the Lender notice of
any changes in facts or circumstances on which the representations and
warranties set forth in this Agreement are made which makes such
representations and warranties false or misleading in any material
respect.  Such notice shall be given
promptly, but in any event not later than ten (10) days after any officer of
the Borrower

 

32

 

becomes aware of its
occurrence.  Except as set forth in the
proviso to Section 7.03 (Conditions Precedent to Each Loan), the delivery of
such a notice shall not imply any waiver by the Lender.

 

Section 10.06.                       Notice of Litigation. 
Promptly after the commencement thereof, but in any event not later than
ten (10) days after any officer or director of the Borrower becomes aware
thereof, the Borrower shall deliver to the Lender notice of any actions, suits,
and proceedings before any court or governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting the Borrower
or any Subsidiary in which amount involved is $250,000 or more or, which, if
not solely for monetary damages, could result in a Material Adverse Change.

 

Section 10.07.                       SEC Disclosure. 
Promptly after the sending or filing thereof, the Borrower shall deliver
to the Lender copies of all proxy statements, financial statements, and reports
which the Borrower or any Subsidiary sends to its shareholders or to the
Trustee or the Noteholders, and copies of all regular, periodic, and special
reports, and all registration statements which the Borrower or any Subsidiary
files with the Securities and Exchange Commission or any governmental authority
which may be substituted therefor, or with any national securities exchange or
regulatory body thereof.

 

Section 10.08.                       Conditions Affecting Collateral.  The Borrower shall give the Lender at least thirty (30) days
prior written notice of any of the following conditions:  (a) the opening or acquisition of a new
facility or office; (b) a change in the jurisdiction of incorporation of
Borrower or any Subsidiary; (c) any creation or acquisition of a Subsidiary; (d)
acquisition of any material amount of property by the Borrower or any
Subsidiary not subject to a valid and perfected Lien pursuant to the then
existing Loan Documents with the priority required by the Loan Documents; or
(e) or any change of domicile or change of name or any change of address of the
chief executive office of any Loan Party.

 

Section 10.09.                       ERISA Notices. 
Promptly after the filing or receiving thereof, the Borrower shall
deliver to the Lender copies of all reports, including annual reports and
audited financial statements, and notices which the Borrower or any Subsidiary
or any ERISA Affiliate files with or receives from PBGC or the U.S. Department
of Labor under ERISA, and as soon as possible and in any event within twenty
(20) days after the Borrower or any Subsidiary or any ERISA Affiliate knows or
has reason to know that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or that the PBGC or the Borrower or any
Subsidiary or any ERISA Affiliate has instituted or will institute proceedings
under Title IV of ERISA to terminate any Plan, or that any Withdrawal Liability
from a Multiemployer Plan has been or will be incurred by Borrower or any
Subsidiary or any ERISA Affiliate or that any Multiemployer Plan to which
Borrower or any Subsidiary or any ERISA affiliate contribute is or will be in
Reorganization, the Borrower will deliver to the Lender a certificate of the
chief financial officer of the Borrower setting forth details as to such
Reportable Event or Prohibited Transaction or Plan termination or Withdrawal
Liability or Reorganization and the action the Borrower proposes to take with
respect thereto, in either case, which respects an event or condition which
could result in a Material Adverse Change.

 

33

 

Section 10.10.                       Miscellaneous. 
With reasonable promptness, the Borrower shall give to the Lender such
other information respecting the business operations and financial condition of
the Borrower or any of its Subsidiaries as the Lender may, from time to time,
request, including with limitation any change in management.

 

Section 10.11.                       Authorization of Third Parties to Deliver Information.  The Borrower hereby agrees that any opinion,
report or other information delivered to the Lender pursuant to the Loan
Documents is hereby deemed to have been authorized and directed by the Borrower
to be delivered for the benefit, and reliance thereupon, of the Lender.

 

 

ARTICLE
11

 

BUSINESS COVENANTS

 

So long as any of the
Obligations is unpaid or the Lender has any commitment to make Loans hereunder,
the Borrower shall, and shall cause each of its Subsidiaries to, comply with
the following covenants.

 

Section 11.01.                       Indebtedness.

 

11.01.1             
General.  The
Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, create, assume, incur or otherwise become or remain obligated in
respect of, or permit to be outstanding, any Indebtedness, except:

 

(a)                                  Indebtedness
in favor of the Lender;

 

(b)                                 The
Senior Secured Notes and any Indebtedness related thereto, pursuant to the
terms of the other Senior Secured Note Documents;

 

(c)                                  obligations
in an aggregate principal amount not to exceed at any time $5,000,000 in
respect of Capital Lease Obligations and purchase money Indebtedness in respect
of equipment;

 

(d)                                 obligations
owing to the Borrower or Subsidiaries of the Borrower;

 

(e)                                  Indebtedness
outstanding on the Closing Date as set forth on Schedule 8.13 and refinancings
thereof, but not Indebtedness shown thereon as being paid off on the date
hereof; and

 

(f)                                    Other
Indebtedness not described in clauses (a)-(e) above in an amount not to exceed
$5 million.

 

11.01.2             
No Default.  In addition to the limitations on the
incurrence or existence of Indebtedness referred to above, no Indebtedness may
be incurred by Borrower or any of its

 

34

 

Subsidiaries unless
immediately before and after giving effect to the incurrence of such
Indebtedness, no Default or Event of Default shall have occurred and be continuing.

 

11.01.3             
No prepayment. 
Borrower will not, and will not permit any Subsidiary to, directly or
indirectly (i) declare, pay, make or set aside any amount for redemption,
repurchase or other payment in respect of Senior Secured Notes, except for
regularly scheduled payments required by the provisions of the Senior Secured
Notes, to the extent permitted pursuant to the Intercreditor Agreement or other
applicable agreement with the Lender, or (ii) amend or otherwise modify the
terms of any Senior Secured Note Documents (other than to provide for
additional collateral and guarantors from time to time, as required by the
Senior Secured Note Documents);

 

Section 11.02.                       Liens.

 

11.02.1             
Negative Pledge. 
The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, assume, incur or permit to exist, any Lien on
any of its properties or assets, whether now owned or hereafter acquired,
except the following (collectively, the “Permitted
Liens”):

 

(a)                                  Liens
in favor of the Lender arising out of the Collateral Agreements;

 

(b)                                 Liens
in favor of the Trustee arising out of any Senior Secured Note Document;

 

(c)                                  Liens
for taxes, assessments, or other governmental charges the payment of which is
not at the time required to be paid pursuant to Section 11.14 (Payment of Taxes
and Claims), not yet subject to penalty or which are being contested in good
faith and by appropriate proceedings, if adequate reserves with respect thereto
are maintained on the books of the Borrower in accordance with GAAP;

 

(d)                                 statutory
Liens of bankers, carriers, landlords, warehousemen, mechanics, laborers and
materialmen incurred in the ordinary course of business for sums not yet due,
or which are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of the
Borrower in accordance with GAAP;

 

(e)                                  Capital
Leases and purchase money security interests incurred in compliance with clause
(c) of Section 11.01 (Indebtedness) above, provided, that no such Liens
shall extend to or cover any property other than the leased property or
equipment purchased by proceeds of such permitted purchase money Indebtedness;

 

(f)                                    zoning
restrictions, easements, rights-of-way, minor restrictions and other similar
encumbrances on real property, in each case incidental to, and not interfering
with, the ordinary conduct of the business of such Person;

 

35

 

(g)                                 Liens
incurred or deposits made in the ordinary course of business to secure the
obligations of the Borrower and the Subsidiaries under workers’ compensation,
unemployment insurance and other types of social security legislation or
otherwise to secure statutory or regulatory obligations or for the payment of
rent of the Borrower or any of the Subsidiaries in the ordinary course of
business consistent with past practice, including to secure the performance of
tenders, surety and appeal bonds, performance bonds, performance of bids,
leases, trade contracts, governmental contracts, operating leases, performance
and return-of-money bonds and other similar obligations (exclusive in each case
of obligations for the payment of borrowed money); provided, that the
obligations in connection with which such Liens were incurred or deposits made
shall have been incurred in the ordinary course of business and shall otherwise
be permitted by this Agreement;

 

(h)                                 Judgement
Liens not giving rise to an Event of Default so long as any such Lien is
adequately bonded and any appropriate legal proceedings which may have been
duly initiated for the review of such judgment shall not have been finally
terminated or the period within which such proceedings may be initiated shall
not have expired;

 

(i)                                     Liens
securing Indebtedness, or Liens on shares of capital stock, of a Person
existing at the time such Person becomes a Subsidiary or is merged with or into
the Borrower or a Subsidiary or any Lien securing Indebtedness incurred in
connection with an Acquisition, provided that (A) such Liens were in existence
prior to the date of such Acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; and
(B) do not exceed $1 million in the aggregate;

 

(j)                                     licenses,
leases or subleases granted to other Persons in the ordinary course of business
not materially interfering with the conduct of the business of the Borrower or
any of its Subsidiaries or materially detracting from the value of the assets
of the Borrower or any Subsidiary;

 

(k)                                  Liens
disclosed on the title reports delivered to Lender on the date hereof or listed
on Schedule 11.02, provided that such Liens do not extend to assets or
secure liabilities in addition to those existing on the date hereof; and

 

(l)                                     the
Lien on the cash collateral account referred to in Section 7.01.6(b).

 

11.02.2             
Negative, Negative Pledge.  The Borrower will not, and will not permit
any of its Subsidiaries to, agree with any Person to restrict or place
limitations on the right of the Borrower or any of its Subsidiaries to create,
incur, assume or permit to exist any Lien on or with respect to any property or
asset of the Borrower or any of its Subsidiaries, other than (a) the Trustee,
and (b) the lessor as to a Capital Lease or the secured party as to a purchase
money security interest, as long as the restriction applies only to the
specific equipment involved.

 

11.02.3             
Licenses. 
The Borrower will not, and will not permit any of its Subsidiaries to,
license or sublicense any of its owned or licensed Intellectual Property or
general

 

36

 

intangibles except to any
Subsidiary and in the ordinary course of business consistent with past practice
as described on Schedule 11.02.

 

Section 11.03.                       Investments and Acquisitions.  After that date which is the last day of any period of 90
consecutive days during which the Revolving Credit Outstandings (without regard
to the presumption in the definition thereof) exceed $10,000,000, the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, make or permit to exist any Investment or make any Acquisition,
except that so long as no Default or Event of Default then exists or would be
caused thereby, the Borrower and its Subsidiaries may:

 

(a)                                  maintain
existing Investments in the direct or indirect wholly-owned Subsidiaries of the
Borrower hereto;

 

(b)                                 create
new direct or indirect wholly-owned Subsidiaries of the Borrower, subject to
the provisions of Section 11.27 (Joinder of Subsidiaries);

 

(c)                                  make
additional investments in Guarantors, and investments up to a maximum aggregate
of $5,000,000 in Foreign Subsidiaries;

 

(d)                                 invest
in Cash Equivalents;

 

(e)                                  make
Investments in securities of trade creditors, customers or any debtor of the
Borrower or its Subsidiaries received in compromise of obligations incurred in
the ordinary course of business, including pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of such
trade creditors, customers or debtors and any Investments received in
satisfaction of judgments;

 

(f)                                    make
loans or advances to employees, directors, officers or consultants of the
Borrower or any Subsidiary of the types consistent with past practice in an
aggregate amount not to exceed $500,000 outstanding at any one time;

 

(g)                                 make
payroll, travel and similar advances to cover matters that are expected at the
time of the advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business and consistent
with past practice; and

 

(h)                                 make
Investments in any Person to the extent such Investments consist of prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers’ compensation, performance and other similar deposits made in the
ordinary course of business and consistent with past practice.

 

Section 11.04.                       Restricted Payments. 
The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, declare, order, pay, make or set apart any sum or
property for any Restricted Payment or agree with any Person (other than the
Trustee) to restrict or place limitations on the right of the Borrower or any
of its Subsidiaries to declare, order, pay, make or set apart any sum or property
for any Restricted Payment, except that:

 

37

 

(a)                                  Subsidiaries
may make Restricted Payments to the Borrower or another Subsidiary of the
Borrower which is not a Foreign Subsidiary;

 

(b)                                 so
long as no Default or Event of Default shall have occurred and be continuing,
the payment of cash dividends to Parent to the extent applied by Parent to
repurchase, redeem or otherwise retire or acquire equity interests of Parent
from its employees or directors (or their heirs or estates) or employees or
directors (or their heirs or estates) of Parent or its Subsidiaries, in each
case, pursuant to the terms of any stockholders agreement, employment
agreement, severance agreement, employee stock option agreement or similar
agreement in accordance with the provisions of any such arrangement as in
effect on the date hereof, in an aggregate amount pursuant to this paragraph
(b) to all such employees or directors (or their heirs or estates) not to
exceed $500,000 per fiscal year on and after the date hereof, provided, that
any amount of such basket not used in a fiscal year may be carried forward to
succeeding fiscal years until used, provided that for any particular fiscal
year, the aggregate of such unused amounts carried forward, together with the
basket available for such fiscal year, shall not exceed $1.0 million in the
aggregate;

 

(c)                                  the
payment of cash dividends to Parent (i) to the extent applied by Parent to pay
reasonable and customary directors fees payable to, and indemnity provided on
behalf of, the Board of Directors of Parent, indemnity provided on behalf of
officers and employees of Parent, and customary reimbursement of travel and
similar expenses incurred in the ordinary course of business (without giving effect
to any amendment or supplement thereto or modification thereof), (ii) in an
aggregate not to exceed $250,000 per fiscal year, to the extent applied by
Parent to pay its general administrative expenses, including, without
limitation, in respect of director fees and expenses, administrative, legal and
accounting services, or (iii) solely to enable Parent to make payments in cash
to holders of its capital stock in lieu of the issuance of fractional shares of
its capital stock in an aggregate amount not to exceed $200,000 on and after
the date hereof;

 

(d)                                 Payments
to the Parent to the extent applied to the tax liability of the Borrower and
its Subsidiaries, computed as if the Borrower and its Subsidiaries were a
separate group filing a consolidated return, reduced by the amount of such tax
liability actually paid by the Borrower and its Subsidiaries; and

 

(e)                                  Payments
may be made pursuant to the Management Agreement referred to in Section
11.05(b), subject to the Subordination Agreement referred to in Section
7.01.6(f).

 

Section 11.05.                       Affiliate Transactions.

 

(a)                                  The
Borrower shall not, and shall not permit any of its Subsidiaries to, directly
or indirectly, engage in any transaction with an Affiliate, or make an
assignment or other transfer of any of its properties or assets to any
Affiliate on terms that are less favorable to the Borrower or such Subsidiary
than those which might be obtained at the time from

 

38

 

unaffiliated third
parties; provided, however, the foregoing restrictions shall not
apply to transactions exclusively among the Borrower and Guarantors;

 

(b)                                 Except
for a certain Management Agreement entered into as of Closing with Bruckmann,
Rosser, Sherrill & Co. LLC and FS Private Investments III, LLC, the
Borrower shall not, and shall not permit any of its Subsidiaries to, (a) enter
into any management agreement with any Person that gives such Person the right
to manage its business except for usual and customary employment agreements and
consulting agreements consistent with past practice, or (b) directly or
indirectly pay or accrue to any Person any sum or property for fees for
management or similar services rendered in connection with the operation of a
business except as set forth in clause (a) above.

 

Section 11.06.                       Disposition of Assets. 
The Borrower shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell, assign, lease, abandon, or otherwise transfer or
dispose of any of its assets (including, without limitation, shares of stock
and indebtedness of Subsidiaries, receivables, and leasehold interests),
except:

 

(a)                                  inventory
disposed of in the ordinary course of its business as presently conducted;

 

(b)                                 the
sale or other disposition of assets no longer used or useful in the conduct of
its business;

 

(c)                                  that
any Subsidiary may sell, lease, assign or otherwise transfer its assets to the
Borrower or to a Guarantor;

 

(d)                                 the
sale or other disposition from time to time of assets (other than pursuant to
clauses (a)-(c) above) after the date hereof having a cumulative book value not
to exceed 10% of Borrower’s consolidated assets as of the date of sale,
provided that (i) after giving effect to the transaction, there exists no
Default or Event of Default, (ii) within 360 days of the sale, the net sale
proceeds are either used to prepay the Loans or are invested in assets or
property, and (iii) during and after such 360 day period, such net sale
proceeds and the assets and properties purchased therewith are subject to a perfected
security interest in favor of the Lender securing the Obligations as
contemplated by this Agreement; and

 

(e)                                  property
subject to a governmental condemnation.

 

Section 11.07.                       Liquidation or Merger. 
The Borrower shall not, and shall not permit any of its Subsidiaries to,
liquidate or dissolve itself (or suffer any liquidation or dissolution) or
otherwise wind up, or enter into any merger or consolidation or division or
similar transaction, other than:

 

(a)                                  a
merger or consolidation among the Borrower and one or more of its Subsidiaries,
provided that the Borrower is the surviving corporation, or

 

39

 

(b)                                 a
merger or consolidation between or among two or more Subsidiaries of the
Borrower.

 

Section 11.08.                       Change in Organizational Documents.  The Borrower shall not, and shall not permit
any of its Subsidiaries to, amend or otherwise modify, the respective articles
or certificate of incorporation, bylaws or other organizational documents of
such Person, except in connection with a merger permitted by Section 11.07
(Liquidation or Merger) above.

 

Section 11.09.                       Issuance of Equity. 
The Borrower shall not, and shall not permit any of its Subsidiaries to,
issue, authorize the issuance of, or obligate itself to issue any shares of its
capital stock or other equity (including, without limitation, any options,
warrants or other rights in respect thereof) to any Person that (a) would
contravene any other provision of this Agreement (including any provision
respecting Change of Control) or (b) would result in there being equity of the
Borrower or any Subsidiary that is not pledged pursuant to the Pledge
Agreement.

 

Section 11.10.                       Environmental Violations. 
The Borrower shall not, and shall not permit any of its Subsidiaries to,
or permit any Person to, use, generate, treat, store, dispose of or otherwise
introduce, any Hazardous Materials into or on any real property owned or leased
by any of them and will not, and will not permit such actions to occur, except
in an environmentally safe manner through methods which have been approved by
and meet all of the standards of the federal Environmental Protection Agency
and any other federal, state or local agency with authority to enforce
Environmental Laws except where the failure to comply with the foregoing
sentence could not reasonably be expected to result in a Material Adverse
Change.  Without limiting the generality
of any other indemnities provided under this Agreement, the Borrower hereby
agrees to indemnify, reimburse, defend and hold harmless any Indemnified Person
for, from and against all demands, liabilities, damages, costs, claims, suits,
actions, legal or administrative proceedings, interest, losses, expenses and
reasonable attorney’s fees (including any such fees and expenses incurred in
enforcing this indemnity) asserted against, imposed on or incurred by any of
the Indemnified Persons, directly or indirectly, pursuant to, or in connection
with, the application of any Environmental Law to acts or omissions occurring
at any time on or in connection with any real estate owned or leased by the
Borrower or any Subsidiary or any business conducted thereon except those which
result from the gross negligence or willful misconduct of any Indemnified
Person.

 

Section 11.11.                       Preservation of Existence, Etc.  The Borrower shall at all times preserve and keep in full force
and effect (a) its corporate existence and (b) the corporate,
partnership or other existence of each of its Subsidiaries except as permitted
by Section 11.07, and (c) the good standing of such Persons in all states in
which they are formed or required to qualify to do business, except, as to
qualification only, where the failure to keep in full force and effect any such
good standing could not result in a Material Adverse Change and except that a
Subsidiary of the Borrower may be dissolved following the transfer of all of
its assets to the Borrower or one or more other wholly-owned Subsidiaries of
the Borrower (the “transferee”)
subject to the conditions that (i) both before and after the transfer and
subsequent dissolution, no Event of Default or Default shall exist and (ii) all
of the equity of the transferee shall have been duly pledged to the Lender
pursuant to the Pledge Agreements, all of the material assets of the

 

40

 

transferee (after giving
effect to one transfer) shall have been pledged as security pursuant to the
Security Agreement, Mortgages and Leasehold Mortgages and the transferee (if
not the Borrower) shall all be parties to one or more Guarantees.

 

Section 11.12.                       Permitted Businesses. 
The Borrower shall, and shall cause each of its Subsidiaries to engage
in the businesses permitted under Section 8.09.

 

Section 11.13.                       Compliance with Law. 
The Borrower shall, and shall cause each of its Subsidiaries to, comply
with the requirements of all Applicable Law and will obtain or maintain all
franchises, permits, licenses and other governmental authorizations and
approvals, necessary to the ownership, acquisition or disposition of their
respective properties or to the conduct of their respective businesses except
where failure to comply with, obtain or maintain any of the foregoing could not
reasonably be expected to result in a Material Adverse Change.

 

Section 11.14.                       Payment of Taxes and Claims.  The Borrower shall, and shall cause each of its Subsidiaries and
Parent to, timely file all tax and information returns required by federal,
state or local tax authorities.  The
Borrower shall, and shall cause each of its Subsidiaries and Parent to, pay all
taxes (including, without limitation, withholding taxes), assessments and
governmental charges or levies required to be paid by it or imposed on it or on
its income or profits or upon any of its properties or assets, prior to the
date on which penalties attach thereto or interest accrues, and all claims for
(including, without limitation, claims for labor, services, materials and
supplies) for sums which have become due and payable and which, if unpaid,
might become a Lien upon its properties or assets; provided that it
shall not be deemed to be a violation of this covenant if any such charge or
claim not paid is being diligently contested in good faith by appropriate
proceedings promptly initiated and diligently conducted and for which adequate
reserves shall have been set aside on the appropriate books, but only so long
as no foreclosure, distraint, sale or similar proceeding shall have been
commenced.

 

Section 11.15.                       Tax Consolidation. 
The Borrower shall not file or consent to or permit the filing of any
consolidated income tax return on behalf of it or any of its Subsidiaries with
any Person (other than a consolidated return for the group of which Parent is
the common parent).  The Borrower shall
not, and shall not permit any Subsidiary to, enter into any agreement with any
Person which would cause the Borrower or such Subsidiary to bear more than the
amount of taxes to which it would have been subject had it separately filed (or
filed as part of a consolidated return among the Borrower’s Subsidiaries).

 

Section 11.16.                       Maintenance of Properties.  The Borrower shall, and shall cause each of its Subsidiaries to,
maintain or cause to be maintained in good repair, working order and condition
(ordinary wear and tear excepted) all properties used or useful in its business
(whether owned or leased), such maintenance to include, without limitation,
repair, renewal, replacement or improvement thereto; and keep, and cause each
Subsidiary to keep, all systems and equipment which may now or in the future be
subject to compliance with any standard or rules imposed by any Governmental
Authority in compliance in all material respects with such standards or
rules.  The Borrower shall, and shall
cause its Subsidiaries to, maintain, preserve and protect, and, when necessary,
renew, all franchises, licenses, patents, copyrights, permits, service marks,
trademarks

 

41

 

and trade names and other
general intangibles held by any of them and all agreements to which any of them
are parties which are necessary to conduct the Borrower’s or applicable
Subsidiary’s business.

 

Section 11.17.                       Insurance.

 

(a)                                  The
Borrower shall, and shall cause each of its Subsidiaries to, maintain or cause
to be maintained with financially sound and reputable insurers, insurance with
respect to the properties and business of the Borrower or such Subsidiary
against loss or damage of the kinds and in the amounts reasonably prudent for
the operation of its business and including such risks as are customarily
insured against by entities of established reputation having similar properties
similarly situated or engaged in the same or similar type of businesses.  The Borrower and each of its Subsidiaries
shall cause each insurance policy issued in connection herewith to provide, and
the insurer issuing such policy to certify to the Lender that (i) the Lender
will be named as additional insured and lender loss payee or mortgagee, as
appropriate, under each such insurance policy; (ii) if such insurance be
proposed to be cancelled or materially changed for any reason whatsoever, such
insurer will promptly notify the Lender and such cancellation or change shall
not be effective as to the Lender for at least thirty (30) days after receipt
by the Lender of such notice, unless the effect of such change is to extend or
increase coverage under the policy; and (iii) the Lender will have the right
(but no obligation) at its election to remedy any default in the payment of
premiums within thirty (30) days of notice from the insurer of such default.

 

(b)                                 If
no Default or Event of Default exists, loss payments will be applied by the
Borrower or the relevant Subsidiary to the repair and/or replacement of
property with respect to which the loss was incurred to the extent reasonably
feasible, and any loss payments or the balance thereof remaining, to the extent
not so applied or used to purchase other assets useful in the business of the
Borrower and its Subsidiaries within 360 days of receipt thereof and subject to
the Liens of the Lender hereunder, shall be payable to the Lender and applied
to the Obligations.  If an Event of
Default or Default shall then exist then such proceeds shall, at the option of
the Lender, be applied to reduce the Obligations, and at the Lender’s election
the Commitment shall be permanently reduced, or be reinvested in the business
of the Borrower or applicable Subsidiary. 
Notwithstanding the foregoing, payments received by the Lender in excess
of all Obligations shall be paid over by the Lender to the Borrower.  Copies of such policies or the related
certificates, in each case, naming the Lender as additional insured and lender
loss payee or mortgagee, as appropriate, shall be delivered to the Lender
annually at the time of the delivery of the financial statements referred to in
Section 10.01(a) below and at the time any new policy of insurance is
issued.  If no Default or Event of
Default exists, no claim may be adjusted without the consent of the Borrower.

 

(c)                                  The
Borrower shall maintain or cause to be maintained all insurance available
through the PBGC and/or insurers acceptable to the Lender against its
obligations and the obligations of its Subsidiaries to the PBGC.

 

42

 

Section 11.18.                       Compliance with ERISA.

 

(a)                                  Borrower
shall, and shall cause each of its ERISA Affiliates to, make all contributions
to any Plan and Multiemployer Plan when such contributions are due and not
incur any Accumulated Funding Deficiency, whether or not waived, and will
otherwise comply in all material respects with the requirements of the Code and
ERISA with respect to the operation of all Plans and Multiemployer Plans.

 

(b)                                 Borrower
shall, and shall cause each of its ERISA Affiliates to, comply in all material
respects with the requirements of COBRA and HIPAA with respect to any Plans
subject to the requirements thereof.

 

(c)                                  Borrower
shall not take, and shall prevent any ERISA Affiliate from taking, any of the
following actions and shall not permit any of the following events to occur if
such action or event together with all other such actions or events, would
subject the Borrower or any of its ERISA Affiliates to any tax, penalty, or
other liabilities which could reasonably be expected to result in a Material
Adverse Change:

 

(i)                                     engage
in any transaction in connection with which the Borrower, any of its
Subsidiaries or any ERISA Affiliate could be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975
of the Code;

 

(ii)                                  terminate
any Plan in a manner, or take any other action, which could result in any
liability of Borrower, any of its Subsidiaries or any ERISA Affiliate to the
PBGC;

 

(iii)                               fail
to make full payment when due of all amounts which, under the provisions of any
Plan, the Borrower, any of its Subsidiaries or any ERISA Affiliate is required
to pay as contributions thereto, or permit to exist any Accumulated Funding
Deficiency, whether or not waived, with respect to any Plan;

 

(iv)                              permit
the current value of all accrued benefits under all Plans which are subject to
title IV of ERISA to exceed the current value of the assets of such Plans
allocable to such vested accrued benefits, except as may be permitted under
actuarial funding standards adopted in accordance with Section 412 of the Code;

 

(v)                                 withdraw
from any Multiemployer Plan, if such withdrawal would result in the imposition
of Withdrawal Liability; or

 

(vi)                              adopt
a Plan amendment which results in significant underfunding (as defined in
Section 307 of ERISA) which requires Borrower or any ERISA Affiliate to provide
security.

