-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P0U24Wx+eiTg5gQtFDxvMBHNsw8VAaTaINyK4px6Dh2c0CW81p9HPX4GoVBRwpQB H+7mQhDMgEZ90JOQAs7wgg== 0000950135-97-002343.txt : 19970514 0000950135-97-002343.hdr.sgml : 19970514 ACCESSION NUMBER: 0000950135-97-002343 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970328 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COURIER CORP CENTRAL INDEX KEY: 0000025212 STANDARD INDUSTRIAL CLASSIFICATION: BOOK PRINTING [2732] IRS NUMBER: 042502514 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-07597 FILM NUMBER: 97602180 BUSINESS ADDRESS: STREET 1: 165 JACKSON ST CITY: LOWELL STATE: MA ZIP: 01852 BUSINESS PHONE: 5084586351 10-Q 1 COURIER CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 For the quarterly period ended March 29, 1997 ------------------------------------------------- or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 For the transition period from to ------------ --------------------------------- Commission file number 0-7597 ---------------------------------------------------------- COURIER CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) MASSACHUSETTS 04-2502514 - ------------------------------------------------------------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer Identification No.) or organization)
15 Wellman Avenue, North Chelmsford, Massachusetts 01863 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (508) 251-6000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) NO CHANGE - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 8, 1997 - ------------------------------------ ------------------------------------ Common Stock, $1 par value 1,985,931 shares Page 1 of 13 2 COURIER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
March 29, September 28, ASSETS 1997 1996 --------- ------------- Current assets: Cash and cash equivalents $ 43 $ 33 Accounts receivable, less allowance for uncollectible accounts 21,949 24,935 Inventories (Note B) 10,349 8,178 Deferred income taxes 1,610 1,580 Other current assets 728 954 ------- ------- Total current assets 34,679 35,680 Property, plant and equipment, less accumulated depreciation: $61,323 at March 29, 1997 and $58,868 at September 28, 1996 34,973 36,675 Real estate held for sale or lease, net (Note D) 2,815 698 Goodwill, at cost 1,204 1,204 Other assets 485 509 ------- ------- Total assets $74,156 $74,766 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. Page 2 of 13 3 COURIER CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) (Dollars in thousands)
March 29, September 28, LIABILITIES AND STOCKHOLDERS' EQUITY 1997 1996 --------- ------------- Current liabilities: Current maturities of long-term debt $ 466 $ 466 Accounts payable 8,863 9,705 Accrued taxes 4,720 4,835 Other current liabilities 6,681 6,952 -------- -------- Total current liabilities 20,730 21,958 Long-term debt 9,250 9,277 Deferred income taxes 3,544 3,488 Other liabilities 1,308 1,279 -------- -------- Total liabilities 34,832 36,002 -------- -------- Stockholders' equity: Preferred stock, $1 par value - authorized 1,000,000 shares; none issued Common stock, $1 par value - authorized 6,000,000 shares; issued 4,500,000 shares 4,500 4,500 Additional paid-in capital 9,072 9,055 Retained earnings 49,988 48,713 Treasury stock, at cost: 2,513,000 shares at March 29, 1997 and 2,471,000 shares at September 28, 1996 (24,236) (23,504) -------- -------- Total stockholders' equity 39,324 38,764 -------- -------- Total liabilities and stockholders' equity $ 74,156 $ 74,766 ======== ========
The accompanying notes are an integral part of the consolidated financial statements. Page 3 of 13 4 COURIER CORPORATION CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) (Dollars in thousands except per share amounts)
QUARTER ENDED SIX MONTHS ENDED ---------------------------- ---------------------------- March 29, March 30, March 29, March 30, 1997 1996 1997 1996 ---------- ----------- ---------- ----------- Net sales $ 32,011 $ 31,384 $ 62,550 $ 61,499 Cost of sales 25,242 25,707 49,460 50,211 ---------- ----------- ---------- ----------- Gross profit 6,769 5,677 13,090 11,288 Selling and administrative expenses 5,396 4,864 10,246 9,372 Interest expense 202 255 362 467 Other income (expense) (Note D) 7 (340) 14 (314) ---------- ----------- ---------- ----------- Income before taxes 1,178 218 2,496 1,135 Provision (benefit) for income taxes (Note C) 350 (445) 739 (152) ---------- ----------- ---------- ----------- Net income $ 828 $ 663 $ 1,757 $ 1,287 ========== =========== ========== =========== Net income per share $ 0.41 $ 0.32 $ 0.86 $ 0.62 ========== =========== ========== =========== Cash dividends declared per share $ 0.12 $ 0.12 $ 0.24 $ 0.24 ========== =========== ========== =========== Weighted average shares outstanding 2,041,000 2,082,000 2,048,000 2,083,000
The accompanying notes are an integral part of the consolidated financial statements. Page 4 of 13 5 COURIER CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) (Dollars in thousands)
SIX MONTHS ENDED ------------------------ March 29, March 30, 1997 1996 --------- --------- Cash provided from (used for) operating activities $ 5,270 ($1,803) ------- ------- Investment activities: Capital expenditures (4,030) (2,099) Proceeds from sale of assets (Note D) -- 1,792 ------- ------- Cash used for investment activities (4,030) (307) ------- ------- Financing activities: Repayment of long-term debt (230) (191) Increase in long-term borrowings 203 1,791 Cash dividends (482) (484) Stock repurchase program (798) -- Proceeds from stock plans 77 214 ------- ------- Cash provided from (used for) financing activities (1,230) 1,330 ------- ------- Increase (decrease) in cash and cash equivalents 10 (780) Cash at the beginning of the period 33 1,147 ------- ------- Cash at the end of the period $ 43 $ 367 ======= =======
The accompanying notes are an integral part of the consolidated financial statements. Page 5 of 13 6 COURIER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES UNAUDITED FINANCIAL STATEMENTS The balance sheet as of March 29, 1997, the statements of income for the quarters ended and the six-month periods ended March 29, 1997 and March 30, 1996 and the statements of cash flows for the six-month periods ended March 29, 1997 and March 30, 1996 are unaudited and, in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been recorded. Such adjustments consisted only of normal recurring items. Certain amounts for fiscal 1996 have been reclassified in the accompanying financial statements in order to be consistent with the current year's classifications. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The year-end balance sheet data as of September 28, 1996 was derived from audited financial statements, but does not include disclosures required by generally accepted accounting principles. It is suggested that these interim financial statements be read in conjunction with the Company's most recent Form 10-K and Annual Report as of September 28, 1996. In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which permits either recording the estimated value of stock-based employee compensation over the applicable vesting period or disclosing the unrecorded cost and the related effect on net income per share in the notes to the financial statements. The Company will continue to apply current accounting rules for the recording of stock-based compensation (APB Opinion No. 25) and will comply with the provision of SFAS No. 123 relative to disclosure in the notes to the financial statements which will be effective with the Company's Annual Report for the fiscal year ending September 27, 1997. In March 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share," which is not effective until the first quarter of the Company's fiscal 1998. This new standard requires dual presentation of basic and diluted earnings per share ("EPS") on the face of the statement of income and requires a reconciliation of the numerators and denominators of basic and diluted EPS calculations. The results would not materially differ from earnings per share as presented. Page 6 of 13 7 COURIER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) B. INVENTORIES Inventories are valued at the lower of cost or market. Cost is determined using the last-in, first-out (LIFO) method for substantially all inventories. Inventories consisted of the following:
(000's Omitted) ----------------------------- March 29, September 28, 1997 1996 --------- ------------- Raw materials $ 2,763 $2,901 Work in process 5,727 3,746 Finished goods 1,859 1,531 ------- ------ Total inventory $10,349 $8,178 ======= ======
C. INCOME TAXES The statutory federal tax rate is 34%. The total tax provision (benefit) differs from that computed using the statutory federal tax rate for the following reasons: (000's Omitted)
Quarter Ended Six Months Ended ---------------------- ---------------------- March 29, March 30, March 29, March 30, 1997 1996 1997 1996 --------- --------- --------- --------- Federal income taxes at statutory rate $ 401 $ 74 $ 849 $ 386 State income taxes, net 23 7 46 34 Donation of real estate (Note D) -- (500) -- (500) Export related income (41) (15) (93) (49) Other (33) (11) (63) (23) ----- ----- ----- ----- Total provision (benefit) $ 350 $(445) $ 739 $(152) ===== ===== ===== =====
Page 7 of 13 8 COURIER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) D. OTHER INCOME (EXPENSE) On March 1, 1996, the Company completed the sale and donation of its former telephone directory manufacturing facility which had been vacant. Sales proceeds of $1.8 million for approximately half the site resulted in a pretax loss of $365,000 which is included in other income (expense). Tax benefits from the donation of the remainder of the property resulted in an after-tax gain on the overall transaction of approximately $250,000 or $.12 per share. page 8 of 13 9 COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Sales in the second quarter of fiscal 1997 increased 2% to $32.0 million compared to $31.4 million in the prior year's second quarter. Excluding the sales value of paper, sales grew by over 10% for the quarter despite a continuation of highly competitive market conditions. Gross profit increased to $6.8 million, or 21% of sales, in the second quarter from $5.7 million, or 18% of sales, in the same period last year. The improvement in gross profit reflects increased sales, gains in productivity, lower costs and benefits realized from streamlining software documentation operations. Selling and administrative expenses increased to $5.4 million in the second quarter of fiscal 1997 from $4.9 million in the corresponding period last year. As a percentage of sales, selling and administrative expenses were 17% compared to 15% in the second quarter last year. The increase includes expansion of the Company's Copyright Management Services (CMS) division and expenses that relate to the increase in profitability. Interest expense was $202,000 compared to $255,000 in the second quarter of fiscal 1996 reflecting decreased average borrowings. Other income (expense) in the second quarter of fiscal 1996 includes the Company's sale and donation of its former telephone directory manufacturing facility. The sale of approximately half of the site resulted in a pretax loss of $365,000. Tax benefits from the donation of the remainder of the property resulted in an after-tax gain of approximately $250,000 or $.12 per share on the overall transaction. The Company's effective tax rate for the second quarter of fiscal 1997 was 30% compared to a 32% rate in the corresponding period last year, exclusive of the $500,000 tax benefit related to the donation of property discussed above. A lower effective state tax rate accounts for the reduction in the overall rate. Net income for the second quarter of fiscal 1997 was $828,000 or $.41 per share, up from $663,000 or $.32 per share in the corresponding period last year. Excluding the one-time, after-tax gain related to the sale and donation of property in the prior year, earnings were more than twice last year's comparable figures. The increase in earnings reflects improvements in the Company's gross profit margins as noted above. For the six months ended March 29, 1997, the Company reported net income of $1.8 million or $.86 per share, compared to $1.3 million or $.62 per share for the same period last year. Sales for the first six months were $62.6 million versus $61.5 million in the comparable period of fiscal 1996. The factors impacting second quarter results similarly affected year-to-date results. In addition, a decrease in the market price of recycled paper reduced gross profit by approximately $375,000 in the first half of fiscal 1997 compared to the same period last year; however, paper recycling income in the second quarter was comparable to last year's second quarter. Also, in the first quarter of fiscal 1997, costs associated with the consolidation of operations in Philadelphia amounted to approximately $350,000. The consolidation into a newer, more efficient manufacturing facility was completed in December 1996. Page 9 of 13 10 COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS (CONTINUED): In October 1995, the Financial Accounting Standards Board issued SFAS No. 123, "Accounting for Stock-Based Compensation," which permits either recording the estimated value of stock-based employee compensation over the applicable vesting period or disclosing the unrecorded cost and the related effect on net income per share in the notes to the financial statements. The Company will continue to apply current accounting rules for the recording of stock-based compensation and will comply with the provision of SFAS No. 123 relative to disclosure in the notes to the financial statements which will be effective with the Company's Annual Report for the fiscal year ending September 27, 1997. In March 1997, the Financial Accounting Standards Board issued SFAS No. 128, "Earnings per Share," which will not be effective until the first quarter of the Company's fiscal 1998. This new standard will require the Company to restate all previously reported earnings per share information to conform with the new pronouncement's requirements. The results would not materially differ from earnings per share as presented. LIQUIDITY AND CAPITAL RESOURCES: During the first half of fiscal 1997, operations provided approximately $5.3 million of cash. Net income was $1.8 million and depreciation was $3.6 million. Investment activities in the first six months of fiscal 1997 used approximately $4.0 million of cash for capital expenditures. Capital expenditures were made primarily for the final phase of the building expansion at the Company's Philadelphia manufacturing facility and for upgrades to binding equipment. Capital expenditures for the entire fiscal year are expected to be comparable to fiscal 1996 levels, which amounted to approximately $7.3 million. In December 1996, the Company completed the consolidation of operations in Philadelphia from an older, multi-story facility to the recently expanded, more efficient property. The Company has signed an agreement to sell the multi-story facility. Closing is scheduled for July 1997 subject to resolution of certain contingencies. The Company's Raymond, New Hampshire facility, which had been leased through June 1996, is now vacant pending sale or lease. With respect to the Company's former headquarters in Lowell, Massachusetts, which was vacated in September 1996, the Company has considered various alternatives and is presently giving priority to donating the property to a not-for-profit organization in order to eliminate ongoing operating costs and to generate a tax benefit in excess of the remaining book value of the property. Page 10 of 13 11 COURIER CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED): Financing activities for the first half of fiscal 1997 used approximately $1.2 million of cash; dividend payments were $0.5 million and stock repurchases amounted to $0.8 million. In March 1997, the Company replaced it's $11 million long-term revolving credit facility and $10 million informal bank credit line with a new $20 million long-term revolving credit facility. At March 29, 1997, the Company had approximately $12.8 million of borrowing capacity available under the new revolving credit facility. Under the new facility, the Company can borrow at either LIBOR plus 3/4% or the bank's money market rates (6.3% at March 29, 1997). The new facility contains restrictive covenants comparable to the prior revolving credit facility, including provisions related to the maintenance of working capital, the incurring of additional indebtedness and a quarterly test of cash flow to debt service. It also provides for a commitment fee of 1/4% per annum on the unused portion. The Company is continuing its program to repurchase up to $3 million of its common shares which the Company believes is currently attractively priced. Through the end of the second quarter, the Company acquired 49,311 shares of common stock at an average cost of $16.18 per share under this program. In April 1997, the Board of Directors voted to extend the program through October 1997. Page 11 of 13 12 COURIER CORPORATION PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders of the registrant was held on January 16, 1997. All nominees of the Board of Directors of the registrant were re-elected for a three-year term. The stockholders also voted to ratify and approve the selection by the Board of Directors of Deloitte & Touche LLP as independent public accountants for the registrant for the fiscal year ending September 27, 1997. ELECTION OF DIRECTORS Votes were cast in the election of directors as follows:
Nominee For Withheld Authority ------- --- ------------------ James F. Conway III 1,745,423 58,063 W. Nicholas Thorndike 1,745,559 57,927 Kathleen Foley Curley 1,745,151 58,335
Directors continuing in office: Edward J. Hoff , Robert P. Story, Jr., Richard K. Donahue, Arnold S. Lerner, Charles E. Otto, George Q. Nichols RATIFICATION/APPROVAL OF ACCOUNTANTS Votes were cast in the ratification and approval of Deloitte & Touche LLP as independent public accountants as follows:
For Against Abstain --- ------- ------- 1,792,923 5,142 5,421
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description of Exhibit ----------- ---------------------- 10 Revolving Credit Agreement, dated as of March 18, 1997, between Courier Corporation and State Street Bank and Trust Company and The First National Bank of Boston, providing for a $20,000,000 revolving credit facility. 27 Financial Data Schedule (b) Reports on Form 8-K None. Page 12 of 13 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. COURIER CORPORATION (REGISTRANT) May 12, 1997 By: s/James F. Conway III - ---------------------------- ------------------------------------ Date James F. Conway III Chairman, President and Chief Executive Officer May 12, 1997 By: s/Robert P. Story, Jr. - ---------------------------- ------------------------------------ Date Robert P. Story, Jr. Senior Vice President and Chief Financial Officer May 12, 1997 By: s/Peter M. Folger - ---------------------------- ------------------------------------ Date Peter M. Folger Vice President and Chief Accounting Officer Page 13 of 13 EX-10 2 REVOLVING CREDIT AGREEMENT DATE 18-MARCH-97 1 - -------------------------------------------------------------------------------- REVOLVING CREDIT AGREEMENT Dated as of March 18, 1997 Among COURIER CORPORATION COURIER-CITIZEN COMPANY COURIER COMPANIES, INC. COURIER DELAWARE HOLDING CORPORATION COURIER FOREIGN SALES CORPORATION LIMITED COURIER INVESTMENT CORPORATION COURIER KENDALLVILLE, INC. COURIER PROPERTIES, INC. COURIER STOUGHTON, INC. COURIER WESTFORD, INC. NATIONAL PUBLISHING COMPANY COURIER NEW MEDIA, INC. as Borrowers and STATE STREET BANK AND TRUST COMPANY THE FIRST NATIONAL BANK OF BOSTON as Banks and STATE STREET BANK AND TRUST COMPANY as Agent - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION 1.1 Definitions 1.2 Rules of Interpretation SECTION 2. THE REVOLVING LOANS 2.1 Revolving Loans 2.2 Loan Account 2.3 Reduction of Revolving Credit Commitment 2.4 Payment 2.5 Interest and Fees SECTION 3. REPRESENTATIONS AND WARRANTIES 3.1 Organization and Qualification 3.2 Corporate Authority 3.3 Valid Obligations 3.4 Approvals and Consents 3.5 Title to Properties; Absence of Liens 3.6 Compliance 3.7 Financial Statements 3.8 No Events of Default 3.9 Taxes 3.10 Litigation 3.11 Margin Rules 3.12 Restrictions on the Borrower 3.13 ERISA 3.14 Intellectual Property; Franchises 3.15 Environmental and Regulatory Compliance 3.16 Labor Relations 3.17 Contracts with Affiliates, Etc. 3.18 Subsidiaries 3.19 Interdependence of Borrowers SECTION 4. CONDITIONS OF LOANS 4.1 Conditions of Initial Loans 4.2 Conditions to all Revolving Loans -i- 3 SECTION 5. COVENANTS 5.1 Financial Reporting 5.2 Conduct of Business 5.3 Maintenance and Insurance 5.4 Taxes 5.5 Limitation of Indebtedness 5.6 Guaranties 5.7 Restrictions on Liens 5.8 Merger, Acquisitions and Purchase and Sale of Assets 5.9 Investments and Loans 5.10 Sale of Notes 5.11 Restricted Payments 5.12 ERISA Compliance 5.13 Pension Plans 5.14 Notification of Default 5.15 Notification of Material Litigation 5.16 Inspection by the Agent and the Banks 5.17 Maintenance of Books and Records 5.18 Use of Proceeds 5.19 Transactions with Affiliates 5.20 Environmental Regulations 5.21 Fiscal Year 5.22 No Amendments to Certain Documents 5.23 No Termination of Certain Documents 5.24 Debt to Worth Ratio 5.25 Current Ratio 5.26 Debt Service Coverage 5.27 Subsidiaries 5.28 Name Change 5.29 Capital Expenditures SECTION 6. EVENTS OF DEFAULT; ACCELERATION SECTION 7. SET-OFF SECTION 8. CONCERNING THE AGENT AND THE BANKS 8.1 Appointment and Authorization 8.2 Agent and Affiliates 8.3 Future Advances 8.4 Payments 8.5 Interest, Fees and Other Payments 8.6 Action by Agent 8.7 Consultation with Experts 8.8 Liability of Agent -ii- 4 8.9 Indemnification 8.10 Independent Credit Decision 8.11 Successor Agent SECTION 9. COURIER AS AGENT FOR THE BORROWERS SECTION 10. MISCELLANEOUS 10.1 Written Notices 10.2 Term of Agreement 10.3 No Waivers 10.4 Further Assurances 10.5 Governing Law 10.6 Payments in Immediately Available Funds 10.7 Expenses, Taxes and Indemnification 10.8 Amendments, Waivers, Etc. 10.9 Binding Effect of Agreement 10.10 Assignment and Participation 10.11 Computation of Interest and Fees 10.12 Entire Agreement 10.13 Captions 10.14 Counterparts 10.15 Severability 10.16 Judgment Currency 10.17 Waiver of Jury Trial EXHIBIT A Form of Revolving Credit Note EXHIBIT B Disclosure EXHIBIT C Existing Indebtedness EXHIBIT D Form of Certificate of Chief Financial Officer EXHIBIT E Form of Legal Opinion of Goodwin, Procter & Hoar LLP EXHIBIT F List of Subsidiaries EXHIBIT G Form of Flash Report -iii- 5 REVOLVING CREDIT AGREEMENT THIS REVOLVING CREDIT AGREEMENT is made as of March 18, 1997, among COURIER CORPORATION, a Massachusetts corporation ("Courier"), COURIER-CITIZEN COMPANY, a Massachusetts corporation ("Citizen"), COURIER COMPANIES, INC., a Massachusetts corporation ("Companies"), COURIER DELAWARE HOLDING CORPORATION, a Delaware corporation ("Holding"), COURIER FOREIGN SALES CORPORATION LIMITED, a Jamaica corporation ("FISC"), COURIER INVESTMENT CORPORATION, a Massachusetts corporation ("Investment"), COURIER KENDALLVILLE, INC., an Indiana corporation ("Kendallville"), COURIER PROPERTIES, INC., a Massachusetts corporation ("Properties"), COURIER STOUGHTON, INC., a Massachusetts corporation ("Stoughton"), COURIER WESTFORD, INC., a Massachusetts corporation ("Westford"), NATIONAL PUBLISHING COMPANY, a Pennsylvania corporation ("Publishing"), and COURIER NEW MEDIA, INC., a Massachusetts corporation ("New Media") (Courier, Citizen, Companies, Holding, FISC, Investment, Kendallville, Properties, Stoughton, Westford, Publishing and New Media being sometimes hereinafter referred to individually as a "Borrower" and collectively as the "Borrowers"), STATE STREET BANK AND TRUST COMPANY, a trust company organized pursuant to the laws of The Commonwealth of Massachusetts, executing this Agreement in its capacity as one of the Banks ("SSB"), THE FIRST NATIONAL BANK OF BOSTON, a national banking association organized under the laws of the United States ("FNBB"), and STATE STREET BANK AND TRUST COMPANY, executing this Agreement, in the capacity of Agent for the Banks (the "Agent"). SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION. 1.1 Definitions. As used herein - 1.1.1 "Affiliate" means, with reference to any Person, (i) any director, officer or employee of that Person, (ii) any other Person controlling, controlled by or under direct or indirect common control of that Person, (iii) any other Person directly or indirectly holding 5% or more of any class of the capital stock or other equity interests (including options, warrants, convertible securities and similar rights) of that Person and (iv) any other Person 5% or more of any class of whose capital stock or other equity interests (including options, warrants, convertible securities and similar rights) is held directly or indirectly by that Person; provided that the term "Affiliate" shall not include the Borrowers or any of their respective Subsidiaries. For purposes of Sections 3.13, 5.12 and 5.13 hereof, "Affiliate" shall mean, within the meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended, (i) any member of a controlled group of corporations which includes a Borrower, (ii) any trade or business, whether or not incorporated, under common control with a Borrower, (iii) any member of an -1- 6 affiliated service group which includes a Borrower, and (iv) any member of a group treated as a single employer by regulation. 1.1.2 "Agent" means SSB acting in the capacity as Agent for the Banks under this Agreement and the other Loan Documents, and includes (where the context so admits) any other Person or Persons succeeding to the functions of the Agent under those documents. 1.1.3 "Agreement" means this Revolving Credit Agreement, including the Exhibits hereto, as originally executed, or if this Agreement is amended, varied or supplemented from time to time, as so amended, varied or supplemented. 1.1.4 "Annual Report" means Courier's Annual Report on Form 10-K for the fiscal year ended September 28, 1996 as filed with the Securities and Exchange Commission. 1.1.5 "Assignee" shall have the meaning set forth in Section 10.10 hereof. 1.1.6 "Applicable Prime Rate Margin" shall have the meaning set forth in Section 2.5.1(ii) hereof. 1.1.7 "Applicable Euroloan Margin" shall have the meaning set forth in Section 2.5.1(ii) hereof. 1.1.8 "Banks" means, collectively, (i) SSB, (ii) FNBB, and (iii) each of the other financial institutions which may after the date hereof become a party to this Agreement as a Bank hereunder. 1.1.9 "Borrowers" shall have the meaning set forth in the preamble hereto. 1.1.10 "Borrowers' Accountants" means independent certified public accountants reasonably acceptable to the Banks. The Banks hereby acknowledge and agree that the Borrowers' Accountants may include Deloitte & Touche LLP. 1.1.11 "Business Day" means (i) for all purposes other than as covered by clause (ii) below, any day on which banks in either Boston, Massachusetts or New York, New York are open for the conduct of a substantial part of their commercial banking business; and (ii) with respect to all notices and determinations in connection with, and payments of principal and interest on, Eurocurrency Loans, any day which is a Business Day described in clause (i) and which is also a day for trading by and between banks in Dollar deposits in the interbank Eurocurrency market in which the Agent regularly participates. -2- 7 1.1.12 "Capital Expenditures" means any expenditure for fixed assets, leasehold improvements, capital leases under GAAP, installment purchases of machinery and equipment, acquisitions of real estate and other similar expenditures including expenditures from the construction in progress account of any Borrower that would be required to be capitalized and shown on the balance sheet of such Person in accordance with GAAP. For purposes of the foregoing definition, Capital Expenditures shall be reduced by cash received from the disposition of a capital asset in accordance with GAAP so long as the proceeds of such disposition have been retained or reinvested by a Borrower. 1.1.13 "Code" means the Internal Revenue Code of 1986, as amended. 1.1.14 "Commitment Percentage" means, with respect to the Revolving Credit Commitment, (i) in relation to SSB, 50%, and (ii) in relation to FNBB, 50%. 1.1.15 "Consolidated" means the relevant figures for the Borrowers and their respective Subsidiaries on a consolidated basis determined in accordance with GAAP. 1.1.16 "Current Assets" means all assets of the Borrowers and their respective Subsidiaries reported on a Consolidated basis which should, in accordance with GAAP, be classified as current assets, but in any event including the cash surrender value of life insurance to the extent it is unencumbered and excluding any assets which are pledged or deposited as security for, or for the purpose of paying, any Indebtedness which is not included in Current Liabilities; provided, however, that for the purpose of computing the Current Ratio in Section 5.25 hereof, inventories shall be valued at the lower of cost (as measured by the first-in, first-out (FIFO) method of accounting) or market. 1.1.17 "Current Liabilities" means the aggregate amount of Indebtedness of the Borrowers and their respective Subsidiaries reported on a Consolidated basis which should properly be classified as current liabilities in accordance with GAAP and in any event including, without limitation, any direct or indirect Indebtedness and other liabilities of the Borrowers and their respective Subsidiaries, if any, which are payable on demand or within one year from the creation thereof. 1.1.18 "Dollars" and "$" mean lawful money of the United States of America. 1.1.19 "EBIT" means, for any period, an amount equal to Consolidated Net Income for such period, (i) plus, to the extent deducted in computing such Consolidated Net Income, (a) interest on Indebtedness for borrowed money and (b) taxes, and (ii) to the extent included in computing such Consolidated Net Income, minus all -3- 8 extraordinary gains or plus all extraordinary losses, and (iii) to the extent included in computing such Consolidated Net Income, plus a one-time, nonrecurring loss projected to be incurred in 1997 or 1998 resulting from the closure or restructuring of a plant forming a segment of the Borrowers' business, which loss may not exceed $1,500,000, in each case net of any tax effect caused by such gains or losses (to the extent not already reflected in clause (i)(b) above). 1.1.20 "Encumbrances" shall have the meaning set forth in Section 5.7 hereof. 1.1.21 "Environmental Laws" shall have the meaning set forth in Section 3.15 hereof. 1.1.22 "ERISA" shall have the meaning set forth in Section 3.13 hereof. 1.1.23 "Eurocurrency Rate" for any Interest Period means the rate of interest determined by the Agent to be the prevailing rate per annum at which deposits in Dollars are offered to the Agent by first-class banks in the interbank Eurocurrency market in which it regularly participates at or about 11:00 a.m. (Boston time) two Business Days before the first day of such Interest Period in an amount approximately equal to the principal amount of the Eurocurrency Loan to which such Interest Period is to apply for a period of time approximately equal to such Interest Period. Each such determination by the Agent shall be conclusive in the absence of manifest error. 1.1.24 "Eurocurrency Loan" means any Loan bearing interest at a rate determined with reference to the Euroloan Rate. 1.1.25 "Euroloan Rate" shall have the meaning set forth in Section 2.5.4(i) hereof. 1.1.26 "Euroloan Rate Amount" means, in relation to any Interest Period, any portions of the principal amount of any Loans on which the Borrowers elect pursuant to Section 2.5.4(i) hereof to pay interest at a rate determined by reference to the Euroloan Rate. 1.1.27 "Event of Default" shall have the meaning set forth in Section 6.1 hereof. 1.1.28 "GAAP" means generally accepted accounting principles (as in effect from time to time), consistently applied. 1.1.29 "Indebtedness" with respect to any Person means and includes, without duplication, (i) all items which, in accordance with GAAP, would be included as a liability on the balance sheet of such Person, but excluding anything in the nature of -4- 9 capital stock, surplus capital and retained earnings, (ii) the face amount of all banker's acceptances and of all letters of credit issued by any bank for the account of such Person and all drafts drawn thereunder, (iii) the total amount of all indebtedness secured by any Encumbrance to which any property or asset of such Person is subject, whether or not the indebtedness secured thereby shall have been assumed, and (iv) the total amount of all indebtedness and obligations of others which such Person has directly or indirectly guaranteed, endorsed (otherwise than for collection or deposit in the ordinary course of business), discounted with recourse or agreed (contingently or otherwise) to purchase or repurchase or otherwise acquire, including, without limitation, any agreement (a) to advance or supply funds to such other Person to maintain working capital, equity capital, net worth or solvency, or (b) otherwise to assure or hold harmless such other Person against loss in respect of its obligations. 1.1.30 [Intentionally Omitted.] 1.1.31 "Interest Period" means, (i) with respect to each Euroloan Rate Amount, any period relating to such Euroloan Rate Amount, the commencement and duration of which shall be determined in accordance with Section 2.5.4 hereof, and (ii) with respect to each Money Market Rate Loan, the Interest Period as specified by the Borrowers in their notice of borrowing (which in any event will not exceed three months), commencing on the borrowing date, or, in the case of a conversion into Money Market Rate Loans, commencing on the date of such conversion, provided that, in the case of this clause (ii), if any such Interest Period would otherwise end on a day which is not a Business Day, such Interest Period shall end and the next Interest Period shall commence on the next succeeding Business Day. 1.1.32 "IRS" shall have the meaning set forth in Section 5.13 hereof. 1.1.33 "Loan" and "Loans" means any of the Revolving Loans as defined in Section 2.1.1 hereof. 1.1.34 "Loan Account" means the account or accounts on the books of the Agent in which will be recorded loans and advances made by the Banks to the Borrowers pursuant to this Agreement, payments made on such loans and other appropriate debits and credits as provided by this Agreement. 1.1.35 "Loan Documents" means, collectively, this Agreement (including, without limitation, the agreements and other instruments listed or described in Section 4 hereof), the Notes, the disclosure letter of even date referred to on Exhibit B attached hereto, and any other agreements, instruments or documents referred to herein (other than the Ancillary Documents) or therein and delivered in connection herewith, and all schedules, exhibits and annexes thereto. -5- 10 1.1.36 "Money Market Rate Loan" means, in relation to any Interest Period, any portion of the principal amount of any Loans on which the Borrowers elect pursuant to Section 2.5.5 hereof to pay interest at a rate determined by reference to the Money Market Rate. 1.1.37 "Money Market Rate" shall have the meaning set forth in Section 2.5.5 hereof. 1.1.38 "Net Income" means the Consolidated gross revenues of the Borrowers and their respective Subsidiaries for the period in question, less all expenses and other proper charges or credits (including taxes on income), all determined in accordance with GAAP, but in any event, excluding from Net Income: (i) any gain or loss arising from any write-up of assets, except to the extent inclusion thereof shall be approved in writing by the Banks; (ii) earnings of any Subsidiary accrued prior to the date it became a Subsidiary; (iii) the net earnings of any business entity (other than a Subsidiary, which term, for purposes of this clause (iii), shall be deemed to include a business entity in which any Borrower or any Subsidiary has an ownership interest of more than 20% but not more than 50%) in which any Borrower or any Subsidiary has an ownership interest, except to the extent such net earnings shall have actually been received by such Borrower or such Subsidiary in the form of cash distributions; (iv) the proceeds of any life insurance policy; (v) any deferred or other credit representing any excess of the equity of any Subsidiary at the date of acquisition thereof over the amount invested in such Subsidiary; and (vi) any reversal of any contingency reserve, except to the extent that provision for such contingency reserve shall be made from income arising during such period. 1.1.39 "Notes" shall have the meaning set forth in Section 2.1 hereof. 1.1.40 "Obligations" means any and all obligations of the Borrowers to the Agent or either Bank of every kind and description, direct or indirect, absolute or contingent, primary or secondary, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument they may be evidenced or whether evidenced by any agreement or instrument, and includes obligations to perform acts and to refrain from acting as well as obligations to pay money. 1.1.41 "Operating Cash Flow" means for any fiscal period, on a Consolidated basis, an amount equal to (i) EBIT for such period, (ii) plus all depreciation, amortization and other non-cash charges of the Borrowers and their respective Subsidiaries taken in accordance with GAAP and deducted in computing Consolidated Net Income for such period, and (iii) minus income taxes actually paid by the Borrowers and their respective Subsidiaries during such period and plus any tax refund actually received by the Borrowers and their respective Subsidiaries during such period. -6- 11 1.1.42 "Participant" shall have the meaning set forth in Section 10.10 hereof. 1.1.43 "PBGC" shall have the meaning set forth in Section 3.13 hereof. 1.1.44 "Pension Plan" and "Pension Plans" shall have the meanings set forth in Section 3.13 hereof. 1.1.45 "Person" includes an individual, a company, a corporation, an association, a partnership, a limited liability company, a limited liability partnership, a joint venture, an unincorporated trade or business enterprise, a trust, an estate, or a government (national, regional or local) or an agency, instrumentality or official thereof. 1.1.46 "Plan" and "Plans" shall have the meanings set forth in Section 3.13 hereof. 1.1.47 "Prime Rate" means that rate of interest announced from time to time by SSB at its head office in Boston as its prime rate, it being understood that such rate is a reference rate, not necessarily the lowest, which serves as the basis upon which effective rates of interest are calculated for obligations making reference thereto. 1.1.48 "Rate Period" means the period beginning on the day following delivery to the Agent and the Banks of the annual financial statements required to be delivered pursuant to Section 5.1(i) hereof and ending one day after the day on which the next such annual financial statements are delivered to the Agent and the Banks. 1.1.49 "Release" shall have the meaning set forth in Section 3.15 hereof. 1.1.50 "Report" shall have the meaning set forth in Section 5.1 hereof. 1.1.51 "Reserve Charge" means, for each day on which any Euroloan Rate Amount is outstanding, a reserve charge in an amount equal to the product of: (i) the outstanding principal amount of the Euroloan Rate Amount, multiplied by (ii) (a) the Eurocurrency Rate (expressed as a decimal) divided by one minus the Reserve Rate, minus (b) the Eurocurrency Rate (expressed as a decimal), multiplied by (iii) 1/360. -7- 12 1.1.52 "Reserve Rate" means the rate in effect from time to time, expressed as a decimal, at which the Agent or the Banks would be required to maintain reserves under Regulation D of the Board of Governors of the Federal Reserve System (or any successor or similar regulation relating to such reserve requirements) against "Eurocurrency Liabilities" (as such term is used in such Regulation D) if such liabilities were outstanding. 1.1.53 "Restricted Payments" means (i) any dividend or other distribution, direct or indirect, on or account of any shares of any class of capital stock of any Borrower except a dividend payable solely in shares of common stock or preferred stock of such Borrower; (ii) any redemption, retirement, purchase or other acquisition, direct or indirect, of any shares of any class of capital stock of any Borrower, or of any warrants, rights or options to acquire any such shares, except to the extent the consideration therefor consists of shares of common stock or preferred stock of such Borrower; and (iii) any investment which is not permitted pursuant to Section 5.9 of this Agreement (the amount involved in any Restricted Payment made or committed for in property shall be the fair market value of such property on the date such Restricted Payment is made or committed for). 1.1.54 "Revolving Credit Commitment" means, in relation to either Bank, the maximum liability from time to time of such Bank to make Revolving Loans to the Borrowers upon the terms and subject to the conditions contained in this Agreement. 1.1.55 "Revolving Loans" shall have the meaning set forth in Section 2.1.1 hereof. 1.1.56 "Revolving Loan Maturity Date" means February 15, 2000. 1.1.57 "Revolving Loan Maximum Amount" means $20,000,000. 1.1.58 "Subsidiary" means, with reference to any Person, any corporation, association, joint stock company, business trust or other similar organization of whose total capital stock or voting stock such Person directly or indirectly owns or controls more than 50% thereof (or such lesser proportion of such capital stock or voting stock as may from time to time constitute a controlling interest in accordance with GAAP) or any partnership or other entity in which such Person directly or indirectly has more than a 50% interest or which is controlled directly or indirectly by such Person (or such lesser proportion of such shares of beneficial interest as may from time to time constitute a controlling interest in accordance with GAAP). 1.1.59 "Tangible Net Worth" means the amount which is equal to the Consolidated net worth of the Borrowers and their respective Subsidiaries computed in accordance with GAAP and with inventory and cost of goods sold determined on a "last in, first out" basis, minus (i) any writeup in the book value of any asset of any Borrower -8- 13 or any Subsidiary of any Borrower resulting from revaluation thereof after the date of the Annual Report, but only to the extent any such writeup is not otherwise approved in advance by the Banks or not otherwise permitted by GAAP, (ii) the book value in accordance with GAAP, net of applicable reserves, of all intangible assets of the Borrowers and their respective Subsidiaries, if any, including, without limitation, goodwill, trademarks, trade names, copyrights, patents and any similar rights, and unamortized debt discount and expense, (iii) the value in accordance with GAAP, if any, attributable to any capital stock of any Borrower or any Subsidiary of any Borrower held in treasury, (iv) the value in accordance with GAAP, if any, attributable to any notes or subscriptions receivable due from stockholders in respect of capital stock, and (v) accounts with Affiliates (including receivables due from Affiliates). 1.1.60 "Total Debt Service" means, in relation to the Borrowers and their respective Subsidiaries on a Consolidated basis for any period, all interest expense which has accrued in accordance with GAAP (whether actually paid or not), for such period, and all payments of principal scheduled to be paid during such period, on all obligations for borrowed money, capitalized leases or similar types of obligations, except for the principal amounts outstanding under the Revolving Loans. 1.1.61 "Voting Shares" means, in relation to any particular corporation, any shares of any class in the capital of such corporation having by the terms thereof ordinary voting power to elect the majority of the board of directors of such corporation. 1.1.62 "Year-End Financial Statements" shall have the meaning set forth in Section 3.7 hereof. 1.2 Rules of Interpretation. For all purposes of this Agreement and the other Loan Documents, except as otherwise expressly provided herein or therein or unless the context otherwise requires: (i) references to any Person defined in this Section 1 refer to such Person and its permitted successor in title and assigns or (as the case may be) his permitted successors, assigns, heirs, executors, administrators and other legal representatives; (ii) references to any agreement, instrument or document defined in this Section 1 refer to such document as originally executed, or if subsequently amended, varied or supplemented from time to time, as so amended, varied or supplemented and in effect at the relevant time of reference thereto; (iii) words importing the singular only shall include the plural and vice versa, and the words importing the masculine gender shall include the feminine gender and vice versa, and all references to dollars shall be United States dollars; -9- 14 (iv) references to any law include any amendment or modification to such law; (v) the words "include," "includes" and "including" are not limiting; (vi) all terms not specifically defined herein or by GAAP, which terms are defined in the Uniform Commercial Code as in effect in the Commonwealth of Massachusetts, have the meanings assigned to them therein; (vii) the words "herein," "hereof," "hereunder" and words of like import shall refer to this Agreement as a whole and not to any particular section or subdivision of this Agreement; (viii) accounting terms not otherwise defined in this Agreement or any of the other Loan Documents have the meanings assigned to them in accordance with GAAP; and (ix) all of the obligations of the Borrowers under this Agreement or any other Loan Document shall be the joint and several obligations of the Borrowers. SECTION 2. THE REVOLVING LOANS 2.1 Revolving Loans. 2.1.1 Upon the terms and subject to the conditions of this Agreement, and in reliance upon the joint and several representations, warranties and covenants of the Borrowers made herein, each of the Banks severally agrees to make loans (the "Revolving Loans") to the Borrowers at the Borrowers' request from time to time, from and after the date hereof and prior to the Revolving Loan Maturity Date in such amounts as requested by the Borrowers up to a maximum aggregate principal amount outstanding (after giving effect to all amounts requested) at any one time equal to such Bank's Commitment Percentage of the Revolving Credit Commitment; provided that the maximum aggregate principal amount of Revolving Loans outstanding at any time (after giving effect to all amounts requested) shall not exceed the aggregate Revolving Credit Commitments of both of the Banks or the Revolving Loan Maximum Amount; and provided, further, that at the time the Borrowers request a Revolving Loan and after giving effect to the making thereof, there is not continuing any Event of Default or any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default. The Revolving Loans shall be made pro rata in accordance with each Bank's Commitment Percentage. If at any time the aggregate principal amount of all Loans then outstanding exceeds the Revolving Credit Commitments, then the Borrowers shall, upon demand by the Agent, pledge, assign and transfer to the Agent for the respective accounts of the Banks, cash collateral in the amount of such excess or repay -10- 15 the amount of such excess by prepaying Loans then outstanding. Any such prepayments of Eurocurrency Loans shall be accompanied by any amounts required to be paid pursuant to Section 2.5.4(vi). Failure to pledge, assign and transfer such collateral or make such payment within two (2) days after demand therefor shall be an Event of Default hereunder. 