 

Section 11.19.                       Maintenance of Records; Fiscal Year.  The Borrower shall, and shall cause each of
its Subsidiaries to, keep at all times books of record and account in which
entries

 

43

 

will be made of all
dealings or transactions in relation to its business and affairs as required by
GAAP.  The Borrower shall keep and shall
cause each of its Subsidiaries to keep its books of account and financial
statements in accordance with GAAP and report on the basis of a fiscal year
ending December 31.

 

Section 11.20.                       Inspections & Field Examinations.  Upon reasonable notice (and for this purpose
no more than two Business Days notice shall be required under any
circumstances) if no Event of Default or Default shall exist, or at any time
with or without notice after the occurrence of an Event of Default or Default,
the Borrower shall, and shall cause each of its Subsidiaries to, allow any
representative of Lender to visit and inspect any of the properties of the
Borrower and any of its Subsidiaries, to examine the books of account and other
records and files of the Borrower and any of its Subsidiaries (including, without
limitation, the financial statements (audited and unaudited, to the extent
prepared) of each Subsidiary and information with respect to each business
operated by the Borrower and any of its Subsidiaries), to make copies thereof
and to discuss the affairs, business, finances and accounts of the Borrower and
its Subsidiaries with its personnel and accountants.  The Lender shall also be permitted to conduct field examinations
at Borrower’s expense, not more than once a year before the occurrence of an
Event of Default and thereafter without limitation.  The Lender’s inspections are solely for the protection of the
Lender and no action or inaction of the Lender shall constitute any
representation by the Lender that the Borrower is in compliance with the terms
of any Loan Documents or that the Lender approves of the Borrower’s affairs,
business, finances or accounts.

 

Section 11.21.                       Exchange of Notes. 
Upon receipt of a written notice of loss, theft, destruction or
mutilation of the Note and of a letter of indemnity from the Lender or its
successors or assigns, and upon surrendering for cancellation such Note if
mutilated (in which event no indemnity shall be required), the Borrower shall
execute and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed
or mutilated Note, as the case may be.

 

Section 11.22.                       Compliance with Federal Reserve Regulations.  No proceeds of the Loans shall be used by
the Borrower, any of its Subsidiaries or other Person, directly or indirectly
to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any margin stock.  Neither the Borrower nor any of its Subsidiaries will, directly
or indirectly, otherwise take or permit to be taken any action which would
result in the Loans or the carrying out of any of the other transactions
contemplated by this Agreement, being violative of such Regulation U or of
Regulation T (12 C.F.R. 220, as amended) or of Regulation X (12 C.F.R. 224, as
amended) or any other regulation of the Board of Governors of the Federal
Reserve System.

 

Section 11.23.                       Limitations on Certain Restrictive Provisions.  The Borrower shall not, and shall not permit
any of its Subsidiaries to (a) except pursuant to any Senior Secured Note
Documents, permit or place any restriction, directly or indirectly, on (i) the
payment of dividends or distributions by any Subsidiary or (ii) the making of
advances or other cash payments by any such Subsidiary or (iii) the transfer by
any Subsidiary of any of its properties or assets, in each case to the Borrower
or its Subsidiaries, or (b) agree with any Person other than the Lender that
the Borrower and/or its Subsidiaries shall not amend the Loan Documents.

 

44

 

 

Section 11.24.                       Corporate Separateness.  The Borrower and each of its Subsidiaries,
on the one hand, shall conduct their business and operations separate from that
of each other Affiliate, on the other hand. 
Without limiting the generality of the foregoing, the Borrower shall
not, and shall not permit any Subsidiary, to commingle funds with any Person
that is not the Borrower or a Subsidiary.

 

Section 11.25.                       Deposit Accounts.  After the ninetieth (90th) day after the
date hereof, the Borrower and its Subsidiaries shall maintain their primary
demand, time and other deposit accounts with the Lender in order to facilitate
the making of the Loans and to provide security to the Lender for repayment of
the Loans, provided that Lender will provide services on a similar basis and at
similar prices to those provided by other banks.  After such ninetieth (90th) day, if for any reason
such accounts are not maintained with Lender, Borrower shall cause the
depositary bank or banks to execute and deliver to Lender control agreements in
form and substance satisfactory to Lender. 
Deposits with financial institutions, other than Lender and other than
depositary banks at which such control agreements are in place, shall at no
time exceed an aggregate of $100,000, provided that, amounts in an employee
payroll account may exceed $100,000 on any particular day if the excess is paid
out of such account to employees on such day..

 

Section 11.26.                       Collateral; Lockbox.

 

(a)                                  Without
limiting the generality of the provisions of Section 11.28 (Further Assurances)
below, at any time that the Borrower or any of its Subsidiaries shall (a)
acquire any property, whether real, personal or other and whether tangible or
intangible, (b) change the location of any property, (c) transfer or otherwise
issues shares of capital stock, (d) change its name or (e) take any action that
would cause the Lender to fail to have a valid, perfected first priority
security interest in all the property of the Borrower and its Subsidiaries and
in all the capital stock of the Borrower and its Subsidiaries, subject only to
the exceptions explicitly permitted under the terms of this Agreement, or at
any time any condition shall exist which results in such failure of the Lender
to be so secured, then the Borrower shall, or shall cause its Subsidiaries to,
take such action as is necessary to provide such security to the Lender, all at
the expense of the Borrower.

 

(b)                                 After
any Lockbox Trigger Date, Lender shall have the right to require that Borrower
and its Subsidiaries institute a lockbox at Lender (or, subject to Section
11.25, another financial institution which has executed a control agreement in
form and substance satisfactory to Lender) pursuant to documentation reasonably
satisfactory to Lender, for the direct deposit and collection of accounts
receivable and from which collected accounts receivable will be swept into
Borrower’s primary account with Lender or such other institution. If on any
date after a Lockbox Trigger Date, there is a date which is the last day of a
period of 90 consecutive days during which the Revolving Credit Outstandings
(without regard to the presumption in the definition thereof) have been less
than $10,000,000, this subsection (b) shall cease to apply on such date, unless
and until another Lockbox Trigger Date occurs. 
“Lockbox Trigger Date” shall mean the last day of any period of 90
consecutive days during which the

 

45

 

Revolving Credit
Outstandings (without regard to the presumption in the definition thereof)
equal or exceed $10,000,000.

 

Section 11.27.                       Joinder of Subsidiaries.  Without limiting the generality of the
provisions of Section 11.28, at any time that the Borrower or any Subsidiary
thereof forms or acquires any new Subsidiary (a “New Subsidiary”), which
formation or acquisition shall be effected only if no Default or Event of
Default has occurred or would be caused thereby and only if such new subsidiary
would be a direct or indirect wholly-owned Subsidiary of the Borrower,

 

(a)                                  the
New Subsidiary shall sign a joinder to the Guaranty Agreement, the Security
Agreement and the Pledge Agreement, and shall execute and deliver such UCC-1
financing statements and Mortgages, and such other Loan Documents as shall be
necessary or appropriate to effect the purposes hereof;

 

(b)                                 the
owner of the equity of the New Subsidiary shall deliver such stock certificates
and other documentation as shall be necessary or advisable to perfect the Lien
in the equity of the New Subsidiary in favor of the Lender; and

 

(c)                                  in
the case of a Foreign Subsidiary, if any, the Collateral will be limited to a
pledge of 65% of the voting equity interests of such Foreign Subsidiary held
directly by Borrower or any domestic Subsidiary, 100% of the nonvoting equity
interests of such Foreign Subsidiary held directly by Borrower or any domestic
Subsidiary and 100% of any intercompany Indebtedness owed by such Foreign
Subsidiary to the Borrower or any of the Guarantors; provided that, Borrower
and its Subsidiaries will cause additional equity interests and assets of each
Foreign Subsidiary to be subject to a perfected Lien in favor of the Lender
securing the Obligations from time to time to the extent not resulting in
potential liability under Section 956(d) of the Code or any amendment or
successor to such statutory provisions.

 

Section 11.28.                       Further Assurances.  The Borrower, at its expense, will promptly
execute and deliver or cause to be executed and delivered to the Lender all
such other and further documents, agreements and instruments, and shall provide
or cause to be provided to the Lender such additional information, and shall do
or cause to be done such further acts, as may be necessary or proper in the
reasonable opinion of the Lender to carry out more effectively the provisions
and purposes of this Agreement and the other Loan Documents.

 

ARTICLE 12

 

DEFAULT

 

Section 12.01.                       Events of Default.  Each of the following shall constitute an
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or otherwise:

 

46

 

(a)                                  The
Borrower shall fail to make any payment of principal on the Loans on the dates
when the same shall become due and payable, whether at stated maturity or at a
date fixed for any installment or prepayment thereof or otherwise;

 

(b)                                 The
Borrower shall fail to make any payment of interest on the Loans or shall fail
to pay the commitment fees or any other amounts owing hereunder (other than
principal of the Loans) or under the other Loan Documents on the dates when
such interest, commitment fees or other amounts shall become due and payable
and such failure continues for more than three (3) Business Days;

 

(c)                                  Any
representation or warranty made in any Operative Document shall prove to have
been incorrect or misleading in any material respect when made or deemed to
have been made;

 

(d)                                 The
Borrower shall fail (i) to perform or observe of any agreement or covenant
contained in Article 9 or in Sections 11.01 through 11.17 or 11.24 hereof or
(ii) to provide any financial statement or report under Article 10 hereof, and,
with respect to this clause (ii) only, such failure shall not be cured within a
period of ten (10) days from the occurrence thereof;

 

(e)                                  The
Borrower or any Subsidiary shall fail to perform or observe any other agreement
or covenant contained in this Agreement or any other Loan Document other than
those referred to in subsections (a), (b), (c) or (d) above, and, if such
failure is capable of being remedied, such failure shall not be cured within a
period of thirty (30) days from the occurrence thereof;

 

(f)                                    Any
breach, violation, default or event of default shall occur in connection with
any Indebtedness of the Borrower or any of its Subsidiaries aggregating One
Million Dollars ($1,000,000) or more which would permit, or which after the
giving of notice or passage of time would permit, the acceleration of the
payment or maturity of any such indebtedness;

 

(g)                                 Any
Collateral Agreement shall at any time after its execution and delivery for any
reason cease to create a valid and perfected first priority security interest
in and to the property purported to be subject to such Collateral Agreement;

 

(h)                                 Judgments,
assessments or orders for the payment of money which aggregate at any time in
excess of One Million Dollars ($1,000,000) shall be entered against the
Borrower and/or any of its Subsidiaries by a court or other tribunal of
competent jurisdiction, which judgments, assessments or orders are not
discharged, vacated, bonded or stayed pending appeal within a period of thirty
(30) days from the date of entry;

 

(i)                                     The
Borrower or any of its Subsidiaries shall suspend or discontinue its business,
shall make an assignment for the benefit of creditors or a composition with
creditors, shall generally not be paying its debts as they mature, shall admit
its inability to pay its debts as they mature, shall file a petition in
bankruptcy, shall become insolvent (howsoever such insolvency may be evidenced),
shall be adjudicated insolvent or bankrupt, shall

 

47

 

petition or apply to any
tribunal for the appointment of any receiver, custodian, liquidator or trustee
of or for it or any substantial part of its property or assets, shall commence
any proceeding relating to it under any bankruptcy, reorganization,
arrangement, readjustment of debt, receivership, dissolution or liquidation law
or statute of any jurisdiction, whether now or hereafter in effect; or if there
shall be commenced against the Borrower or any of its Subsidiaries, any such
proceeding and the same shall not be dismissed within sixty (60) days after an
order, judgment or decree approving the petition in any such proceeding shall
be entered against the Borrower or any of its Subsidiaries; or if the Borrower
or any of its Subsidiaries shall by any act or failure to act indicate its
consent to, approval of or acquiescence in, any such proceeding or any
appointment of any receiver, custodian, liquidator or trustee of or for it or
for any substantial part of its property or assets; or if any court of
competent jurisdiction shall assume jurisdiction with respect to any such
proceeding and the same shall not be dismissed within sixty (60) days; or if a receiver
or a trustee or other officer or representative of a court, governmental office
or agency, shall, under color of legal authority, take and hold possession of
any substantial part of the property or assets of the Borrower or any of its
Subsidiaries, and shall not have relinquished possession within sixty (60)
days; or if the Borrower or any of its Subsidiaries shall have concealed,
removed, or permitted to be concealed or removed, any part of its property,
with intent to hinder, delay or defraud its creditors, or any of them, or shall
have made or suffered a transfer of any of its property which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law;

 

(j)                                     There
shall be any Accumulated Funding Deficiency, whether or not waived, with
respect to any Plan maintained by the Borrower or any of its Subsidiaries or
any ERISA Affiliate, or to which the Borrower or any of its Subsidiaries or any
ERISA Affiliate has any liabilities, or any trust created thereunder; or a
trustee shall be appointed by a United States District Court to administer any
such Plan; or PBGC shall institute proceedings to terminate any such Plan; or
the Borrower or any of its Subsidiaries or any ERISA Affiliate shall incur any
liability to PBGC in connection with the termination of any such Plan or its
withdrawal from any such Plan with respect to which it is a substantial
employer within the meaning of Section 4063(b) of ERISA; or any Plan or trust
created under any Plan of the Borrower or any of its Subsidiaries or any ERISA
Affiliate shall engage in a Prohibited Transaction which would subject any such
Plan, any trust created thereunder, any trustee or administrator thereof, or
any party dealing with any such Plan or trust to the tax or penalty on
Prohibited Transactions imposed by Section 502 of ERISA or Section 4975 of the
Code; or Borrower or any Subsidiary or ERISA Affiliate fails to make a
quarterly installment to a Plan as required under Section 412(m) of the Code if
such failure results in a lien in favor of the Plan under Section 412(n) of the
Code; or Borrower or any Subsidiary or ERISA Affiliate incurs any Withdrawal
Liability which, individually or in the aggregate, could reasonably be expected
to result in a liability in excess of One Million Dollars ($1,000,000);

 

(k)                                  If
there shall occur a Material Adverse Change that, in the reasonable judgment of
the Lender, could be expected to result in the Borrower’s failure to pay the
Obligations when due;

 

(l)                                     Any
Loan Document shall cease to be a legal, valid and binding agreement,
enforceable against each Loan Party signatory thereto, in accordance with its
terms or

 

48

 

shall in any way be
declared ineffective or inoperative or shall in any way be challenged or contested
by any Loan Party;

 

(m)                               Any
attachment or garnishment proceeding or similar type of action shall be
commenced against or involving the property of the Borrower or any of its
Subsidiaries, which proceeding or action could affect or involve any deposits
held by the Borrower or any of its Subsidiary with the Lender; or

 

(n)                                 A
Change of Control shall occur.

 

Section 12.02.                       Remedies.

 

(a)                                  Termination
of Obligation to Make Loans. 
Without limiting the generality of Section 7.03, at any time after an
Event of Default, the Lender shall have no obligation to make any Loans
hereunder.

 

(b)                                 Acceleration.  At any time an Event of Default specified in
Section 12.01 above (other than an Event of Default under subsection (i)
thereof) shall have occurred and shall be continuing, the Lender may, by
providing written notice to the Borrower, declare the principal, interest and
other amounts due hereunder and under the Note and all other Obligations to be
forthwith due and payable without presentment, demand, protest or notice of
protest, notice of dishonor or other notice of any kind, all of which are
hereby expressly waived, anything in any Loan Document to the contrary
notwithstanding.

 

(c)                                  Automatic
Acceleration in Connection with Bankruptcy of Insolvency Proceeding.  Upon the occurrence of an Event of Default
specified in subsection (i) of Section 12.01 above, all principal, interest and
other amounts due hereunder and under the Note, and all other Obligations,
shall be immediately due and payable, all without any action by the Lender and
without presentment, demand, protest or other notice of protest or other notice
of dishonor of any kind, all of which are expressly waived, anything in the
Loan Documents to the contrary notwithstanding.

 

(d)                                 Appointment
of Receiver.  Upon acceleration of
the Note as provided in paragraphs (b) or (c) above, the Lender shall have the
right to the appointment of a receiver for the properties and assets of the
Borrower and its Subsidiaries.  The
Borrower, for itself and on behalf of its Subsidiaries, hereby consents to such
right and such appointment and hereby waives any objection the Borrower or any
Subsidiary may have thereto or the right to have a bond or other security
posted by, or on behalf of, the Lender, in connection therewith.

 

(e)                                  Additional
Remedies.  In addition to the
remedies set forth above, the Lender shall have all of the post-default rights
granted to it under any of the Loan Documents and under Applicable Law.

 

Section 12.03.                       Cash Collateral.  If (a) any Event of Default specified in
Section 12.01(i) shall occur, (b) the Obligations shall have otherwise been
accelerated pursuant to Section 12.02,

 

49

 

or (c) the Commitment
shall have been terminated pursuant to Section 12.02, then without any request
or the taking of any other action by Lender, Borrower shall immediately comply
with the provisions of Section 1.04(e) with respect to the deposit of cash
collateral to secure the existing Letter of Credit Liabilities and Acceptance
Liabilities and future payment of related fees.

 

ARTICLE 13

 

DEFINITIONS

 

Section 13.01.                       Defined Terms.  For the purposes of this Agreement, the
following terms shall have the meanings specified in this Article 13 unless the
context otherwise requires:

 

“Acceptance”
means any draft drawn on and accepted by the Lender pursuant to Article 3 of
this Agreement.

 

“Acceptance
Liabilities” means, at any time of calculation, the sum
of (i) the amount of all outstanding Acceptances (without regard to whether any
conditions to payment thereunder can then be met), plus (ii) the aggregate unpaid amount of all reimbursement
obligations under Section 3.02 in respect of previous Acceptances.

 

“Acquisition”
means (whether by purchase, lease, exchange, issuance of equity or debt
securities, merger, reorganization or any other method) (i) any acquisition by
the Borrower or any of its Subsidiaries of an interest in any other Person
which shall then become Consolidated with the Borrower or any such Subsidiary
in accordance with GAAP, or (ii) any acquisition by the Borrower or any of its
Subsidiaries of all or any substantial part of the assets of any other Person.

 

“Accumulated
Funding Deficiency” means any accumulated funding
deficiency as defined in Section 302(a) of ERISA.

 

“Affiliate”
means, with respect to a Person, a spouse of such Person, any relative (by
blood, adoption or marriage) of such Person within the third degree, any
director, officer or employee of such Person, any other Person of which such
first Person is a partner, member, director, officer or employee, and any other
Person directly or indirectly controlling or controlled by or under common
control with such first Person.  For
purposes of this definition “control” (including, with correlative meanings,
the terms “controlled by” and “under common control with”), as used with
respect to any Person, means the possession, direct or indirect, of the power
to direct, or cause the direction of, the management and policies of such
Person, whether through the ownership of voting securities, by contract or
otherwise.  Without limiting the
generality of the foregoing, any Person who has the direct or indirect
beneficial ownership of more than twenty percent (20%) of the voting securities
or voting equity of another Person shall be deemed an Affiliate of such other
Person.

 

“Agreement”
means this Revolving Credit Agreement, as the same may be amended, modified or
supplemented, from time to time.

 

50

 

“Applicable
Law” means, with respect to any Person, all provisions of
constitutions, laws, statutes, ordinances, rules, treaties, regulations,
permits, licenses, approvals, interpretations and orders of court or
Governmental Authorities and all orders of arbitrators with appropriate
jurisdiction (by contract or otherwise), and decrees of all courts and
arbitrators in proceedings or actions to which the Person is a party or by
which it (or any of its property) is bound.

 

“Applicable
Margin” means the interest rate margin applicable to the
Loans determined in accordance with Section 5.01(c) (Applicable Margin) hereof.

 

“Assignment
and Acceptance Agreement” means an Assignment and
Acceptance Agreement in substantially the form of Exhibit G attached
hereto.

 

“Authorized
Signatory” means, with respect to any documents,
agreements or instruments, such officer(s) of a Person as may be duly
authorized by its Board of Directors, its bylaws or similar authority to
execute the relevant documents, agreements or instruments on behalf of such Person.

 

“Available Commitment” means that
portion of the Commitment which, at any date of determination, the Borrower is
eligible to borrow under the terms of this Agreement.

 

“Bankers Acceptance Facility” means the
facility extended pursuant to Article 3 for the Borrower to deliver drafts for
acceptance by the Lender.

 

“Base
Rate” means, at any time, the higher of (i) the variable
per annum rate of interest so designated from time to time by the Lender as its
prime rate (which rate is a reference rate and does not necessarily represent
the lowest or best rate being charged to any customer) and (ii) the Federal
Funds Rate plus one-half of one percent (1⁄2%). 
The Base Rate is not necessarily the lowest rate of interest charged by
the Lender.  Changes in the rate of
interest resulting from changes in the Prime Rate shall take place immediately
without notice or demand of any kind.

 

“Base
Rate Loan” means any Loan that bears interest at the Base
Rate plus the Applicable Margin.

 

“Borrower”
means the Borrower referred to in the preamble hereto, together with such
successors and assigns thereof as are permitted pursuant to the terms of
Section 14.05 (Successors and Assigns) below.

 

“Borrowing
Base” means, on any date, a dollar amount equal to the
sum of (i) 85% of Eligible Receivables and (ii) 50% of Eligible Inventory,
minus the sum of credit exposure under interest rate hedge agreements on a
“mark-to-market” basis.

 

“Business
Day” means any day on which commercial banks are not
required or permitted to be closed for the transaction of business in
Philadelphia, Pennsylvania and, if the applicable Business Day relates to a
LIBOR Loan, then the term “Business Day” shall exclude any day on which
dealings are not carried on in the London Interbank Eurocurrency Market.

 

51

 

“Business
Plan” means,  for any fiscal year of the Borrower, a
detailed budget by Subsidiary setting forth the amounts budgeted on a quarterly
basis for revenues and operating expenses by category for each Subsidiary as
well as the amount of Capital Expenditures, along with a comparison of the
actual amounts (and, if applicable, the budgeted amounts) of such items for the
preceding year.

 

“Capital
Expenditures” means expenditures for the purchase of
assets of long-term use which are, or should be in accordance with GAAP,
capitalized.

 

“Capital
Lease” means, with respect to any Person, any lease which
has been, or should be in accordance with GAAP, accounted for as a capital
lease in respect of which such Person is liable as lessee.

 

“Capital
Lease Obligation” means that portion of any obligation of
a Person as lessee under a Capital Lease which at the time appears, or in
accordance with GAAP should appear, on the balance sheet of such Person or in a
note to such balance sheet.

 

“Cash Equivalent” means:

 

(a)                                  securities
issued or directly and fully guaranteed or insured by the United States of
America or any agency or instrumentality thereof (provided, that the full faith
and credit of the United States of America is pledged in support thereof),

 

(b)                                 securities
issued or directly and fully guaranteed or insured by any state of the United
States of America or any agency or instrumentality thereof and that are rated
within one of the two highest ratings for such securities by Standard &
Poor’s Corporation or Moody’s Investors Service, Inc.,

 

(c)                                  demand
and time deposits, certificates of deposit, bankers’ acceptances and commercial
paper issued by the parent corporation of any domestic commercial bank of
recognized standing having capital and surplus in excess of $500 million,

 

(d)                                 commercial
paper issued by others rated at least A-2 or the equivalent thereof by Standard
& Poor’s Corporation or at least P-2 or the equivalent thereof by Moody’s
Investors Service, Inc.,

 

(e)                                  repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in (a) through (d) above entered into with any financial
institution meeting the qualifications specified in (d) above, or

 

(f)                                    money
market funds, substantially all of the assets of which constitute Cash
Equivalents of the kinds described in (a) through (e) of this definition,

 

and in the case of each
of (b), (c), (d) and (e) maturing within one year after the date of
acquisition.

 

52

 

“CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended from time to time.

 

“Change
of Control” means

 

(a)                                  The
Permitted Holders, collectively, (a) cease to own at least fifty-one percent
(51%) of the voting stock of Parent, free and clear of all Liens, or (b) enter
into any voting trust or other agreement which in any way (i) limits their
ability to exercise such majority voting power, or (ii) transfer any of the
economic benefits of ownership of such voting stock to any other Person with
the effect that the Permitted Holders, collectively, cease to maintain 51% of
the economic benefits of ownership of the voting stock of Parent; or

 

(b)                                 During
any period of two consecutive years, individuals who at the beginning of such
period constituted the board of directors of the Parent (together with any new
directors whose election by such board of directors or whose nomination for
election by the shareholders of the Parent was approved by a vote of 66 2/3% of
the directors of the Parent at the time of such approval who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the board of directors then in office;

 

(c)                                  Parent
shall cease to own 100% of the outstanding equity interests of the Borrower;

 

(d)                                 The
Lender shall fail to have a valid, first priority Lien in all issued and
outstanding shares of capital stock of the Borrower and its Subsidiaries
(except to the extent provided in Section 11.27);

 

(e)                                  Borrower
or any Subsidiary adopts a plan of liquidation;

 

(f)                                    any
merger or consolidation of Parent with or into another Person or the merger of
another Person with or into Parent, or the sale of all or substantially all of
Parent’s assets (determined on a consolidated basis) to another Person (other
than, in all such cases, one or more Permitted Holders) other than:

 

(A)                              in
the case of a merger or consolidation transaction, holders of securities that
represented 100% of the aggregate voting power of Parent’s voting stock
immediately prior to such transaction (together with holders of nonvoting
securities that were convertible into Borrower’s voting stock immediately prior
to such transaction) own directly or indirectly at least a majority of the
aggregate voting power of the voting stock of the surviving Person in such
merger or consolidation transaction immediately after such transaction or have
the right or ability by voting power, contract or otherwise to elect or
designate for a election a majority of Parent’s Board of Directors; or

 

53

 

(B)                                in
the case of a sale of assets transaction, each transferee is a Permitted
Holder; or

 

(f)                                    There
exists any “change of control” or “change in control” as defined under any
agreement to which Borrower or any Subsidiary is party or is subject.

 

For purposes of this
definition, “voting stock” means capital stock or other ownership interests of
any class or classes of a corporation or another entity the holders of which
are entitled to elect a majority of the corporate directors or Persons
performing similar functions.

 

“COBRA”
means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
from time to time.

 

“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any
regulations, revenue rulings or technical information releases issued
thereunder.

 

“Collateral”
means all property which is, or is to be, subject to the Lien granted by the
Collateral Agreements.

 

“Collateral
Agreements” means the Security Agreement, the Pledge
Agreement, the Mortgages, the IP Agreement, and all other Loan Documents which
purport to grant or perfect a Lien in favor of the Lender securing the
Obligations.