2.1.2 All requests for Revolving Loans shall be in such form and shall be made in such manner as is consistent with the Agent's customary practices. The Revolving Loans shall be evidenced by separate Revolving Credit Notes of the Borrowers to each Bank substantially in the form of Exhibit A attached hereto (collectively, the "Notes"), with appropriate insertions. 2.1.3 Each Bank and the Agent shall, and is hereby irrevocably authorized by the Borrowers to, enter on the schedule forming a part of the respective Notes or otherwise in its records appropriate notations evidencing the date and the amount of each Loan, the interest rate applicable thereto and the date and amount of each payment of principal made by the Borrowers with respect thereto; and in the absence of manifest error, such notations shall constitute conclusive evidence thereof. Each Bank and the Agent is hereby irrevocably authorized by the Borrowers to attach to and make a part of the Notes a continuation of any such schedule as and when required. No failure on the part of either Bank or the Agent to make any endorsement of a notation as provided in this subsection 2.1.3 shall in any way affect any Loan, or the rights or obligations of the Agent, the Banks or the Borrowers with respect thereto. 2.2 Loan Account. The Agent shall enter Revolving Loans as debits in the Loan Account. The Agent shall also record in the Loan Account all payments made by the Borrowers on account of Revolving Loans, and may also record therein, in accordance with customary accounting practices, other debits and credits, including customary banking charges and all interest, fees, charges and expenses chargeable to the Borrowers under this Agreement. The debit balance of the Loan Account shall reflect the amount of the Borrowers' Obligations to the Banks and the Agent from time to time by reason of Revolving Loans and other appropriate charges permitted hereunder. Periodically, the Agent shall render a statement of account showing as of its date the debit balance of the Loan Account which, unless within thirty (30) days of the Borrowers' receipt of such statement notice to the contrary is received by the Agent from the Borrowers, shall be considered prima facie evidence that it is correct and accepted by Borrowers in the absence of manifest error. 2.3 Reduction of Revolving Credit Commitment. The Borrowers shall have the right at any time and from time to time upon five (5) Business Days' prior written notice to the Agent to reduce by $500,000 or an integral multiple thereof or terminate entirely the unborrowed portion of the Revolving Credit Commitment, whereupon the Revolving Credit Commitments of the Banks shall be reduced pro rata in accordance with their respective Commitment Percentages of the amount specified in such notice, or, as -11- 16 the case may be, terminated. Promptly after receiving any notice of the Borrowers delivered pursuant to this Section 2.3, the Agent will notify the Banks of the substance thereof. Upon the effective date of any such reduction or termination, the Borrowers shall pay to the Agent, for the ratable account of each Bank, the full amount of any commitment fee then accrued pursuant to Section 2.5.2 hereof on the amount of the reduction. If the Borrowers reduce the Revolving Credit Commitment hereunder, any commitment fee payable thereafter under Section 2.5.2 hereof shall be payable with respect to the Revolving Credit Commitment as so reduced or terminated. No reduction of the Revolving Credit Commitment may be reinstated. 2.4 Payment. 2.4.1 (i) Loans bearing interest at a rate determined by reference to the Prime Rate may be prepaid from time to time in whole or in part, without premium or penalty, provided that interest accrued on the amounts so prepaid to the date of such payment and all (if any) outstanding fees and charges in respect thereof must be paid at the time of any such prepayment. Amounts so paid and other amounts may be borrowed and reborrowed from time to time as provided in Section 2.1 hereof. (ii) No Loan bearing interest at a rate determined by reference to the Euroloan Rate may be prepaid by the Borrowers prior to the last day of any Interest Period applicable to such Loan. (iii) No Loan bearing interest at a rate determined by reference to the Money Market Rate may be prepaid by the Borrowers prior to the last day of any Interest Period applicable to such Loan. 2.4.2 Notwithstanding the foregoing, the Borrowers jointly and severally promise to pay on the Revolving Loan Maturity Date, and there shall become absolutely due and payable on the Revolving Loan Maturity Date, all outstanding Revolving Loans and the Notes, together with all unpaid interest accrued thereon and all fees and other amounts due hereunder. In the case of any partial prepayment of the Notes, the total amount of such partial prepayment shall be allocable between or among the Notes pro rata in accordance with the Commitment Percentage of each Bank. 2.4.3 The Revolving Loan Maturity Date may be extended for one or more additional one-year periods as follows: (i) not sooner than ninety (90) and not later than forty-five (45) days prior to each anniversary of the date of this Agreement, the Borrowers may, by written notice to the Agent, request a one-year extension of the Revolving Loan Maturity Date, and the Agent shall forthwith inform each Bank of such request; (ii) each Bank shall thereafter have thirty (30) days after notice from the Agent regarding the Borrowers' request to extend the Revolving Loan Maturity Date, to notify the Agent whether it will consent to the Borrowers' -12- 17 request, and the Agent shall forthwith inform the Borrowers of each Bank's decision; (iii) if the Agent notifies the Borrowers that either Bank has elected not to consent to the Borrowers' request or has failed to respond within such thirty (30) day period (such Bank a "Non-Consenting Bank"), then the Borrowers shall have the right to recommend to the Agent, within 5 days after notice from the Agent, a replacement for the Non-Consenting Bank with another bank acceptable to the remaining Bank(s); (iv) if the Non-Consenting Bank is not replaced, or if both Banks have elected not to consent to the Borrowers' request, or if the replacement bank is not acceptable to the remaining Bank(s), in each case prior to the Revolving Loan Maturity Date, then the Agreement shall be terminated on the then current Revolving Loan Maturity Date; (v) if the Non-Consenting Bank is so replaced or if both Banks have consented to the Borrowers' request, then the Revolving Loan Maturity Date shall be extended for an additional one-year period; and (vi) it is acknowledged and agreed by the parties hereto that upon any request for an extension of the Revolving Loan Maturity Date made by the Borrowers after the first anniversary of the date of this Agreement, the Banks shall have the right to review the interest rates and fees applicable to the Loans and require a modification thereof as a precondition to approving the requested extension of the Revolving Loan Maturity Date. 2.5 Interest and Fees. 2.5.1 (i) Except to the extent the Borrowers are permitted and have chosen the alternatives set forth in Sections 2.5.4 and/or 2.5.5 hereof, the entire unpaid principal (not at the time overdue) of each Revolving Loan shall bear interest at a rate per annum equal to the Prime Rate plus the Applicable Prime Rate Margin in effect from time to time. Upon and after the occurrence of an Event of Default, and during the continuation thereof, the unpaid balance of the Revolving Loans shall bear interest, to the extent permitted by law, at the annual rate of interest equal to three percent (3%) above the Prime Rate plus the Applicable Prime Rate Margin in effect on the first Business Day following the occurrence of such Event of Default, which interest shall be compounded monthly and payable on demand. Any change in the Prime Rate shall result in a change on the same day in the rate of interest to accrue from and after such day on the unpaid balance of principal of the Revolving Loans. Except as provided in the second sentence of this Section 2.5.1, interest on Revolving Loans shall be payable monthly in arrears on the first Business Day of the next succeeding month, commencing on the first such date following the date hereof, with the final payment at maturity of the Revolving Loan. -13- 18 (ii) For purposes of this Section 2.5.1 and also Section 2.5.4 below, (x) the "Applicable Prime Rate Margin" shall be equal to the percentage determined for each Rate Period by reference to Table 1 below, and (y) the "Applicable Euroloan Margin" shall be equal to the percentage determined for each Rate Period by reference to Table 1 below: Table 1
Applicable Applicable Prime Rate Euroloan Consolidated Net Income Margin Margin ----------------------- ---------- ---------- a) greater than or equal to $1,000,000 0.00% 0.75% b) less than $1,000,000 but equal to or greater than $0 0.25% 1.00% c) less than $0 but equal to or greater than negative ($1,000,000) 0.50% 1.25%
For purposes of determining the Applicable Prime Rate Margin and the Applicable Euroloan Margin, Consolidated Net Income will be tested annually based on the annual financial statements required to be delivered pursuant to Section 5.1(i) hereof, and for further purposes of such determination, there will be excluded all extraordinary items and, to the extent included in computing such Consolidated Net Income, a one-time, nonrecurring loss projected to be incurred in 1997 or 1998 resulting from the closure or restructuring of a plant forming a segment of the Borrowers' business, which loss may not exceed $1,500,000. For purposes of determining the interest rate for any Rate Period hereunder, any interest rate change shall be effective five (5) days after the date on which the financial statements required to be delivered pursuant to Section 5.1(i) are delivered to the Agent and the Banks, together with a notice to the Agent (which shall be verified by the Agent) specifying any change in the Applicable Prime Rate Margin and the Applicable Euroloan Margin, and if the Borrowers have failed to deliver the financial statements required to be delivered by them pursuant to Section 5.1(i), the applicable Prime Rate Margin and the Applicable Euroloan Margin shall automatically be increased to 0.50% and 1.25%, respectively, until such financial statements are delivered. It is further understood and agreed that if Consolidated Net Income is determined to be less than negative ($1,000,000), such occurrence shall constitute an Event of Default hereunder. -14- 19 2.5.2 The Borrowers jointly and severally agree to pay to the Agent for the account of the Banks, to be allocated between the Banks in accordance with their Commitment Percentages, a fee on the daily average unused amount of the Revolving Credit Commitment from time to time available during the period commencing on the date hereof and ending on the Revolving Loan Maturity Date (as the same may be extended pursuant to Section 2.4.3 hereof), computed at the annual rate of one-quarter of one percent (1/4%), and payable quarterly in arrears on the last day of each March, June, September and December in each year, commencing on the first such date following the date hereof, and also payable on the date on which such Revolving Credit Commitment shall terminate in full hereunder. 2.5.3 The Borrowers jointly and severally agree to pay to the Agent for the account of the Banks, to be allocated between the Banks in accordance with their Commitment Percentages, any and all reasonable charges customarily made by banks against borrowers. 2.5.4 (i) At the option of the Borrowers, so long as there is not then continuing any Event of Default or any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default, the Borrowers may elect from time to time prior to the Revolving Loan Maturity Date to request that all or a portion of the Revolving Credit Loans shall bear interest during any particular Interest Period at the Euroloan Rate; provided that any such Revolving Credit Loan shall be in an integral multiple of $100,000 with respect to any single Interest Period. Any election by the Borrowers to request that a Revolving Credit Loan bear interest at the Euroloan Rate shall be made by notice (which shall be irrevocable) to the Agent at least three (3) Business Days prior to the first day of the proposed Interest Period, specifying the Euroloan Rate Amount and the duration of the proposed Interest Period (which must be for one, two, three or six months and which shall expire not later than the Revolving Loan Maturity Date). Any such election of a Euroloan Rate shall lapse at the end of the expiring Interest Period unless extended by a further election notice as hereinbefore provided. Except as otherwise provided herein, each Euroloan Rate Amount shall bear interest during each Interest Period relating thereto at an annual rate (the "Euroloan Rate") equal to the Eurocurrency Rate plus the Applicable Euroloan Margin. Interest on each Euroloan Rate Amount shall be payable in Dollars (a) on the last day of each Interest Period relating thereto, or (b) if any Interest Period is longer than three months, on the last day of each three-month period following the commencement of such Interest Period and on the last day of such Interest Period. (ii) The Borrowers shall pay to the Agent, for the account of the applicable Bank, the Reserve Charge, if any, incurred by either Bank with respect to Euroloan Rate Amounts of the Revolving Loans outstanding from time to time on the dates interest is payable on such Euroloan Rate Amounts. -15- 20 (iii) The Agent shall forthwith upon determining any Euroloan Rate provide notice thereof to the Borrowers. Each such notice shall, absent manifest error, be conclusive and binding upon the Borrowers. (iv) If on any date on which the Euroloan Rate would otherwise be set the Agent shall have determined in good faith (which determination shall be final and conclusive) that, by reason of changes affecting the interbank Eurocurrency market for Dollar deposits, adequate and reasonable means do not exist for ascertaining the Eurocurrency Rate, or at any time the Agent shall have determined in good faith (which determination shall be final and conclusive) that: (a) the making of a Eurocurrency Loan has been made impracticable or unlawful by (1) the occurrence of a contingency that materially and adversely affects the interbank Eurocurrency market for Dollar deposits or (2) compliance by the Agent or any Bank in good faith with any applicable law or governmental regulation, guideline or order or interpretation or change thereof by any governmental authority charged with the interpretation or administration thereof or with any request or directive of any such governmental authority (whether or not having the force of law); or (b) the Eurocurrency Rate shall no longer represent the effective cost to the Agent for Dollar deposits in the interbank market for deposits in which the Agent regularly participates; then, and in any such event, the Agent shall forthwith so notify the Borrowers thereof. Until the Agent notifies the Borrowers that the circumstances giving rise to such notice no longer apply, the obligation of the Agent and the Banks to allow the selection by the Borrowers of the type of Loans affected by the contingencies described in this Subsection 2.5.4(iv) (herein called "Affected Loans") shall be suspended. If at the time the Agent so notifies the Borrowers, the Borrowers have previously requested one or more Affected Loans but such Loans have not yet gone into effect, such notification shall be deemed to be void and the Borrowers may request Loans at the rate of interest provided in Section 2.5.1 or Section 2.5.5 hereof. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given) the Borrowers shall, with respect to the outstanding Affected Loans, prepay the same, together with interest thereon and any amounts required to be paid pursuant to Section 2.5.4(vi) and may request a Loan of another type in accordance with Section 2.1 hereof. (v) If any Interest Period in respect of a Euroloan Rate Amount would otherwise end on a day which is not a Business Day for Euroloan Rate purposes, that Interest Period shall end on the Business Day next preceding or next succeeding such -16- 21 day as determined by the Agent in accordance with its usual practices and of which the Agent notifies the Borrowers at the beginning of such Interest Period. (vi) If, notwithstanding Section 2.4.1(ii) hereof, for any reason any payment or prepayment of principal of a Euroloan Rate Amount is made on any day other than the last day of an Interest Period, then the Borrowers shall reimburse the Agent or the applicable Bank for such amount as the Agent or such Bank certifies to be the amount that will compensate the Agent or such Bank for the resulting loss, if any. 2.5.5 In addition, the Borrowers may request, and the Agent, in the sole discretion of the Agent and the Banks, may quote the Borrowers, a so-called money market rate (the "Money Market Rate") for one or more proposed Revolving Loans and/or Interest Periods, provided that (i) each Money Market Rate Loan shall not be less than $500,000 or integral multiples of $250,000 in excess of $500,000, and (ii) the aggregate principal amount of Money Market Rate Loans at any one time outstanding shall not exceed the Revolving Loan Maximum Amount (less the aggregate amount of then outstanding Loans), and provided, further, that at the time of the request of the Money Market Rate Loan and after giving effect to the making thereof, there is not then continuing any Event of Default or any event which, with the giving of notice or the passage of time, or both, would constitute an Event of Default. Any request by the Borrowers for a Revolving Loan bearing interest at the Money Market Rate shall be made prior to 11:00 a.m. (Boston time) of the first day of the proposed Interest Period. Notwithstanding anything else in this Agreement, the maximum principal amount which the Borrowers may borrow under any possible combination of Loans shall not exceed the amount of the Revolving Loan Maximum Amount as in effect from time to time. If the Borrowers desire to proceed with a Money Market Rate Loan on the proposed date on a basis quoted to it, the Borrowers shall, within the time limit specified in such quotation, give notice to the Agent of (i) the amount thereof, and (ii) the Interest Period to be applicable thereto. Each such notice given by the Borrowers shall be irrevocable and shall obligate the Borrowers to accept the Loan described therein on the basis proposed therefor. In addition, the Borrowers shall enter into with the Agent and the Banks such agreements and execute such instruments and documents as the Agent and the Banks reasonably require. 2.5.6 If after the date hereof, either Bank shall have determined that the adoption of any applicable law, rule, regulation, guideline, directive or request (whether or not having the force of law) regarding capital requirements for banks or bank holding companies, or any change therein, or any change in the interpretation or administration thereof by any governmental authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Bank with any of the foregoing imposes or increases a requirement by such Bank to allocate capital resources to such Bank's commitment to make Loans hereunder which has or would have the effect of reducing the return on such Bank's capital to a level below that which such Bank could have achieved (taking into consideration such Bank's then existing policies with respect -17- 22 to capital adequacy and assuming full utilization of such Bank's capital) but for such adoption, change or compliance by any amount deemed by such Bank to be material, then: (i) the Agent shall promptly after its determination of such occurrence give notice thereof to the Borrowers; and (ii) the Borrowers shall pay to the Agent, for the account of the applicable Bank, as an additional fee from time to time on demand such amount as such Bank certifies to be the amount that will compensate such Bank for such reduction. A certificate of the applicable Bank claiming compensation under this Section shall be conclusive in the absence of manifest error. Such certificate shall set forth the nature of the occurrence giving rise to such compensation, the additional amount or amounts to be paid to it hereunder and the method by which such amounts were determined. In determining such amount, such Bank may use any reasonable averaging and attribution methods. The provisions of this Section 2.5.6 shall be applied to the Borrowers so as not to discriminate against the Borrower vis-a-vis other customers of the applicable Bank. 2.5.7 Anything hereinbefore to the contrary notwithstanding, if, after the date hereof, any present or future applicable law (which expression, as used in this Agreement, includes statutes and rules and regulations thereunder and interpretations thereof by any competent court or by any governmental or other regulatory body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time heretofore or hereafter made upon or otherwise issued to the Agent or either Bank by any central bank or other fiscal, monetary or other authority, whether or not having the force of law) shall (i) subject the Agent or either Bank to any tax, levy, impost, duty, charge, fee, deduction or withholding of any nature with respect to this Agreement, the maximum amount of any Loan, any Loans, any other Loan Document, including, without limitation, the Notes or the payment to the Agent or either Bank of any amounts due to it thereunder or hereunder, or (ii) materially change the basis of taxation of payments to the Agent or either Bank of the principal or the interest on or any other amounts payable to the Agent or either Bank hereunder, under the Notes or under any other Loan Document, or (iii) impose or increase or render applicable any special or supplemental special deposit or reserve or similar requirements or assessment against assets held by, or deposits in or for the account of, or any liabilities of, or loans by an office of the Agent or either Bank in respect of the transactions contemplated herein, or (iv) impose on the Agent or either Bank any other conditions or requirements with respect to this Agreement, the maximum amount of any Loan, any Loan, the Notes or any other Loan Document, and the result of any of the foregoing is (a) to increase the cost to the Agent or either Bank of making, funding or maintaining all or any part of the Loans or the commitment thereto, or (b) to reduce the amount of principal, interest or other amount payable to the Agent or either Bank hereunder, under the Notes or under any other Loan Document or (c) to require the Agent or either Bank to make any payment or to forgo any interest or other sum payable hereunder, under the Notes or under any other Loan Document, the amount of which payment or foregone interest or other sum is calculated by reference to the gross amount of any sum receivable or deemed received by the Agent or either Bank from the Borrowers hereunder, under the Notes or under any other Loan Document, then, and in -18- 23 each such case not otherwise provided for hereunder, the Borrowers will, upon demand made by the Agent or such Bank accompanied by calculations thereof in reasonable detail, pay to the Agent or such Bank such additional amounts as will be sufficient to compensate the Agent or such Bank for such additional cost, reduction, payment or foregone interest or other sum, provided that the foregoing provisions of this sentence shall not apply in the case of any additional cost, reduction, payment or foregone interest or other sum resulting from any taxes charged upon or by reference to the overall net income, profits or gains of the Agent or such Bank. 2.5.8 Anything hereinbefore to the contrary notwithstanding, if at any time, whether as a result of the application of any present or future law (which expression, as used in this Agreement, includes statutes and rules and regulations thereunder and interpretations thereof by any competent court or by any governmental body or official charged with the administration or the interpretation thereof and requests, directives, instructions and notices at any time or from time to time heretofore or hereafter made upon or issued to the Agent or either Bank by any central bank or any fiscal, monetary or other authority, whether or not having the force of law), changes in any present or future law, subsequent transactions by the Borrowers, changes in the ratio of Indebtedness of the Borrowers to Tangible Net Worth or otherwise, the Agent or either Bank is deemed to be involved in a so-called "highly leveraged transaction" by virtue of its having extended or its maintaining the Loans, then the Agent shall notify the Borrowers thereof. The Agent or such Bank and the Borrowers shall thereupon commence negotiations in good faith to agree on the extent to which fees, interest rates and/or margins hereunder should be increased so as to reflect the Agent's or such Bank's involvement in a "highly leveraged transaction." If the Borrowers and the Agent or such Bank agree on the amount of such increase or increases, this Agreement shall be promptly amended to give effect to such increase or increases. If the Borrowers and the Agent or such Bank fail so to agree within thirty (30) days after the date on which the Borrowers receive notice from the Agent or such Bank as provided above, then the Agent and the Banks may, at their option, at any time thereafter by notice to the Borrowers, terminate the Revolving Credit Commitment, effective not less than one hundred and twenty (120) days after the giving of such notice of termination, and on the effective date of such termination the commitment to make Loans hereunder shall terminate and the Notes shall become due and payable in full. 2.5.9 The Borrowers authorize the Agent and each Bank to charge to the Loan Account or, without double-charging, to any deposit account which the Borrowers may maintain with the Agent or such Bank, the interest, fees, charges, taxes and expenses provided for in this Agreement or any other document executed or delivered in connection herewith. -19- 24 SECTION 3. REPRESENTATIONS AND WARRANTIES. The Borrowers hereby jointly and severally represent and warrant to the Agent and each Bank as follows: 3.1 Organization and Qualification. Each of the Borrowers and its Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of its incorporation as indicated on Exhibit B attached hereto; (ii) has all requisite corporate power and authority to own its property and conduct its business as now conducted and as presently contemplated; and (iii) is duly qualified and in good standing in each jurisdiction (which jurisdictions are listed on Exhibit B attached hereto) where the nature of its properties or its business requires such qualification, except where the failure to be so qualified would not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. 3.2 Corporate Authority. The execution, delivery and performance of this Agreement, the Notes and the other Loan Documents and the transactions and other documents contemplated hereby and thereby are within each Borrower's corporate authority, have been authorized by all necessary corporate proceedings on the part of such Borrower, and do not and will not (i) contravene any provision of law (except for any contravention as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole), or its or any of its Subsidiaries' charter documents or by-laws (each as in effect from time to time), or (ii) contravene any provisions of, or constitute an Event of Default hereunder or a default under, or an event which with the lapse of time or the giving of notice, or both, would constitute an Event of Default hereunder or a default under any other agreement, instrument, judgment, order, decree, permit, license or undertaking binding upon or applicable to such Borrower, any Subsidiary of such Borrower or any of their respective properties, or result in the creation of any mortgage, pledge, security interest, lien, encumbrance or charge upon any of the properties or assets of such Borrower or any Subsidiary of such Borrower, or (iii) require any waivers, consents or approvals by any of the creditors or trustees for creditors of such Borrower or any Subsidiary of such Borrower, or (iv) require any consents or approvals by any shareholders of such Borrower or any Subsidiary of such Borrower, or (v) require any approval, consent, order, authorization or license by, or giving notice to, or taking any other action with respect to, any governmental or regulatory authority or agency, except those actions that have been taken or will be taken prior to the date of this Agreement, under any provision of any applicable law. 3.3 Valid Obligations. The agreements and obligations of each Borrower in this Agreement, the Notes and the other Loan Documents to which such Borrower is a party constitute legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their respective terms, except as limited by -20- 25 bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors' rights generally, and except as the remedy of specific performance or of injunctive relief is subject to the discretion of the court before which any proceeding therefor may be brought. 3.4 Approvals and Consents. The execution, delivery and performance of this Agreement, the Notes and the other Loan Documents and the transactions and other documents contemplated hereby and thereby do not require any approval or consent of, or filing or registration with, any governmental or other agency or authority or any other Person, except as disclosed on Exhibit B attached hereto. 3.5 Title to Properties; Absence of Liens. As of the date of this Agreement, each of the Borrowers and its Subsidiaries has good and marketable title to all of its respective properties, assets and rights of every name and nature now purported to be owned by it, including, without limitation, the properties, assets and rights reflected in the Year-End Financial Statement, in each case free from all liens, charges and encumbrances whatsoever except for insubstantial defects in title which do not materially detract from the value or impair the use of the affected properties and liens, charges or encumbrances permitted under Section 5.7 hereof, and as of the date of this Agreement its Obligations under the Loan Documents rank at least pari passu as to the right of repayment with all its other Indebtedness for borrowed money except as set forth on Exhibit B attached hereto. The rights, properties and other assets presently owned, leased or licensed by any of the Borrowers or any of their respective Subsidiaries and described elsewhere in this Agreement include all rights, properties and other assets necessary to permit the Borrowers and their respective Subsidiaries to conduct their respective businesses in all material respects in the same manner as such businesses are being conducted on the date of this Agreement. 3.6 Compliance. Except as set forth in Exhibit B attached hereto, each of the Borrowers and its Subsidiaries has all necessary permits, approvals, authorizations, consents, licenses, franchises, registrations and other rights and privileges (including patents, trademarks, trade names and copyrights) to allow it to own and operate its business without any violation of law or the rights of others (except for any such violation as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole); and each of the Borrowers and its Subsidiaries is duly authorized, qualified and licensed under and in compliance with all applicable laws, regulations, authorizations and orders of public authorities (except where the failure to comply would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole). 3.7 Financial Statements. The Borrowers have furnished to the Agent and the Banks the Consolidated balance sheet and statement of income of the Borrowers and their -21- 26 respective Subsidiaries as at September 28, 1996 and for the fiscal year then ended certified by the Borrowers' Accountants (the "Year-End Financial Statement"), which was prepared in accordance with GAAP and fairly presents the financial position of the Borrowers and their respective Subsidiaries as at the close of business on such date and the results of operations for the fiscal year period then ended, along with Courier's Quarterly Report on Form 10-Q for the fiscal quarter ended December 28, 1996 as filed with the Securities and Exchange Commission. The Borrowers have also furnished to the Agent and the Banks projections of the Borrowers' and their respective Subsidiaries' results of operations for the fiscal year ended September 27, 1997, all of which were made in good faith and based on assumptions which the Borrowers believed reasonable when made and continue to be reasonable at the date hereof. At the date hereof, the Borrowers and their respective Subsidiaries have no Indebtedness or other liabilities, debts or obligations involving amounts material to the Borrowers and their respective Subsidiaries taken as a whole, whether accrued, absolute or, to the best knowledge of the Borrowers, contingent, and whether due or to become due, including, but not limited to, liabilities or obligations on account of taxes or other governmental charges, that are not set forth on Exhibit C attached hereto or reflected in the Year-End Financial Statement or in such Form 10-Q. Since the date of such Form 10-Q there have been no changes in the assets, liabilities, financial condition or business of the Borrowers and their respective Subsidiaries taken as a whole, the effect of which has, in the aggregate, been materially adverse, except as set forth on Exhibit B attached hereto. 3.8 No Events of Default. As of the date of this Agreement, no Event of Default exists, and no event or condition exists which, with the passage of time or the giving of notice, or both, would constitute an Event of Default. 3.9 Taxes. Each of the Borrowers and its Subsidiaries has filed all federal, state and other tax returns required to be filed and all material taxes, assessments and other such governmental charges due from the Borrowers and their respective Subsidiaries have been fully paid. Except as set forth on Exhibit B attached hereto, neither any Borrower nor any Subsidiary of any Borrower has executed any waiver that would have the effect of extending the applicable statute of limitations in respect of tax liabilities involving amounts material to the Borrowers taken as a whole. Each of the Borrowers and its Subsidiaries has established on its books reserves in accordance with GAAP for the payment of all federal, state and other tax liabilities. 3.10 Litigation. Except as set forth on Exhibit B attached hereto, there is no litigation, proceeding or governmental investigation, civil or criminal, administrative or judicial, pending or, to the best knowledge of the Borrowers, threatened against any Borrower or any Subsidiary of any Borrower which, if decided adversely to such Borrower or such Subsidiary would have a materially adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole or on the ability of the Borrowers to perform their obligations hereunder, under the Notes, under the other Loan Documents to -22- 27 which any Borrower is a party or under any other agreement or document contemplated hereby, nor is any substantial basis for any such litigation known to exist. 3.11 Margin Rules. No portion of any Loan is to be used for the purpose of purchasing or carrying any "margin security" or "margin stock" as such terms are used in Regulations G, U or X of the Board of Governors of the Federal Reserve System. 3.12 Restrictions on the Borrowers. Neither any Borrower nor any Subsidiary of any Borrower is party to or bound by any contract, agreement or instrument, nor subject to any charter or other corporate restriction, materially and adversely affecting the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. 3.13 ERISA. (i) Each "Employee Pension Benefit Plan" (as such term is defined in Section 3 of the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations thereunder ("ERISA")) now or heretofore maintained by any Borrower or any Affiliate (as defined solely in the second sentence of Section 1.2) (individually the "Pension Plan" and collectively the "Pension Plans") and any "Employee Welfare Benefit Plan" (as such term is defined in Section 3 of ERISA) now or heretofore maintained by any Borrower or any Affiliate (individually the "Plan" and collectively the "Plans") is listed on Exhibit B attached hereto and is in substantial compliance with ERISA (to the extent that ERISA is applicable); (ii) no Pension Plan, Plan or trust created thereunder, no trustee thereof, no administrator or fiduciary (other than an unrelated third party administrator or fiduciary) thereof, and neither any Borrower nor any Affiliate has engaged in a "Prohibited Transaction" (as such term is defined in Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code") ("Prohibited Transaction")) which would subject any such Pension Plan, Plan, trust created thereunder, trustee, administrator or fiduciary thereof or any Borrower or any Affiliate or any party dealing with any such Pension Plan, Plan or trust to a material tax or penalty on a "Prohibited Transaction" imposed under Section 4975 of the Code or Section 502 of ERISA; (iii) except as set forth on Exhibit B attached hereto, no Pension Plan or trust created thereunder has been the subject of a Reportable Event (as such term is defined in Section 4043 of ERISA), including, without limitation, the termination of any Pension Plan or trust; (iv) if and to the extent that either any Borrower or any Affiliate is a party to a multi-employer plan (as defined in Section 4001 of ERISA), then neither any Borrower nor any Affiliate has incurred withdrawal liability, within the meaning of Section 4201 of ERISA, with respect to any such multi-employer plan and neither any Borrower nor any Affiliate has any knowledge that any such multi-employer plan to which any Borrower or any Affiliate thereof is required to contribute is in reorganization or is insolvent pursuant to Section 4241 or 4245 of ERISA; (v) no Pension Plan which is not a multi-employer Plan is insolvent or in reorganization; (vi) neither any Borrower nor any Affiliate has ceased operations at a facility with the result that any Borrower or any Affiliate thereof is to be treated as a substantial employer as provided in Section 4062(e) of ERISA, or has withdrawn from a Pension Plan with -23- 28 respect to which it was a "substantial employer"; (vii) neither any Borrower nor any Affiliate and no Pension Plan or trust created thereunder has incurred any "accumulated funding deficiency" (as such term is defined in Section 412 of the Code and Section 302 of ERISA) whether or not waived, since the effective date of ERISA; (viii) no condition exists which presents a material risk to any Borrower or any Affiliate of incurring a liability to or on account of a Pension Plan or Plan pursuant to any of the foregoing sections of the Code and ERISA; (ix) the aggregate current value of all assets of Pension Plans which are single-employer plans (i.e., plans which are not referred to in clause (iv) hereof), based upon actuarial assumptions which are reasonable in general and in relation to the experience of such Pension Plans, is at least equal to the aggregate current value of all accrued benefits under such Pension Plans; and (x) no Pension Plan and neither any Borrower nor any Affiliate has incurred any liability to the Pension Benefit Guaranty Corporation or any governmental authority succeeding to any and all of the functions of said corporation (the "PBGC") over and above premiums required by law. 3.14 Intellectual Property; Franchises. Each of the Borrowers and its Subsidiaries, respectively, has all licenses, franchises, patents, patent applications, patent licenses, patent rights, trademark rights, trade names, trade name rights, copyrights, permits, authorizations and other rights as are necessary for the conduct of its business. All of the foregoing are in full force and effect, and each of the Borrowers and its Subsidiaries is in compliance with the foregoing without any known conflict with the valid rights of others which would affect or impair in a material manner the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. No event has occurred which permits, or after notice of lapse of time or both would permit, the revocation or termination of any such license or other right, or materially and adversely affects the rights of any Borrower or any Subsidiary of any Borrower thereunder. There is no litigation or other proceeding or dispute the result of which may materially and adversely affect the validity or the extension or renewal of any of the foregoing. 3.15 Environmental and Regulatory Compliance. Except as set forth on Exhibit B attached hereto, to the best knowledge of the Borrowers, each of the real properties owned or leased by any Borrower or any of their respective Subsidiaries, all as described on Exhibit B attached hereto, and any operations conducted thereon by any Borrower or any of their respective Subsidiaries, are presently in compliance with and have in full force and effect all permits, licenses, or approvals required by all applicable building, zoning, environmental, health, safety or other laws, ordinances or regulations (collectively, "Environmental Laws"), and any judgment, decree or order relating thereto, except for any non-compliance with respect to, or lack of possession of, the foregoing which does not have or will not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole, and neither any Borrower nor, to the best knowledge of the Borrowers, any Subsidiary of any Borrower, has received notification that any of the foregoing properties or operations conducted by such Borrower or any -24- 29 such Subsidiary is in violation or alleged violation of any of the foregoing except for any violation which would not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. Except as set forth on Exhibit B attached hereto, to the best knowledge of the Borrowers, neither any Borrower nor any of its respective Subsidiaries has ever generated, stored, handled or disposed of any hazardous substances, hazardous materials or oil on any of such properties or any portion thereof or in connection with any of such operations except in compliance with all applicable Environmental Laws and neither any Borrower nor, to the best knowledge of the Borrowers, any of their respective Subsidiaries is aware of the disposal, spill or release or threatened release of such substances on any of such properties or any portion thereof by any prior owner or prior occupant or prior user thereof or by anyone else, except for any such operation, storage, handling, disposal, spill, release or threatened release which, individually or in the aggregate, does not have or will not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. Except as set forth on Exhibit B attached hereto, no inquiry, notice or threat to give notice by any governmental authority or any other third party has been received by any Borrower or, to the best knowledge of the Borrowers, any of their respective Subsidiaries with respect to the generation, storage, handling or disposal or release or threat of release (collectively, a "Release") or alleged Release thereof, or with respect to any violation or alleged violation of any Environmental Laws or any judgment, decree or order relating thereto, except for any such inquiry, notice, threat of notice, violation, alleged violation, judgment, decree or order which, individually or in the aggregate, does not have or will not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. Except as set forth on Exhibit B attached hereto, to the best knowledge of the Borrowers, no underground storage tanks or surface impoundments are on any of the properties owned or leased or operated by any Borrower or any of their respective Subsidiaries, except for any such underground storage tanks or surface inpoundments which, individually or in the aggregate, do not have or will not have a material and adverse effect on the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. For the purposes of this Section, (i) "hazardous substances" shall mean "hazardous substances" as defined in the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. Section 9601, et seq., and regulations thereunder or under the provisions of any other applicable federal, state, county or municipal law, ordinance, rule or regulation, (ii) "hazardous material" and "oil" shall mean "hazardous material" and "oil," respectively, as defined in the Massachusetts Oil and Hazardous Material Release Prevention and Response Act, as amended, M.G.L. Chapter 21E, and regulations thereunder or under the provisions of any other applicable federal, state, county or municipal law, ordinance, rule or regulation, and (iii) "release" or "threat of release" shall mean such terms as they are defined in any of the foregoing laws, ordinances, rules or regulations, as applicable. -25- 30 3.16 Labor Relations. Neither any Borrower nor, to the best knowledge of the Borrowers, any of their respective Subsidiaries is engaged in any unfair labor practice that would have a material adverse effect on the Borrowers and their respective Subsidiaries taken as whole. Except as set forth in Exhibit B, there is (i) no significant unfair labor practice complaint pending against any Borrower or any Subsidiary of any Borrower or, to the best knowledge of the Borrowers, threatened against any of them, before the National Labor Relations Board, and no significant grievance or significant arbitration proceeding arising out of or under any collective bargaining agreement is so pending against any Borrower or any of their respective Subsidiaries or, to the best knowledge of the Borrowers, threatened against any of them, except for such complaints, grievances and arbitration proceedings which, if adversely decided, would not have a material and adverse effect on the Borrowers and their respective Subsidiaries taken as a whole, (ii) no significant strike, labor dispute, slowdown or stoppage pending against any Borrower or any of their respective Subsidiaries or, to the best knowledge of the Borrowers, threatened against any Borrower or any of their respective Subsidiaries, except for any such labor action as would not have a material and adverse effect on the Borrowers and their respective Subsidiaries taken as a whole, and (iii) to the best knowledge of the Borrowers, no significant union representation question existing with respect to the employees of any Borrower or any of their respective Subsidiaries and, to the best knowledge of the Borrowers, no union organizing activities are taking place, except for any such question or activities as would not have a material and adverse effect on the Borrowers and their respective Subsidiaries taken as a whole. 