 

“Commitment”
means the obligation of the Lender pursuant to the terms hereof to make
Revolving Credit Loans to the Borrower in an initial aggregate principal amount
outstanding at any time not to exceed Eighteen Million Dollars ($18,000,000),
from time to time until the Termination Date. 
The amount of the Commitment shall be reduced pursuant to the terms
hereof, after which the Commitment shall terminate in its entirety.

 

“Consolidated”
means, with respect to any Person and any specified Subsidiaries, the
consolidation of financial statements of such Person and such Subsidiaries in
accordance with GAAP.

 

“Debits” shall have the meaning set
forth in Section 2.01(c).

 

“Default”
means any event which, with the giving of notice or passage of time, or both,
would constitute an Event of Default.

 

“Default
Rate” is defined in Section 5.03(c).

 

“Disqualified
Stock” means, with respect to any Person, any capital
stock which by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable): 
(a) matures or is mandatorily redeemable for any reason, (b) is
convertible or exchangeable for Indebtedness or Disqualified Stock, or  (c) is redeemable at the option of the
holder thereof, in whole or in part, in each case on or prior to the first
anniversary of the stated maturity of the Notes.

 

54

 

“EBITDA”
means, for any Person for any period, the Net Income of such Person for such
period (before deducting fees either paid in cash or deferred during the
applicable period under the Management Agreement referenced in Section 11.05) plus
the sum of the following (to the extent deducted in the computation of such Net
Income):

 

(i)                                     depreciation
expense;

 

(ii)                                  amortization
expense (including amortization expense associated with purchase accounting
write-up of tangible and intangible assets) and deferred financing costs;

 

(iii)                               Interest
Expense;

 

(iv)                              income
taxes including (with respect to Borrower) any amounts payable or paid to
Parent for such taxes (but, if there is a net tax benefit, that should be
deducted from Net Income in calculating EBITDA); and

 

(v)                                 restructuring
charges (as determined in accordance with GAAP) relating to the consolidation
of operations or reduction in head-count,

 

(vi)                              all
other non-cash charges reducing Net Income for such period (A) including, but
not limited to, (1) non-cash charges attributable to the grant, exercise or
repurchase of options for or shares of capital stock to or from employees of
such Person and its Consolidated Subsidiaries determined in accordance with
GAAP, (2) unrealized losses resulting solely from the marking to market of
derivative securities or securities held in deferred compensation plans, (3)
non-cash charges associated with the amortization or write-off of deferred
financing costs and debt issuance costs of such Person and its Consolidated
Subsidiaries during such period, and (4) non-cash charges associated with the
purchase accounting write-up of inventory, but (B) excluding non-cash charges
that require an accrual of or a reserve for cash charges for any future periods
and normally occurring accruals such as reserves for accounts receivable, and

 

(vii)                           any
premium or penalty paid in connection with redeeming or retiring Indebtedness
of such Person and its Consolidated Subsidiaries prior to the stated maturity
thereof pursuant to the agreements governing such Indebtedness, and

 

less:

 

(a)                                  all
non-cash items increasing Consolidated Net Income for such period (including
unrealized gains resulting solely from the marking to market of derivative
securities or securities held in deferred compensation plans), and

 

55

 

(b)                                 the
amount of all cash payments made by such Person or any of the Subsidiaries
during such period to the extent such payments relate to non-cash charges that
were added back in determining EBITDA for such period or any prior period.

 

“Eligible
Institution” means any federally chartered or state
chartered bank or any financial institution whose deposits are insured by the
Federal Deposit Insurance Corporation.

 

“Eligible
Inventory” means, at any date of determination thereof,
the aggregate value (determined at the lower of cost or market on a basis
consistent with that used in the preparation of the financial statements
referred to in Section 10.01) at such date of all Inventory owned by the
Borrower or any of its Subsidiaries, recorded on the Borrower’s financial
statements in accordance with GAAP and located in any jurisdiction in the
United States of America as to which appropriate UCC financing statements have
been filed naming the Borrower or such Subsidiary, as the case may be, as
“debtor” and the Lender as “secured party”, all net of any amounts payable by
the Borrower or such Subsidiary in respect of commissions, processing fees or
other charges, excluding, however, without duplication (i) any such Inventory
which has been shipped to a customer, even if on a consignment or “sale or
return” basis; (ii) any Inventory subject to a Lien (other than Liens created
pursuant to the Security Agreement) including a landlord’s or warehouseman’s
Lien (other than any such Lien that has been waived pursuant to a landlord’s or
warehouseman’s waiver), (iii) any item of Inventory for which a reserve shall
be required in accordance with GAAP consistently applied with past practice;
provided that such item of Inventory shall be excluded only to the extent of
the amount of such reserve; (iv) any Inventory not subject to a valid and
perfected first-priority Lien in favor of the Lender under the Security
Agreement, subject to no prior or equal Lien; (v) any Inventory not produced by
the Borrower or such Subsidiary in compliance with the applicable requirements
of the Fair Labor Standards Act; (vi) any supply, scrap or obsolete Inventory
and any Inventory that is not reasonably marketable and (vii) any Inventory
located at any property leased by the Borrower or such Subsidiary in respect of
which a landlord’s consent agreement in form and substance reasonably
satisfactory to the Lender is not in full force and effect.

 

“Eligible
Receivables” means, at any date of determination thereof,
the aggregate amount of all accounts receivable at such date due to Borrower or
any of its Subsidiaries, recorded on the Borrower’s financial statements in
accordance with GAAP, other than the following (determined without
duplication):

 

(a)                                  (i)  any account receivable due from an account
debtor that is not both domiciled in the United States of America or Canada and
(if not a natural person) organized under the laws of the United States of
America or Canada or any political subdivision thereof, except to the extent
that (A) such account receivable is secured by one or more letters of credit
that are (1) in favor of the Lender or the Borrower (and in which the Lender
has a fully perfected first priority security interest) or (2) assigned to the
Lender; provided that in each case such letters of credit are (x) in form and
substance reasonably acceptable to the Lender and (y) issued by a bank doing
business in the United States and reasonably acceptable to the Lender, or (B)
in the case of any account receivable due from an account debtor that is
located in Canada or any political subdivision thereof, the aggregate amount of
all accounts receivable that are due that

 

56

 

otherwise satisfy the
requirements of this definition of “Eligible Receivables” do not exceed
$1,000,000, and (ii) any account receivable that is not denominated and payable
in U.S. dollars;

 

(b)                                 any
account receivable that does not comply with all applicable legal requirements,
to the extent such non-compliance could have an adverse effect on the value of
such account receivable or the validity or binding nature of the related
obligation, including, without limitation, all laws, rules, regulations and
orders of any governmental or judicial authority (including any account
receivable due from an account debtor located in the States of Indiana or New
Jersey, unless the Borrower or such Subsidiary (at the time the account
receivable was created and at all times thereafter) (i) had filed and has
maintained effective a current notice of business activities report with the appropriate
office or agency of the State of Indiana or New Jersey, as applicable or (ii)
was and has continued to be exempt from filing such report and has provided the
Lender with satisfactory evidence thereof);

 

(c)                                  any
account receivable in respect of which there is any unresolved dispute with the
account debtor, but only to the extent of such dispute;

 

(d)                                 any
account receivable that remains unpaid for more than 90 days from the date of
the original issuance of the invoice therefor;

 

(e)                                  any
unbilled account receivable and any account receivable in respect of Goods not
yet shipped or in respect of services not yet rendered;

 

(f)                                    any
account receivable arising outside the ordinary course of business of the
Borrower and its Subsidiaries;

 

(g)                                 any
account receivable in respect of which there has been established a contra
account, or which is due from an account debtor to whom the Borrower or such
Subsidiary owes a trade payable, but only to the extent of such account or
trade payable;

 

(h)                                 any
account receivable that is not subject to a first priority perfected Lien under
the Security Agreement, and any account receivable evidenced by an “instrument”
(as defined in the UCC) not in the possession of the Lender;

 

(i)                                     any
account receivable due from an account debtor (A) as to which on such date
accounts receivable representing more than 50% of the aggregate amount of all
accounts receivable of such account debtor have remained unpaid for more than
90 days from the date of the original issuance of the invoice therefor, (B) in
respect of which the Lender shall have notified the Borrower that such account
debtor does not have a satisfactory credit standing as determined in good faith
by the Lender in accordance with commercially reasonable standards, (C) that is
a Subsidiary or Affiliate of the Borrower, (D) that is the United States of
America or any department, agency or instrumentality thereof, unless the
Borrower or such Subsidiary has complied in all respects with the Federal
Assignment of Claims Act of 1940, or (E) that is the subject of a case or
proceeding of the type described in clause (i) of Section 12.01;

 

57

 

(j)                                     any
account receivable due from an account debtor that makes payments in a form
that cannot be accepted in a lockbox account at any time during which payments
with respect to accounts receivable are required to be made to a lockbox
account in accordance with the provisions of the Security Agreement; and

 

(k)                                  any
accounts receivable due from an account debtor at any time, to the extent that
the aggregate outstanding amount of accounts receivable due from such account
debtor and its Affiliates at such time exceeds, in the case of an account
debtor other than an account debtor listed on Schedule 13.01 (an Approved
Account Debtor”), 20% of the aggregate amount of all Receivables, and in the
case of any Approved Account Debtor, the percentage specified in Schedule 13.01
(which may be amended from time to time upon the consent of the Lender and the
Borrower) with respect to such Account Debtor, of the aggregate amount of all
accounts receivable due to the Borrower and its Subsidiaries at such time, but
only to the extent of such excess.

 

“Environmental
Laws” means all Applicable Laws relating to the pollution
or protection of the environment, including, without limitation, Applicable
Laws relating to the release, discharge, emission, spill, leaching, or disposal
of Hazardous Substances to air, water or land, or to the withdrawal or use of
ground water, or to the use, handling, disposal, treatment, storage or
management of Hazardous Substances, including, without limitation, CERCLA and
the Resource Conservation and Recovery Act of 1976, as amended.

 

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time, and any rules and regulations issued thereunder.

 

“ERISA
Affiliate” means (i) any corporation included with the
Borrower in a controlled group of corporations within the meaning of Section
414(b) of the Code, (ii) any trade or business (whether or not incorporated)
which is under common control with the Borrower within the meaning of Section
414(c) of the Code, (iii) any member of an affiliated service group of which
the Borrower is a member within the meaning of Section 414(m) of the Code, and
(iv) any other entity required to be aggregated with Borrower pursuant to
Section 414(o) of the Code.

 

“Equity Documents” means that certain
Contribution Agreement or Resolution of even date herewith under which Parent
is contributing common stock and additional paid in capital to Sheridan in the
amount of $47 million.

 

“Event
of Default” means any of the events specified in Section
12.01 (Events of Default), provided that any requirement for notice or lapse of
time has been satisfied.

 

“Federal
Funds Rate” means, for any period, a fluctuating interest
rate equal, for each day during such period, to the rate announced by the
Federal Reserve Bank of New York on each such day as the weighted average of
the rates on overnight federal funds transactions with the members of the
Federal Reserve System arranged by federal funds brokers (or, if such day is
not a Business Day, for the next preceding Business Day) or, if such rate is
not so published for any day which is a

 

58

 

Business Day, the average
of the quotations for such day on such transactions received by the Lender from
three (3) federal funds brokers of recognized standing selected by the Lender.

 

“Foreign
Subsidiary” means any Subsidiary of the Borrower which
(i) is not organized under the laws of the United States, any state thereof or
the District of Columbia and (ii) conducts substantially all of its business
operations outside the United States of America.

 

“GAAP”
means generally accepted accounting principles in the United States, which, as
to the Borrower and its Subsidiaries, shall be consistently applied with those
applied in the preparation of the financial statements referred to in Section
7.01.4(a) (Conditions Precedent to Initial Loan), with such changes as may be
agreed pursuant to Section 13.02.

 

“Goods” means the goods in
connection with which an Acceptance is created.

 

“Governmental Authority” means any
nation, province, state or political subdivision thereof, and any government or
any Person exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, including, without limitation, any
central bank or comparable agency and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing.

 

“Guarantors” means some
subsidiaries which have executed a Guaranty Agreement.

 

“Guaranty”
or “Guaranteed,” as applied
to any Person (the “guarantor”) means and includes any direct or indirect
liability, contingent or otherwise, of such guarantor with respect to any
indebtedness, lease, dividend or other financial or performance obligation of
another Person (“primary obligor”), including, but not limited to (1) any
direct or indirect guaranty, endorsement (other than for collection or deposit
in the ordinary course of business), discount or sale with recourse by such
guarantor of the obligations of the primary obligor and (2) any agreement
(contingent or otherwise) to (a) purchase, repurchase or otherwise acquire an
obligation of the primary obligor or any security therefor, (b) provide funds
for the payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), (c) maintain
the solvency or financial condition of the primary obligor, or (d) make payment
for any products, materials, supplies or services tendered or rendered to the
primary obligor, in any case if the purpose or intent of such agreement or
arrangement is to provide assurance that the primary obligor’s obligation will
be paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such obligation will be protected against loss in
respect thereof.  In addition to the
other restrictions on Guaranties set forth in this Agreement, no Guaranty shall
be permitted by this Agreement unless the maximum dollar amount of the
obligation being guaranteed is readily ascertainable by the terms of such
obligation or the agreement or instrument evidencing such Guaranty specifically
limits the dollar amount of the maximum exposure of the guarantor
thereunder.  For purposes of making
computations under this Agreement, the amount of any Guaranty made during any
period shall be the aggregate amount of the obligation guaranteed (or such
lesser amount as to which the maximum exposure of the guarantor shall have been
specifically limited), less any amount by which the guarantor may have

 

59

 

been discharged with
respect thereto (including any discharge by way of a reduction in the amount of
the obligation guaranteed).

 

“Guaranty
Agreement” means
the one or more Guaranty Agreements executed and delivered pursuant to the
terms of this Agreement, as such Guaranty Agreement may be amended, modified or
supplemented from time to time.

 

“Hazardous
Substances” means any and all pollutants, contaminants,
toxic or hazardous wastes or any other substances that might pose a hazard to
health or safety, the removal of which may be required, or the generation,
manufacture, refining, production, processing, treatment, storage, handling,
transportation, transfer, use, disposal, release, discharge, spillage, seepage
or filtration of which may be restricted, prohibited or penalized by any
Environmental Law (including, without limitation, petroleum products, asbestos,
urea formaldehyde foam insulation and polychlorinated biphenyls and substances
defined as Hazardous Substances under CERCLA).

 

“HIPAA”  means the Health Insurance Portability and
Accountability Act of 1996, as amended from time to time.

 

“Indebtedness”  means, with respect to any Person (without
duplication):

 

(a)                                  all
indebtedness for borrowed money of such Person;

 

(b)                                 all
obligations of such Person for the deferred purchase price of capital assets or
other property or services (other than accounts payable incurred in the
ordinary course of business) to the extent such liabilities and obligations
would appear as a liability upon the Consolidated balance sheet of such
specified Person in accordance with GAAP;

 

(c)                                  all
obligations of such Person evidenced by notes, bonds, debentures or other
instruments;

 

(d)                                 all
indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property) and
all other obligations secured by a Lien on the property or assets of such
Person;

 

(e)                                  all
Capital Lease Obligations of such Person;

 

(f)                                    all
obligations, contingent or otherwise, of such Person under acceptances, letters
of credit or similar facilities;

 

(g)                                 all
obligations of such Person in respect of Disqualified Stock or other
obligations of such Person to purchase, redeem, retire or otherwise acquire for
value any capital stock of such Person or any warrants, rights or options to
acquire such capital stock, which obligations shall be valued, in the case of
redeemable preferred stock, at the greater of its

 

60

 

voluntary or involuntary
liquidation preference plus accrued and unpaid dividends and, in the case of
other such obligations, at the amount that, in light of all the facts and
circumstances existing at the time of determination, is reasonably expected to
be payable;

 

(h)                                 interest
accrued but not paid on the scheduled date;

 

(i)                                     all
Guarantees of such Person;

 

(j)                                     all
Indebtedness referred to in clauses (a) through (i) above secured by (or which
the holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness;

 

(k)                                  all
fixed (but not variable) payments required by such Person under non-compete
agreements; and

 

(l)                                     all
obligations of such Person that are the functional equivalent of the
Indebtedness referred to in clauses (a) through (k) above.

 

“Indemnified
Person” means the Lender, its directors, officers,
agents, employees, attorneys, consultants and Affiliates and any successors,
assigns and participants thereof.

 

“Intellectual
Property” means the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, (i) all copyrights arising under the laws of the United
States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished, l
registrations and recordings thereof, and all applications in connection therewith,
including, without limitation, all registrations, recordings and applications
in the United States Copyright Office, (ii) all letters patent of the United
States, any other country or any political subdivision thereof, all reissues
and extensions thereof and all goodwill associated therewith, and all
applications for letters patent of the United States or any other country and
all divisions, continuations and continuations-in-part thereof, (iii)  all trademarks, trade names, corporate
names, company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, (iv) all rights to obtain any reissues or extensions of
the foregoing and (v) all licenses for any of the foregoing.

 

“Interest
Expense” means, with respect to any Person for any
period, all interest expense (including imputed interest with respect to
Capitalized Lease Obligations and accreted interest on zero coupon bonds and
similar obligations) paid, accrued or accreted, or to be paid, accrued or

 

61

 

accreted, with respect to
any Indebtedness of such Person during such period pursuant to the terms of the
agreement respecting such Indebtedness, together with all fees (including,
without limitation, commitment or unused fees) payable in respect thereof, all
as calculated in accordance with GAAP, excluding amortization or write-off or
deferred financing cost and debt issuance cost of such Person for such period.

 

“Interest
Period” means a period commencing, in the case of the
first Interest Period applicable to a LIBOR Loan, on the day of the making of,
or conversion into, such Loan, and, in the case of each subsequent, successive
Interest Period applicable thereto, on the last day of the immediately
preceding Interest Period, and ending on the same day in the first, second,
third or sixth calendar month thereafter except that

 

(a)                                  any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day, unless such Business Day
falls in another calendar month, in which case such Interest Period shall end
on the next preceding Business Day and

 

(b)                                 any
Interest Period that begins on the last Business Day of a calendar month (or on
a day for which there is no numerically corresponding day in the calendar month
in which such Interest Period ends) shall end on the last Business Day of the
calendar month in which such Interest Period ends.

 

“Inventory”
means “inventory” (as defined in Article 9 of the UCC) of Borrower and its
Subsidiaries.

 

“Investment”
means, as applied to any Person, any direct or indirect purchase or other
acquisition by such Person of stock or other securities of another Person, or
any direct or indirect loan, advance or capital contribution by such Person to
any other Person, including all Indebtedness and accounts receivable from such
other Person which are not current assets or did not arise from sales to such
other Person in the ordinary course of business.

 

“IP
Collateral Agreement” means the one or more IP Collateral
Agreement(s) executed or to be executed and delivered pursuant to the terms of
the Security Agreement, as such IP Collateral Agreement(s) may be amended,
modified or supplemented from time to time.

 

“Lender”
means the Lender referred to in the preamble hereto, or any successors and permitted
assigns.

 

“Lender
Priority Collateral” has the meaning assigned to the term “Bank Priority Collateral’
in the Intercreditor Agreement.

 

“Letter
of Credit” means a standby letter of credit issued for
the account of Borrower or any of its Subsidiaries by Lender which expires by
its terms within one year after the date of issuance and in any event at least
thirty (30) days prior to the Revolving Credit Termination Date.  Notwithstanding the foregoing, a Letter of
Credit may provide for automatic extensions of

 

62

 

its expiry date for one
or more successive one (1) year periods provided that the Lender has the right
to terminate such Letter of Credit on each such annual expiration date and no
renewal term may extend the term of the Letter of Credit to a date that is
later than the thirtieth (30th) day prior to the Revolving Credit
Termination Date.

 

“Letter
of Credit Facility” means the facility extended pursuant
to Section 1.04 for the Borrower to request Letters of Credit from Lender.

 

“Letter
of Credit Liabilities” means, at any time of calculation,
the sum of (i) the amount then available for drawing under all outstanding
Letters of Credit (without regard to whether any conditions to drawing
thereunder can then be met), plus (ii)
the aggregate unpaid amount of all reimbursement obligations in respect of
previous drawings made under such Letters of Credit.

 

“LIBOR
Loan” means any Loan bearing interest at a rate equal to
the LIBOR Rate plus Applicable Margin.

 

“LIBOR
Rate” means, as applicable to any LIBOR Loan, the rate
per annum as determined on the basis of the offered rates for deposits in U.S.
Dollars, for a period of time comparable to such LIBOR Loan which appears on
the Telerate page 3750 as of 11:00 a.m. London time on the day that is two
London Banking Days preceding the first day of such LIBOR Loan; provided,
however, if the rate described above does not appear on the Telerate
System on any applicable interest determination date, the LIBOR rate shall be
the rate (rounded upward, if necessary, to the nearest one hundred-thousandth
of a percentage point), determined on the basis of the offered rates for
deposits in U.S. dollars for a period of time comparable to such LIBOR Loan
which are offered by four major banks in the London interbank market at
approximately 11:00 a.m. London time, on the day that is two (2) London Banking
Days preceding the first day of such LIBOR Loan as selected by Bank.  The principal London office of each of the
four major London banks will be requested to provide a quotation of its U.S.
Dollar deposit offered rate.  If at
least two such quotations are provided, the rate for that date will be the
arithmetic mean of the quotations.  If
fewer than two quotations are provided as requested, the rate for that date
will be determined on the basis of the rates quoted for loans in U.S. dollars
to leading European banks for a period of time comparable to such LIBOR Loan
offered by major banks in New York City at approximately 11:00 am.  New York City time, on the day that is two
London Banking Days preceding the first day of such LIBOR Loan.  In the event that Bank is unable to obtain
any such quotation as provided above, it will be deemed that LIBOR pursuant to
a LIBOR Loan cannot be determined.  In
the event that the Board of Governors of the Federal Reserve System shall
impose a Reserve Percentage with respect to LIBOR deposits of Bank, then for
any period during which such Reserve Percentage shall apply, LIBOR shall be
equal to the amount determined above divided by an amount equal to 1 minus the
Reserve Percentage.  “Reserve
Percentage” shall mean the maximum aggregate reserve requirement (including all
basic, supplemental, marginal and other reserves) which is imposed on member
banks of the Federal Reserve System against “Euro-currency Liabilities” as
defined in Regulation D.  “Banking Day”
shall mean, in respect of any city, any day on which commercial banks are open
for business in that city.

 

63

 

“Lien”
means any mortgage, lien, pledge, adverse claim, assignment, charge, security
interest, title retention agreement, separate beneficial interest, levy,
execution, seizure, attachment, garnishment or other encumbrance in respect of
any property, whether created by statute, contract, common law or otherwise,
and whether or not choate, vested or perfected.

 

“Loan
Documents” means this Agreement, the Note, the Pledge
Agreement, the Guaranty Agreements, the Security Agreement, the IP Collateral
Agreement, the Mortgages, the Uniform Commercial Code financing statements and
all other documents and agreements executed or delivered in connection with or
contemplated by this Agreement, in each case as amended, modified or
supplemented, from time to time.

 

“Loan
Party” means Sheridan, the Borrower, each Subsidiary of
Sheridan,  each Pledgor, and each other
obligor under any of the Loan Documents.

 

“Loans”
means the Revolving Credit Loans or Swing Loans.

 

“Material
Adverse Change” means (a) any material adverse change in
the business, condition (financial or otherwise), assets, liabilities, results
of operations, properties, or business prospects of the Borrower and its
Subsidiaries on a Consolidated basis, or (b) any material adverse change with
respect to the binding nature, validity, or enforceability of this Agreement or
any other Loan Document, or with respect to the ability of the Borrower, its
Subsidiaries or any other Loan Parties to perform their obligations under this
Agreement or deed(s) of trust, as applicable, whether resulting from any single
act, omission, situation or event or taken together with other such acts,
omissions, situations or events.

 

“Material
Agreements” has the meaning set forth in Section 8.25 (No
Burdensome Agreements; Material Agreements).

 

“Maturity
Date” means August 21, 2008.

 

“Mortgage”
means the one or more real estate mortgages or deeds of trust, as applicable,
executed or to be executed and delivered pursuant to the terms of this
Agreement, as such instruments may be amended, modified or supplemented, from
time to time.

 

“Multiemployer
Plan” has the meaning set forth in Section 4001(a)(3) of
ERISA.

 

“Net
Income” means, for any Person and for any period, the net
income (or net loss) of such Person for such period determined in accordance
with GAAP provided that such amount shall be adjusted to exclude (to the extent
otherwise included therein and without duplication) the following:

 

(a)                                  any
write-up or write-down of any asset;

 

64

 

(b)                                 any
net gain from the collection of the proceeds of life insurance policies;

 

(c)                                  any
gain (or loss) arising from the acquisition or sale of any securities or
Indebtedness of such Person and any gain or loss arising from the exercise of
any warrant of such Person;

 

(d)                                 any
aggregate net gain (or loss) during such period arising from the sale, exchange
or other disposition of capital assets (such term to include all fixed assets,
whether tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets and all securities) other than any sale, exchange
or other disposition in the ordinary course of business;

 

(e)                                  all
other extraordinary items;

 

(f)                                    any
net income that is attributable to or derived from an entity or other issuer
that is not a Subsidiary of such Person; and

 

(g)                                 all
non-recurring items properly identified as such on such Person’s financial
statements and reports including, for the quarter ending September 30, 2003, up
to $2,000,000 in management bonuses, director and officer liability insurance
costs and other miscellaneous costs relating to the transactions contemplated
by this Agreement.

 

“Note”
means the promissory note in the original aggregate principal
amount of Eighteen Million Dollars ($18,000,000) issued by the Borrower to the
Lender in substantially the form of Exhibit A attached hereto, and any
other promissory note or notes issued by the Borrower to evidence the Loans and
Reimbursement Obligations pursuant to this Agreement and any replacement or
restatement of, and any supplement to, such note.

 

“Note
Priority Collateral” shall mean the property, plant and
equipment of Borrower and its Subsidiaries and all proceeds thereof.

 

“Notice
of LC Credit Event” means a written notice from an
Authorized Signatory of Borrower to Lender with respect to any issuance,
increase or extension of a Letter of Credit specifying:  (i) the date of issuance or increase of a
Letter of Credit; (ii) the expiry date of such Letter of Credit; (iii) the
proposed terms of such Letter of Credit, including the face amount; and (iv)
the transactions or additional transaction or transactions that are to be
supported or financed with such Letter of Credit or increase thereof.

 

“Obligations”
means (a) all payment and performance obligations of every kind, nature and
description of the Borrower and any other Loan Party to the Lender under this
Agreement and the other Loan Documents (including, without limitation, any
interest, fees and other charges on the Loans or otherwise under the Loan
Documents that would accrue but for the filing of a bankruptcy action, whether
or not such claim is allowed in such bankruptcy action), whether such
obligations are direct or indirect, absolute or contingent, due or not due,
contractual or tortious, liquidated or

 

65

 

unliquidated, arising by
operation of law or otherwise, now existing or hereafter arising, and (b) (to
the extent not included in the preceding clause (a)) the obligation of the
Borrower or any obligor to pay an amount equal to the amount of any and all
damage which the Lender may suffer by reason of a breach by such Person of any
obligation, covenant or undertaking with respect to this Agreement or any other
Loan Document.