3.17 Contracts with Affiliates, Etc. (i) Except as disclosed on Exhibit B attached hereto, and except for agreements or transactions (in each case) in the ordinary course of business and on an arm's-length basis, neither any Borrower nor any of their respective Subsidiaries is a party to or otherwise bound by any agreements, instruments or contracts (whether written or oral) with any Affiliate other than the Loan Documents, except for any such agreement, instrument or contract as would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole. (ii) There is no Indebtedness for borrowed money in excess of $25,000 owing by any Borrower or any Subsidiary of any Borrower to any Affiliate. Except as disclosed on Exhibit B attached hereto, there is no Indebtedness for borrowed money owing by any Affiliate to any Borrower or any Subsidiary of any Borrower. 3.18 Subsidiaries. As of the date of this Agreement, all of the Subsidiaries of each Borrower are as set forth on Exhibit F attached hereto. Each Borrower is the owner, free and clear of all liens and encumbrances, of all of the issued and outstanding capital stock of each of its Subsidiaries. All shares of such capital stock have been validly issued -26- 31 and are fully paid and nonassessable, and no rights to subscribe to any additional shares have been granted, and no options, warrants or similar rights are outstanding. 3.19 Interdependence of Borrowers. In order to induce the Agent and each Bank to enter into this Agreement and the other Loan Documents to which it is a party, and grant the Revolving Loans hereunder, the Borrowers hereby jointly and severally represent and warrant that: (i) the business of each Borrower shall benefit from the successful performance of the business of each other Borrower, and all of the Borrowers as a group; (ii) each Borrower has cooperated to the extent necessary and shall continue to cooperate with each other Borrower to the extent necessary in the development and conduct of each other Borrower's business, and shall to the extent necessary share and participate in the formulation of methods of operation, distribution, leasing, inventory control, and other similar business matters essential to each Borrower's business; (iii) the business of each Borrower shall continue to benefit from the maintenance with the other Borrowers of common facilities and the sharing with the other Borrowers of officers, directors and staff personnel, and shall benefit from reporting its financial results on a Consolidated basis with the other Borrowers; (iv) the failure of any Borrower to cooperate with the other Borrowers in the conduct of their respective businesses shall have an adverse impact on the business of each Borrower; and (v) the failure of any Borrower to associate or cooperate with the other Borrowers is reasonably likely to impair the goodwill of such Borrower and of all of the Borrowers as a group. SECTION 4. CONDITIONS OF LOANS. 4.1 Conditions of Initial Loans. The obligation of each Bank to make the initial Revolving Loan hereunder shall be subject to the satisfaction, prior thereto or concurrently therewith, of each of the following conditions precedent: 4.1.1 Receipt by the Agent of the following documents, certificates and opinions in form and substance satisfactory to the Agent and each Bank and duly executed and delivered by the parties thereto: (i) This Agreement; (ii) The Notes, substantially in the form of Exhibit A attached hereto; (iii) A certified copy of resolutions of each Borrower's Board of Directors evidencing the due authorization, execution and delivery of this Agreement, the Notes and the other Loan Documents to which such Borrower is a party and the transactions contemplated hereby; -27- 32 (iv) Certificates as of the date hereof signed by each of the President and Clerk (or Assistant Clerk) or Secretary (or Assistant Secretary) regarding the incumbency and true signature of the officers authorized to sign the documents referred to in this Section 4.1.1 and all other documents and instruments related to the Loans and the transactions contemplated hereby; (v) A written legal opinion addressed to the Agent and each Bank from Messrs. Goodwin, Procter & Hoar LLP, in or substantially in the form of Exhibit E attached hereto; (vi) Certifications from governmental officials evidencing the legal existence and corporate and tax good standing of each Borrower as of the most recent practicable date (it being agreed, however, that certifications evidencing each Borrower's tax good standing will be delivered as soon as available after the date of this Agreement); (vii) Certified copies of each Borrower's charter or other incorporation documents as in effect on such date of certification and its by-laws as in effect on such date; and (viii) The disclosure letter referred to on Exhibit B attached hereto. 4.1.4 The representations and warranties contained in Section 3 shall be true and accurate on and as of the date of the initial Revolving Loan, the Borrowers shall have performed and complied with all covenants and conditions required in this Agreement to be performed or complied with by them prior to the making of such Loan, and no event shall have occurred and be continuing and no condition shall exist, or would result from the Loans to be made on the date hereof or the transactions contemplated hereby, which would constitute, or with the passage of time or the giving of notice, or both, would constitute, an Event of Default. 4.1.5 The Borrowers shall have provided the Agent with such additional instruments, certificates, opinions and other documents as the Agent, either Bank or its counsel shall reasonably request. 4.1.6 No change in applicable law or regulation shall have occurred as a consequence of which it shall have become and continue to be unlawful (i) for the Agent or either Bank to perform any of its agreements or obligations under any of the Loan Documents to which it is a party on the date of the initial Revolving Loan, or (ii) for any -28- 33 Borrower to perform any of its agreements or obligations under any of the Loan Documents to which it is a party on the date of the initial Revolving Loan. 4.1.7 All corporate, governmental and other proceedings in connection with the transactions contemplated by the Loan Documents and all instruments and documents incidental thereto, shall be in form and substance reasonably satisfactory to the Agent and each Bank, and the Agent shall have received all such counterpart originals or certified or other copies of all such instruments and documents as the Agent or either Bank shall have reasonably requested. 4.1.8 The Agent and each Bank shall be satisfied that the financial statements referred to in Section 3.7 hereof fairly present the business and financial condition of the Borrowers and their respective Subsidiaries as at the close of business on the date thereof and the results of operations for the periods then ended, and that there has been no material adverse change in the assets, business or financial condition of the Borrowers or their respective Subsidiaries since the most recent financial statements referred to therein (except as described on Exhibit B attached hereto). 4.1.9 The Borrowers shall have reimbursed the Agent for all of the fees and disbursements of Messrs. Goulston & Storrs, counsel to the Agent, which shall have been incurred by the Agent in connection with the preparation, negotiation, execution and delivery of the Loan Documents. 4.2 Conditions to all Revolving Loans. The obligations of the Banks to make any Revolving Loan shall be subject to the satisfaction, prior thereto or concurrently therewith, of each of the following conditions precedent: 4.2.1 The representations and warranties contained in this Agreement or otherwise made in writing by or on behalf of the Borrowers or any of their respective Subsidiaries pursuant hereto or in connection with the transactions contemplated hereby shall be true and correct in all material respects at the time of each such Revolving Loan (except for representations and warranties limited as to time or with respect to a specific event, which representations and warranties shall continue to be limited to such time or event) with and without giving effect to the Revolving Loans to be made at such time and the application of the proceeds thereof. The Agent and the Banks may without waiving this condition consider it fulfilled, and a representation by the Borrowers to such effect made, if no written notice to the contrary, dated the date of such Revolving Loan, is received from the Borrowers. In the event that the Borrowers submit a written notice as contemplated by the preceding sentence, the conditions set forth in this Section 4.2.1 will be considered fulfilled if such notice specifies in detail the exceptions to the representations and warranties as of the date of such Revolving Loan, the exceptions as stated in such notice are satisfactory to the Agent and the Banks and the Agent so notifies the Borrowers. -29- 34 4.2.2 At the time of each such Revolving Loan: (i) the Borrowers shall have performed and complied in all material respects with all agreements and conditions contained in this Agreement required to be performed or complied with by them prior to or at such time; and (ii) no condition or event that constitutes an Event of Default or that, after notice or lapse of time or both, would constitute an Event of Default shall have occurred and be continuing. SECTION 5. COVENANTS. The Borrowers hereby jointly and severally covenant with the Agent and each Bank and warrant that, from the date hereof and so long as any part of the Revolving Credit Commitment remains in effect and until such later date as all of the Obligations under this Agreement are paid and satisfied in full: 5.1 Financial Reporting. The Borrowers shall furnish to the Agent and each Bank: (i) as soon as available to the Borrowers, but in any event within one hundred and twenty (120) days after each fiscal year-end, the Consolidated balance sheet of the Borrowers and their respective Subsidiaries as at the end of, and related Consolidated statements of income, retained earnings and cash flow for, such fiscal year, prepared in accordance with GAAP and certified by the Borrowers' Accountants; and concurrently with such financial statements, (a) a written statement by the Borrowers' Accountants that, in the making of the audit necessary for their report and opinion upon such Consolidated financial statements, they have obtained no knowledge of any Event of Default, or knowledge of any event which, with the passage of time, will constitute such an Event of Default, or, if in the opinion of such accountant such Event of Default or event exists, they shall disclose in such written statement the nature and status thereof, and (b) a consolidating "flash report" of the Borrowers and their respective Subsidiaries in substantially the form of Exhibit G hereto (a "Report") for the fiscal year then ended, certified by the chief financial officer of Courier; (ii) as soon as available to the Borrowers, but in any event within sixty (60) days after the end of each of the first three fiscal quarters of each fiscal year of the Borrowers and their respective Subsidiaries, the unaudited Consolidated balance sheet of the Borrowers and their respective Subsidiaries as at the end of, and related unaudited Consolidated statements of income, retained earnings and cash flow for, the portion of the fiscal year then ended and for the fiscal quarter then ended (all in reasonable detail), prepared in accordance with GAAP (subject to normal year-end adjustments), and certified by the chief financial officer of Courier; and concurrently with such financial statements, a consolidating Report -30- 35 of the Borrowers and their respective Subsidiaries for the fiscal quarter then ended, certified by the chief financial officer of Courier; (iii) promptly as they become available, copies of all such financial statements, proxy material and reports as Courier shall send to or make generally available to stockholders and of all regular and periodic reports filed by any Borrower or any of its Subsidiaries with any securities exchange or with the Securities and Exchange Commission or any governmental authority succeeding to any or all of the functions of said Commission; (iv) from time to time, such other financial data and information about any Borrower and any Subsidiary of any Borrower as the Agent or any Bank may reasonably request; (v) concurrently with each delivery of financial statements pursuant to clause (i) and clause (ii) of this Section 5.1, a report in substantially the form of Exhibit D hereto signed by the chief financial officer of Courier; and (vi) as soon as available to the Borrowers following the approval thereof by its Board of Directors, but in any event prior to December 1 of each fiscal year, pro forma Consolidated projections for the Borrowers and their respective Subsidiaries for such fiscal year, including projected balance sheets, income statements, cash flow statements and such other statements as the Agent or any Bank may reasonably request and in form and substance reasonably satisfactory to the Agent and the Banks, all prepared on a basis consistent with the financial statements required by clause (i) of this Section. For purposes of this Section 5.1, each Borrower hereby acknowledges and agrees that each certificate signed by the chief financial officer of Courier pursuant to this Section 5.1 shall have the same effect as if signed by each individual Borrower. 5.2 Conduct of Business. Each of the Borrowers will and will cause each of its respective Subsidiaries to: (i) duly observe and comply with all applicable laws and all requirements of any governmental authorities relative to its corporate existence, rights and franchises, to the conduct of its business and to its property and assets (except where the failure to observe and comply would not materially and adversely affect the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole or the ability of the Borrowers to perform their respective obligations to the Agent and the Banks, and shall maintain and keep in full force and effect all licenses and permits necessary in any material respect to the proper conduct of its business; and -31- 36 (ii) maintain its corporate existence, except as permitted by Section 5.8 hereof, and remain or engage in substantially the same business as that in which it is now engaged plus reasonable extensions and expansions thereof, except that any Borrower or any Subsidiary of any Borrower may, upon notice to the Agent, withdraw from any business activity which its Board of Directors reasonably deems unprofitable or unsound. 5.3 Maintenance and Insurance. Each of the Borrowers will and will cause its respective Subsidiaries to maintain and keep its properties in such repair, working order and condition as shall be in the best interests of its business, and from time to time make all needful and proper repairs, renewals, replacements, additions and improvements thereto as such Borrower, in the exercise of its reasonable judgment, deems necessary or advisable so that its business may be properly conducted at all times, and will comply with the provisions of all material leases to which it is a party or under which it occupies property so as to prevent any material loss or forfeiture thereof or thereunder; but nothing in this Section 5.3 shall prevent any Borrower or any Subsidiary of any Borrower from selling, abandoning or otherwise disposing of any property or lease if such property or lease is no longer useful in the business of such Borrower or such Subsidiary. Each of the Borrowers at all times will and will cause its Subsidiaries to maintain with financially sound and reputable insurance companies insurance, in such amounts (including, without limitation, so-called "all-risk" coverage at replacement value and "broad form" liability coverage), against such hazards and liabilities and for such purposes as may be reasonable and is customary in the industry for companies of established reputation engaged in the same or similar businesses and owning or operating similar properties. 5.4 Taxes. Each of the Borrowers and its Subsidiaries will pay or cause to be paid all taxes, assessments or governmental charges on or against it or its properties prior to such taxes becoming delinquent, except for any tax, assessment or charge which is being contested in good faith by proper legal proceedings (to the extent legal proceedings are applicable) and with respect to which reserves required by GAAP have been established and are being maintained, provided that no enforcement action to enforce a lien has been commenced against any Borrower or its Subsidiaries with respect to any such tax, assessment or charge which is material in amount. 5.5 Limitation of Indebtedness. Except with the prior written consent of the Agent and each Bank, no Borrower will, or will cause or permit any of its Subsidiaries at any time to, create, incur, assume or suffer to exist, or in any manner become or be liable directly or indirectly with respect to, any Indebtedness except: (i) the Obligations; (ii) Indebtedness for borrowed money existing on the date of this Agreement, listed and described, but only to the extent so listed and described, on Exhibit C attached hereto; (iii) Indebtedness for the purchase price of capital assets and capitalized leases incurred in the ordinary course of business, subject, however, to the limitations set forth in Section 5.7 hereof; (iv) Indebtedness for taxes, assessments or governmental charges to the extent -32- 37 that payment therefor shall at the time not be required to be made in accordance with Section 5.4 hereof; (v) Indebtedness on open account for the purchase price of services, materials and supplies incurred by a Borrower in the ordinary course of business (not as a result of borrowing), so long as all of such open account Indebtedness shall be promptly paid and discharged when due or in conformity with customary trade terms and practices, except for any such open account Indebtedness which is being contested in good faith by such Borrower, as to which adequate reserves required by GAAP have been established and are being maintained and as to which no encumbrance has been placed on any property of such Borrower; (vi) Indebtedness for borrowed money of any Borrower to another Borrower; provided that such Indebtedness for borrowed money is on normal and customary terms as to form, interest rate and covenants, and is unsecured by any liens, charges or encumbrances whatsoever; (vii) except as otherwise permitted in this Section 5.5, Indebtedness for borrowed money of Courier; provided that (a) all such Indebtedness for borrowed money is on normal and customary terms as to form, interest rate and covenants, (b) such Indebtedness for borrowed money is unsecured by any liens, charges or encumbrances whatsoever, and (c) on the date on which such Indebtedness for borrowed money is proposed to be incurred, (1) no event or condition which constitutes an Event of Default, or which, with notice or the passage of time, or both, would constitute an Event of Default, would occur by reason of the incurrence thereof, and (2) no breach of the covenants, agreements or obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement would occur by reason of the incurrence thereof if such covenants were measured as of the date such Indebtedness for borrowed money is proposed to be incurred; and (viii) Indebtedness for borrowed money of any Borrower resulting from its borrowing against the cash surrender value of a key life insurance policy owned by such Borrower. 5.6 Guaranties. No Borrower shall, or shall cause or permit any of its Subsidiaries at any time to, become or be liable by way of guaranty, surety or other arrangement for the Indebtedness or obligations of any nature or kind of any other Person (including any Subsidiary of any Borrower); except (i) for endorsement of instruments for collection in the ordinary course of business, (ii) guaranties by a Borrower of any Indebtedness or other obligations of any of its Subsidiaries, so long as (a) such Indebtedness or other obligation is not prohibited by this Agreement, and (b) on the date on which such guaranty is proposed to be given, (1) no event or condition which constitutes an Event of Default, or which, with notice or the passage of time, or both, would constitute an Event of Default, would occur by reason of the entering into thereof, and (2) no breach of the covenants, agreements or obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement would occur by reason of the entering into thereof if such covenants were measured as of the date such guaranty is proposed to be given, and (iii) as set forth on Exhibit B attached hereto. 5.7 Restrictions on Liens. No Borrower shall, or shall cause or permit any of its Subsidiaries at any time to, create, incur, assume or suffer to exist any mortgage, pledge, security interest, lien or other charge or encumbrance, including the lien or -33- 38 retained security title of a vendor, ("Encumbrances") upon or with respect to any property or assets, real or personal, of such Borrower, or assign or otherwise convey any right to receive income, except: (i) Encumbrances existing on the date of this Agreement and set forth on Exhibit B attached hereto; or (ii) In addition to the Encumbrances referred to in clause (i) hereof, Encumbrances securing Indebtedness for the purchase price of capital assets and capitalized leases to the extent such Indebtedness is permitted by Section 5.5(iii) hereof, provided that (a) each such Encumbrance is given solely to secure the purchase price of such property, does not extend to any other property and is given at the time of acquisition of the property, and (b) the Indebtedness secured thereby does not exceed the lesser of the cost of such property or its fair market value at the time of acquisition; or (iii) Liens for taxes, fees, assessments and other governmental charges to the extent that payment of the same is not required in accordance with the provisions of Section 5.4 hereof; or (iv) Encumbrances in favor of the Agent, for the ratable benefit of the Banks; or (v) Liens of mechanics, laborers, materialmen, carriers and warehousemen arising by operation of law to secure payment for labor, materials, supplies or services incurred in the ordinary course of such Borrower's business, but only if the payment thereof is not at the time required, such liens are junior to Encumbrances in favor of the Agent and such liens do not, individually or in the aggregate, materially detract from the value or limit the use of any property subject thereto; or (vi) Deposits made in the ordinary course of such Borrower's business in connection with workmen's compensation, unemployment insurance, social security and other similar laws. 5.8 Merger, Acquisitions and Purchase and Sale of Assets. No Borrower shall, or shall cause or permit any of its Subsidiaries at any time to, consolidate or merge with or into any other corporation or other entity, liquidate and/or dissolve, acquire the assets or stock of any entity, or sell, lease, transfer or otherwise dispose of all or any substantial part of its assets, either by or through a single transaction or by or through a series of separate but related transactions, except: (i) that (a) a wholly-owned Subsidiary of such Borrower may be merged or consolidated with such Borrower or any other Borrower if a Borrower -34- 39 shall be the continuing or surviving corporation or with any one or more other wholly-owned Subsidiaries of any Borrower if the successor formed or resulting from such consolidation or merger shall be a wholly-owned Subsidiary of a Borrower, and (b) a wholly-owned Subsidiary of such Borrower may be liquidated and dissolved so long as all of its properties and assets have been (or, in connection with any such liquidation or dissolution, are) distributed to such Borrower; and (ii) in connection with acquisitions of interests in other corporations or business entities engaged in the same business in which such Borrower or Subsidiary is now engaged or in a reasonable extension or expansion thereof (either through the purchase of assets or capital stock or otherwise), provided that (a) except as permitted by Section 5.7 hereof, the properties and assets acquired in connection with such acquisitions shall be free from all liens, charges and encumbrances whatsoever, (b) in the case of an acquisition of the stock of any entity, such entity shall, immediately after such acquisition, become a wholly-owned Subsidiary of such Borrower (except to the extent otherwise permitted by Section 5.9(xi) hereof), and (c) on the date on which such acquisition is proposed to be made, (1) no event or condition which constitutes an Event of Default, or which, with notice or the passage of time, or both, would constitute an Event of Default, would occur by reason of the consummation thereof, and (2) no breach of the covenants, agreements or obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement would occur by reason of the consummation thereof if such covenants were measured as of the date such acquisition is proposed to be made (it being agreed that the Borrowers shall have furnished to the Agent, on or before the 10th day preceding the consummation of the proposed acquisition, a pro forma calculation showing to the satisfaction of the Agent and the Banks the Borrowers' compliance with such covenants); and (iii) the sale or other disposition of assets of such Borrower or Subsidiary, so long as (a) all of the proceeds from such sale or disposition shall be retained by such Borrower or Subsidiary (as the case may be), and (b) on the date on which such sale or disposition is proposed to be made, (1) no event or condition which constitutes an Event of Default, or which, with notice or the passage of time, or both, would constitute an Event of Default, would occur by reason of the consummation of such sale or disposition, and (2) no breach of the covenants, agreements or obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement would occur by reason of the consummation thereof if such covenants were measured as of the date such sale or disposition is proposed to be made. 5.9 Investments and Loans. No Borrower shall, or shall cause or permit any of its Subsidiaries at any time to, make or have outstanding at any time any investments in or loans to any other Person (including any Subsidiary of such Person), whether by -35- 40 way of advance, guaranty, extension of credit, capital contribution, purchase of stocks, notes, bonds or other securities or evidences of Indebtedness, or acquisition of limited or general partnership interests, other than: (i) in obligations of the United States of America or any agency or instrumentality thereof, maturing within three years of their issuance; (ii) in time certificates of deposit, bankers' acceptances or repurchase agreements, maturing within one year of their issuance, from banks in the United States having capital, surplus and undivided profits in excess of $100,000,000; (iii) in short term commercial paper rated Prime-1 by Moody's Investor Service, Inc. or A-1 by Standard and Poors Corporation rating services and issued by corporations headquartered in the United States, in currency of the United States of America; (iv) advances to employees for business related expenses to be incurred in the ordinary course of business and consistent with past practices in an amount not to exceed $50,000 in the aggregate outstanding at any one time; (v) investments in addition to those permitted in this Section 5.9 which do not exceed in the aggregate $5,000,000, so long as such investments are not made for the purpose specified in clause (vi) below, and so long as on the date on which any such investment is proposed to be made, (1) no event or condition which constitutes an Event of Default, or which, with notice or the passage of time, or both, would constitute an Event of Default, would occur by reason of the making of such investment, and (2) no breach of the covenants, agreements or obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement would occur by reason of the making thereof if such covenants were measured as of the date such investment is proposed to be made; (vi) in connection with acquisitions of interests in other corporations or business entities to the extent permitted under Section 5.8(ii) hereof; (vii) in any wholly-owned Subsidiary; provided, that immediately prior to and after giving effect to such investment, no Event of Default shall exist; (viii) in marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing not more than one year from the date of acquisition thereof and, at the time of acquisition, having the highest rating obtainable from Standard and Poors Corporation or Moody's Investor Service, Inc.; (ix) in shares of money-market mutual funds having assets in excess of $100,000,000 and substantially all of the assets of which consist of investments referred to in clauses (i) through (iii), inclusive, and clause (viii), above; (x) loans from a Borrower to another Borrower to the extent permitted by Section 5.5(vi) hereof; and (xi) in any Subsidiary of a Borrower which is not wholly-owned by such Borrower, provided that (a) the aggregate amount of all such investments by the Borrowers shall not exceed $10,000,000 at any time, and (b) immediately prior to and after giving effect to any such investment, no Event of Default shall exist. 5.10 Sale of Notes. No Borrower shall, or shall cause or permit any of its Subsidiaries at any time to, sell, discount or dispose of any note, instrument, account, or other obligation owing to such Borrower or such Subsidiary in an amount that is material to the Borrowers and their respective Subsidiaries taken as a whole, except to either of the Banks. -36- 41 5.11 Restricted Payments. No Borrower shall, directly or indirectly (through any Affiliate or any Subsidiary or otherwise), declare, pay or make any Restricted Payment, unless (i) no event or condition which constitutes an Event of Default, or which, with notice or the passage of time, or both, would constitute an Event of Default, would occur by reason of the taking of such action, and (ii) no breach of the covenants, agreement or obligations contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement would occur by reason of the taking of such action if such covenants were measured as of the date such action is proposed to be taken. 5.12 ERISA Compliance. None of the Borrowers nor their respective Affiliates (as defined solely in the second sentence of Section 1.2), no Pension Plan, Plan or trust created thereunder, and no trustee, administrator or fiduciary thereof shall engage in any Prohibited Transaction (provided that the foregoing shall not apply to actions of an unrelated institutional trustee, administrator or fiduciary to the extent the Agent and each Bank reasonably believes it will bear no liability, either directly or indirectly, through any Pension Plan, Plan or otherwise, for the actions of such institution); none of the Borrowers nor their respective Affiliates and no Pension Plan or trust created thereunder shall incur any "accumulated funding deficiency" (as defined in Section 412(a) of the Code and Section 302 of ERISA) whether or not waived, or shall fail to satisfy any additional funding requirements set forth in Section 412 of the Code and Section 302 of ERISA; none of the Borrowers nor their Affiliates, no trustee thereof and no administrator or fiduciary thereof shall terminate any Pension Plan in a manner which could result in the imposition of a lien on any property of any Borrower or any of its Affiliates; and each Plan and Pension Plan shall comply in all material respects with ERISA. 5.13 Pension Plans. (a) With respect to any Pension Plans, the Borrowers shall, or shall cause their respective Affiliates (as defined solely in the second sentence of Section 1.2) to: (i) fund on a timely basis each Pension Plan as required by the provisions of Section 412 of the Code and Section 302 of ERISA; (ii) cause each Pension Plan to pay all benefits when due in accordance with applicable law; and (iii) furnish to the Agent (A) written notice of the occurrence of a Reportable Event (as such term is defined in Section 4043 of ERISA), such notice to be given within thirty (30) days after such Borrower or any Affiliate knows or has reason to know that a Reportable Event has occurred with respect to a Pension Plan; (B) a copy of any request for a waiver of the funding standards or -37- 42 an extension of the amortization periods required under Section 412 of the Code and Section 302 of ERISA, such copy to be furnished no later than the date of submission of the request to the Department of Labor or to the Internal Revenue Service (the "IRS"), as the case may be; (C) a copy of any notice of intent to terminate any Pension Plan such copy to be furnished no later than the date of submission to the PBGC or, if earlier, the date on which those participating in the Pension Plan are notified of the intended termination; and (D) notice that any Borrower or any Affiliate, will or may incur any liability to or on account of a Pension Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA, such notice to be given within ten (10) days after such Borrower or any Affiliate knows or has reason to know thereof. Any notice to be provided to the Agent under this Section shall include a certificate of the chief financial officer of such Borrower setting forth details as to such occurrence and the action, if any, which such Borrower or such Affiliate is required or proposes to take, together with any notices required or proposed to be filed with or by such Borrower, such Affiliate, the PBGC, the IRS, the trustee or the plan administrator with respect thereto. (b) Each Borrower shall furnish to the Agent, promptly upon the request of the Agent or either Bank, a copy of the annual report of each Pension Plan or Plan (Form 5500 or comparable form) required to be filed with the IRS and/or the Department of Labor. (c) Promptly after the adoption of any Plan (other than a Plan which is intended to substitute a Plan listed in Exhibit B attached hereto and is substantially similar to such Plan listed in Exhibit B) or Pension Plan subject to ERISA or of any amendment to any Pension Plan which results in a significant under-funding within the meaning of Section 401(a)(29) of the Code and Section 307 of ERISA, each Borrower shall notify the Agent of such adoption and of the vesting and funding schedules and other principal provisions thereof. 5.14 Notification of Default. Upon becoming aware of the existence of any condition or event which would cause an Event of Default, or any condition or event which would upon notice or passage of time, or both, constitute an Event of Default, the Borrowers shall promptly give the Agent written notice thereof specifying the nature and duration thereof and the action being or proposed to be taken with respect thereto. 5.15 Notification of Material Litigation. The Borrowers shall promptly notify the Agent in writing of any litigation or of any investigative proceedings (civil or criminal) of a governmental agency or authority commenced or known to be threatened against any of them or any of their respective Subsidiaries which would, if adversely -38- 43 decided, have a material and adverse effect on the business or the financial condition of the Borrower and their respective Subsidiaries taken as a whole. 5.16 Inspection by the Agent and the Banks. Each Borrower shall and shall cause its Subsidiaries to permit the Agent and each Bank or its designees, at any reasonable time and from time to time, to visit and inspect the properties of such Borrower and its Subsidiaries, to examine and make copies of and take abstracts from the books and records of such Borrower and its Subsidiaries, and to discuss the affairs, finances and accounts of such Borrower and its Subsidiaries, with appropriate officers. The Agent and each Bank agree to take all reasonable steps to keep confidential any and all of the information obtained from such inspection, other than information contained in documents filed by any Borrower with any public agency which are generally available to the public or through the use of the Freedom of Information Act or any equivalent statute, and any other information in any public record; provided that such information may be made available for inspection and examination by (i) any governmental regulatory authority having jurisdiction over the Agent or any Bank, (ii) any independent auditors of the Agent or any Bank, and (iii) upon receipt of the prior consent of the Borrowers, which consent may not be unreasonably withheld, any potential Assignees and Participants. 5.17 Maintenance of Books and Records. Each Borrower shall and shall cause its Subsidiaries to keep adequate books and records of account in which true and complete entries will be made reflecting all of its business and financial transactions. Such books and records shall form the basis for preparing the Consolidated financial statements of Courier and its Subsidiaries in accordance with GAAP, and such entries will be made in accordance with applicable law including, without limitation, laws with respect to questionable, improper or corrupt payments. 5.18 Use of Proceeds. Each Borrower shall use the proceeds of the Revolving Loans for the working capital needs of such Borrower and its Subsidiaries and for any other purpose permitted hereunder, including for purposes of making acquisitions to the extent permitted by Section 5.8 hereof. 5.19 Transactions with Affiliates. No Borrower shall, or shall cause or permit any of its Subsidiaries at any time to, directly or indirectly enter into any material purchase, sale, lease or other transaction with any Affiliate except in the ordinary course of business on terms that are no less favorable to such Borrower or any such Subsidiary than those which might be obtained at the time in a comparable arm's length transaction with any Person who is not an Affiliate. 5.20 Environmental Regulations. (a) Each Borrower shall and shall cause its Subsidiaries to comply in all material respects with all applicable Environmental Laws (as such term is defined in Section 3.15 hereof), in all jurisdictions in which any of them operates now or in the -39- 44 future, and each Borrower shall, and shall cause its Subsidiaries to comply in all material respects with all such laws and regulations that may in the future be applicable to such Borrower, its Subsidiaries, and their respective properties and assets. (b) If any Borrower or any of its Subsidiaries shall (i) receive notice that any material violation of any Environmental Law may have been committed by any Borrower or any of their respective Subsidiaries, (ii) receive notice that any administrative or judicial complaint or order has been filed against any Borrower or any of their respective Subsidiaries alleging a violation of any Environmental Law or requiring any Borrower to take any action in connection with the release of toxic or hazardous wastes or materials into the environment, or (iii) receive any notice from a federal, state, or local governmental agency alleging that any Borrower or any of their respective Subsidiaries may be liable or responsible for any costs associated with a response to or cleanup of a release of hazardous wastes or materials into the environment or any damages caused thereby, such Borrower shall provide the Agent with a copy of such notice within ten (10) days after such Borrower's or its Subsidiary's receipt thereof. Within fifteen (15) days after any Borrower has learned of the enactment or promulgation of any Environmental Law which may result in any material adverse change in the condition (financial or otherwise), properties, business or results of operations of the Borrowers and their respective Subsidiaries taken as a whole, such Borrower shall provide the Agent with notice thereof. 5.21 Fiscal Year. The Borrowers and their respective Subsidiaries shall have fiscal years ending on the last Saturday in September of each year and shall not change such fiscal years without the prior written consent of each Bank; provided that so long as Courier is required to file reports with the Securities Exchange Commission pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, each as amended, the Borrowers and their Subsidiaries shall be permitted to change such fiscal years (all to the same date) upon thirty (30) days' prior written notice thereof to the Agent (whereupon the Banks shall have the right to modify the timing of the financial covenants hereunder accordingly in order to correspond to any such change in the fiscal years of the Borrowers and their respective Subsidiaries). 5.22 No Amendments to Certain Documents. No Borrower shall at any time cause or permit any of the charter or other incorporation documents or by-laws of such Borrower or any of its Subsidiaries to be modified, amended or supplemented in any respect whatever, without (in each case) the express prior written agreement, consent or approval of each Bank, except for any such modification, amendment or supplement as would not, on the date on which proposed to be made, cause (a) an Event of Default or an event which, with notice or the passage of time, or both, would constitute an Event of Default, or (b) a breach of the financial covenants contained in Sections 5.24 through 5.26, inclusive, or 5.29 of this Agreement if such covenants were measured as of the date such modification, amendment or supplement is proposed to be made. -40- 45 5.23 No Termination of Certain Documents. No Borrower shall at any time directly or indirectly terminate, cancel or rescind, or cause or permit, or otherwise agree or consent to or approve, the termination, cancellation or rescission of, any of the Loan Documents without (in each case) the express prior written agreement, consent or approval of each Bank. 5.24 Debt to Worth Ratio. The Borrowers shall not cause or permit the ratio of (i) total Consolidated Indebtedness to (ii) Tangible Net Worth at the end of any fiscal quarter of the Borrowers to be greater than 2.0 to 1. 5.25 Current Ratio. The Borrowers shall not cause or permit the ratio of (i) Current Assets to (ii) Current Liabilities at the end of any fiscal quarter of the Borrowers to be less than 1.50 to 1. 5.26 Debt Service Coverage. At the end of each fiscal quarter, for the preceding four consecutive fiscal quarters commencing with the fiscal quarter ending March 29, 1997, the Borrowers shall not cause or permit the ratio of (i) Consolidated Operating Cash Flow to (ii) Consolidated Total Debt Service to be less than 4.0 to 1. 5.27 Subsidiaries. The Borrowers shall give the Agent written notice of the formation after the date hereof of any Subsidiary, and agree that they shall cause any such Subsidiary to engage in the business of conducting branches or divisions of the business now conducted by the Borrowers (or reasonable extensions or expansions thereof) or holding any of the property of any Borrower. 5.28 Name Change. The Borrowers shall give the Agent thirty (30) days' prior written notice of any change in the name or corporate form of any Borrower or in the name under which its business is transacted. 5.29 Capital Expenditures. The Borrowers shall not make any Capital Expenditures in excess of $9,000,000 in the aggregate in any fiscal year. SECTION 6. EVENTS OF DEFAULT; ACCELERATION. 6.1 Any or all of the Obligations of the Borrowers to the Agent and the Banks shall, at the option of the Banks (acting through the Agent) and notwithstanding the provisions of any instrument evidencing an Obligation, be immediately due and payable without notice or demand upon the occurrence and continuation of any of the following events of default (individually, an "Event of Default"): (i) any principal payable under this Agreement or any Note shall not be paid within five (5) days after the date on which the same shall have first become due and payable; or -41- 46 (ii) any interest or any other sum (except principal) payable to the Agent or either Bank under any of the Loan Documents shall not be paid punctually on the date on which the same shall have first become due and payable, and such failure to pay under this clause (ii) shall continue for more than one (1) day after the earlier of the date on which a principal officer of any Borrower shall have first become aware of such failure to pay or the Agent or either Bank shall have first notified any Borrower of such failure to pay; or (iii) (a) any Borrower shall fail to perform, comply with or observe or shall otherwise breach any one or more of its covenants, agreements or obligations contained in the last paragraph of Section 2.5.1(ii) of this Agreement, or in Sections 5.5 through 5.8, inclusive, 5.14, 5.20, 5.23 through 5.26, inclusive, and 5.29 of this Agreement; or (b) any Borrower shall fail to perform, comply with or observe or shall otherwise breach any one or more of its covenants, agreements or obligations contained in Sections 5.9, 5.22, and 5.27 of this Agreement and such failure under this clause (b) shall continue for more than five (5) days after the earlier of the date on which any Borrower shall have first become aware of such failure or breach or the Agent or either Bank shall have first notified any Borrower of such failure or breach; or (c) any Borrower shall fail to perform, comply with or observe or shall otherwise breach any one or more of its covenants, agreements or obligations contained herein (other than those specified in clauses (a) and (b) hereof) or in any other Loan Document to which such Borrower is a party and such failure under this clause (c) shall continue for more than thirty (30) days after the earlier of the date on which any Borrower shall have first become aware of such failure or breach or the Agent or either Bank shall have first notified such Borrower of such failure or breach; or (iv) any representation or warranty at any time made by or on behalf of any Borrower in any Loan Document or in any certificate, written report or statement furnished to the Agent or either Bank pursuant thereto shall prove to have been false in any material respect upon the date when made or deemed to have been made; or (v) any Borrower or any Subsidiary of any Borrower shall fail to pay when due, or within any applicable period of grace (not to exceed thirty (30) days), obligations for borrowed money, or fail to observe or perform any term, covenant or agreement contained in any agreement by which it is bound, evidencing or securing borrowed money, for such period of time as would permit (including the giving of appropriate notice if required) the holder or holders thereof or of any obligations issued thereunder to accelerate the maturity thereof; excluding, however, from the operation of this clause, obligations for borrowed money, and agreements in connection therewith, not exceeding $500,000 in the aggregate; or (vi) any Borrower or any Subsidiary of any Borrower shall (a) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, -42- 47 trustee or liquidator of itself or of all or a substantial part of its property, (b) be generally not paying its debts as such debts become due, (c) make a general assignment