 

“Operative Documents” means the Loan
Documents, the Purchase Documents, the Senior Secured Note Documents and the
Equity Documents.

 

“Parent” means TSG Holdings Corp., a
Delaware corporation.

 

“Payment
Date” means (a) the last Business Day of each calendar
quarter and (b) the Revolving Credit Termination Date.

 

“Permitted
Holders” means the BRS Group, the JCP Group and their
respective Affiliates, excluding any portfolio companies of any such
person.  For purposes of this
definition, “BRS Group” means (i) Bruckmann, Rosser, Sherrill & Co., LLC
and Bruckmann, Rosser, Sherrill & Co. II, L.P. and their respective
Affiliates and (ii) any investment vehicle that is managed (whether through
ownership of securities having a majority of the voting power or through management
of investments) by any of the Persons listed in clause (i), but excluding any
portfolio companies of any Person listed in clause (i) or (ii); and “JCP Group”
means (i) ING Furman Selz Investors III L.P., ING Barings Global Leveraged
Equity Plan Ltd., ING Barings U.S. Leveraged Equity Plan LLC and FS Private
Investments III LLC and any of their respective Affiliates and (ii) any
investment vehicle that is managed (whether through ownership of securities
having a majority of the voting power or through management of investments) by
any of the Persons listed in clause (i), but excluding any portfolio companies
of any Person listed in clause (i) or (ii).

 

“Permitted
Liens” has the meaning set forth in Section 11.02
(Liens).

 

“PBGC”
means the Pension Benefit Guaranty Corporation or any entity succeeding to any
or all its functions under ERISA.

 

“Person”
means an individual, corporation, limited liability company, association,
partnership, business, joint venture, trust, estate, unincorporated
organization, government or any agency or political subdivision thereof, or any
other entity.

 

“Plan”
means an “Employee Pension Benefit Plan” (as defined in Section 3(2) of ERISA)
and/or an “Employee Welfare Benefit Plan” (as defined in Section 3(1) of ERISA)
which is or has been established or maintained, or to which contributions are
or have been made, by the Borrower, any of its Subsidiaries or any ERISA
Affiliate (or any predecessor thereof).

 

“Pledge
Agreement” means the one or more Pledge Agreement(s)
executed or to be executed and delivered pursuant to the terms of this
Agreement, as such Pledge Agreement(s) may be amended, modified or supplemented
from time to time.

 

66

 

“Pledgor”
means any obligor under any Pledge Agreement.

 

“Predecessor
Indebtedness” means all indebtedness to Fleet National
Bank, as Agent, under that certain Credit Agreement dated as of February 2,
1998, as amended and $15,000,000 in principal amount of subordinated debt under
that certain Senior Subordinated Loan Agreement dated as of February 2, 1998.

 

“Prohibited
Transaction” means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code or any successor sections.

 

“Purchase Documents” means that certain
Stock Purchase Agreement dated as of August 1, 2003 among Acquisition Co. and
the shareholders of Sheridan immediately prior to the Merger, and all related
agreements, instruments and documents.

 

“Regulatory
Change” means any Applicable Law including, without
limitation, any interpretation, directive, request or guideline (whether or not
having the force of law) or any change therein or in the administration or
enforcement thereof, that becomes effective or is implemented or first required
or expected to be complied with after the date of this Agreement (including any
Applicable Law that shall have become such as the result of any act or omission
of the Borrower or any of its Affiliates without regard to when such Applicable
Law shall have been enacted or implemented), whether the same is (i) the result
of an enactment by a government or any agency or political subdivision thereof,
a determination of a court or regulatory authority or otherwise; or (ii)
enacted, adopted, issued or proposed before or after the date of this
Agreement, including any such that imposes, increases or modifies any tax,
reserve requirement, insurance charge, special deposit requirement, assessment
or capital adequacy requirement.

 

“Reimbursement
Obligations” means, at any date, the obligations of
Borrower then outstanding to reimburse Lender for payments made by Lender under
a Letter of Credit or with respect to an Acceptance.

 

“Release”  means a release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration of any Hazardous Substance into the indoor or outdoor environment or
into or out of any property, including the movement of Hazardous Substances
through or in air, soil, surface water or groundwater on any property.

 

“Remedial
Action”  means any
action necessary to comply with any Environmental Law with respect to (1) clean
up, removal, treatment or handling of Hazardous Substances in the indoor or
outdoor environment; (2) prevention of Releases or threats of Releases or
minimization of further Releases so they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor environment; or
(3) performance of pre-remedial studies and investigations and post-remedial
monitoring and care.

 

“Reorganization”
means reorganization as defined in Section 4241(a) of ERISA.

 

67

 

“Reportable
Event” has the meaning set forth in Title IV of ERISA.

 

“Request
for Advance” means a certificate designated as a “Request
for Advance”, signed by an Authorized Signatory of the Borrower requesting an
Advance hereunder, which shall be substantially in the form of Exhibit B
attached hereto.

 

“Reserve
Percentage” means, with respect to any LIBOR Loan, the
maximum rate at which reserves (including any marginal, supplemental or
emergency reserves) are required to be maintained during the relevant Interest
Period under Regulation D (and/or other similar regulation) of the Board of
Governors of the Federal Reserve System against “Eurocurrency Liabilities” (as
such term is used in Regulation D). 
Without limiting the effect of the foregoing, the Reserve Percentage
shall reflect any other reserves required to be maintained by reason of any
regulatory change against (i) any category of liabilities which includes
deposits by reference to which LIBOR Rate is to be determined as provided in
the definition of “LIBOR Rate” or (ii) any category of extensions of credit or
other assets which include loans the interest rate of which is based on LIBOR
Rate.

 

“Restricted
Payment” means:

 

(a)                                  any
direct or indirect distribution, dividend or other payment (other than stock
dividends and stock splits) to any Person on account of (i) any general or
limited partnership interest in, or shares of capital stock or other securities
of, the Borrower or any of its Subsidiaries or (ii) any warrants or other
rights or options to acquire shares of capital stock of, or other interest in,
the Borrower or any of its Subsidiaries;

 

(b)                                 any
redemption, retirement, purchase or other acquisition or any other payment on
account of any interests or securities listed above, except to the extent that
the consideration therefor consists solely of shares of stock of the Borrower
or its Subsidiary, as the case may be;

 

(c)                                  any
sinking fund, other prepayment or installment payment on account of the
foregoing;

 

(d)                                 any
other payment, loan or advance to a shareholder, partner or equity owner of the
Borrower or any of its Subsidiaries (whether or not in its capacity as
shareholder, partner or equity owner) other than salaries or compensation which
are (i) not otherwise restricted under the Loan Documents, (ii) in reasonable
amounts and (iii) paid in the ordinary course of business; and

 

(e)                                  any
forgiveness or release without adequate consideration by the Borrower or any of
its Subsidiaries of any Indebtedness or other obligation of a shareholder,
partner or equity owner.

 

68

 

“Revolving
Credit Facility” means the Revolving Credit Facility of
$18,000,000 extended hereunder, consisting of the Revolving Loan Facility, the
Swing Loan Facility, the Letter of Credit Facility and the Bankers Acceptance
Facility.

 

“Revolving Credit Limit” shall mean the
lesser of (a) the amount of the Commitment, and (b) the amount of the Borrowing
Base.

 

“Revolving
Credit Loans” means the loans made by the Lender to the
Borrower pursuant to Section 1.01 (Commitment to Lend) below.

 

“Revolving
Credit Outstandings” means at any time of calculation the
sum of the then existing aggregate outstanding principal amount of Revolving
Credit Loans and Swing Loans and the then existing Letter of Credit Liabilities
and Acceptances Liabilities; provided that, for purposes of calculating
availability under the Revolving Loan Facility, the Letter of Credit Facility
or the Acceptance Facility, it shall be presumed that the amount drawn under
the Swing Loan Facility is at all times the maximum amount of $3,000,000.

 

“Revolving
Credit Termination Date” means the Maturity Date, or such
earlier date on which the Commitment shall be completely terminated hereunder.

 

“Revolving
Loan Facility” means the facility extended pursuant to
Article 1 for the Borrower to make Revolving Loans from Lender.

 

“Security
Agreement” means the one or more Security Agreement(s) executed
and delivered pursuant to the terms of this Agreement, as such Security
Agreement(s) may be amended, modified or supplemented from time to time.

 

“Senior Secured Notes” means the Senior
Secured Notes being issued by the Borrower on the date hereof in the aggregate
principal amount not to exceed $110,000,000, and any notes issued in exchange
therefor pursuant to any registration rights agreement or other Senior Secured
Note Document.

 

“Senior Secured Note Documents” means
the Senior Secured Notes and all related agreements, instruments and documents.

 

“Subsidiary”
means, as applied to any Person, (a) any corporation of which more than fifty
percent (50%) of the outstanding stock (other than directors’ qualifying
shares) having ordinary voting power to elect a majority of the board of
directors of such corporation (regardless of whether the holders of any class
or classes of securities shall or might have such voting power upon the
occurrence of any contingency) is directly or indirectly owned or controlled by
such Person, by such Person and one or more of its other Subsidiaries, or by
one or more of such Person’s other Subsidiaries, (b) any partnership, joint
venture or other association which is owned or controlled by such Person, by
such Person and one or more of its other Subsidiaries, or by one or more of
such Person’s other Subsidiaries, or (c) any other entity which is directly or
indirectly controlled or

 

69

 

capable of being
controlled by such Person, or by one or more Subsidiaries of such Person, or by
such Person and one or more Subsidiaries of such Person.

 

“Swing Loan Facility” means the
$2,500,000 Swing Loan Facility established pursuant to Article 2 hereof.

 

“Swing
Loan Limit” shall have the meaning set forth in Section
2.01(a).

 

“Swing
Loans” shall have the meaning set forth in Section
2.01(a).

 

“Target Balance” shall have the meaning
set forth in Section 2.02(a).

 

“Taxes” has the meaning set forth
in Section 6.05(a).

 

“Trustee” means the Trustee under the
Senior Secured Note Documents for the benefit of the holders of the Senior
Secured Notes.

 

“Type”
with respect to any Loan, means its designation as a Base Rate Loan or LIBOR
Loan of a specified Interest Period. 
Loans with Interest Periods ending on different days or of differing
durations shall be deemed to be different Types of Loans.

 

“UCC” shall have the meaning set forth
in the Security Agreement.

 

“Unqualifiedly
Certified” when used in connection with audited financial
statements delivered pursuant to Section 10.01 (Financial Statements) hereby by
the Borrower’s independent auditors or accountants, means the absence of any
qualification, limitation, exception or explanatory paragraph that would (x)
call into question or express substantial doubt about the ability of the
Borrower or any Subsidiary to continue as a going concern, as discussed in the
American Institute of Certified Public Accounting’s Statement of Auditing
Standard Number 59, (y) relate to the limited scope of examination of matters
relevant to such financial statements or (z) relate to the treatment or
classification of any item in such financial statements and, which as a
condition of its removal would require an adjustment to such item the effect of
which would be to cause the occurrence of a Default or an Event of Default.

 

“Withdrawal
Liability” means any withdrawal liability as defined in
Section 4201 of ERISA.

 

Section 13.02.                       Accounting Terms.  Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, all accounting
determinations hereunder (including without limitation determinations made
pursuant to the exhibits hereto) shall be made, and all financial statements
required to be delivered hereunder shall be prepared on a consolidated basis in
accordance with GAAP applied on a basis consistent with the audited
consolidated financial statements of Borrower and its Consolidated Subsidiaries
for the year ended December 31, 2002 delivered to Lender; provided, that if (a)
Borrower shall object to determining compliance with the provisions of this
Agreement on such basis by written notice delivered to Lender at the time

 

70

 

of delivery of required
financial statements due to any change in GAAP or the rules promulgated with
respect thereto or (b) Lender shall so object in writing by written notice
delivered to Borrower within sixty (60) days after delivery of such financial
statements, then compliance with this Agreement shall be determined on a basis
consistent with the above-referenced financial statements, but the parties
hereto shall promptly enter into negotiations in order to amend the financial
covenants and other terms of this Agreement and so as to equitably reflect such
changes in GAAP with the desired result that the criteria for evaluating the
financial condition of Borrower and its Consolidated Subsidiaries and such
other terms shall be the same in all material respects after such changes as if
such changes had not been made.  All
amounts used for purposes of financial calculations required to be made herein
shall be without duplication.

 

Section 13.03.                       Other Definitional Provisions.  References in this Agreement to “Articles”,
“Sections”, “Annexes” or “Exhibits” shall be to Articles, Sections, Annexes or
Exhibits of or to this Agreement unless otherwise specifically provided.  Any term defined herein may be used in the
singular or plural.  “Include”,
“includes” and “including” shall be deemed to be followed by “without
limitation”.  Except as otherwise
specified herein, references to any Person include the successors and assigns
of such Person.  References “from” or
“through” any date mean, unless otherwise specified, “from and including” or
“through and including”, respectively. 
References to any statute or act shall include all related current
regulations and all amendments and any successor statutes, acts and
regulations.  Unless the context
otherwise requires, any terms used in the masculine form shall also include the
feminine and neuter forms and vice versa and any terms used in the plural shall
include the singular and vice versa.

 

ARTICLE 14

 

MISCELLANEOUS

 

Section 14.01.                       Notices.  All notices, requests, demands, directions and other
communications (collectively, “notices”) given to or made upon any party hereto
under the provisions of this Agreement shall be by telephone or in writing
(including telex or facsimile communication) unless otherwise expressly
provided hereunder and, if in writing, shall be delivered or sent by telex or facsimile
to the respective parties at the addresses and numbers set forth under their
respective names on the signature pages hereof or in accordance with any
subsequent unrevoked written direction from any party to the others.  All notices shall, except as otherwise
expressly herein provided, be effective (a) in the case of facsimile, when
received, (b) in the case of over-night courier or other hand-delivered notice,
when hand-delivered, (c) in the case of telephone or e-mail, when telephoned or
e-mailed; provided, however, that in order to be effective,
telephonic notices or e-mail must be confirmed in writing by another medium
provided for in this Section 14.01, received no later than the next day, (d) if
given by mail, four (4) days after such communication is deposited in the mails
with first class postage prepaid, return receipt requested, and (e) if given by
any other means (including by air courier), when delivered.  In the event of a discrepancy between any
telephonic or written notice, the written notice shall control.

 

71

 

Section 14.02.                       Duration; Survival.  All representations and warranties of the
Borrower contained in the Loan Documents shall survive the making of the Loans
and shall not be waived by the execution and delivery of any Loan Document or
any investigation by the Lender, or payment in full of the Loans.  All such representations and warranties as
well as all other covenants and agreements of the Borrower contained in the
Loan Documents shall continue in full force and effect from and after the date
hereof so long as the Borrower may borrow hereunder and until termination of
the Commitment and payment in full of the Obligations.

 

Section 14.03.                       No Implied Waiver; Rights Cumulative.  No failure or delay on the part of the
Lender or any holder of a Note in exercising any right, power or privilege
hereunder or under any other Loan Document and no course of dealing between the
Borrower and the Lender or any holder of a Note shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder or under any other Loan Document preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.  The rights and remedies
herein expressly provided are cumulative and not exclusive of any other rights
or remedies which the Lender or any subsequent holder of a Note would otherwise
have.  No notice to or demand on the
Borrower in any case shall entitle the Borrower to any other or further notice
or demand in similar or other circumstances or shall constitute a waiver of the
right of the Lender to take any other or further action in any circumstances
without notice or demand.

 

Section 14.04.                       Entire Agreement and Amendments.  This Agreement and the other Loan Documents
are intended by the parties as the final, complete and exclusive statement of
the transactions evidenced by this Agreement. 
All prior or contemporaneous promises, agreements and understandings,
whether oral or written, are deemed to be superceded by this Agreement and the
other Loan Documents, and no party is relying on any promise, agreement or
understanding not set forth in this Agreement and the other Loan
Documents.  This Agreement and the other
Loan Documents may not be amended or modified except by a written instrument
describing such amendment or modification executed by Borrower and Lender.

 

Section 14.05.                       Successors and Assigns.

 

(a)                                  Successors
Bound.  Whenever in this Agreement
or any other Loan Document any of the parties hereto is referred to, such
reference shall be deemed to include the successors and assigns of such party;
and all covenants, promises and agreements by or on behalf of the Borrower or
the Lender that are contained in such agreement shall bind and inure to the
benefit of their respective successors and assigns; provided, however,
without the prior written consent of the Lender, the Borrower may not assign,
or permit or suffer the assignment whether by operation of law or otherwise any
of its rights or delegate any of its duties or obligations hereunder.

 

(b)                                 Participations.  Lender shall have the unrestricted right at
any time and from time to time, and without the consent of or notice to
Borrower or any Guarantor, to grant to one ore more Lenders or other financial
institutions (each, a “Participant”) participating interests in Lender’s
obligation to lend hereunder and/or any or all of the loans held by Lender
hereunder.  In the event of any such grant
by Lender of a participating interest to a Participant, whether or not upon
notice to Borrower, Lender shall remain responsible for the performance of its
obligations

 

72

 

hereunder and Borrower
shall continue to deal solely and directly with Lender in connection with
Lender’s rights and obligations hereunder. 
Lender shall not be entitled to create in favor of any participant, in
the participation agreement pursuant to which such participant’s participating
interest shall be created or otherwise, any right to restrict Lender’s right to
vote on, consent to or approve any matter relating to this Agreement or any
other Loan Document, except for the amounts and dates on which the Obligations
are due and payable and the release of any material portion of the
Collateral.  Lender may furnish any
information concerning Borrower in its possession from time to time to
prospective Participants, provided that Lender shall require any such
prospective Participant to agree in writing to maintain the confidentiality of
such information.

 

(c)                                  Assignments.  Lender shall have the unrestricted right at
any time or from time to time, and upon Borrower’s written consent, which will
not be unreasonably withheld, to assign all or any portion of its rights and
obligations hereunder to one or more Lenders or other financial institutions
(each, an “Assignee”), and Borrower and each Guarantor agrees that it shall
execute, or cause to be executed, such documents, including without limitation,
amendments to this Agreement and to any other documents, instruments and
agreements executed in connection herewith as Lender shall deem necessary to
effect the foregoing.  In addition, at
the request of Lender and any such Assignee, Borrower shall issue one or more
new promissory notes, as applicable, to any such Assignee and, if Lender has
retained any of its rights and obligations hereunder following such assignment,
to Lender, which new promissory notes shall be issued in replacement of, but
not in discharge of, the liability evidenced by the promissory note held by
Lender prior to such assignment and shall reflect the amount of the respective
commitments and loans held by such Assignee and Lender after giving effect to
such assignment.  Upon the execution and
delivery of the Assignment and Assumption Agreement in the form attached hereto
as Exhibit G and any other documentation required by Lender in connection with
such assignment, and the payment by Assignee of the purchase price agreed to by
Lender, and such Assignee, such Assignee shall be a party to this Agreement and
shall have all of the rights and obligations of Lender hereunder (and under any
and all other guaranties, documents, instruments and agreements executed in
connection herewith) to the extent that such rights and obligations have been
assigned by Lender pursuant to the assignment documentation between Lender and
such Assignee, and Lender shall be released from its obligations hereunder and
thereunder to a corresponding extent. 
Borrower may furnish any information concerning Borrower in its
possession from time to time to prospective Assignees, provided that Lender
shall require any such prospective Assignees to agree in writing to maintain
the confidentiality of such information.

 

(d)                                 Issuance
of New Note.  Within five (5)
Business Days after receipt of an Assignment and Acceptance Agreement, the
Borrower, at its own expense, shall execute and deliver to the Lender in
exchange for the surrendered Note (a) a new Note (or Notes) to the order of
such assignee in an amount equal to its portion of the Commitment and Loans
assigned to it pursuant to such Assignment and Acceptance Agreement and (b) a
new Note (or Notes) to the order of the Lender in an amount equal to the
Commitment and Loans retained by it thereunder.  Such Note(s) shall be in an aggregate principal amount equal to
the aggregate principal amount of the surrendered Note(s) shall be dated the
date of such surrendered Note(s) and shall otherwise be in

 

73

 

substantially the form of
Exhibit A hereto.  Cancelled
Notes shall be returned to the Borrower upon the execution of such new Notes.

 

(e)                                  Assignment
to Federal Reserve Lender.  Lender
may at any time pledge or assign all or any portion of its rights under the
Loan Documents including any portion of the promissory note to any of the
twelve (12) Federal Reserve Lenders organized under Section 4 of the Federal
Reserve Act. 12 U.S.C. Section 341.  No
such pledge or assignment or enforcement thereof shall release Lender from its
obligations under any of the loan documents.

 

Section 14.06.                       Descriptive Headings.  The descriptive headings of the several
sections of this Agreement are inserted for convenience only and shall not
affect the meaning or construction of any of the provisions hereof.

 

Section 14.07.                       Governing Law.  This Agreement and the rights and
obligations of the parties hereunder shall be construed and interpreted in
accordance with the laws of the Commonwealth of Pennsylvania (the “Governing
State”) (excluding the laws applicable to conflicts or choice of law).

 

Section 14.08.                       Payments Due on Non-Business Days.  If any payment under the Loan Documents
becomes due on a day which is not a Business Day, the due date of such payment
shall be extended to the next succeeding Business Day, and such extension of
time shall be included in computing interest and fees in connection with such
payment.

 

Section 14.09.                       Counterparts.  This Agreement and the other Loan Documents may be executed in
one or more counterparts, each of which shall constitute an original, but all
of which together shall constitute one and the same instrument.  Delivery of a photocopy or telecopy of an
executed counterpart of a signature page to any Loan Document shall be as
effective as delivery of a manually executed counterpart of such Loan Document.

 

Section 14.10.                       Maximum Lawful Interest Rate.

 

(a)                                  All
agreements between Borrower and Guarantor(s) and Lender are hereby expressly
limited so that in no contingency or event whatsoever, whether by reason of
acceleration of maturity of the indebtedness evidenced hereby or otherwise,
shall the amount paid or agreed to be paid to Lender for the use or the
forbearance of the indebtedness evidenced hereby exceed the maximum permissible
under applicable law.  As used herein,
the term “applicable law” shall mean the law in effect as of the date hereof;
provided however, that in the event there is a change in the law, which results
in a higher permissible rate of interest, then this Agreement shall be governed
by such new law as of its effective date. 
In this regard, it is expressly agreed that it is the intent of Borrower
and Lender in the execution, delivery and acceptance of this Agreement to
contract in strict compliance with the laws of the Commonwealth of Pennsylvania
from time to time in effect.  If, under
or from any circumstances whatsoever, fulfillment of any provision hereof or of
any of the Loan Documents at the time of performance of such provision shall be
due, shall involve transcending the limit of such validity prescribed by
applicable law, then the obligation to be fulfilled shall automatically be
reduced to

 

74

 

the limits of such
validity, and if under or from circumstances whatsoever Lender should ever
receive as interest an amount which would exceed the highest lawful rate, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest.  This provision shall control every other
provision of all agreements between Borrower, Guarantor(s) and Lender.

 

(b)                                 If,
at any time, the rate of interest, together with all amounts which constitute
interest and which are reserved, charged or taken by Lender as compensation for
fees, services or expenses incidental to the making, negotiating or collection
of the loan evidenced hereby, shall be deemed by any competent court of law,
governmental agency or tribunal to exceed the maximum rate of interest
permitted to be charged by Lender to Borrower under applicable law, then,
during such time as such rate of interest would be deemed excessive, that
portion of each sum paid attributable to that portion of such interest rate
that exceeds the maximum rate of interest so permitted shall be deemed a
voluntary prepayment of principal.  As
used herein, the term “applicable law” shall mean the law in effect as of the
date hereof; provided, however, that in the event there is a
change in the law which results in a higher permissible rate of interest, then
this Agreement shall be governed by such new law as of its effective date.

 

Section 14.11.                       Set-off of Bank Accounts. 
The Borrower hereby grants to Lender and its successors and assigns a
continuing lien, security interest and right of set-off as security for all
liabilities and obligations to Lender, whether now existing or hereafter
arising, upon and against all deposits, credits, collateral and property now or
hereafter in the possession, custody, safekeeping or control of Lender or any entity
under common control which Lender or in transit to any of them.  At any time following an Event of Default
which is continuing without demand or notice (any such notice being expressly
waived by the Borrower), Lender may set-off the same or any part thereof and
apply the same to any liability or obligation of the Borrower or any Guarantor
even though unmatured and regardless of the adequacy of the other Collateral.
AND ALL RIGHTS TO REQUIRE LENDER TO EXERCISE ITS RIGHTS OR REMEDIES WITH
RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE LOANS, PRIOR TO EXERCISING
ITS RIGHT TO SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF
THE BORROWER OR ANY GUARANTOR, ARE HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVED.

 

Section 14.12.                       Severability. 
Every provision of the Loan Documents is intended to be severable, and
if any term or provision hereof or thereof shall be invalid, illegal or
unenforceable for any reason, the validity, legality and enforceability of the
remaining provisions hereof or thereof shall not be affected or impaired
thereby, and any invalidity, illegality or unenforceability in any jurisdiction
shall not affect the validity, legality or enforceability of any such term or
provision in any other jurisdiction.

 

75

 

Section 14.13.                       Payment and Reimbursement of Costs and Expenses; Indemnification.

 

(a)                                  Borrower
shall pay on demand all expenses of the Lender in connection with the
preparation, administration, default, collection, waiver or amendment of any of
the Loan Documents, or in connection with the Lender’s exercise, preservation
or enforcement of any of its rights, remedies or options hereunder, including,
without limitation, fees of outside legal counsel or the reasonable allocated
costs of in-house legal counsel, accounting, consulting, brokerage or other
similar professional fees and expenses, and any fees and expenses associated
with travel or other costs relating to any appraisals or examinations
conduction with the Loans or any Collateral, and the amount of all of such
expenses shall, beginning 5 days following notification of the Borrower thereof
until paid, bear interest at the rate applicable to Base Rate Loans hereunder
(including the Default Rate) and be any obligation secured by the Collateral.

 

(b)                                 Whether
or not any Loans are made, the Borrower shall, unconditionally upon demand, pay
or reimburse the Lender for, and indemnify and save the Lender harmless
against, any all liabilities, losses, costs, expenses, claims, and/or charges
(including without limitation reasonable fees and disbursements of legal
counsel, accountants, investigators and other experts, whether or not they are
employees of the Lender) arising out of, relating to or connected with:

 

(i)                                     the
negotiation, preparation, execution and delivery of (1) the Loan Documents and
(2) whether or not executed, any waiver, modification, restatement,
reaffirmation, amendment or consent thereunder or thereto;

 

(ii)                                  the
administration of the Loan Documents, including, without limitation, performing
audits or investigations or consulting with attorneys or other advisors with
respect to any matter in any way arising out of, related to, or connected with,
the Loan Documents;

 

(iii)                               protecting,
preserving, exercising or enforcing any of the rights of the Lender in, under
or related to the Loan Documents;

 

(iv)                              all
transfer, documentary, stamp and similar taxes, and all recording and filing
fees and taxes payable in connection with, arising out of, or in any way related
to, the execution, delivery and performance of the Loan Documents or the making
of the Loans; and

 

(v)                                 commissions
or claims by or on behalf of brokers, finders or agents not retained by the
Lender.  The Borrower represents that it
has not engaged or used any such broker, finder or agent.