for the benefit of its creditors, (d) commence a voluntary case under the Federal Bankruptcy Code (as now or hereafter in effect), (e) file a petition seeking to take advantage of any other law providing for the relief of debtors, (f) consent to any petition filed against it seeking an order for relief under the Bankruptcy Code or of any other law providing for the relief of debtors, (g) take any action under the laws of its jurisdiction of incorporation or organization similar to any of the foregoing, or (h) take any corporate action for the purpose of effecting any of the foregoing; or (vii) a proceeding or case shall be commenced against any Borrower or any Subsidiary of any Borrower in any court seeking (a) the liquidation, reorganization, dissolution, winding up, or composition or readjustment of its debts, (b) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets, (c) an order for relief under the Bankruptcy Code, (d) similar relief in respect of it, under any law providing for the relief of debtors; and any such proceeding specified in (a) through (d) hereinabove (A) shall not be dismissed within thirty (30) days from the initiation thereof, or (B) shall not be contested by such Borrower or such Subsidiary in good faith and with due diligence; or action under the laws of the jurisdiction of incorporation or organization of any Borrower or any Subsidiary of any Borrower similar to any of the foregoing shall be taken with respect to any Borrower or any Subsidiary of any Borrower and such action shall not be dismissed within thirty (30) days from the initiation thereof, or during such thirty (30) day period such Borrower or such Subsidiary shall not contest the same in good faith and with due diligence; or (viii) a court shall with respect to any Borrower or any Subsidiary of any Borrower order or enter (a) the liquidation, reorganization, dissolution, or composition or readjustment of its debts, (b) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets, (c) order for relief under the Bankruptcy Code, (d) similar relief in respect of it, under any law providing for the relief of debtors, or (e) similar order under the laws of the jurisdiction of incorporation or organization; or (ix) judgments or orders for the payment of money shall be entered against any Borrower or any Subsidiary of any Borrower by any court, or warrants of attachment or execution or similar process shall be issued or levied against property of any Borrower or any Subsidiary of any Borrower, which in the aggregate exceeds $500,000 in value, and the same shall continue unsatisfied and in effect for a period of thirty (30) days without being vacated, discharged, satisfied or stayed pending appeal, provided that the total out-of-pocket cost of any bond applied in order to procure a stay of execution in any such litigation shall not exceed $50,000; or (x) any Borrower or any member of the controlled group shall fail to pay when due a material amount which it shall have become liable to pay to the PBGC or -43- 48 to a Plan under Title IV of ERISA or to a Plan under Section 412 of the Code or Section 302 of ERISA; or notice of intent to terminate a Plan or Plans having aggregate Unfunded Benefit Liabilities shall be filed under Title IV of ERISA by any Borrower or any member of the controlled group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate or to cause a trustee to be appointed to administer any such Plan or Plans or a proceeding shall be instituted by a fiduciary of any such Plan or Plans against any Borrower to enforce Section 515 of ERISA and such proceedings shall not have been dismissed within thirty (30) days thereafter; or a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any such Plan or Plans must be terminated; or (xi) any Loan Document shall be cancelled, terminated, revoked or rescinded otherwise than in accordance with the express prior written agreement, consent or approval of each Bank; or any action at law, suit in equity or other legal proceeding to cancel, revoke or rescind any Loan Document shall be commenced by or on behalf of any Borrower or any other Person (other than the Agent or any Bank) bound thereby, or by any court or any other governmental or regulatory authority or agency of competent jurisdiction; or any court or any other governmental or regulatory authority or agency of competent jurisdiction shall make a determination that, or shall issue a judgment, order, decree or ruling to the effect that, any one or more of the Loan Documents, or any one or more of the obligations of any Borrower or any other Person under any one or more of the Loan Documents, are illegal, invalid or unenforceable in any material respect in accordance with the terms thereof; or (xii) at any time after the date hereof, any Borrower shall own, both legally and beneficially, less than one hundred percent (100%) of all the issued and outstanding Voting Shares of each of its Subsidiaries, which Subsidiaries are set forth in Exhibit F hereto, or such lesser percentage as such Borrower may be permitted to own pursuant to Section 5.8 of this Agreement. 6.2 Upon the occurrence of any Event of Default and at any time thereafter (unless such Event of Default shall theretofore have been remedied or waived), at the option of the Banks (acting through the Agent): (i) the Revolving Credit Commitment shall terminate in full, and each of the Banks shall thereupon be relieved of all of its obligations to make any Revolving Loans hereunder; (ii) the unpaid principal amount of the Notes together with accrued interest thereon and all other Obligations shall become immediately due and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and (iii) the Agent and each of the Banks may exercise any and all rights it has under this Agreement, the Notes, the other Loan Documents or any other documents or agreements executed in connection with the transactions contemplated by this Agreement, or by law or equity, and proceed to protect and enforce the Agent's and each Bank's rights by any action at law, suit in equity or other appropriate proceeding, whether for specific performance or for an injunction -44- 49 against a violation of any covenant contained herein or in any Loan Document or in aid of the exercise of any power granted hereby or thereby or by law. SECTION 7. SET-OFF 7.1 Any deposits or other sums at any time credited by or due from any Bank to any Borrower, without notice (any such notice being expressly waived hereby) and to the fullest extent permitted by law and without regard to any collateral or other source of payment whatsoever, may at any time after the occurrence and during the continuance of an Event of Default, be applied to or set off against Obligations on which any Borrower is primarily liable and may at or after the maturity thereof be applied to or set off against Obligations on which any Borrower is secondarily liable, and in furtherance of the foregoing each Borrower grants the Agent and each Bank a lien on and security interest in all such deposits to secure payment of the Obligations. 7.2 Any deposits or other sums which at any time may be credited to any Borrower by or due to it from any Participant may at any time after the occurrence and during the continuance of an Event of Default, without notice (any such notice being expressly waived hereby) and to the fullest extent permitted by law and without regard to any collateral or other source of payment whatsoever, be applied to or set off by such Participant against the then outstanding indebtedness of any Borrower hereunder. SECTION 8. CONCERNING THE AGENT AND THE BANKS. 8.1 Appointment and Authorization. Each of the Banks hereby appoints SSB, acting through its head office, to serve as Agent under this Agreement and the other Loan Documents and irrevocably authorizes the Agent to take such action as Agent on such Bank's behalf under this Agreement and the other Loan Documents and to exercise such powers and to perform such duties under this Agreement, the other Loan Documents and the other documents and instruments executed and delivered in connection with the consummation of the transactions contemplated hereby as are delegated to the Agent by the terms hereof or thereof, together with all such powers as are reasonably incidental thereto. 8.2 Agent and Affiliates. SSB shall have the same rights and powers under this Agreement and the other Loan Documents as each other Bank and may exercise or refrain from exercising the same as though it were not the Agent, and SSB and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of business with any Borrower or Affiliate of any Borrower as if it were not the Agent hereunder and under the other Loan Documents. Except as otherwise provided by the terms of this Agreement, nothing herein shall prohibit any of the Banks from accepting -45- 50 deposits from, lending money to or generally engaging in any kind of business with any Borrower or Affiliate of any Borrower. 8.3 Future Advances. In order to more conveniently administer the Revolving Loans, FNBB does hereby authorize the Agent and SSB to make all Revolving Loans and advances, subject to the terms and conditions of this Agreement, to the Borrowers, which are requested by the Borrowers on any Business Day. FNBB does hereby further irrevocably agree, whether or not this Agreement has been terminated, an Event of Default has occurred, the Agent has accelerated the Obligations or the Agent is proceeding to liquidate any collateral, to transfer to the Agent on each Business Day, if not already transferred, sufficient immediately available federal funds to reimburse SSB for FNBB's respective Commitment Percentage of all Revolving Loans and other advances made during such Business Day after taking into account payments received by the Agent. Any payments made by the Agent on behalf of any Borrower shall constitute Revolving Loans initially made by the Agent at such time as such funds are actually provided, or such payments are made, by the Agent. All Revolving Loans and other advances made by the Agent on behalf of FNBB shall be, for purposes of interest income and other charges, considered loans from FNBB to the Borrowers at such time as the Agent receives from FNBB funds as provided in this Section 8.3, and prior to such time such Revolving Loans and advances shall be considered, for purposes of interest income and other charges, loans from SSB. The Agent may at any time upon notice to FNBB (i) refuse to make Revolving Loans and advances on behalf of FNBB unless FNBB shall have provided to the Agent immediately available federal funds sufficient to cause the outstanding Revolving Loans to equal each of the Banks' respective Commitment Percentage; (ii) require FNBB to fund such Revolving Loans and advances before making such Revolving Loans and advances to the Borrower requesting the same; or (iii) require that FNBB immediately transfer to the Agent on each Business Day immediately available federal funds sufficient to cause the outstanding Revolving Loans to equal each of the Banks' respective Commitment Percentage. Notwithstanding the provisions hereof, the obligations to make Revolving Loans and advances under the terms of this Agreement shall be the several and not joint obligation of FNBB and SSB, and any advances made by the Agent on behalf of FNBB are strictly for the administrative convenience of the parties and shall in no way diminish FNBB's liability to the Agent and SSB to repay the Agent for such Revolving Loans and advances. 8.4 Payments. All payments and prepayments of principal of Loans received by the Agent shall be paid to each of the Banks pro rata in accordance with their respective Commitment Percentage. All such payments from the Borrowers received by the Agent shall be held in trust for the benefit of the Banks. As each such payment is received by the Agent, the Agent shall promptly charge or credit each of the Banks to the extent necessary to ensure that as between them, each of the Banks holds its respective Commitment Percentage of outstanding Revolving Loans, based on the then unpaid aggregate principal amounts of the Revolving Loans outstanding. -46- 51 8.5 Interest, Fees and Other Payments. (i) All payments of interest received by the Agent in respect of Revolving Loans, except as otherwise provided by the terms of this Agreement, and all other fees and premiums received by the Agent hereunder or in respect of Revolving Loans shall be shared by the Banks pro rata in accordance with their respective Commitment Percentages. (ii) All payments received by the Agent pursuant to Section 10.7 of this Agreement shall be applied by the Agent to reimburse itself, SSB or FNBB as the case may be, on account of the Obligation, tax, charge or expense in respect of which such payment is made. 8.6 Action by Agent. (i) The obligations of the Agent hereunder are only those expressly set forth herein. The Agent shall have no duty to exercise any right or power or remedy hereunder, under any other Loan Document, or under any other document or instrument executed and delivered in connection with or as contemplated by this Agreement or to take any affirmative action hereunder or thereunder. (ii) The Agent shall keep records of the Revolving Loans and payments hereunder, and shall give and receive notices and other communications to be given or received by the Agent hereunder on behalf of the Banks. (iii) Upon the occurrence of an Event of Default, the Agent shall exercise, if so directed by the Banks, the option of the Banks pursuant to Section 6.2 hereof to declare all Obligations immediately due and payable and take such action as may be necessary or desirable to collect the Obligations and enforce the rights and remedies of the Agent or the Banks with respect to any collateral or otherwise. (iv) Whether or not an Event of Default shall have occurred, the Agent may from time to time exercise the rights of the Agent and Banks hereunder, under the other Loan Documents, or under the other documents or instruments executed or delivered in connection with or as contemplated by this Agreement as it reasonably may deem necessary or desirable to protect any collateral and the interests of the Agent and the Banks. 8.7 Consultation with Experts. The Agent shall be entitled to retain and consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable to the Banks for any action taken, omitted to be taken or suffered in good faith by it in accordance with the advice of such counsel, accountants or experts. The Agent may employ agents and attorneys-in-fact and shall not be liable to the Banks for the default or misconduct of any such agents or attorneys. 8.8 Liability of Agent. The Agent shall exercise the same care to protect the interests of each of SSB and FNBB as it does to protect its own interests, so that so long as the Agent exercises such care it shall not be under any liability to any of the Banks, -47- 52 except for the Agent's gross negligence or willful misconduct with respect to anything it may do or refrain from doing. Subject to the immediately preceding sentence, neither the Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or not taken by it in connection herewith in its capacity as Agent. Without limiting the generality of the foregoing, neither the Agent nor any of its directors, officers, agents or employees shall be responsible for or have any duty to ascertain, inquire into or verify: (i) any statement, warranty or representation made in connection with this Agreement, any other Loan Document, or any borrowing hereunder; (ii) the performance or observance of any of the covenants or agreements of any Borrower; (iii) the satisfaction of any condition specified in Sections 4.1 or 4.2 hereof, except receipt of items required to be delivered to the Agent; or (iv) the validity, effectiveness, enforceability or genuineness of this Agreement, the Notes, the other Loan Documents or any other document or instrument executed and delivered in connection with or as contemplated by this Agreement. The Agent shall not incur any liability by acting in reliance upon any notice, consent, certificate, statement or other writing (which may be a bank wire, telex or similar writing) believed by it to be genuine or to be signed by the proper party or parties. 8.9 Indemnification. Each Bank agrees to indemnify the Agent (to the extent the Agent is not reimbursed by any Borrower), ratably in accordance with its Commitment Percentage, from and against any cost, expense (including attorneys' fees and disbursements), claim, demand, action, loss or liability which the Agent may suffer or incur in connection with this Agreement or any other Loan Document, or any action taken or omitted by the Agent hereunder or thereunder, or the Agent's relationship with the Borrowers hereunder, including, without limitation, the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers and duties hereunder and of taking or refraining from taking any action hereunder. No payment by any Bank under this Section shall in any way relieve any Borrower of its obligations under this Agreement with respect to the amounts so paid by any Bank, and the Banks shall be subrogated to the rights of the Agent, if any, in respect thereto. 8.10 Independent Credit Decision. Each of the Banks represents and warrants to the Agent that it has, independently and without reliance upon the Agent or the other Banks and based on the financial statements referred to in Section 3.7 and such other documents and information as it has deemed appropriate, made its own independent credit analysis and decision to enter into this Agreement. Each of the Banks acknowledges that it has not relied upon any representation by the Agent and that the Agent shall not be responsible for any statements in or omissions from any documents or information concerning the Borrowers, this Agreement, the Notes, the other Loan Documents or any other document or instrument executed and delivered in connection with or as contemplated by this Agreement. Each of the Banks acknowledges that it will, independently and without reliance upon the Agent or the other Banks and 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 this Agreement. -48- 53 8.11 Successor Agent. SSB, or any successor Agent, may resign as Agent at any time by giving written notice thereof to the Banks, and Courier on behalf of the Borrowers. Upon any such resignation, the Banks shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Banks, and shall have accepted such appointment, within thirty (30) days after the retiring Agent's giving of notice of resignation, then the retiring Agent may, on behalf of the Banks, appoint a successor Agent, which shall be a commercial bank (or Affiliate thereof) or savings and loan association organized under the laws of the United States of America or any State thereof or under the laws of another country which is doing business in the United States of America or any State thereof and having a combined capital, surplus and undivided profits of at least $100,000,000. Upon the acceptance of any appointment as Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from all further duties and obligations under this Agreement. After any retiring Agent's resignation or removal hereunder as Agent, the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement. SECTION 9. COURIER AS AGENT FOR BORROWERS. Each Borrower (other than Courier) hereby appoints Courier as its agent with respect to the receiving and giving of any notices, requests, instructions, reports, schedules, revisions, financial statements or any other written or oral communications hereunder. The Agent and each Bank is hereby entitled to rely on any communications given or transmitted by Courier as if such communication were given or transmitted by each and every Borrower; provided, however, that any communication given or transmitted by any Borrower other than Courier shall be binding with respect to such Borrower. Any communication given or transmitted by the Agent or any Bank to Courier shall be deemed given and transmitted to each and every Borrower. SECTION 10. MISCELLANEOUS. 10.1 Written Notices. Any notices, expressly required by this Agreement to be in writing, to any party hereto shall be deemed to have been given when delivered by hand, when sent by telex or facsimile transmission, one (1) day after being delivered to any overnight delivery service freight pre-paid or three (3) days after deposit in the mails, postage prepaid, and addressed to such party at its address given at the beginning of this Agreement or at any other address specified in writing. Written notices to the Borrowers shall be sent to the attention of Robert P. Story, Jr., Senior Vice President and Chief Financial Officer, or to such other officer as may be designated by the Borrowers, with a copy to Goodwin, Procter & Hoar LLP, Exchange Place, Boston, Massachusetts 02109, -49- 54 Attention: F. Beirne Lovely, Jr. P.C.; and written notices to the Agent and SSB shall be sent to the attention of such officer as may be designated by the Agent and SSB, with a copy to Goulston & Storrs, 400 Atlantic Avenue, Boston, Massachusetts 02110-3333, Attention: Philip A. Herman, Esq., and written notices to FNBB shall be sent to the attention of such officer as may be designated by FNBB, with a copy to Goulston & Storrs, 400 Atlantic Avenue, Boston, Massachusetts 02110-3333, Attention: Philip A. Herman, Esq. Any notice, unless otherwise specified, may be given orally or in writing. 10.2 Term of Agreement. This Agreement shall continue in force and effect so long as the Revolving Credit Commitment, any portion of the Loans or any Obligation of any Borrower for any interest, fee, charge or expense shall be outstanding. 10.3 No Waivers. No failure or delay by the Agent or any Bank in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies otherwise provided by law. 10.4 Further Assurances. Each Borrower shall do, make, execute and deliver all such additional and further acts, things, assurances, and instruments as the Agent or any Bank may reasonably require more completely to vest in and assure to the Agent and the Banks its rights hereunder and under the other Loan Documents, and to carry into effect the provisions and intent of this Agreement and the other Loan Documents. 10.5 Governing Law. This Agreement and the other Loan Documents shall be deemed to be contracts made under seal and shall be construed in accordance with and governed by the laws of the Commonwealth of Massachusetts (without regard to conflicts of laws rules). Any legal action or proceeding arising out of or relating to this Agreement or any Obligation may be instituted in the courts of the Commonwealth of Massachusetts or of the United States of America for the District of Massachusetts, and the Borrowers hereby irrevocably submit to the jurisdiction of each such court in any such action or proceeding; provided, however, that the foregoing shall not limit the Agent's or any Bank's rights to bring any legal action or proceeding in any other appropriate jurisdiction. 10.6 Payments in Immediately Available Funds. All payments required of the Borrowers hereunder or under the Notes shall be made in lawful money of the United States of America in federal or other funds immediately available to the recipient thereof at the prescribed place of payment. 