 

(c)                                  Without
limiting the generality of the foregoing paragraph (a), whether or not any
Loans are made, the Borrower shall indemnify and hold each Indemnified 

 

76

 

Person harmless from and
against all losses (including judgments, penalties and fines) suffered, and pay
or reimburse each Indemnified Person for all costs and reasonable expenses
(including reasonable fees and disbursements of legal counsel and other experts
employed or retained by such Indemnified Person) incurred by such Indemnified
Person in connection with, arising out of or in any way relating to (i) any
claim (whether civil, criminal or administrative and whether sounding in tort,
contract or otherwise) arising out of, related to or connected with, the Loan
Documents (including, without limitation, related to property subject to
Mortgages or Leasehold Mortgages), whether such claim arises or is asserted
before or after the date hereof or before or after the Maturity Date (whether
such claim is asserted by such Indemnified Person or the Borrower or any other
Person), or (ii) any investigation, governmental or otherwise, arising out of,
related to, or in any way connected with, the Loan Documents or the relationships
established thereunder, including, in either case (i) or (ii), the prosecution
or defense or investigation thereof and any litigation or proceeding with
respect thereto (whether or not, in the case of any such litigation or
proceeding, such Indemnified Party is a party thereto) except to the extent any
of the foregoing results from the gross negligence or willful misconduct of
such Indemnified Person.

 

(d)                                 In
furtherance and not limitation of the foregoing, the Borrower hereby agrees to
assume, pay and satisfy all liabilities and obligations of Bruckmann, Rosser,
Sherrill & Co. and Jefferies Capital Partners under the commitment letter
dated July 31, 2003 from the Lender and the related fee letter.

 

Section 14.14.                       Consent To Jurisdiction. 
For the purpose of any action that may be brought in connection with
this Agreement or any Loan Document, the Borrower hereby consents to the
jurisdiction and venue of the courts of the Commonwealth of Pennsylvania or of
any federal court located in such state and waives personal service of any and
all process upon it and consents that all such service of process be made by
certified or registered mail directed to such Borrower at the address provided
for in Section 14.01 (Notices) and service so made shall be deemed to be
completed on actual receipt.  The
Borrower waives the right to contest the jurisdiction and venue of the courts
located in the Commonwealth of Pennsylvania on the ground of inconvenience or
otherwise and, further, waives any right to bring any action or proceeding
against the Lender in any court outside the City of Philadelphia in the
Commonwealth of Pennsylvania.  The
provisions of this Section shall not limit or otherwise affect the right of the
Lender to institute and conduct an action in any other appropriate manner,
jurisdiction or court.

 

Section 14.15.                       Termination.  This Agreement shall remain in full force and effect until the
later of (a) the time that all Obligations shall have been indefeasibly paid in
full and (b) the time that there shall be no Commitment; provided, however,
that the Borrower’s expense and indemnification obligations pursuant to Section
14.13 above as well as any liability in connection with any untrue
representation or warranty, shall survive such termination.

 

Section 14.16.                       Waiver of Right to Jury Trial.  BORROWER AND LENDER (BY ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN
RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS CONTEMPLATED TO BE

 

77

 

EXECUTED IN CONNECTION
HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY
COURSE OF CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF LENDER RELATING
TO THE ADMINISTRATION OF THE LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND
AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY
OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.  EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY
WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES.  BORROWER
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER.  THIS
WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO ACCEPT THIS AGREEMENT
AND MAKE THE LOAN.

 

Section 14.17.                       Confidentiality. 
Lender agrees to keep confidential all non-public information provided
to it by any Loan Party pursuant to this Agreement;  provided that nothing herein shall prevent Lender from
disclosing any such information (a) to any participant or assignee (each, a “Transferee”)
or prospective Transferee that agrees to comply with the provisions of this
Section (or executes a confidentiality agreement with confidentiality terms
that are substantially similar to the terms of this Section), (b) to any of its
employees, directors, agents, attorneys, accountants and other professional
advisors), (c) upon the request or demand of any Governmental Authority or
self-regulatory body having or claiming to have jurisdiction over it, (d) in
response to any order of any court or other Governmental Authority or as may
otherwise be required pursuant to any requirement of law, (e) if requested or
required to do so in connection with any litigation or similar proceeding, or
(f) in connection with the exercise of any remedy hereunder or under any other
Loan Document.  Notwithstanding any
other express or implied agreement, arrangement or understanding to the
contrary, each of the parties hereto hereby agree that, each party hereto (and
each of its employees, representatives or agents) are permitted to disclose to
any and all persons, without limitation, the tax treatment and tax aspects of
the Loans and the other transactions contemplated hereby, and all materials of
any kind (including opinions or other tax analyses) that are provided to the
Loan Parties or the Lender, related to such tax treatment and tax aspects.  To the extent not inconsistent with the
immediately preceding sentence, this authorization does not extend to
disclosure of any other information or any other term or detail not related to
the tax treatment or tax aspects of the Loans or the other transactions
contemplated hereby.

 

Section 14.18.                       Intercreditor.  So
long as the Intercreditor Agreement is in effect, the rights and, obligations
and remedies of the parties shall be subject thereto.  This Agreement shall not impose any obligation or grant any right
to any party to the extent that such obligation or right is inconsistent or
conflicts with the Intercreditor Agreement. 
This Section 14.18 is for the benefit of the Lender and the Trustee, and
none of the Loan Parties shall be third party beneficiaries hereof.

 

78

 

IN WITNESS WHEREOF, the
parties hereto have executed this Agreement, or caused it to be executed by
their duly authorized officers, all as of the day and year first above written.

 

 

	
  BORROWER:

  	
  SHERIDAN ACQUISITION
  CORP.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Rice Edmonds

  
	
   

  	
   

  	
  Name: J. Rice Edmonds

  
	
   

  	
   

  	
  Title: Vice President

  
	
   

  	
   

  	
  11311 McCormick Road,
  Suite 260

  
	
   

  	
   

  	
  Hunt Valley, Maryland
  21031-1437

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Phone: (410) 785-7277

  
	
   

  	
   

  	
  Fax: (410) 785-7217

  
	
   

  	
   

  	
  E-Mail:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  SUCCESSOR TO INITIAL
  BORROWER

  	
  THE SHERIDAN GROUP,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John A. Saxton

  
	
   

  	
   

  	
  Name: John A. Saxton

  
	
   

  	
   

  	
  Title: President and
  Chief Executive Officer

  
	
   

  	
   

  	
  11311 McCormick Road,
  Suite 260

  
	
   

  	
   

  	
  Hunt Valley, Maryland
  21031-1437

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Phone: (410) 785-7277

  
	
   

  	
   

  	
  Fax: (410) 785-7217

  
	
   

  	
   

  	
  E-Mail:

  
								

 

79

 

	
  LENDER:

  	
  FLEET NATIONAL BANK

  
	
   

  
	
   

  
	
   

  	
  By:

  	
  /s/ Kenneth G. Wood

  
	
   

  	
   

  	
  Kenneth G. Wood

  
	
   

  	
   

  	
  Senior Vice President

  
	
   

  	
   

  	
  Corporate Banking

  
	
   

  	
   

  	
  Fleet National Bank

  
	
   

  	
   

  	
  Mail Stop: PA RP 08301G

  
	
   

  	
   

  	
  7111 Valley Green Road

  
	
   

  	
   

  	
  Fort Washington, PA
  19034

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Phone No.: (215)
  835-3816

  
	
   

  	
   

  	
  Fax No.: (215) 836-3802

  
	
   

  	
   

  	
  Email:
  Kenneth_G_Wood@fleet.com

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wire Transfer
  Information:

  
	
   

  	
   

  	
  Fleet National Bank

  
	
   

  	
   

  	
  ABA #021300019

  
	
   

  	
   

  	
  G/L AC/ #1510351-15901

  
	
   

  	
   

  	
  RE:  Sheridan Group

  
	
   

  	
   

  	
  Att:  Chris Zimmerman

  
				

 

80

 

EXHIBIT A

 

REVOLVING
CREDIT NOTE

 

	
  $18,000,000

  	
   

  	
  August 21, 2003

  
	
   

  	
   

  	
  Philadelphia,
  Pennsylvania

  

 

FOR VALUE RECEIVED,
intending to be legally bound hereby, SHERIDAN ACQUISITION CORP., a Delaware
corporation (“Borrower”), hereby promises to pay to the order of FLEET NATIONAL
BANK (“Lender”) the principal sum of EIGHTEEN MILLION DOLLARS ($18,000,000), or
so much thereof as may be the aggregate unpaid principal amount of all Loans
and Reimbursement Obligations made by Lender to Borrower or arising pursuant to
the Revolving Credit Agreement (hereinafter defined), as recorded by Lender on
its books (which books shall be conclusive absent manifest error), on the dates
specified in the Credit Agreement and to pay interest on such principal amount
on the dates and at the rates (including, if applicable, the Default Rate)
specified in the Credit Agreement.  All
payments due to Lender under this Note shall be made at the place, in the type
of money and funds and in the manner specified in Section 6.01 (Manner of
Tendering Payments by Borrower) of the Credit Agreement.

 

As used in this Note,
“Credit Agreement” shall mean the Revolving Credit Agreement dated as of August
21, 2003, as amended, supplemented and/or modified from time to time, to which
Borrower and Lender are parties, and capitalized terms that are used herein and
not defined herein shall have the meaning given to such terms in the Credit
Agreement.

 

Lender may at any time,
including prior to any transfer of this Note, endorse the then outstanding
principal amount of this Note on the Loan Schedule attached hereto, such
endorsement to be conclusive as to the matters referred to therein absent
manifest error, but failure of Lender to make such endorsement shall not affect
the rights of Lender or the obligations of Borrower under this Note, under the
Credit Agreement, under the other Loan Documents or under applicable law.  (In the event that the space on the attached
Schedule is inadequate, Lender may attach additional Schedules hereto.)

 

This Note may be
voluntarily prepaid, and is subject to mandatory prepayment, in accordance with
the provisions applicable to prepayments set forth in the Credit Agreement.

 

Notwithstanding any
provision contained herein or in the Credit Agreement, the total liability of
Borrower for payment of interest pursuant hereto shall not exceed the maximum
amount of such interest permitted by law to be charged, collected, or received
from Borrower, and if any payments by Borrower include interest in excess of
such a maximum amount, Lender shall apply such excess to the reduction of the
unpaid principal amount due pursuant hereto, or if none is due, such excess
shall be refunded to Borrower.

 

A-1

 

This instrument shall be
construed according to and governed by the laws of the Commonwealth of
Pennsylvania.  If any of the terms of
this Note, or any instrument securing payment hereof, shall be declared invalid
by any court of competent jurisdiction, such invalidity shall not affect any of
the other terms hereof or such other instrument.

 

This Note is the Note
referred to in the Credit Agreement. 
The holder of this Note is entitled to all of the benefits under the
Credit Agreement and the other Loan Documents including certain security
provided thereunder.  In case an Event
of Default shall occur, the principal of, and accrued interest and fees, if
any, on this Note shall become due and payable in the manner and with the
effect provided in the Credit Agreement.

 

If the holder of this
Note engages the services of an attorney-at-law for the purpose of exercising
its rights hereunder or under the Credit Agreement or other Loan Documents, in
addition to any other amounts specified in the Loan Documents, Borrower will
pay the reasonable fees and disbursements thereby incurred promptly upon
demand, all of which will be deemed to be sums becoming due hereunder and shall
be secured by the liens as set forth in the Loan Documents.

 

BORROWER AND LENDER (BY
ACCEPTANCE OF THIS NOTE) MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED
HEREON, ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER LOAN
DOCUMENTS CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS OR ACTIONS OF LENDER RELATING TO THE ADMINISTRATION OF THE
LOAN OR ENFORCEMENT OF THE LOAN DOCUMENTS, AND AGREE THAT NEITHER PARTY WILL
SEEK TO CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL
CANNOT BE OR HAS NOT BEEN WAIVED. 
EXCEPT AS PROHIBITED BY LAW, BORROWER HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO CLAIM OR RECOVER IN ANY LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES.  BORROWER CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF LENDER HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT LENDER WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER.  THIS WAIVER
CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO ACCEPT THIS NOTE AND MAKE THE
LOAN.

 

Borrower hereby waives
presentment for payment, demand, and, except for notices specifically required
by the Credit Agreement, notice of nonpayment, notice of protest, and protest
of this Note, and all other notices or demands in connection with the delivery,
acceptance, performance, default, dishonor, or enforcement of the payment of
this Note.

 

A-2

 

The Sheridan Group, Inc.,
a Maryland corporation, hereby agrees that it is unconditionally assuming all obligations
hereunder immediately and automatically upon consummation of the Merger, of the
Borrower.

 

IN WITNESS WHEREOF, the
undersigned have caused this Note to be duly executed as of the date first
above written, intending to be legally bound.

 

 

	
   

  	
  SHERIDAN ACQUISITION
  CORP.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  
	
   

  
	
   

  	
  THE SHERIDAN GROUP,
  INC.

  
	
   

  
	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
					

 

A-3

 

LOAN
SCHEDULE

 

	
  DATE

  	
   

  	
  AMOUNT OF

  FUNDING

  	
   

  	
  AMOUNT OF

  PRINCIPAL

  PAID OR

  PRE-PAID

  	
   

  	
  UNPAID

  PRINCIPAL

  BALANCE

  	
   

  	
  NOTATION

  MADE BY

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-4

 

EXHIBIT B

 

REQUEST
FOR ADVANCE

 

 

	
  Fleet National Bank

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
               ,
  200    

  

 

Dear Sir/Madam:

 

Reference is made to the
Revolving Credit Agreement, dated August 21, 2003, among Sheridan Acquisition
Corp., the Sheridan Group, Inc. and Fleet National Bank as amended (the “Credit
Agreement”).  Terms defined in the
Credit Agreement and not otherwise defined herein are used herein as defined in
the Credit Agreement.

 

Pursuant to Section
7.03(d) of the Credit Agreement, the undersigned Borrower hereby gives notice
of its request to have the following Loans, Letter of Credit Liabilities and
Acceptances made or issued to it:(1)

 

A.  Type of Credit:

 

B.  Amount of Credit: $

 

C.  Date of Credit:  

 

D.  Type of Loan (Base Rate or LIBOR):  

 

E.  If LIBOR, Interest Period:  

 

The undersigned
represents and warrants as follows:

 

1.                                       All
of the representations and warranties of the Borrower under the Credit
Agreement are true and correct as of this date, both before and after giving
effect to the application of the proceeds of the above requested Credit;

 

(1)          If the Loan is a LIBOR
Loan, then it must be in a minimum amount of $100,000 and an integral multiple
of $10,000.

 

B-1

 

(2)          Notice must be given
prior to 12:00 noon on the date of any Base Rate Loan and two (2) Business Days
prior to any LIBOR Loan.

 

B-2

 

2.                                       All
of the representations and warranties of the Borrower under the Credit
Agreement are true and correct in all material respects as of this date, both
before and after giving effect to the application of the proceeds of the above
requested Credit;

 

3.                                       No
Default or Event of Default exists or would be caused by the making of such
Credit;

 

4.                                       No
Material Adverse Change has occurred since the date of the Credit Agreement and
no event has occurred which may reasonably be expected to result in such a
Material Adverse Change; and

 

5.                                       Based
on the last Borrowing Base Certificate which was delivered to Lender, which was
fully completed, executed and true and correct in all respects on the date
delivered, the Revolving Credit Outstandings are equal to or less than the
Revolving Credit Limit.

 

 

	
   

  	
   

  	
  SHERIDAN ACQUISITION CORP.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  THE SHERIDAN GROUP, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
							

 

B-3

 

EXHIBIT C

 

On
Customer’s Letterhead

 

BANKERS
ACCEPTANCE CONFIRMATION

 

Date:__________________

 

Fleet National
Bank

Trade Services
Operations

One Fleet Way

Scranton, PA  18507

 

	
  Attention:

  	
   

  	
  Bankers’ Acceptance
  Unit

  
	
   

  	
   

  	
  Via Fax:  (800) 755-8745

  

 

Gentlemen:

Please accept and
discount drafts totaling US$______________ and credit the proceeds to our
account with yourselves.  We request
financing for _____  days.

 

Goods
Shipped:              
__________________

Shipment
From:               __________________

Shipment To:                   __________________

 

We certify that:

 

The product is
currently in the channels of trade.

The transaction is
not being financed by any other means.

The tenor
requested is within the terms of payment for the goods.

It is a current
shipment (within 45 days).

We agree to hold
available for presentation to you upon request, copies of the invoices and
related transport documents evidencing the transactions being financed.

We authorize you
to debit our account for the face amount of the drafts at maturity.

 

 

	
   

  	
  [NAME OF COMPANY]

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

C-1

 

EXHIBIT D

 

FORM
OF NOTICE OF CONVERSION OR CONTINUATION

 

Fleet National Bank

 

__________________

 

__________________

 

__________, 200__

 

Dear Sir/Madam:

 

Reference is made to the
Revolving Credit Agreement, dated as of August 21, 2003, among Sheridan
Acquisition Corp., The Sheridan Group, Inc. and Fleet National Bank (Lender) as
amended, (the “Credit Agreement”). 
Terms defined in the Credit Agreement that are not otherwise defined
herein are used herein with the meanings therein ascribed to them.  The undersigned hereby gives notice pursuant
to Section 5.02(d) of the Credit Agreement of its desire to convert or continue
the Loans specified below into or as Loans of the Types and in the amounts
specified below on [insert date of conversion or continuation]:

 

Loans to be
Converted or Continued

 

	
  Type

  of

  Loan

  	
   

  	
  Last Day of

  Current

  Interest Period

  	
   

  	
  Amount

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

D-1

 

Converted or
Continued Loans

 

	
  Date of

  Conversion or

  Continuation

  	
   

  	
  Type

  of Loan

  	
   

  	
  Duration

  of Interest

  Period

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

	
   

  	
   

  	
  THE SHERIDAN GROUP INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

D-2

 

EXHIBIT E

 

FORM
OF BORROWING BASE CERTIFICATE

 

 

Pursuant to the
provisions of the Revolving Credit Agreement, dated as of August 21, 2003 (as
amended, restated, supplemented and/or modified from time to time, the “Credit
Agreement”) by and among SHERIDAN ACQUISITION CORP., THE SHERIDAN GROUP,
INC. and FLEET NATIONAL BANK. 
Capitalized terms used herein without definition shall have the meaning assigned
to such terms in the Credit Agreement.

 

I, ________________,
the_________________ 1 of THE SHERIDAN GROUP, INC., a
Maryland corporation (the “Borrower”), DO HEREBY CERTIFY that annexed hereto as
Annex A is a true and accurate calculation of the           
Borrowing Base of the Borrower as of ______________, 20__, determined in
accordance with the requirements of the Credit Agreement.

 

IN WITNESS WHEREOF, I
have signed this certificate as of this _____day of __________________, 20___.

 

	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
				

 

1 In accordance
with Section 10.02 of the Credit Agreement, this certificate should be
completed and certified by the Chief executive officer or chief financial
officer of the Borrower.

 

E-1

 

ANNEX
A

 

The Sheridan
Group, Inc.

(all numbers in
thousands)

As of ________,
20___

 

Calculation
of Borrowing Base:

 

	
  ACCOUNTS
  RECEIVABLE:

  Aggregate of all accounts receivable of the Borrower or its
  Subsidiaries:1

  	
   

  	
  $_________ 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Less:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (a)

  	
   

  	
  Foreign accounts and
  accounts not denominated in US dollars and Canadian accounts over $1,000,000

  	
   

  	
  __________

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (b)

  	
   

  	
  accounts receivable
  that do not comply with all applicable legal requirements, to the extent such
  non-compliance could have an adverse effect on the value of such account
  receivable or the validity or binding nature of the related obligation

  	
   

  	
  __________

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (c)

  	
   

  	
  accounts receivable
  subject to an unresolved dispute with account debtors (to the extent of such
  dispute)

  	
   

  	
  __________

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (d)

  	
   

  	
  accounts receivable
  that remain unpaid for more than 90 days from the date of the original
  invoice

  	
   

  	
  __________

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (e)

  	
   

  	
  Unbilled accounts
  receivable and accounts receivable for unshipped Goods or unrendered services

  	
   

  	
  __________

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (f)

  	
   

  	
  accounts receivable
  arising outside the ordinary course of business of the Borrower or its
  Subsidiaries

  	
   

  	
  __________

  

 

1                    Attached
hereto is a reconciliation of the information provided herein with Borrower’s
Financial Statements.

 

E-2

 

	
  (g)

  	
   

  	
  accounts receivable for
  which have been established a contra account, or to an account debtor to whom
  the Borrower or such Subsidiary owes a trade payable, but only to the extent
  of such account or trade payable

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (h)

  	
   

  	
  accounts receivable not
  subject to a first priority perfected Lien under the Security Agreement and
  accounts receivable evidenced by an “instrument” (as defined in the Uniform
  Commercial Code) not in possession of the Lender

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i)

  	
   

  	
  accounts receivable due
  from an ineligible account debtor

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (j)

  	
   

  	
  account receivable due
  from an account debtor that makes payments in a form that cannot be accepted
  in a lockbox account at any time during which payments with respect to accounts
  receivable are required to be made to a lockbox account in accordance with
  the provisions of the Security Agreement

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (k)

  	
   

  	
  In the case of (i) any
  account debtor other than an Approved Account Debtor, accounts receivable due
  from such an account debtor from whom more than 20% of the aggregate accounts
  receivable of the Borrower are due or (ii) any Approved Account Debtor,
  accounts receivable due from such an account debtor in excess of the
  percentage specified in the definition of “Eligible Receivables” in the
  Credit Agreement with respect to such Account, but, in both cases, only to
  the extent of such excess

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total
  Ineligible Receivables

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ELIGIBLE
  RECEIVABLES

  	
   

  	
  $____x 85 %=______

  

 

E-3

 

	
  INVENTORY::2

  The Aggregate value (determined at the lower of cost or market on a basis
  consistent with that used in the preparation of the financial statements
  referred to in Section 10.01 of the Credit Agreement) of all Inventory
  owned by the Borrower or any of its Subsidiaries and located in any
  jurisdiction in the United States of America as to which appropriate UCC
  financing statements have been filed naming the Borrower or such Subsidiary,
  as the case may be, as “debtor” and the Lender as “secured party”, all net of
  any amounts payable by the Borrower or such Subsidiary in respect of
  commissions, processing fees or other charges

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Less:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (i).

  	
   

  	
  Inventory shipped to a
  customer, even if on a consignment or “sale or return” basis

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (ii).

  	
   

  	
  Inventory that is
  subject to a Lien (other than Liens created pursuant to the Security
  Agreement) including landlord’s or warehouseman’s Liens (other than any such
  Lien that has been waived pursuant to a landlord’s or warehouseman’s waiver)

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iii).

  	
   

  	
  Inventory against which
  a reserve is required in accordance with GAAP consistently applied with past
  practice, but only to the extent of the amount of such reserve

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (iv).

  	
   

  	
  Inventory not subject
  to a valid and perfected first priority Lien in favor of the Lender under the
  Security Agreement, and subject to no prior or equal Lien

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (v).

  	
   

  	
  Inventory not produced
  by the Borrower or such Subsidiary in compliance with the applicable
  requirements of the Fair Labor Standards Act

  	
   

  	
  __________ 

  

 

2 Attached hereto is a
reconciliation of the information provided herein with Borrower’s Financial
Statements.

 

E-4

 

	
  (vi).

  	
   

  	
  Supply, scrap or
  obsolete Inventory and Inventory not reasonably marketable

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (vii).

  	
   

  	
  Inventory located at
  any property leased by the Borrower or such Subsidiary in respect of which a
  landlord’s consent agreement in form and substance reasonably satisfactory to
  the Lender is not in full force and effect.

  	
   

  	
  __________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Ineligible
  Inventory

  	
   

  	
  $_________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ELIGIBLE
  INVENTORY

  	
   

  	
  $_____ x 50% =_______

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWING BASE TOTAL

  (add the percentage of Eligible Receivables to the
  percentage of Eligible Inventory)

  	
   

  	
  $__________ 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Lesser
  of Borrowing Base or $18,000,000

  	
   

  	
  $__________ 

  
	
   

  	
   

  	
   

  
	
  Total
  Revolving Credit Outstanding

  	
   

  	
  $__________ 

  
	
   

  	
   

  	
   

  
	
  Total
  Revolving Credit Available – or -

  	
   

  	
  $__________ 

  
	
   

  	
   

  	
   

  
	
  Total Amount by which Revolving
  Credit is overdrawn

  	
   

  	
  $__________ 

  

 

E-5

 

EXHIBIT F

 

FORM
OF COMPLIANCE CERTIFICATE

 

In accordance with the
provisions of Section 10.02 of the Revolving Credit Agreement dated as of
August 21, 2003, as amended through the date hereof (the “Credit Agreement”) by
and among Sheridan Acquisition Corp., The Sheridan Group, Inc. (the
“Borrower”), and Fleet National Bank (the “Lender”), I, __________ , the
__________  and authorized officer of Borrower, do hereby certify to the
Lender as follows:

 

(a)                                  The
representations and warranties made by the Borrower and other Loan Parties in
the Credit Agreement and other Loan Documents are true with the same effect as
though such representations and warranties are made on and as of this date;

 

(b)                                 No
Default or Event of Default has occurred or now exists; and

 

(c)                                  The
Borrower is in compliance with the financial covenants set forth in Article 9
of the Credit Agreement as more fully set forth below and on Annex 1
hereto:

 

	
   

  	
   

  	
  Actual

  	
   

  	
  Required

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Minimum EBITDA for
  rolling four quarters

  	
   

  	
  $__________ 

  	
   

  	
  at least $21,000,000
  through 9/30/06

  $23,000,000 thereafter

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Interest Coverage Ratio
  for rolling four quarters

  	
   

  	
   

  	
   

  	
   

  
	
  EBITDA

  	
  $__________ 

  	
   

  	
   

  	
   

  	
  at least 2.0 to 1.0

  	 

	
  Interest

  	
  $__________ 

  	
   

  	
  ______to 1.0

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Maximum

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capex Trigger Date
  ______, 20__

  	
   

  	
   

  	
   

  	
  $12,000,000 before
  12/31/03

  
	
  Capital Expenditures
  since CTD

  	
  $__________ 

  	
   

  	
   

  	
   

  	
  $10,000,000 thereafter

  

 

Attached hereto as Annex
1 are calculations supporting the figures reported above and also a
reconciliation of such figures with Borrower’s financial statements.

 

Any capitalized terms
which are used in this Certificate and which are not defined herein, but which
are defined in the above-described Credit Agreement, shall have the meanings
given to those terms in the Credit Agreement.

 

F-1

 

IN WITNESS WHEREOF, I
have executed this Certificate the __________  day of __________ ,
200__.

 

 

	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  __________ of
  Borrower

  

 

F-2

 

EXHIBIT G

 

FORM
OF ASSIGNMENT AND ASSUMPTION

 

This Assignment and
Assumption (the “Assignment and Assumption”) is dated as of the
Effective Date set forth below and is entered into by and between [Insert name of Assignor] (the “Assignor”)
and [Insert name of Assignee]
(the “Assignee”).  Capitalized
terms used but not defined herein shall have the meanings given to them in the
Revolving Credit Agreement dated August 21, 2003, among Sheridan Acquisition
Corp., The Sheridan Group, Inc. and Fleet National Bank (as amended, the “Credit
Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee.  The Standard Terms and
Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

 

For an agreed
consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the
Assignor, subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below, the interest in and to all of the
Assignor’s rights and obligations under the Credit Agreement and any other
documents or instruments delivered pursuant thereto that represents the amount
and percentage interest identified below of all of the Assignor’s outstanding
rights and obligations under the respective facilities identified below
(including without limitation any letters of credit and swingline loans
included in such facilities and, to the extent permitted to be assigned under
applicable law, all claims (including without limitation contract claims, tort
claims, malpractice claims and all other claims at law or in equity, including
claims under any law governing the purchase and sale of securities or governing
indentures pursuant to which securities are issued), suits, causes of action
and any other right of the Assignor against any other Person) (the “Assigned
Interest”).  Such sale and
assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by the Assignor.

 

	
  1.

  	
   

  	
  Assignor:

  	
   

  	
  ______________________________ 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Assignee:

  	
   

  	
  ______________________________ [and
  is an Affiliate/Approved Fund of [identify
  Lender]]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Borrower(s):

  	
   

  	
  The Sheridan Group,
  Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Administrative Agent:

  (if any)

  	
   

  	
  ______________________________ ,
  as the administrative agent under the Credit Agreement

  	
   

  

 

G-1

 

5.                                       Assigned
Interest:

 

	
  Facility Assigned

  	
   

  	
  Aggregate 

  Amount of 

  Commitment/Loan 

  for all Lenders1

  	
   

  	
  Amount of 

  Commitment/Loans 

  Assigned2

  	
   

  	
  Percentage 

  Assigned of 

  Commitment/Loans3

  	
   

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
  $

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
  $

  	
   

  	
   

  	
  $

  	
   

  	
   

  	
   

  	
  %

  
										

 

[7.                                   Trade
Date:________________________ ]4

 

Effective
Date:__________ , 20___ [TO BE INSERTED BY AGENT AND WHICH SHALL BE THE
EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

 

8.  The Assignee agrees to join the
Intercreditor Agreement with the Trustee under the Senior Secured Note
Documents and be bound thereby as a condition to effectiveness of this
Assignment.

 

 

1                                            Amount
to be adjusted by the counterparties to take into account any payment or
prepayments made between the Trade Date and the Effective Date. 

 

2                                             Set forth,
to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders
thereunder.

 

3                                             Fill in
the appropriate terminology for the types of facilities under the Credit
Agreement that are being assigned under this Assignment.

 

4                                            To
be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

G-2

 

REVOLVING CREDIT
AGREEMENT

THE SHERIDAN
GROUP, INC.

 

STANDARD TERMS AND
CONDITIONS FOR

ASSIGNMENT AND
ASSUMPTION

 

1.                                       Representations
and Warranties.

 

1.1                                 Assignor.  The Assignor (a) represents and warrants
that (i) it is the legal and beneficial owner of the Assigned Interest, (ii)
the Assigned Interest is free and clear of any lien, encumbrance or other
adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or
representations made in or in connection with the Credit Agreement or any other
Loan Document, (ii) the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Credit Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, any of its
Subsidiaries or Affiliates or any other Person obligated in respect of any
Credit Document or (iv) the performance or observance by the Borrower, any of
its Subsidiaries or Affiliates or any other Person of any of their respective
obligations under any Credit Document.

 

1.2.                              Assignee.  The Assignee (a) represents and warrants
that (i) it has full power and authority, and has taken all action necessary,
to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby and to become a Lender under the Credit
Agreement, (ii) it meets all requirements of an Eligible Assignee under the
Credit Agreement (subject to receipt of such consents as may be required under
the Credit Agreement), (iii) from and after the Effective Date, it shall be
bound by the provisions of the Credit Agreement as a Lender thereunder and, to
the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iv) it has received a copy of the Credit Agreement, together with
copies of the most recent financial statements delivered pursuant thereto, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a [Foreign Lender], attached to the
Assignment and Assumption is any documentation required to be delivered by it
pursuant to the terms of the Credit Agreement, duly completed and executed by
the Assignee; and (b) agrees that (i) it will, independently and without
reliance on the Administrative Agent, the Assignor or any other Lender, and
based on 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
under the Credit Documents, and (ii) it will perform in accordance with their
terms all of the obligations which by the terms of the Credit Documents are
required to be performed by it as a Lender.

 

G-3

 

2.                                       Payments.  From and after the Effective Date, the
Administrative Agent shall make all payments in respect of the Assigned
Interest (including payments of principal, interest, fees and other amounts) to
the Assignor for amounts which have accrued to but excluding the Effective Date
and to the Assignee for amounts which have accrued from and after the Effective
Date.

 

3.                                       General
Provisions.  This Assignment and
Assumption shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns. This Assignment and
Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature
page of this Assignment and Assumption by telecopy shall be effective as
delivery of a manually executed counterpart of this Assignment and
Assumption.  This Assignment and
Assumption shall be governed by, and construed in accordance with, the law of
the Commonwealth of Pennsylvania.

 

G-4

 

The terms set forth in this Assignment and Assumption
are hereby agreed to:

 

 

	
   

  	
   

  	
  ASSIGNOR

  
	
   

  	
   

  	
  [NAME OF ASSIGNOR]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ASSIGNEE

  
	
   

  	
   

  	
  [NAME OF ASSIGNEE]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  [Consented to and]3 Accepted:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [NAME OF ADMINISTRATIVE
  AGENT],

  as Administrative Agent 

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [Consented to:]4

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  [NAME OF RELEVANT
  PARTY]

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  

 

 

3  To be
added only if the consent of the Administrative Agent is required by the terms
of the Credit Agreement.

 

4  To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, L/C Issuer) is required
by the terms of the Credit Agreement.

 

G-5

 

Schedule 8.01

Jurisdictions of
Incorporation and Qualification

 

	
  Legal Name of

  Company

  	
   

  	
  Jurisdiction of

  Formation

  	
   

  	
  Jurisdiction of Foreign

  Qualification

  
	
  Sheridan Acquisition
  Corp.

  	
   

  	
  Delaware

  	
   

  	
  None

  
	
  The Sheridan Group,
  Inc.

  	
   

  	
  Maryland

  	
   

  	
  None

  
	
  The Sheridan Group
  Holding Company

  	
   

  	
  Delaware

  	
   

  	
  None

  
	
  Sheridan Books, Inc.

  	
   

  	
  Delaware

  	
   

  	
  Michigan

  Virginia

  
	
  The Sheridan Press,
  Inc.

  	
   

  	
  Maryland

  	
   

  	
  Pennsylvania

  
	
  Capital City Press,
  Inc.

  	
   

  	
  Vermont

  	
   

  	
  None

  
	
  Dartmouth Journal
  Services, Inc.

  	
   

  	
  New Hampshire

  	
   

  	
  None

  
	
  Dartmouth Printing
  Company

  	
   

  	
  New Hampshire

  	
   

  	
  None

  
	
  United Litho, Inc.

  	
   

  	
  Maryland

  	
   

  	
  Virginia

  

 

 

Schedule 8.02

Capitalization

 

	
  Legal Name
  of Company

  	
   

  	
  Authorized Shares

  	
   

  	
  Shares Issued and 

  Outstanding

  	
   

  	
  Holder and % of 

  Equity Interest

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sheridan Acquisition Corp.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Common Stock, $0.01 par
  value

  	
   

  	
  100

  	
   

  	
  1

  	
   

  	
  100%
  by TSG

  
	
   

  	
   

  	
   

  	
   

  	
  Cert.
  # 1

  	
   

  	
  Holdings
  Corp.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Sheridan Group, Inc.

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Series
  A Preferred Stock, $1.00 par value

  	
   

  	
  20,000

  	
   

  	
  0

  	
   

  	
  100%
  by Sheridan

  
	
  Series
  A-1 Preferred Stock, $1.00 par value

  	
   

  	
  20,000

  	
   

  	
  0

  	
   

  	
  Acquisition
  Corp.

  
	
  Series
  B Preferred Stock, par value $1.00 par value

  	
   

  	
  20,000

  	
   

  	
  0

  	
   

  	
  prior
  to the

  
	
  Series
  B-1 Preferred Stock, $1.00 par value

  	
   

  	
  20,000

  	
   

  	
  0

  	
   

  	
  effectiveness
  of the

  
	
  Series
  C Preferred stock, $1.00 par value

  	
   

  	
  20,000

  	
   

  	
  0

  	
   

  	
  Merger

  
	
  Class
  A Common Stock, $0.01 par value

  	
   

  	
  12,250,000

  	
   

  	
  304,097.6897

  	
   

  	
   

  
	
  Class
  B Common Stock, $0.01 par value

  	
   

  	
  495,000

  	
   

  	
  0

  	
   

  	
   

  
	
  Class
  C Common Stock, $0.01 par value

  	
   

  	
  12,250,000

  	
   

  	
  0

  	
   

  	
   

  
	
  Class
  D Common Stock, $0.01 par value

  	
   

  	
  5,000

  	
   

  	
  0

  	
   

  	
   

  
	
  Class
  E Common Stock, $0.01 par value

  	
   

  	
  12,250,000

  	
   

  	
  0

  	
   

  	
   

  

 

 

Schedule 8.03

Capitalization of
Subsidiaries  

 

	
  Legal Name of Company

  	
   

  	
  Authorized Shares

  	
   

  	
  Shares Issued and

  Outstanding

  	
   

  	
  Holder and % of 

  Equity Interest

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The
  Sheridan Group Holding Company  

  Common Stock, without par value

  	
   

  	
  5,000

  	
   

  	
  100 

  	
   

  	
  100% by Debtor

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # 1

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sheridan
  Books, Inc.  

  Common Stock, $0.01 par value

  	
   

  	
  3,000

  	
   

  	
  100 

  	
   

  	
  100% by Debtor

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # 2

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The
  Sheridan Press, Inc.  

  Common Stock, $0.1 par value

  	
   

  	
  25,000,000

  	
   

  	
  500,000 

  	
   

  	
  100% by Debtor

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # 56

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capital
  City Press, Inc.  

  Common Stock, $0.01 par value

  	
   

  	
  40,000

  	
   

  	
  13,000

  	
   

  	
  100% by Debtor

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # 4

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dartmouth
  Journal Services, Inc.  

  Common Stock, $0.01 par value

  	
   

  	
  10,000

  	
   

  	
  5,000

  	
   

  	
  100% by Debtor

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # C-1

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dartmouth
  Printing Company  

  Preferred Stock, $100.00 par value 

  	
   

  	
  50

  	
   

  	
  None

  	
   

  	
  100% by Debtor

  
	
  Common
  Stock, $100.00 par value

  	
   

  	
  200

  	
   

  	
  200

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # 22

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United
  Litho, Inc.  

  Common Stock, without par value

  	
   

  	
  5,000

  	
   

  	
  1,000 

  	
   

  	
  100% by Debtor

  
	
   

  	
   

  	
   

  	
   

  	
  Cert. # 1

  	
   

  	
   

  

 

 

Schedule 8.06

UCC Filing
Jurisdictions

 

UCC
Filings  

 

	
  Company

  	
   

  	
  Filing Jurisdiction

  
	
  Sheridan Acquisition
  Corp.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  The Sheridan Group,
  Inc.

  	
   

  	
  Maryland

  
	
   

  	
   

  	
   

  
	
  The Sheridan Group
  Holding Company

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  Sheridan Books, Inc.

  	
   

  	
  Delaware

  
	
   

  	
   

  	
   

  
	
  The Sheridan Press,
  Inc.

  	
   

  	
  Maryland

  
	
   

  	
   

  	
   

  
	
  Capital City Press,
  Inc.

  	
   

  	
  Vermont

  
	
   

  	
   

  	
   

  
	
  Dartmouth Journal
  Services, Inc.

  	
   

  	
  New Hampshire

  
	
   

  	
   

  	
   

  
	
  Dartmouth Printing
  Company

  	
   

  	
  New Hampshire

  
	
   

  	
   

  	
   

  
	
  United Litho, Inc.

  	
   

  	
  Maryland

  

 

 

Schedule 8.07

Real Property

 

Owned
Real Property

 

1.               450 Fame Avenue,
Hanover, Pennsylvania (Manufacturing, sales and administrative offices).  Owned by Sheridan Press.

 

2.               400 Fame Avenue,
Hanover, Pennsylvania (Warehouse space). 
Owned by Sheridan Press.

 

3.               2178 Airport Road,
Barre, Vermont (Manufacturing, sales and administrative offices).  Owned by Capital City Press.

 

4.               613 East Industrial
Drive, Chelsea, Michigan (Manufacturing and administrative offices).  Owned by Sheridan Books.

 

5.               100 N. Staebler
Road, Ann Arbor, Michigan (Manufacturing and sales offices).  Owned by Sheridan Books.

 

6.               3591 Lee Hill
Drive, Fredericksburg, Virginia (Manufacturing).  Owned by Sheridan Books.

 

7.               69 Lyme Road,
Hanover, New Hampshire (Manufacturing, sales and administrative offices).  Owned by Dartmouth Printing.

 

8.               21800 Beaumeade
Circle, Ashburn, Virginia (Manufacturing, sales and administrative
offices).  Owned by United Litho.

 

Leased
Real Property  

 

1.               Lease, dated as of
January 18, 1999, as amended March 1, 2003, by and between Hunt Valley 75
Limited Partnership, as landlord, and the Company, as tenant, for 11311
McCormick Road, Suite 260, Hunt Valley, Maryland (Headquarters).

 

2.               Lease, dated as of
June 18, 2002, as amended June 19, 2003, by and between Wall Street
Investments, as landlord, and Capital City Press, as tenant, with respect to
manufacturing space located at 131 South Main Street, Barre, Vermont.

 

3.               Lease, dated as of
November 26, 1997, by and between Ronald L. Saldi, Sr. and Marylou Saldi, as
landlord, and Capital City Press, as tenant, with respect to warehouse space
located at 109 Industry Street—Williamstown Industrial Park—Route 14,
Williamstown, Vermont.

 

4.               Lease, dated as of
March 1, 2003, by and between Angela Matera, as landlord, and Sheridan Books,
as tenant, with respect to office space located at 510 Sylvan Avenue, Englewood
Cliffs, New Jersey.

 

5.               Lease, dated as of
June 1, 2001, by and between S.D. & B. Enterprises, Inc., as landlord, and
Sheridan Books, as tenant, with respect to sales offices located at 201 Houston
Street, Suite 302, Batavia, Illinois.

 

6.               Lease, dated as of
May 1, 1999, by and between Hilldrup Properties, as landlord, and Sheridan
Books, as tenant, with respect to 18,700 square feet of storage space located
at 216 Central Road, Fredericksburg, Virginia.

 

7.               Verbal Agreement by
Dartmouth Printing to lease on a month to month basis, at $1,650 per month,
from Daniels Transport, 12,000 square feet of storage space located at 250 Bank
Street Extension, Lebanon, New Hampshire.

 

8.               Lease, dated as of
May 30, 2002, by and between APAC Realty Corp., as landlord, and Dartmouth
Journal, as tenant, with respect to office space located at 3 Archertown Road,
Orford, New Hampshire.

 

 

9.               Lease, dated as of
July 9, 1999 and renewed on August 1, 2003, by and between Aegis Palatine, LLC,
as landlord, and Sheridan Books, as tenant, with respect to office space located
at 800 East Northwest Highway, Suite 700 Palatine, Illinois.

 

 

Schedule 8.13

Indebtedness

 

	
  Principal Debt

  	
   

  	
   

  	
   

  	
  Amount Outstanding

  As of

  July 31, 2003

  	
   

  	
  Comments

  	
   

  
	
  Revolving
  line of credit

  	
   

  	
   

  	
   

  	
  [ To be calculated at
  Closing]

  	
   

  	
   

  	
   

  
	
  Term
  A

  	
   

  	
   

  	
   

  	
  1,307,047

  	
   

  	
   

  	
   

  
	
  Term
  B

  	
   

  	
   

  	
   

  	
  32,722,469

  	
   

  	
   

  	
   

  
	
  Senior
  subordinated debt

  	
   

  	
   

  	
   

  	
  14,625,000

  	
   

  	
  (net of unamortized
  discount of $375,000)

  	
   

  
	
  Loudoun
  County, VA industrial revenue bond

  	
   

  	
   

  	
   

  	
  4,104,000

  	
   

  	
   

  	
   

  
	
  Michigan
  industrial revenue bond

  	
   

  	
   

  	
   

  	
  1,679,000

  	
   

  	
   

  	
   

  
	
  Lloyd
  Sample stock redemption agreement

  	
   

  	
   

  	
   

  	
  1,231,920

  	
   

  	
   

  	
   

  
	
  Richard
  Hearn notes

  	
   

  	
   

  	
   

  	
  700,000

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
   

  	
  56,369,439

  	
   

  	
   

  	
   

  
	
  Capital
  leases

  	
   

  	
  Man Portfolio
  Services

  	
   

  	
  1,437,553

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Agfa Finance
  Group

  	
   

  	
  47,339

  	
   

  	
   

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
   

  	
  1,484,892

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
  $

  	
  57,854,328

  	
   

  	
   

  	
   

  
									

 

1.               Credit Agreement,
dated as of February 2, 1998, as amended in October 1998 and
May 1999, by and among the Company, various lending institutions, First
Union National Bank (as document agent), National Westminster Bank PLC (as
administrative agent), and Gleacher Natwest Inc. (as arranger) ($69,546,200)
and related financing and security documents. The Credit Agreement was amended
by the Resignation Letter and Assignment Agreement dated August 25, 1999,
whereby Summit Bank replaced National Westminster PLC as administrative
agent.  The Credit Agreement was further
amended by the Novation Agreement dated November 24, 2000, whereby
National Westminster PLC transferred its accounts to The Royal Bank of Scotland
PLC.  The Credit Agreement was further
amended by the Assignment Agreement dated January 15, 2003, whereby The
ING Senior Secured High Income Fund, L.P. assigned its rights to Spring Street
Partners I, L.P.

 

2.               Senior Subordinated
Loan Agreement, dated as of February 2, 1998, among the Company, various
lending institutions and National Westminster Bank PLC (as administrative
agent) ($15,000,000).

 

3.               Seller Note, dated
as of February 2, 1998, in the principal amount of $350,000, issued by the
Company in favor of Richard Hearn.

 

4.               Seller Note (2),
dated as of February 2, 1998, in the principal amount of $350,000, issued
by the Company in favor of Richard Hearn.

 

 

5.               Stock Redemption
Agreement, dated as of January 27, 1998, by and between Lloyd E. Sample (“Sample”)
and the Company, pursuant to which the Company agreed to purchase Sample’s
3,938 shares of the Company’s Class D Common Stock for an aggregate purchase
price of $1,760,283.00.  As of
August 20, 2003, the Company owed Sample the principal amount of $1,231,919.75.

 

6.               $8,600,000 Loudoun
County (Virginia) Variable Rate Industrial Development Revenue Bonds for United
Litho, dated as of July 29, 1996, backed by Irrevocable Standby Letter of
Credit (No. S134465), dated January 29, 1998, as amended, issued in favor
of The Bank of New York by Wachovia (f/k/a First Union National Bank) for the
account of the Company.  The current
amount available to be drawn on such Letter of Credit is $4,897,209.  The Company has received notice from the
Bank of New York that such Letter of Credit is set to expire on January 27,
2004.

 

7.               $3,000,000 Michigan
Strategic Fund Limited Obligation Variable Rate Industrial Development Revenue
Bonds for Sheridan Books, dated as of October 17, 1997, backed by
Irrevocable Standby Letter of Credit (No. S134698), dated October 17, 1997,
in favor of First Union National Bank Trust Company by Wachovia (f/k/a First
Union National Bank) for the account of the Company.  The current amount available to be drawn on such Letter of Credit
is $1,758,053.

 

8.               Capital Lease
Agreement, dated as of December 22, 2000, by and between MAN Capital Corp.
and Sheridan Press, with respect to 6-Color Press.

 

9.               Capital Lease
Agreement, dated as of February 2, 1999, by and between Agfa Finance Group
and Dartmouth Printing with respect to Computer-to-Plate equipment.

 

10.         Interest Rate Hedge
Agreement, dated as of April 30, 2001, by and between the Company and
First Union (Wachovia).

 

11.         The obligations of the
Company pursuant to Section 9 of the Employment Agreement, dated as of
February 2, 1998, by and between the Company and R. Champlin Sheridan.

 

Each of the above listed
Agreements will be terminated simultaneously with the consummation of the
transactions contemplated by the Stock Purchase Agreement except for item No. 5
which will continue and items No. 6 and 7 which should be terminated at the
earliest possible date thereafter pursuant to the terms and provisions of such
agreement.

 

 

Schedule 8.17

Intellectual
Property

 

REGISTERED
TRADEMARKS

 

	
  Reg. No.

  	
   

  	
  Country

  	
   

  	
  Mark

  	
   

  	
  Owner

  	
   

  	
  Registration

  Date

  	
   

  
	
  1437516

  	
   

  	
  USA

  	
   

  	
  DURO SHEEN

  	
   

  	
  Sheridan Books

  	
   

  	
  4/21/87

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1302016

  	
   

  	
  USA

  	
   

  	
  BOOKCRAFTERS_B
  (and Design)

  	
   

  	
  Sheridan Books

  	
   

  	
  10/23/84

  	
   

  

 

TRADEMARK
APPLICATIONS

 

	
  Serial No.

  	
   

  	
  Country

  	
   

  	
  Mark

  	
   

  	
  Owner

  	
   

  	
  Application

  Date

  	
   

  
	
  76/468031

  	
   

  	
  USA

  	
   

  	
  The Sheridan Group

  	
   

  	
  Sheridan Group Holding

  	
   

  	
  11/19/02

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  76/417868

  	
   

  	
  USA

  	
   

  	
  Digital Expert (and
  Design)

  	
   

  	
  Company

  	
   

  	
  6/7/02

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  76/476438

  	
   

  	
  USA

  	
   

  	
  Strive For Smiles
  (Stylized)

  	
   

  	
  Sheridan Books

  	
   

  	
  12/16/02

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  76/476437

  	
   

  	
  USA

  	
   

  	
  Striving For Your
  Smile! (Stylized)

  	
   

  	
  Sheridan Books

  	
   

  	
  12/16/02

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  76/476436

  	
   

  	
  USA

  	
   

  	
  Strive For Smiles!
  (Stylized)

  	
   

  	
  Sheridan Books

  	
   

  	
  12/16/02

  	
   

  

 

DOMAIN
NAMES

 

	
  The Sheridan Group,
  Inc.

  	
   

  	
  sheridan.com

  
	
   

  	
   

  	
   

  
	
  Capital City Press,
  Inc.

  	
   

  	
  capcitypress.com

  
	
   

  	
   

  	
   

  
	
  Dartmouth Journal
  Services, Inc.

  	
   

  	
  dartmouthjournals.com

  dartmouthjournalservices.com

  
	
   

  	
   

  	
   

  
	
  Dartmouth Printing
  Company

  	
   

  	
  dpc-nh.com

  
	
   

  	
   

  	
   

  
	
  Sheridan Books, Inc.

  	
   

  	
  sheridanbooks.com

  
	
   

  	
   

  	
   

  
	
  The Sheridan Press,
  Inc.

  	
   

  	
  sheridanpress.com

  sheridanreprints.com

  
	
   

  	
   

  	
   

  
	
  United Litho, Inc.

  	
   

  	
  unitedlitho.com

  

 

 

Schedule 8.19

ERISA Disclosure

 

I.                                         IRC
section 401(a) Qualified Plans:

 

A.                                   The
Sheridan Group 401(k) Retirement Plan, effective January 1, 2003
(originally effective January 1, 1958)(Wells Fargo Bank Defined
Contribution Nonstandardized 401(k) Profit Sharing Prototype Plan):

 

B.                                     Capital
City Press, Inc. 401(k) Retirement Plan, effective January 1, 1997
(originally effective January 1, 1989)(Wells Fargo Bank Nonstandardized
401(k) Profit Sharing Prototype Plan

 

II.                                     Collectively
Bargained Severance Pay:

 

In event of merger,
consolidation or suspension, discontinuance of department, equipment or
permanent layoff of Company’s operation, or any part thereof covered by the
terms of this agreement, all regular full-time employees shall be given (if
their termination is related to said merger, consolidation or suspension, etc.)
1.5 weeks severance for each 5 years of continuous employment if the Company
cannot provide another suitable position within 10% of employee’s current wage.

 

III.                                 Health
And Welfare Arrangements:

 

A.                                   The
Sheridan Group Flexible Benefits Plan

 

1.                                       Dependent
Care Assistance Plan

 

2.                                       Medical
Reimbursement Plan

 

B.                                     The
Sheridan Press Medical, Prescription Drug, Dental and Vision Benefits

 

C.                                     The
Sheridan Group Guardian Insurance Co. Group Insurance Plan - Group Policy.

 

D.                                    Capital
City Press, Inc. Group Benefits - Long Term Disability - Fortis Benefits
Insurance Company.

 

E.                                      Capital
City Press, Inc. Group Benefits Plan - Life Insurance, AD&D - Hartford Life
and Accident Insurance Co.

 

F.                                      Sheridan
Books, Inc. Employee Benefit Plan - Medical, Dental and Prescription Drug -
Self Insured.

 

G.                                     Sheridan
Books, Inc. Group Long Term Disability Insurance Program for Hourly Employees -
Reliance Standard Life Insurance Co.

 

 

H.                                    Group
Life Insurance - Reliance Standard Life Insurance Co.

 

I.                                         Dartmouth
Printing Co. Group Long Term Disability Insurance - Standard Insurance Co.

 

J.                                        Dartmouth
Printing Co. Life Insurance and AD&D Insurance - Boston Mutual Life
Insurance Co.

 

K.                                    Dartmouth
Printing Co. Delta Dental Plan.

 

L.                                      Capital
City Press, Inc. Short Term Disability - Self Insured.

 

M.                                 Capital
City Press, Inc. Employee Benefit Plan - Self Insured.

 

N.                                    Dartmouth
Printing/Dartmouth Journal Healthcare, Prescription and Vision Plans

 

O.                                    United
Litho Healthcare and Dental Plans.

 

P.                                      United
Litho Long Term Disability Plan.

 

Q.                                    United
Litho Life Insurance Plan.

 

 

Schedule 8.24

Agreements with
Affiliates

 

Stockholder Notes

 

1.               Stockholder Note,
dated as of February 2, 1998, in the principal amount of $76,250, issued
by G. Paul Bozuwa in favor of the Company. 
This note will be terminated simultaneously with the consummation of the
transactions contemplated by the Credit Agreement.

 

2.               Stockholder Note,
dated as of February 2, 1998, in the principal amount of $200,000, issued
by David C. Hewitt in favor of the Company. 
This note will be terminated simultaneously with the consummation of the
transactions contemplated by the Credit Agreement.

 

3.               Stockholder Note,
dated as of February 2, 1998, in the principal amount of $33,250, issued
by Stuart V. Smith in favor of the Company. 
This note will be terminated simultaneously with the consummation of the
transactions contemplated by the Credit Agreement.

 

Split Dollar Agreements

 

1.               Split Dollar
Agreement and Collateral Assignment, dated as of October 26, 1995, by and
between the Company and Robert L. Rohrbach, as Trustee U/D/T of John A. Saxton,
pursuant to which the Company agreed to pay the premiums on a life insurance
policy for John A. Saxton as an additional employee benefit.

 

2.               Split Dollar
Agreement and Collateral Assignment, dated as of October 23, 1995, by and
between the Company and J.M. Dryden Hall, Jr., as Trustee for R. Champlin
Sheridan, pursuant to which the Company agreed to pay the premiums on a life
insurance policy for R. Champlin Sheridan as an additional employee benefit.

 

3.               Split Dollar
Agreement and Collateral Assignment, dated as of March 1, 1988, by and
between United Litho and Joseph A. Becker, as Trustee for Lloyd E. Sample, III,
pursuant to which United Litho agreed to pay the premiums on a life insurance
policy for Lloyd E. Sample as an additional employee benefit.

 

Employment/Non-competition
Agreements

 

1.               Sales Compensation
Plan, dated as of January 1, 2003, by and between Dartmouth Printing and
the Sales Representatives of Dartmouth Printing.

 

2.               Independent Sales
Representative Agreement, dated as of January 1, 2003, by and between
Sheridan Books and Eric B. Quist.

 

3.               Independent Sales
Representative Agreement, dated as of December 30, 2002, by and between
Sheridan Books and William J. Puccio.

 

4.               Employment
Agreement, dated as of February 2, 1998, by and between the Company and
John A. Saxton, as amended by Amendment Agreement No. 1, dated as of
April 1, 2000.

 

5.               Employment
Agreement, dated as of June 30, 2001, as amended April 18, 2003, by
and between the Company and G. Paul Bozuwa.

 

6.               Employment
Agreement, dated as of October 31, 2001, by and between the Company and
Joan B. Weisman.

 

 

7.               Employment
Agreement, dated as of February 2, 1998, by and between the Company and R.
Champlin Sheridan.

 

8.               Employment
Agreement, dated as of May 1, 2001, by and between Sheridan Press and
Marsha Fogler, trading as Medical Reprint Services.

 

9.               Employment
Agreement, dated as of February 2, 1998, as amended August 1, 2003,
by and between Dartmouth Printing and David C. Hewitt.

 

Miscellaneous Agreements

 

1.               Management
Agreement, dated as of the date hereof, by and among Bruckmann, Rosser,
Sherrill & Co., LLC, FS Private Investments III LLC (d/b/a Jefferies Capital
Partners) and Sheridan Acquisition Corp.

 

2.               Trademark Licensing
Agreement, dated as of October 1, 1991, between The Sheridan Group Holding
Company and The Sheridan Press, Inc.

 

3.               The Sheridan Group
Holding Company (“Holding Company”) manages the intellectual property of The
Sheridan Group, Inc. and its subsidiaries. 
The Sheridan Press, Inc. (“TSP”) and Sheridan Books, Inc. (“SBI”) pay
royalties to Holding Company for the use of their trademarks.  In turn Holding Company lends TSP’s portion
of the royalties back to TSP.  Holding
Company dividends SBI’s portion of the royalties to The Sheridan Group,
Inc.  The Sheridan Group, Inc. then
makes a capital contribution to SBI.

 

 

Schedule 8.25

Material
Agreements

 

See also the Agreements
listed on Schedule 8.24

 

Consulting Agreements

 

1.               Consulting
Agreement, dated as of October 22, 2002, by and between Kaufman-Wills
Group LLC and Sheridan Press, pursuant to which Kaufman-Wills researches,
writes and formats White Papers (topics which will be discussed and assigned by
Sheridan Press).

 

2.               Statement of Work,
dated as of February 6, 2003, by and between Buchanan Associates and
Sheridan Books, with respect to Customer Complaint Database.

 

3.               Consulting Services
Statement of Work, dated as of March 6, 2001, as amended May 12,
2003, by and between Sheridan Books and Taurus Tech, with respect to DBC work
session (a legacy application used by Sheridan Books).

 

Equipment Leases

 

4.               Master Lease
Agreement, dated as of September 21, 2001, by and between Fifth Third Leasing
Company and Sheridan Press, with respect to MAN Roland 2-color printing press.

 

5.               Lease Agreement,
dated as of January 8, 2001, by and between Agfa Finance Group and
Sheridan Press, with respect to Galileo platesetter.

 

6.               Master Lease
Agreement, dated as of June 4, 2002, by and between General Electric
Capital Corporation and Sheridan Press, with respect to Kolbus binder.

 

7.               Lease Agreement,
dated as of January 2, 2001, by and between Agfa Finance Group and Capital
City Press, with respect to Avantra 44 platesetter.

 

8.               Master Lease
Agreement, dated as of June 28, 2001, by and between CreoScitex Financial
Services and the Company, with respect to Computer to Plate Device used by
Capital City Press.

 

9.               Lease Agreement,
dated as of June 6, 2002, by and between Fifth Third Leasing Company and
Sheridan Books, with respect to Timson press.

 

10.         Lease Agreement, dated as
of December 18, 1995, by and between Lease Plan U.S.A., Inc. and
Bookcrafters U.S.A, Inc. (Sheridan Books), with respect to Variquik press. This
lease was assigned to Sheridan Books pursuant to an Assignment of Lease, dated
May 25, 1999.

 

11.         Product Schedule,
Maintenance Services, Professional Services Agreement, dated as of
March 19, 2003, by and between IOS Capital and Sheridan Books, with
respect to Canon-3IR 550, IR8500 and 400S printers.

 

12.         Lease Agreement, dated as
of March 30, 1999, by and between Agfa Finance Group and Dartmouth
Printing, with respect to Galileo platesetter.

 

13.         Lease, dated as of
January 19, 2001, by and between US Bancorp Equipment Finance,
Inc.(Heidelberg Print Finance Americas, Inc., Notice of Assignment, dated
January 7, 2002) and Dartmouth Printing, with respect to Heidelberg Press.

 

14.         Master Lease Agreement,
dated as of May 10, 2001, by and between General Electric Capital
Corporation and Dartmouth Printing, with respect to Gammerler robot.

 

15.         Lease Agreement, dated as
of November 9, 1998, by and between Transamerica Business Credit
Corporation and United Litho, with respect to Press and Bailer.

 

 

16.         Master Lease Agreement,
dated as of March 28, 2001, by and between General Electric Capital
Corporation and United Litho, with respect to Kolbus binder/gatherer.

 

17.         Lease Agreement, dated as
of May 8, 2000, by and between Agfa Finance Group and United Litho, with
respect to Galileo platesetter.

 

18.         Lease Agreement, dated as
of September 27, 2001, by and between Agfa Finance Group and United Litho,
with respect to Galileo Violet  platesetter.

 

19.         Agreement and Service
Agreement, dated as of July 18, 2003, by and between Heidelberg USA, Inc.
and The Sheridan Press, with respect to the Digimaster 9100 CP Book Factory
(digital printing press).

 

Storage Agreement

 

20.         Lease, dated as of
January 18, 2002, by and between L&H Trucking Company, Inc., as
landlord, and Sheridan Press, as tenant, with respect to 50,000 square feet of
storage space located at Building #3, 860 Gitts Run Road, Hanover,
Pennsylvania.

 

Customer Agreements

 

21.         Customer Agreement, dated
as of June 27, 2003, by and between Elsevier Science and the Company.

 

22.         Volume Incentive
Agreement, dated as of May 21 1, 2003, by and between Blackwell Publishing
Group and the Company.

 

23.         Relationship Agreement,
dated as of April 17, 2001, by and among Lippincott Williams &
Wilkins, Sheridan Press, Capital City Press and Dartmouth Printing.

 

24.         Letter, dated
October 24, 2001, to the American Society of Agronomy from Capital City
Press, with respect to extending the Combined Contract for Typesetting and
Printing through December 31, 2004.

 

25.         Letter of Agreement,
dated as of July 11, 2002, by and between the American Philosophical
Association and Capital City Press.

 

26.         Services Agreement, dated
as of June 30, 2003, by and between American Society of Plant Biologists
and Capital City Press.

 

27.         Contract, dated as of
September 12, 2002, by and between Emerson College and Capital City Press,
with respect to Ploughshares Journal.

 

28.         Relationship Agreement,
dated as of August 6, 2002, by and among Gallaudet University, Sheridan
Press and Capital City Press.

 

29.         Agreement, dated as of
December 31, 2001, by and between The Genetics Society of America and
Capital City Press.

 

30.         Relationship Agreement,
dated as of May 21, 2002, by and between Guilford Publications and Capital
City Press.

 

31.         Relationship Agreement,
dated as of March 10, 2003, by and among Humana Press, Sheridan Press and
Capital City Press.

 

32.         New Business Rebate
Agreement, dated as of July 12, 2002, by and between John Wiley & Sons
and Capital City Press.

 

33.         Relationship Agreement,
dated as of November 15, 2002, by and among Johns Hopkins University
Press, Sheridan Press and Capital City Press.

 

 

34.         Business Agreement, dated
as of July 19, 2001, by and between the Organization of American
Historians and Capital City Press.

 

35.         Full Service, Redactory,
Composition and Printing Agreement, dated as of January 10, 2002, by and
between Journal of Lipid Research and Capital City Press.

 

36.         Agreement, dated as of
February 12, 2001, by and between the Medieval Academy of America and
Capital City Press.

 

37.         Business Agreement, dated
as of September 23, 2002, by and between Rockefeller University Press and
Capital City Press.

 

38.         Customer Agreement, dated
as of September 26, 2002, by and between ABC-CLIO and Sheridan Books.

 

39.         Volume Incentive
Agreement, dated as of February 4, 2003, by and between American
Psychological Association and Sheridan Books.

 

40.         Customer Agreement, dated
as of August 13, 2002, by and between Quality Press and Sheridan Books.

 

41.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Creative
Communications, Inc. and Sheridan Books.

 

42.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Greenwood-Heinemann
and Sheridan Books.

 

43.         Rebate Agreement, dated
as of October 1, 2002, by and between Hermetic Press and Sheridan Books.

 

44.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Human Kinetics,
Inc. and Sheridan Books.

 

45.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between InterVarsity Press
and Sheridan Books.

 

46.         Volume Incentive
Agreement, dated as of January 1, 2002, by and between Lawrence Erlbaum
Associates, Inc. and Sheridan Books.

 

47.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Marcel Dekker, Inc.
and Sheridan Books.

 

48.         Production Sales Discount
Agreement, dated as of March 20, 2003, by and between University of
Minnesota Press and Sheridan Books.

 

49.         Rebate Agreement, dated
as of August 3, 2002, by and between Moody Press and Sheridan Books.

 

50.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Practicing Law
Institute and Sheridan Books.

 

51.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Printing, Inc. and
Sheridan Books.

 

52.         Volume Incentive
Agreement, dated as of January 1, 2003, by and between Springer-Verlag
Publishing and Sheridan Books.

 

Communications Contracts

 

53.         Communications Contract,
dated as of July 25, 2001, by and between Sprint and the Company.

 

 

54.         AT&T Master Agreement,
dated as of February 28, 2000, by and between AT&T and Capital City
Press, with respect to internet service.

 

55.         Mbps Service Agreement,
dated as of January 10, 2002, by and between CTC Communications and
Capital City Press, with respect to T1 Service and Internet Service.

 

56.         Basic Internet Access
Services Sales Agreement, dated as of May 17, 2002, by and between SBC
Communications, Inc. and Sheridan Books.

 

57.         Voice Local Service
Agreement, dated as of October 28, 2000, by and between Ameritech and Sheridan
Books.

 

58.         Centrex Service
Agreement, dated as of February 14, 2002, by and between Ameritech and
Sheridan Books.

 

59.         Cellular Service
Agreements, dated as of October 10, 2002, by and between Verizon Wireless
and Sheridan Books (4 phones).

 

60.         Voice Access VA-MI
Agreement, dated as of June 11, 2001, by and between Qwest and Sheridan
Books.

 

61.         Dedicated Access WAN
VA-MI Agreement, dated as of June 12, 2002, by and between Qwest and
Sheridan Books.

 

62.         Dedicated Access WAN MI
Agreement, dated as of February 12, 2001, by and between Ameritech and
Sheridan Books.

 

63.         Cellular Service
Agreements, dated as of August 7, 2002, by and between Cingular Wireless
and Sheridan Books (5 phones).

 

64.         Telephone Maintenance
Contract, dated as of February 5, 2003, by and between NextiraOne and
United Litho.

 

65.         Payphone Service
Contract, dated as of April 15, 2002, by and between Verizon and United
Litho.

 

66.         Long distance Service
Contract, dated as of August 1, 2002, by and between Sprint and United
Litho.

 

67.         Internet Access
Agreement, dated as of June 1, 2002, by and between Verio and United
Litho.

 

68.         Pagers Contract, dated as
of February 1, 2001, by and between Metrocall and United Litho.

 

Office Contracts

 

69.         Image Management
Agreement, dated as of January 22, 2003 and September 10, 2002, by
and between IKON Office Solutions and Dartmouth Printing.

 

70.         Service Agreement, dated
as of January 1, 2001, by and between Organization Services, Inc. and
Sheridan Group Holding, with respect to basic corporate services in the State
of Delaware.

 

71.         Office Service Contract,
dated as of August 1, 2002, by and between Aegis Palatine, LLC, as
landlord, and Sheridan Books, as tenant, with respect to office space located
at 800 East Northway Hwy., Suite 700, Palatine, Illinois.

 

Prepress Agreements

 

72.         Service Contract, dated
as of April 20, 2003,  by and
between American Prepress Services, LLC and Sheridan Books.

 

73.         Service Contract, dated
as of August 17, 2002, by and between Imation and Sheridan Books.

 

74.         Service Contract, dated
as of February 17, 2003, by and between Esko-Graphics and Sheridan Books.

 

 

75.         Service Contract, dated
as of March 1, 2003, by and between Escher-Grad Technologies, Inc. and
Sheridan Books.

 

76.         Service Contract, dated
as of February 11, 2003, by and between Epson Accessories, Inc. and
Sheridan Books.

 

77.         Service Contract, dated
as of January 3, 2003, by and between Epson Accessories, Inc. and Sheridan
Books.

 

78.         Agreement, dated as of
June 1, 1998, by and between Fuji and Dartmouth Printing.

 

Reprint
Dept. Maintenance Contracts

 

79.         Service Contract, dated
as of March 18, 2003, by and between Heidelberg USA, Inc. and Sheridan
Press.

 

Reprint
Marketing Services Agreement

 

80.               Reprint Marketing
Services Agreement, dated as of March 17, 2003, by and between MBL
Communications and Sheridan Press.

 

Shipping
Contracts

 

81.               Federal Express
Custom Pricing Agreement, dated as of April 22, 2002, by and between
Federal Express and the Company.

 

82.               UPS Ground, Air,
Hundredweight, International and Sonicair Incentive Program Carrier Agreement,
dated as of April 25, 2002, by and between United Parcel Service and the
Company.

 

83.               Shipping Contract,
dated as of September 24, 2002, by and between NewPenn and Sheridan Press.

 

84.               Shipping Contract, dated
as of May 1, 2002, by and between Pitt Ohio Express and Sheridan Press.

 

85.               Shipping Contract,
dated as of May 8, 2002, by and between Watkins Motor Lines and Sheridan
Press.

 

General
Agreements 

 

86.               Consumable Purchase
Agreement, dated as of February 1, 2002, by and between Agfa Corporation
and the Company.

 

87.               Letter of
Understanding, dated as of December 17, 2001, by and between Grainger
Industrial Supply and the Company.

 

88.               Customer
Agreement-USA, dated as of March 1, 2003, by and between CREO Americas,
Inc. and the Company.

 

89.               Service Agreement,
dated as of January 1, 2001, by and between Organization Services, Inc.
and the Company.

 

90.               Letter, dated
May 20, 2002, from Dartmouth Journal to TnQ Books and Journals Private
Limited, regarding SGML, pagination and copyediting services.

 

 

Leased Real Property

 

91.               Lease, dated as of
January 18, 1999, as amended March 1, 2003, by and between Hunt
Valley 75 Limited Partnership, as landlord, and the Company, as tenant, for
11311 McCormick Road, Suite 260, Hunt Valley, Maryland (Headquarters).

 

92.               Lease, dated as of
June 18, 2002, as amended June 19, 2003, by and between Wall Street
Investments, as landlord, and Capital City Press, as tenant, with respect to
manufacturing space located at 131 South Main Street, Barre, Vermont.

 

93.               Lease, dated as of
November 26, 1997, by and between Ronald L. Saldi, Sr. and Marylou Saldi,
as landlord, and Capital City Press, as tenant, with respect to warehouse space
located at 109 Industry Street—Williamstown Industrial Park—Route 14,
Williamstown, Vermont.

 

94.               Lease, dated as of
March 1, 2003, by and between Angela Matera, as landlord, and Sheridan
Books, as tenant, with respect to office space located at 510 Sylvan Avenue,
Englewood Cliffs, New Jersey.

 

95.               Lease, dated as of
June 1, 2001, by and between S.D. & B. Enterprises, Inc., as landlord,
and Sheridan Books, as tenant, with respect to sales offices located at 201
Houston Street, Suite 302, Batavia, Illinois.

 

96.               Lease, dated as of
May 1, 1999, by and between Hilldrup Properties, as landlord, and Sheridan
Books, as tenant, with respect to 18,700 square feet of storage space located
at 216 Central Road, Fredericksburg, Virginia.

 

97.               Verbal Agreement by
Dartmouth Printing to lease on a month to month basis, at $1,650 per month,
from Daniels Transport, 12,000 square feet of storage space located at 250 Bank
Street Extension, Lebanon, New Hampshire.

 

98.               Lease, dated as of
May 30, 2002, by and between APAC Realty Corp., as landlord, and Dartmouth
Journal, as tenant, with respect to office space located at 3 Archertown Road,
Orford, New Hampshire.

 

Intellectual Property
Agreements

 

99.               Purchase and
License Agreement, dated as of March 25, 1998, by and between Logic
Associates, Inc. and United Litho, with respect to Auto-Count 3000 and Data
Collection Server.

 

100.         Sale Term and Conditions,
dated as of November 23, 1998, by and between Priority Systems and
Sheridan Press, with respect to Clippership software.

 

101.         Purchase Invoice, dated
as of April 19, 2002, by and between Captaris and Sheridan Books, with
respect to Main Fax Server for electronic transmission.

 

102.         Guaranteed Two Year Price
Program, dated as of April 2, 2003, by and between ADP and Sheridan Books,
with respect to payroll processing.

 

103.         Purchase Invoice, dated
as of August 31, 2002, by and between CDW Computer Centers, Inc. and
Sheridan Books, with respect to Norton anti-virus protection software.

 

104.         Purchase Invoice, dated
as of October 30, 2002, by and between CDW Computer Centers, Inc. and
Sheridan Books, with respect to Veritas backup software.

 

105.         Software Subscription
Purchase Order, dated as of October 15, 2001, by and between printCafé,
Inc. and United Litho, with respect to Prograph Pre Press tracking software.

 

106.         Computer Software
Order/Agreement, dated as of June 11, 2003, by and between Streamline
Development LLC and Sheridan Books, Inc., with respect to PrintStream software.

 

 

107.         License Agreement, dated
as of December 20, 1999, by and between INERA Incorporated and the
Company, with respect to Copy Edit Tool software.

 

108.         Application Software
License Agreement, dated as of June 15, 1998, by and between Vercom
Software, Inc. (d.b.a. Primac Systems Inc.) and the Company, with respect to
Primac accounting software.

 

109.         Microsoft Business
Agreement, dated as of September 27, 2001, by and between Microsoft and
the Company, with respect to all Microsoft applications.

 

110.         Software License
Agreement, dated as of June 24, 1999, by and between the Company and AHP
Systems, with respect to KEREN 2000 Production Management System.

 

111.         Software License
Agreement, dated as of June 29, 2001, by and between AHP Systems and the
Company, with respect to printCafé/ Print Flow software.

 

112.         License Agreement, by and
between Ipswitch, Inc. and Sheridan Press, with respect to the WhatsUp Gold
software. (undated)

 

113.         End-User License
Agreement, by and between eEye Digital Security and Sheridan Press, with
respect to the Secure IIS software. (undated)

 

114.         License Agreement, by and
between Trend Micro Incorporated and Sheridan Press, with respect to Trend
Micro spam filtering software. (undated)

 

115.         License Agreement, by and
between Somix Technologies, Inc., and Sheridan Press, with respect to Network
Monitoring software. (undated)

 

116.         VIP Volume License
Program, dated as of September 19, 2001, by and between Veritas and
Sheridan Press, with respect to Veritas Server, SQL and Exchange software.

 

117.         End-User Software License
Agreement, by and between BakBone Software and Capital City Press, with respect
to Netvault software. (undated)

 

118.         Software License
Agreement, by and between NetIQ Corporation and Capital City Press, with
respect to Webtrends software. (undated)

 

119.         End User License
Agreement, dated January 2000, by and between Check Point Software
Technologies, Ltd. and Capital City Press, with respect to firewall software.

 

120.         Software License, dated
as of June 7, 1999, by and between Northern Telecom and Capital City
Press, with respect to Norstar phone system software.

 

121.         End User License
Agreement, by and between Procom Technology, Inc. and Capital City Press, with
respect to Procom software. (undated)

 

122.         Sub-license, dated
April 12, 1997, by and among NASTech, Inc., Vercom Software, Inc. and
Capital City Press, with respect to NASTech software.

 

123.         Application Software
License Agreement, dated April 12, 1997, by and between Vercom Software,
Inc. and Capital City Press, with respect to UniData software.

 

124.         Application Software
License Agreement, dated as of April 12, 1997, as amended by the
Application Software Re-Licensing Agreement, by and between Vercom Software,
Inc. and Capital City Press, with respect to POM PRIMAC software. (undated)

 

125.         License Program
Certificate, dated as of July 24, 2001, by and between Computer Associates
and Dartmouth Printing, with respect to antivirus software.

 

 

126.         SupportPlus Renewal
Invoice, dated as of April 23, 2003, provided by Best Software, Inc. to
Dartmouth Printing, with respect to Abra Suite.

 

127.         Software Subscription
Purchase Order, dated as of July 19, 2001, provided by printCafé, Inc. to
Dartmouth Printing, with respect to Logic and Auto-Count software.

 

128.         License Agreement, by and
between Veritas Software Corporation and Dartmouth Printing, with respect to
the Backup Executive Single Server to Server Edition. (undated)

 

129.         License Agreement, by and
between Veritas Software Corporation and Dartmouth Printing, with respect to
the Backup Executive Agent for Microsoft SQL Server. (undated)

 

130.         End User License
Agreement, dated as of October 2000, by and between Scenicsoft, Inc. and
Dartmouth Printing, with respect to Color Central software.

 

131.         License Agreement, by and
between Apogee Create and Dartmouth Printing, with respect to Apogee Create
programs. (undated)

 

132.         License Agreement, by and
between Enfocus Software, Inc. and Dartmouth Printing, with respect to the
Pitstop Server 2.0. (undated)

 

133.         License Agreement, by and
between Enfocus Software, Inc. and Dartmouth Printing, with respect to Pitstop
Professional. (undated)

 

134.         License, by and between
Heidelberger Druckmaschinen companies and Dartmouth Printing, with respect to
Lino Color 5.1.2. (undated)

 

135.         License Agreement, by and
between Purup-Eskofot A/S and Dartmouth Printing, with respect to Perfection
2.0. (undated)

 

136.         License Agreement, by and
between Purup-Eskofot A/S and Dartmouth Printing, with respect to EskoScan JPS
9.0. (undated)

 

137.         Dainippon Screen License
Agreement, by and between Dainippon Screen Mfg. Co., Ltd. and Dartmouth
Printing, with respect to Color Genius for Screen Scanner. (undated)

 

138.         License Authorization
Grant, dated as of October 17, 2001, by and between Network Associates,
Inc. and Sheridan Books, with respect to anti-virus protections.

 

139.         Letter, dated
June 7, 1999, from Data Plus to Sheridan Books, with respect to Niakwa
estimating software.

 

140.         Passport Advantage Proof
of Entitlement, dated as of May 23, 1999, by and between Passport
Advantage and Sheridan Books, with respect to Lotus Notes.

 

141.         Volume Licensing
Agreement, by and between Sheridan Books and Microsoft, with respect to Select
5. (undated)

 

142.         Software License and
Services Agreement, by and between PeopleSoft USA, Inc. and Sheridan Books,
with respect to accounting and financial software. (undated)

 

143.         Software License and
Software Maintenance Agreement, dated as of September 25, 2001, by and
between Interact Commerce Corporation and United Litho, with respect to
SalesLogix.net Versions 5.0-5.9.

 

144.         Software License and
Other Services, dated as of December 1, 1999, by and between Prograph
Systems, Inc. and United Litho, with respect to Prograph Toolbox Lite.

 

145.         Development Agreements

 

 

146.         Software Development
Agreement, dated as of April 1, 2002, by and between Stephen E. Fanning
and United Litho, with respect to designing software for United Litho.

 

147.         Software Maintenance
Agreements

 

148.         Annual Maintenance
Agreement, dated as of January 25, 2003, by and between CK Systems and the
Company, with respect to Maintimizer 2000.

 

149.         Terms and Conditions of
Software Maintenance Agreement, by and between Miles 33 and Capital City Press,
with respect to Miles 33 Typesetting software. (undated)

 

150.         Support Services
Agreement, dated as of October 26, 1999, by and between Oracle and
Sheridan Books, with respect to database engine for PeopleSoft USA, Inc.

 

151.         Master Service Agreement,
as amended by the Special Provisions Addendum, dated as of February 25,
2003, by and between CREO Americas, Inc. and Sheridan Books, with respect to
Prinergy Front-End Processing system for electronic imaging.

 

152.         Trademark Licensing
Agreement, dated as of October 1, 1991, between The Sheridan Group Holding
Company and The Sheridan Press, Inc.

 

153.         The Sheridan Group
Holding Company (“Holding Company”) manages the intellectual property of The
Sheridan Group, Inc. and its subsidiaries. 
The Sheridan Press, Inc. (“TSP”) and Sheridan Books, Inc. (“SBI”) pay
royalties to Holding Company for the use of their trademarks.  In turn Holding Company lends TSP’s portion
of the royalties back to TSP.  Holding
Company dividends SBI’s portion of the royalties to The Sheridan Group,
Inc.  The Sheridan Group, Inc. then
makes a capital contribution to SBI.

 

Inventory
Consignment Arrangements

 

Certain of the Company’s Subsidiaries currently have
in place agreements to purchase paper, materials and other supplies on a
consignment basis.  The paper, materials
and other supplies are paid for on a post-consumption basis.  The Subsidiaries’ material consignment
agreements are set forth in the chart below.

 

 

	
   

  	
   

  	
  SHERIDAN

  PRESS

  	
   

  	
  CAPITAL CITY

  PRESS

  	
   

  	
  SHERIDAN

  BOOKS

  	
   

  	
  DARTMOUTH

  PRINTING

  	
   

  	
  UNITED

  LITHO

  	
   

  
	
  MATERIAL

  CATEGORY

  	
   

  	
  SUPPLIER

  	
   

  	
  SUPPLIER

  	
   

  	
  SUPPLIER

  	
   

  	
  SUPPLIER

  	
   

  	
  SUPPLIER

  	
   

  
	
  Paper

  	
   

  	
  Lindenmeyr

  Frank Parsons

  	
   

  	
  Unisource

  	
   

  	
  Xpedx

  Ambrose

  Internat’l

  Pratt

  Simon Miller

  	
   

  	
  NA

  	
   

  	
  NA

  	
   

  
	
  Plates
  & Plate Chemistry

  	
   

  	
  G.E. Richards

  	
   

  	
  Pitman

  	
   

  	
  G.E. Richards

  Xpedx

  	
   

  	
  Enovation

  Northeast

  	
   

  	
  Pitman

  	
   

  
	
  Film
  & Film Chemistry

  	
   

  	
  G.E. Richards

  	
   

  	
  Pitman

  	
   

  	
  G.E. Richards

  Xpedx

  	
   

  	
  Enovation

  	
   

  	
  Pitman

  	
   

  
	
  Ink

  	
   

  	
  K&E Pertech

  Sun Chemical

  	
   

  	
  NA

  	
   

  	
  Braden Sutphin

  Ink

  	
   

  	
  Sun Chemical

  	
   

  	
  Kohl-Madden

  	
   

  
	
  Proofing

  	
   

  	
  G.E. Richards

  	
   

  	
  Pitman

  	
   

  	
  Xpedx

  G.E. Richards

  	
   

  	
  Northeast

  Enovation

  	
   

  	
  Pitman

  	
   

  
	
  Cartons/
  Packaging

  	
   

  	
  Packaging

  Control Corp.

  Colony Papers

  	
   

  	
  NA

  	
   

  	
  Tecumseh

  Corrugated

  PCA

  Xpedx

  	
   

  	
  NA

  	
   

  	
  NA

  	
   

  
	
  Other Supplies (cloth, blankets, cleaners, etc.)

  	
   

  	
  G.E. Richards

  	
   

  	
  Pitman

  	
   

  	
  Dales & Graphics

  Xpedx

  ICG/Holliston

  FiberMark

  General Roll Leaf

  HB Fuller

  National Starch

  	
   

  	
  Pitman

  Enovation

  Northeast

  	
   

  	
  Accurate

  Printing Supply

  (various)

  	
   

  

 

 

Schedule 8.28

Environmental
Compliance

 

Hanover, Pennsylvania:  Potential liability for environmental
conditions or violations associated with the past and present use of, and
Releases from, the below-grade concrete pits/sumps which were historically used
to treat film and plate developing materials and to which process-related
wastewater is currently discharged prior to discharge to the municipal sewer
(as identified in Section III of the Environmental Review of The Sheridan Group
prepared by Environ International Corporation, dated July 2003).

 

Ann Arbor, Michigan:  Potential liability for environmental
conditions or violations associated with (i) the use of and Releases from the
former septic system and any soil and groundwater impacts therefrom (including,
but not limited to, those detected in the 1997 sampling performed by ENSR which
included TPH, arsenic, cadmium, silver, barium, chromium, and lead in soil and
arsenic, lead, vinyl chloride, and 1, 2 dichloroethane in groundwater); (ii)
the use of and Releases from the former UST system, including the chromium
contamination as discovered in 1990 in the vicinity of the former USTs; and
(iii) Sheridan’s or the property’s contribution or alleged contribution to the
regional ground water contamination known as the Staebler Road Groundwater
Contamination (SRGC) (as each of the above are identified in Section VII of the
Environmental Review of The Sheridan Group prepared by Environ International
Corporation, dated July 2003).

 

Berlin, Vermont:  Potential liability for or environmental
conditions or violations associated with past use of or Releases from the
drywells and former septic systems located at the northern and southern
portions of the site, as identified in Section V of the Environmental Review of
The Sheridan Group prepared by Environ International Corporation, dated July
2003.

 

 

Schedule 11.02

Liens

 

11.02.1    Permitted Liens

 

	
  DEBTOR NAME

  	
   

  	
  JURISDICTION

  	
   

  	
  TYPE OF FILING;

  FILING NO.;

  FILING DATE;

  NAME OF

  SECURED PARTY

  	
   

  	
  COLLATERAL

  DESCRIPTION

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Sheridan Group,
  Inc.

  	
   

  	
  State of Maryland

  	
   

  	
  Form UCC-1;

  No. 181032112;

  1/5/00;

  Original Secured Party: Stamford Computer Group Inc.; Directly Assigned to
  Wells Fargo Equipment Finance.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 05
  to the Equipment Lease Agreement dtd. April 2, 1998 between The Sheridan
  Group, Inc. as Lessee and Stamford Computer Group Inc. as Lessor.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 181094718;

  9/4/01;

  Wells Fargo Equipment Finance, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  Schedule No. 06 to Equipment Lease Agreement dtd. April 2, 1998.

  Toshiba DK4241 Base Cabinet and associated equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 181107579;

  1/23/02;

  De Lage Landen Financial Services, Inc.

  	
   

  	
  Field Upgrade of
  CreoScitex VLF Platesetter-F to V including all additions, attachments,
  accessions, substitutions, replacements and proceeds.

  Contract No. TFW-1604/MG.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 181138985;

  12/17/02;

  De Lage Landen Financial Services, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  Collateral Description Missing.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of Michigan

  	
   

  	
  Form UCC-1;

  No. D624810;

  2/29/00;

  IKON Office Solutions Organization.

  	
   

  	
  EQUIPMENT
  LEASE.

  Various equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. D642232;

  4/14/00;

  IKON Office Solutions.

  	
   

  	
  EQUIPMENT
  LEASE.

  Canon 4500 Serial No. ULR31392.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  	
   

  	
  EQUIPMENT
  LEASE.

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  No. D642233;

  4/14/00;

  IKON Office Solutions.

  	
   

  	
  Various equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. D642234;

  4/14/00;

  IKON Office Solutions.

  	
   

  	
  EQUIPMENT
  LEASE.

  Canon 4500 Serial No. ULR16956.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. D707070;

  10/24/00;

  IKON Office Solutions.

  	
   

  	
  EQUIPMENT
  LEASE.

  Canon Recond. 4050 Serial No. NAGO6577.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. D 772700;

  5/10/01;

  IKON Office Solutions.

  	
   

  	
  EQUIPMENT
  LEASE.

  Various equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commonwealth of
  Pennsylvania

  	
   

  	
  Form UCC-1;

  No. 29610601;

  11/20/98;

  Original Secured Party: Stamford Computer Group, Inc.; Directly Assigned to
  Transamerica Business Credit Corporation.

  	
   

  	
  EQUIPMENT
  LEASE.

  Equipment leased pursuant to Equipment Lease Agreement dtd. 4/2/98 and
  Equipment Schedule No. 02 dtd. 11/9/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 29980670;

  3/4/99;

  Original Secured Party: Stamford Computer Group, Inc.; Directly Assigned to
  Norwest Equipment Finance.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 04 to the Master
  Lease Agreement dtd. 4/2/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 29980805;

  3/4/99;

  Original Secured Party: Stamford Computer Group, Inc.; Directly Assigned to
  Norwest Equipment Finance.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 03 to the Master
  Lease Agreement dtd. 4/2/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of Vermont

  	
   

  	
  Form UCC-1;

  No. 00-128300;

  8/4/00;

  De Lage Landen Financial Services, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  Contract No. WSL-535/MG.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 00-128301;

  	
   

  	
  EQUIPMENT
  LEASE.

  Contract No. WSL-721/MG.

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  8/4/00;

  De Lage Landen Financial Services, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 01-142090;

  8/15/01;

  De Lage Landen Financial Services, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  Contract No. WSL-721/cw

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commonwealth of
  Virginia

  	
   

  	
  Form UCC-1;

  No. 9903107053;

  3/10/99;

  Original Secured Party: Stamford Computer Group, Inc.; Directly Assigned to
  Norwest Equipment Finance, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 04 to the Master
  Lease Agreement dtd. 4/2/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 9903107055;

  3/10/99;

  Original Secured Party: Stamford Computer Group, Inc.; Directly Assigned to
  Norwest Equipment Finance, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 03 to the Master
  Lease Agreement dtd. 4/2/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 9904087035;

  4/8/99;

  Original Secured Party: Stamford Computer Group Inc.; Directly Assigned to
  Transamerica Business Credit Corporation.

  	
   

  	
  EQUIPMENT
  LEASE.

  The equipment leased pursuant to Equipment Lease Agreement dtd. 4/2/98 and
  Equipment Schedule No. 02, dtd. 11/9/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 0001057012;

  1/5/00;

  Original Secured Party: Stamford Computer Group Inc.; Directly Assigned to
  Wells Fargo Equipment Finance, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 05 to the Equipment
  Lease Agreement dtd. 4/2/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VA - Loudoun County

  	
   

  	
  Form UCC-1;

  No. 2546-98;

  10/13/98;

  Original Secured Party:

  	
   

  	
  Various Equipment.

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Stamford Computer Group
  Inc., Directly Assigned to General Electric Capital Corporation.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 2922-98;

  11/23/98;

  Original Secured Party: Stamford Computer Group Inc., Directly Assigned to
  Transamerica Business Credit Corporation.

  	
   

  	
  Various Equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 2923-98;

  11/23/98;

  Original Secured Party: Stamford Computer Group Inc., Directly Assigned to
  Transamerica Business Credit Corporation.

  	
   

  	
  Collateral description
  not provided.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 0736-99;

  3/10/99;

  Original Secured Party: Stamford Computer Group, Inc., Directly Assigned to
  Norwest Equipment Finance, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 04 to Master Lease
  Agreement dtd. 4/2/98.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 0737-99;

  3/10/99;

  Original Secured Party: Stamford Computer Group, Inc., Directly Assigned to
  Norwest Equipment Finance, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 03 to Master Lease
  Agreement dtd. 4/2/99.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 0029-00;

  1/5/00;

  Original Secured Party: Stamford Computer Group Inc., Directly Assigned to
  Wells 

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment leased or to be leased under Schedule No. 05 to Equipment Lease
  Agreement dtd. 4/2/98.

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Fargo Equipment
  Finance, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Sheridan Books, Inc.

  	
   

  	
  State of Delaware

  	
   

  	
  Form UCC-1;

  No. 20646707;

  2/21/02;

  HB Fuller Company.

  	
   

  	
  All consigned
  adhesives.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 22699118;

  10/16/02;

  Fifth Third Leasing Company.

  	
   

  	
  One (1) New Timson
  T-48A Web Offset Press, Serial Number 20010.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 30282312;

  1/31/03;

  G.E. Richards Graphic Supplies Co., Inc.

  	
   

  	
  CONSIGNED
  GOODS.

  All graphic supplies, and all goods of, for or related thereto, delivered by
  Consignor to Consignee on a consignment basis, including but not limited to
  film, chemistry, plates and tapes, and the proceeds thereof and the proceeds
  of proceeds thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 30319098;

  2/5/03;

  G. E. Richards Graphic Supplies Co., Inc.

  	
   

  	
  CONSIGNED
  GOODS.

  All graphic supplies, and all goods of, for or related thereto, delivered by
  Consignor to Consignee on a consignment basis, including but not limited to
  film, chemistry, plates and tapes, and the proceeds thereof and the proceeds
  of proceeds thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 30419773;

  2/19/03;

  G.E. Richards Graphic Supplies Co., Inc.

  	
   

  	
  CONSIGNED
  GOODS.

  All graphic supplies, and all goods of, for or related thereto, delivered by
  Consignor to Consignee on a consignment basis, including but not limited to
  film, chemistry, plates and tapes, and the proceeds thereof and the proceeds
  of proceeds thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  State of Michigan

  	
   

  	
  Form UCC-1;

  No. D531038;

  6/15/99;

  STI Credit Corporation.

  	
   

  	
  (1) SHM Variquik
  Printing System (s/n 6Y01-17) together with any and all substitutions,
  replacements, attachments and accessions thereto or therefor, and the
  proceeds thereof, including, without limitation,

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  insurance proceeds and
  the proceeds of all subleases and all other dispositions thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. D534156;

  6/23/99;

  KeyCorp Leasing, a Division of Key Corporate Capital Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All right, title and interest, now owned or hereafter acquired, in and to One
  (1) SHM Variquik Printing System, together with any and all substitutions,
  replacements or exchanges therefor, replacement parts, additions, attachments
  and accessories incorporated therein or affixed thereto, or used in
  connection therewith, and proceeds thereof (both cash and non-cash),
  including insurance proceeds (but without power of sale by Debtor), and also
  including, without limitation, claims of the Debtor against third parties for
  loss or damage to, or destruction of, such equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. D729631;

  1/4/01;

  Savin Credit Corp.

  	
   

  	
  EQUIPMENT
  LEASE.

  Savin 2070 H4805900034, together with all replacements, additions, accessions
  and accessories incorporated therein and/or affixed thereto and all proceeds
  thereof, including, but not limited to, amounts payable under any insurance
  policy.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  MI - Washtenaw County

  	
   

  	
  Fixture Filing:

  Form UCC-1;

  No. L4184 P705;

  11/18/02;

  Fifth Third Leasing Company.

  	
   

  	
  One (1) New Timson
  T-Illegible Web Offset Press, Serial Number 20010.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commonwealth of
  Virginia

  	
   

  	
  Form UCC-1;

  No. 0110237262;

  10/23/01;

  BB&T Leasing Corporation.

  	
   

  	
  Nissan 5000 LB Forklift

  Model 1995 C50K W/Per Roll Clamp

  Serial #904427

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 02073071416;

  7/30/02;

  Kodak Polychrome

  	
   

  	
  *Illegible* Laminator -
  Serial #401387

  Proofing Processor - Serial #100927

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Graphics, LLC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  The Sheridan Press, Inc.

  	
   

  	
  State of Maryland

  	
   

  	
  From UCC-1;

  No. 181122582;

  6/20/02;

  Lindenmeyr Munroe, a division of Central National-Gottesman, Inc.

  	
   

  	
  Various goods consigned
  pursuant to Consignment Agreement dtd. 4/22/02.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 181127541;

  8/8/02;

  Lindenmeyr Munroe, a division of Central National-Gottesman, Inc.

  	
   

  	
  Various goods consigned
  pursuant to Consignment Agreement dtd. 4/22/02.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 181143023;

  2/3/03;

  G.E. Richards Graphic Supplies Co., Inc.

  	
   

  	
  All graphic supplies
  and all goods of, for or related thereto, delivered by Consignor to Consignee
  on a consignment basis, including but not limited to film chemistry, plates
  and tapes, and the proceeds thereof and the proceeds of proceeds thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 181144770;

  2/25/03;

  General Electric Capital Corporation.

  	
   

  	
  EQUIPMENT
  LEASE.

  One (1) 2002 Kolbus Adhesive Binding Line - ZU840A Gathering Machine s/n 69;
  KM 472 A Ratiobinder s/n 492; Conveyor; high Capacity Three Knife Trimmer s/n
  585; RS3313S Rima System Stadker s/n 336945-10 and including all additions,
  attachments, accessories and accessions thereto, and any and all
  substitutions, replacements or exchanges therefor, and all insurance and/or
  other proceeds thereof by and between Lessee and Lessor whether now owned or
  hereafter acquired.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Commonwealth of
  Pennsylvania

  	
   

  	
  Form UCC-1;

  No. 31870008;

  7/18/00;

  NMHG Financial Services, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment now or hereafter leased by Lessor to Lessee; and all
  accessions, additions, replacements and substitutions thereto and therefor
  and all

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  proceeds, including
  insurance proceeds, thereof.

  Lease No. 4106193001.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 34090212;

  6/25/01;

  Original Secured Party: Technology Credit Corporation; directly assigned to

  Key Equipment Finance.

  	
   

  	
  EQUIPMENT
  LEASE.

  Various equipment - MLA #1837-01

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  From UCC-1;

  No. 36510555;

  8/5/02;

  Sun Chemical Corporation.

  	
   

  	
  EQUIPMENT
  LEASE.

  Various equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PA - York County
  Prothonotary

  	
   

  	
  Form UCC-1;

  No. 2000ST0227501;

  7/18/00;

  NMHG Financial Services, Inc.

  	
   

  	
  EQUIPMENT
  LEASE.

  All equipment now or hereafter leased by the Lessor to Lessee; and all
  accessions, additions, replacements and substitutions thereto and therefor
  and all proceeds, including insurance proceeds, thereof.

  Lease No. 4106193001.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 2001ST0157601;

  6/27/01;

  Original Secured Party: Technology Credit Corporation; Directly Assigned to

  Key Equipment Finance.

  	
   

  	
  EQUIPMENT
  LEASE.

  Various equipment

  Master Lease Agreement No. 1837-01.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  PA - York County
  Recorder

  	
   

  	
  Form UCC-1;

  No. 1527-2790;

  11/7/02;

  General Electric Capital Corporation.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 1552-8990;

  3/17/03;

  General Electric Capital Corporation.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Capital City Press,
  Inc.

  	
   

  	
  State of Vermont

  	
   

  	
  From UCC-1;

  No. 98-101462;

  10/19/98;

  	
   

  	
  1 Fuji First Look w/
  Powermac

  s/n 1967

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Bloom’s Incorporated.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 98-101566;

  10/20/98;

  Pitman Company.

  	
   

  	
  Consignment Inventory.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 01-133595;

  1/2/01;

  Pitman Company.

  NOTE DEBTOR NAME: PAUL BOZUWA, PRESIDENT,
  CAPITAL CITY PRESS, INC.

  	
   

  	
  1 - Agfa SelectSet
  Avantra 44SS w/Bridge Configuration

  

  1 Stoesser SR-200 40” x 50” Vacuum Frame Configuration.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 03-161059;

  1/24/03;

  Heidelberg USA, Inc.

  	
   

  	
  One (1) used SM102-8P3.5,
  serial #541315.

  Includes all standing equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Dartmouth Printing
  Company

  	
   

  	
  State of New Hampshire

  	
   

  	
  Form UCC-1;

  No. 427274;

  8/12/94;

  Fuji Photo Film U.S.A., Inc.

  Continued 4/13/99.

  	
   

  	
  OLEC Olite AL53 Light
  Source Serial #532007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 489658;

  6/19/97;

  Fuji Photo Film U.S.A., Inc.

  Continued 4/10/02.

  	
   

  	
  OLEC AL53 S/N 534527

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 542188;

  7/30/99;

  Fuji Photo Film U.S.A., Inc.

  	
   

  	
  2 Teaneck TFDS-6 Frames
  S/N 535466, 535448

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 575109;

  2/5/01;

  Heidelberg Web Systems, Inc.

  	
   

  	
  One (1) eight unit two
  web side by side duplex Heidelberg Sunday 2000 press system includnig PCF1.1
  Combination Folders.  Now referred to
  as CSO#OR5600.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 587146;

  8/31/01;

  General Electric Capital Corporation.

  	
   

  	
  EQUIPMENT
  LEASE.

  1 2001 Gammerler Printing Equipment comprising Stacker KL507/1, Low Infeed,
  Std.; Wide Product Kit for KL507; Pit

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Press, Lower Dbl. PAR;
  Flat Conveying, Crushers; Dartmouth Printing FS260 Conv. Assy.; PR500 Robotic
  Palletizer, Steel structure (overhead); Manual Stacker.

  Serial No. Z12584-30-00-900.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 618328;

  4/14/03;

  Fujifilm.

  	
   

  	
  Fujifilm graphic arts
  equipment.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NH - Grafton County
  Registry

  	
   

  	
  Form UCC-1;

  No. 001849;

  2/5/01;

  Heidelberg Web Systems, Inc.

  	
   

  	
  Fixture Filing:

  One (1) eight unit two web side by side duplex Heidelberg Sunday 2000 press
  system including PCF1.1 Combination Folders. 
  Now referred to as CSO#OR5600.

  Equipment located at 69 Lyme Road, Hanover, NH.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 001866;

  2/5/01;

  Heidelberg Print Finance Americas, Inc.

  	
   

  	
  Fixture Filing:

  Two new four unit 1 web Heidelberg Model Sunday 2000 web offset press system
  duplexed with one single and one double web PCF1.1 (Serial  #OR5600) and related auxiliaries.

  Equipment located at 69 Lyme Road, Hanover, NH.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 016213;

  8/31/01;

  General Electric Capital Corporation.

  	
   

  	
  EQUIPMENT
  LEASE.

  1 2001 Gammerler Printing Equipment, SN Z12584-30-00-900, comprising Stacker
  KL507/1, Low Infeed, Std.; Wide Product Kit for KL507; Plt, Press, Lower Dbl
  PAR; Flat Conveying, Crushers; Dartmouth Printing FS260 Conv. Assy.; PR500
  Robotic Palletizer; Steel structure (overhead); Manual Stacker, including all
  additions, attachments, accessories and accessions thereto, and any and all
  substitutions, replacements or exchanges therefor, and all insurance and/or
  other proceeds thereof, now owned or hereafter 

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  acquired.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  NH - Hanover Town Clerk

  	
   

  	
  Form UCC-1;

  No. 6240;

  8/15/94;

  Fuji Photo Film U.S.A., Inc.

  Continued 4/13/99 by Filing No. 6827.

  	
   

  	
  OLEC OLITE AL 53 Light
  Source Serial #532007

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 6866;

  8/2/99;

  Fuji Photo Film U.S.A., Inc.

  	
   

  	
  2 Teaneck TFDS-6 Frames
  S/N 535466, 535448

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 7031;

  2/5/01;

  Heidelberg Web Systems, Inc.

  	
   

  	
  One (1) eight unit two
  web side by side duplex Heidelberg Sunday 2000 press system including PCF1.1
  Combination Folders.  Now referred to
  as CSO#OR5600.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 7032;

  2/5/01;

  Heidelberg Print Finance Americas, Inc.

  	
   

  	
  Two new four unit 1 web
  Heidelberg Model Sunday 2000 web offset press system duplexed with one single
  and one double PCF1/1 (Serial # OR5600) and related auxiliaries.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  United Litho Inc.

  	
   

  	
  Commonwealth of
  Virginia

  	
   

  	
  Form UCC-1;

  No. 0002077426;

  2/7/00;

  Pitman Company.

  	
   

  	
  Consigned inventory
  including but not limited to “graphics” films, photographic papers, chemistry
  sundries and supplied spare parts.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 0104277825;

  4/27/01;

  General Electric Capital Corporation.

  	
   

  	
  SALE/LEASEBACK.

  1 2000 Kolbus ZU816C Automatic High Speed Rotary Gatherer

  S/N 1639/2000  81/2000

  828/2000

  including all additions, attachments, accessories and accessions thereto, and
  any and all substitutions, replacements or exchanges therefor, and all
  insurance and/or other proceeds thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 03013171987;

  1/31/03;

  Kohl & Madden Printing Ink 

  	
   

  	
  Consigned Inks.

  

 

 

	
   

  	
   

  	
   

  	
   

  	
  Corporation.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 9811207226;

  11/20/98;

  Transamerica Business Credit.

  	
   

  	
  EQUIPMENT
  LEASE.

  Equipment leased pursuant to that certain Equipment Lease Agreement dtd.
  4/2/98 and Equipment Schedule No. 02 dtd. 11/9/98, together with all
  accessories, substitutions and replacements therefor and proceeds (including
  without limitation insurance proceeds) therefor.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  VA - Loudoun County
  Circuit Court

  	
   

  	
  Form UCC-1;

  No.2921-98;

  11/23/98;

  Transamerica Business Credit.

  	
   

  	
  EQUIPMENT
  LEASE.

  Equipment leased pursuant to that certain Equipment Lease Agreement dtd.
  4/2/98 and Equipment Schedule No. 02 dtd. 11/9/98, together with all
  accessories, substitutions and replacements therefor and proceeds (including
  without limitation insurance proceeds) therefor.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 1356-01;

  4/27/01;

  General Electric Capital Corporation.

  	
   

  	
  SALE/LEASEBACK.

  1 2000 Kolbus ZU816C Automatic High Speed Rotary Gatherer

  S/N 1639/2000  81/2000

  828/2000

  including all additions, attachments, accessories and accessions thereto, and
  any and all substitutions, replacements or exchanges therefor, and all
  insurance and/or other proceeds thereof.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Form UCC-1;

  No. 1357-01;

  4/27/01;

  General Electric Capital Corporation.

  	
   

  	
  Fixture Filing.

  SALE/LEASEBACK.

  1 2000 Kolbus ZU816C Automatic High Speed Rotary Gatherer

  S/N 1639/2000  81/2000

  828/2000

  including all additions, attachments, accessories and accessions thereto and
  any and all substitutions, replacements or exchanges therefor, and all

  

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  insurance and/or other
  proceeds thereof.

  

 

11.02.3                    Licenses

 

1.       Pursuant to the Software
Subscription Purchase Order, dated as of October 15, 2001, by and between
printCafé, Inc. and United Litho, Inc. with respect to Prograph Pre Press
tracking software, United Litho, Inc. uses certain software in its business
operations.  In accordance with this
agreement, it also allows its customers to use the software, free of
charge.  Prior to a customer’s use of
the Prograph software, such customer must agree not to give away or modify the
software and to return it when such customer ceases to be a customer of The
Sheridan Group, Inc. or its subsidiaries.

 

2.       The Sheridan Group Holding
Company (“Holding Company”) manages the intellectual property of The Sheridan
Group, Inc. and its subsidiaries.  The
Sheridan Press, Inc. (“TSP”) and Sheridan Books, Inc. (“SBI”) pay royalties to
Holding Company for the use of their trademarks.  In turn Holding Company lends TSP’s portion of the royalties back
to TSP.  Holding Company dividends SBI’s
portion of the royalties to The Sheridan Group, Inc.  The Sheridan Group, Inc. then makes a capital contribution to
SBI.

 

 

Schedule 13.01

Approved Account
Debtors

 

	
  Customer

  	
   

  	
  Percentage

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Reed Elsevier

  	
   

  	
  30

  	
  %

  
	
  2.

  	
  Wolters Kluwer

  	
   

  	
  30

  	
  %

  
	
  3.

  	
  John Wiley & Sons

  	
   

  	
  30

  	
  %

  
	
  4.

  	
  Blackwell Publishing
  Group

  	
   

  	
  30

  	
  %

  
	
  5.

  	
  Penguin-Putnam

  	
   

  	
  30

  	
  %

  
	
  6.

  	
  Marcel Dekker, Inc.

  	
   

  	
  30

  	
  %

  
	
  7.

  	
  Sage Publishing

  	
   

  	
  30

  	
  %

  
	
  8.

  	
  Cambridge University
  Press

  	
   

  	
  30

  	
  %

  
	
  9.

  	
  American Thoracic
  Society

  	
   

  	
  30

  	
  %

  
	
  10.

  	
  Rockefeller University
  Press

  	
   

  	
  30

  	
  %

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