10.7 Expenses, Taxes and Indemnification. (a) The Borrowers shall pay all taxes (other than taxes on the income of the Banks), charges and expenses of every kind or description, including, without limitation, (i) attorneys' fees and expenses, reasonably incurred or expended by the Agent -50- 55 or the Banks in connection with or in any way related to the Agent's or the Banks' relationship with the Borrowers, whether hereunder or otherwise, including, without limitation, those incurred or expended in connection with the preparation, execution, delivery, interpretation or amendment of this Agreement, the Notes, the other Loan Documents and any related agreement, instrument or document, the making of the Loans, and the protection or enforcement of the Agent's or the Banks' rights hereunder and (ii) fees and expenses reasonably incurred, expended or charged by the Agent or the Banks in connection with any examination of the business, assets or properties of the Borrowers, conducted after and during the continuance of an Event of Default, whether or not conducted by employees of the Agents or either Bank. The Borrowers authorize the Agent and the Banks to charge the Loan Account or any deposit account which the Borrowers may maintain with the Agent or any Bank for any of the foregoing; provided that prior to an Event of Default only principal and interest shall be charged against the deposit accounts of the Borrowers with the Agent or any Bank. (b) The Borrowers shall, jointly and severally, absolutely and unconditionally indemnify and hold the Agent and each Bank harmless against any and all claims, demands, suits, actions, causes of action, damages, losses, settlement payments, obligations, costs, expenses and all other liabilities whatsoever which shall at any time or times be incurred or sustained by the Agent or either Bank or by any of their respective shareholders, directors, officers, employees, subsidiaries, affiliates or agents (except any of the foregoing incurred or sustained as a result of the gross negligence or willful misconduct of the Agent or such Bank) on account of or in relation to any of the arrangements or transactions contemplated by, associated with or ancillary to either this Agreement, or any of the other documents executed or delivered in connection herewith (including, without limitation, those arising as a result of a breach by the Borrowers of any Environmental Laws, whether or not disclosed in Exhibit B attached hereto), whether or not all or any of the transactions contemplated by, associated with or ancillary to this Agreement, or any of such documents, are ultimately consummated. 10.8 Amendments, Waivers, Etc. This Agreement, the other Loan Documents and any provision hereof or thereof may be waived, discharged or terminated only by an instrument in writing signed by the Agent and each of the Banks and may be amended only by an instrument in writing signed by the Borrowers and the Agent and each of the Banks. 10.9 Binding Effect of Agreement. This Agreement shall be binding upon and inure to the benefit of the Borrowers, the Agent, the Banks and their respective successors and assigns. The Banks may, in accordance with the provisions of Section 10.10 hereof, sell, assign or otherwise transfer all or any portion of their respective right, title and interest in, and their respective Obligations under, this Agreement and the Loans made and to be made hereunder, or grant participations in their respective right, title and interest herein and therein. No Borrower may assign or transfer any of its rights or obligations hereunder. -51- 56 10.10 Assignment and Participation. (i) Assignments by the Banks. From and after the date hereof, any Bank may at any time assign all, or a proportionate part of all, of its rights, interests and duties with respect to its Revolving Credit Commitment and its Note to one or more banks or other financial institutions (each, an "Assignee") on such terms, as between such Bank and each of its Assignees, as such Bank may think fit, and such Assignee shall assume such rights, interests and duties pursuant to an instrument executed by such Assignee and such Bank, and for this purpose such Bank may make available to each of its potential Assignees such information relating to the Borrowers, this Agreement and the transactions contemplated hereby as such Bank may think necessary or desirable, which information shall be held by each potential Assignee strictly in confidence; provided, however, that (a) prior to assigning any interest to any Assignee hereunder, (1) such Bank shall notify the Agent and the Borrowers in writing identifying the proposed Assignee and stating the aggregate principal amount of the proposed interest to be assigned, and (2) receive the prior written consent of the Agent and the Borrowers, which consent may not be unreasonably withheld, and (b) no Bank will assign to any Assignee less than an aggregate amount equal to $5,000,000 of such Bank's Revolving Credit Commitment and Loans and interest in its Note or, if less, the remaining amount of such Bank's Revolving Credit Commitment. It is understood and agreed that the proviso contained in the immediately preceding sentence shall not be applicable in the case of, and this paragraph (i) shall not restrict, (a) an assignment or other transfer by such Bank to an Affiliate of such Bank or to any other Bank or (b) a collateral assignment or other similar transfer to any of the twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve Act, 12 U.S.C. Section 341. Upon execution and delivery of such an instrument and payment by such Assignee to such Bank of an amount equal to the purchase price agreed between such Bank and such Assignee, such Assignee shall be a Bank party to this Agreement and shall have all the rights, interests and duties of a Bank with a Revolving Credit Commitment and a Revolving Loan as set forth in such instrument of assumption, and such assigning Bank shall be released from its obligations hereunder to a corresponding extent, and no further consent or action by any party shall be required. Upon the consummation of any assignment pursuant to this paragraph (i), such assigning Bank and the Borrowers shall make appropriate arrangements so that, if required, a new Note is issued to the Assignee. (ii) Participations by the Banks. From and after the date hereof, any Bank shall be at liberty to offer participations in its Revolving Credit Commitment and its Note to one or more banks or other financial institutions (each, a "Participant") on such terms as such Bank may think fit, provided that each participation must be for an amount equal to at least $5,000,000 of such Bank's Revolving Credit Commitment and Loans. For this purpose such Bank may make available to each of its potential Participants such information relating to the Borrowers, this Agreement and the transactions contemplated hereby as such Bank may think necessary or desirable, which information shall be held -52- 57 by each potential Participant strictly in confidence. It is agreed that such Bank offering such participation shall retain the sole right to consent to amendments to, or waivers of, the provisions of this Agreement and its Note and the sole right and responsibility to enforce the obligations of the Borrowers hereunder and under the Notes; provided that such Bank may agree with each of its Participants that such Bank will not agree, without the consent of the Participant, to any amendment or waiver of any provision of this Agreement which would increase or otherwise change such Revolving Credit Commitment or reduce the principal of or rate of interest on the Loans subject to such participation, or postpone the date fixed for any payment of principal or of interest on any Loans. (iii) No Assignee, Participant or other transferee of any Bank's rights shall be entitled to receive any greater payment under Sections 2.5.6 through 2.5.8, inclusive, hereof than such Bank would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrowers' prior written consent or at a time when the circumstances giving rise to such greater payment did not exist. (iv) Assignments require a fee payable by the transferor Bank or its transferee to the Agent, solely for the account of the Agent, of $1,500. 10.11 Computation of Interest and Fees. Interest, fees and charges shall be computed daily on the basis of a year of 360 days and paid for the actual number of days for which due. If the due date for any payment of principal is extended by operation of law, interest shall be payable for such extended time. Except as otherwise expressly provided in this Agreement, if any payment required by this Agreement becomes due on a day on which banks in Boston, Massachusetts are required or permitted by law or an appropriate authority to remain closed, such payment may be made on the next succeeding day on which such banks are open, and such extension shall be included in computing interest in connection with such payment. 10.12 Entire Agreement. This Agreement (including the exhibits hereto) and the other Loan Documents set forth the entire agreement and understanding of the parties hereto in respect of the subject matter contained herein, and supersedes all prior agreements, promises, covenants, arrangements, communications, representations, warranties, whether oral or written, by any officer, employee or representative of any party hereto. 10.13 Captions. The captions for the sections of this Agreement are for ease of reference only and are not an integral part of this Agreement. 10.14 Counterparts. This Agreement may be signed in any number of counterparts with the same effect as if the signatures hereto and thereto were upon the same instrument. -53- 58 10.15 Severability. The provisions of this Agreement are severable, and if any of these provisions shall be held by any court of competent jurisdiction to be unenforceable, such holdings shall not affect or impair any other provision hereof. 10.16 Judgment Currency. If for the purposes of obtaining a judgment in any court or obtaining an order enforcing a judgment it is necessary to convert any amount due from the Borrowers hereunder or under the Notes in the currency expressed to be payable herein or under the Notes (the "specified currency") into another currency, then the conversion shall be made at the Agent's spot rate of exchange for buying the specified currency with such other currency, in accordance with normal banking procedures, prevailing at the Agent's close of business on the business day next preceding the day on which the judgment is given or the order is made. In the event that there is a difference between the rate of exchange on the basis of which the amount of such judgment or order is determined and the rate of exchange prevailing on the date of payment, the Borrowers shall pay such additional amount as may be necessary to ensure that the amount paid is the amount of such other currency which permits the Agent to purchase the amount of the specified currency due when such judgment or order is issued at the Agent's spot rate of exchange for buying the specified currency with such other currency, in accordance with normal banking procedures, prevailing at the Agent's opening of business on the date of payment. 10.17 WAIVER OF JURY TRIAL. THE BORROWERS HEREBY IRREVOCABLY WAIVE TRIAL BY JURY IN ANY JURISDICTION AND IN ANY COURT WITH RESPECT TO, IN CONNECTION WITH, OR ARISING OUT OF THIS AGREEMENT, THE OBLIGATIONS, OR ANY INSTRUMENT OR DOCUMENT DELIVERED PURSUANT HERETO OR THERETO, OR ANY CLAIM OR DISPUTE HOWSOEVER ARISING, BETWEEN ANY OF THE BORROWERS AND THE AGENT AND/OR THE BANKS. THIS WAIVER OF JURY TRIAL SHALL BE EFFECTIVE FOR EACH AND EVERY DOCUMENT EXECUTED BY THE BORROWERS, THE AGENT AND/OR THE BANKS AND DELIVERED TO THE AGENT, THE BANKS OR THE BORROWERS, AS THE CASE MAY BE, WHETHER OR NOT SUCH DOCUMENT SHALL CONTAIN A WAIVER OF JURY TRIAL. THE BORROWERS FURTHER ACKNOWLEDGE THAT ALL DOCUMENTS DELIVERED BY THE AGENT, THE BANKS OR THE BORROWERS ARE SUBJECT TO THIS WAIVER OF JURY TRIAL AS TO ANY ACTION THAT MAY BE BROUGHT AS TO ANY OF SUCH DOCUMENTS, INSTRUMENTS OR LETTERS OR THE LIKE. THE BORROWERS FURTHER CONFIRM THAT THE FOREGOING WAIVERS ARE INFORMED AND FREELY MADE. -54- 59 WITNESS the execution hereof under seal on the day and year first above written. The Borrowers: COURIER CORPORATION By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Sr. VP and CFO COURIER CITIZEN COMPANY By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Sr. VP and CFO COURIER COMPANIES, INC. By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer COURIER DELAWARE HOLDING CORPORATION By: /s/ William L. Lampe, Jr. --------------------------------------- Title: Vice President, Asst. Secretary COURIER FOREIGN SALES CORPORATION LIMITED By: /s/ Robert P. Story, Jr. --------------------------------------- Title: President -55- 60 COURIER INVESTMENT CORPORATION By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer COURIER KENDALLVILLE, INC. By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer COURIER PROPERTIES, INC. By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer COURIER STOUGHTON, INC. By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer COURIER WESTFORD, INC. By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer NATIONAL PUBLISHING COMPANY By: /s/ William L. Lampe, Jr. --------------------------------------- Title: Treasurer -56- 61 COURIER NEW MEDIA, INC. By: /s/ Robert P. Story, Jr. --------------------------------------- Title: Treasurer The Banks: STATE STREET BANK AND TRUST COMPANY By: /s/ C. Jaynelle A. Landy --------------------------------------- Title: Loan Officer THE FIRST NATIONAL BANK OF BOSTON By: /s/ Gregory G. O'Brien --------------------------------------- Title: Managing Director The Agent: STATE STREET BANK AND TRUST COMPANY By: /s/ C. Jaynelle A. Landy --------------------------------------- Title: Loan Officer -57- 62 EXHIBIT A Revolving Credit Note $10,000,000 Boston, Massachusetts March __, 1997 FOR VALUE RECEIVED, the undersigned (hereinafter, together with their respective successors in title and assigns, collectively called the "Borrowers"), by this promissory note (hereinafter, called "this Note"), absolutely and unconditionally promise to pay to the order of _______________________, _________________________ (hereinafter, together with its successors in title and assigns, called the "Bank"), the principal sum of TEN MILLION DOLLARS ($10,000,000), or so much thereof as shall have been advanced by the Bank to the Borrowers by way of revolving loans under the Credit Agreement (as hereinafter defined) and shall remain outstanding, such payment to be made as hereinafter provided, and to pay interest on the principal sum outstanding hereunder from time to time from the date hereof until the said principal sum or the unpaid portion thereof shall have become due and payable as hereinafter provided. The entire unpaid principal (not at the time overdue) of this Note shall bear interest at the rate or rates from time to time in effect under the Credit Agreement. Accrued interest on the unpaid principal under this Note shall be payable on the dates specified in the Credit Agreement. On February 15, 2000, the date of the final maturity of this Note, there shall become absolutely due and payable by the Borrowers hereunder, and the Borrowers hereby jointly and severally promise to pay to the holder hereof, the balance (if any) of the principal hereof then remaining unpaid, all of the unpaid interest accrued hereon and all (if any) other amounts payable on or in respect of this Note or the indebtedness evidenced hereby. Each overdue amount (whether of principal, interest or otherwise) payable on or in respect of this Note or the indebtedness evidenced hereby shall (to the extent permitted by applicable law) bear interest at the rates and on the terms provided by the Credit Agreement. The unpaid interest accrued on each overdue amount in accordance with the foregoing terms of this paragraph shall become and be absolutely due and payable by the Borrowers to the holder hereof on demand by the holder of this Note. Interest on each overdue amount will continue to accrue as provided by the foregoing terms of this paragraph, and will (to the extent permitted by applicable law) be compounded monthly until the obligations of the Borrowers in respect of the payment of such overdue amount shall be discharged (whether before or after judgment). -1- 63 Each payment of principal, interest or other sum payable on or in respect of this Note or the indebtedness evidenced hereby shall be made by the Borrowers directly to the Agent in U.S. Dollars, at the Agent's Head Office (as hereinafter defined), on the due date of such payment, and in immediately available and freely transferable funds. All payments on or in respect of this Note or the indebtedness evidenced hereby shall be made without set-off or counterclaim and free and clear of and without any deductions, withholdings, restrictions or conditions of any nature. This Note is made and delivered by the Borrowers to the Bank pursuant to a Revolving Credit Agreement, dated as of March __, 1997, among the Borrowers, the Banks and the Agent (hereinafter, as originally executed, or, if varied or supplemented or amended and restated, called the "Credit Agreement"). This Note evidences the joint and several obligations of the Borrowers (a) to repay the principal amount of each Revolving Loan (as defined in the Credit Agreement) made by the Bank to the Borrowers pursuant to the Credit Agreement; (b) to pay interest, as herein and therein provided, on the principal amount hereof remaining unpaid from time to time; and (c) to pay other amounts which may become due and payable hereunder as herein provided. Reference is hereby made to the Credit Agreement (including the Exhibits annexed thereto) for a complete statement of the terms thereof. No reference herein to the Credit Agreement or to any provisions thereof shall impair the obligations of the Borrowers, which are absolute, unconditional and irrevocable, to pay the principal of and the interest on this Note and to pay all (if any) other amounts which may become due and payable on or in respect of this Note or the indebtedness evidenced hereby, strictly in accordance with the terms and the tenor of this Note. For all purposes of this Note, the following terms shall have the respective meanings set forth below: (a) "Agent" means State Street Bank and Trust Company, acting in its capacity as Agent for the Banks under the Credit Agreement. (b) "Agent's Head Office" means the head office of State Street Bank and Trust Company located at 225 Franklin Street, Boston, Massachusetts 02110. (c) "Banks" shall have the meaning ascribed to such term in the Credit Agreement. (d) "holder" means the Bank in possession of this Note or any other Person who is at the time the lawful holder in possession of this Note. -2- 64 The Borrowers will have the right to prepay the unpaid principal of this Note in full or in part upon the terms contained in the Credit Agreement. The Borrowers will have an obligation to prepay principal of this Note upon the terms contained in the Credit Agreement. Any partial payment of the indebtedness evidenced by this Note shall be applied in accordance with the terms of the Credit Agreement. Pursuant to, and upon the terms contained in, Section 6 of the Credit Agreement, the entire unpaid principal of this Note, all of the interest accrued on the unpaid principal of this Note and all (if any) other amounts payable on or in respect of this Note or the indebtedness evidenced hereby may be declared to be immediately due and payable, whereupon the entire unpaid principal of this Note, all of the interest accrued on the unpaid principal of this Note and all (if any) other amounts payable on or in respect of this Note or the indebtedness evidenced hereby shall (if not already due and payable) forthwith become and be due and payable to the holder of this Note without presentment, demand, protest or any other formalities of any kind, all of which are hereby expressly and irrevocably waived by the Borrowers. All computations of interest payable as provided in this Note shall be made by the Agent on the basis of the actual number of days elapsed divided by 360. The Prime Rate (as defined in the Credit Agreement) in effect from time to time shall be determined in accordance with the terms of the Credit Agreement. Should all or any part of the indebtedness represented by this Note be collected by action at law, or in bankruptcy, insolvency, receivership or other court proceedings, or should this Note be placed in the hands of attorneys for collection after default, the Borrowers hereby jointly and severally promise to pay to the holder of this Note, upon demand by the holder hereof at any time, in addition to principal, interest and all (if any) other amounts payable on or in respect of this Note or the indebtedness evidenced hereby, all court costs and attorneys' fees and all other collection charges and expenses reasonably incurred or sustained by the holder of this Note. The Borrowers hereby irrevocably waive notice of acceptance, presentment, notice of nonpayment, protest, notice of protest, suit and all other conditions precedent in connection with the delivery, acceptance, collection and/or enforcement of this Note. The Borrowers hereby absolutely and irrevocably consent and submit to the jurisdiction of the Courts of the Commonwealth of Massachusetts and of any Federal Court located in the said Commonwealth in connection with any actions or proceedings brought against the Borrowers by the holder hereof arising out of or relating to this Note. This Note is intended to take effect as a sealed instrument. This Note and the obligations of the Borrowers hereunder shall be governed by and interpreted and determined in accordance with the laws of the Commonwealth of Massachusetts. -3- 65 Each of the Borrowers shall be jointly and severally liable for the full amount owing under this Note. IN WITNESS WHEREOF, this REVOLVING CREDIT NOTE has been duly executed by the undersigned on the day and in the year first above written in Boston, Massachusetts. The Borrowers: WITNESS: COURIER CORPORATION __________________________ By:_____________________________ Title: Title: WITNESS: COURIER CITIZEN COMPANY __________________________ By:_____________________________ Title: Title: WITNESS: COURIER COMPANIES, INC. __________________________ By:_____________________________ Title: Title: WITNESS: COURIER DELAWARE HOLDING CORPORATION __________________________ By:_____________________________ Title: Title: WITNESS: COURIER FOREIGN SALES CORPORATION LIMITED __________________________ By:_____________________________ Title: Title: -4- 66 WITNESS: COURIER INVESTMENT CORPORATION __________________________ By:_____________________________ Title: Title: WITNESS: COURIER KENDALLVILLE, INC. __________________________ By:_____________________________ Title: Title: WITNESS: COURIER PROPERTIES, INC. __________________________ By:_____________________________ Title: Title: WITNESS: COURIER STOUGHTON, INC. __________________________ By:_____________________________ Title: Title: WITNESS: COURIER WESTFORD, INC. __________________________ By:_____________________________ Title: Title: WITNESS: NATIONAL PUBLISHING COMPANY __________________________ By:_____________________________ Title: Title: WITNESS: COURIER NEW MEDIA, INC. __________________________ By:_____________________________ Title: Title: -5- 67 EXHIBIT B DISCLOSURE STATEMENT
Revolving Credit Agreement Section , and Information Requested Disclosure --------------------- ---------- 3.1 Organization and Qualification - Borrower information - Courier Corporation: incorporated and qualified in Massachusetts - Subsidiary information - Refer to Exhibit F 3.4 Approvals and Consents - No exceptions 3.5 Title to Properties: Absence of Liens - Borrower's Obligations under the - Demand loan due State Street Bank and Loan Documents rank at least paripassu Trust totaling $4,047,000 on September as to right of repayment with all of 28, 1996 Borrower's other Indebtedness except as set forth here. 3.6 Compliance - No exceptions 3.7 Financial Statements - Material adverse changes to financial - No exceptions statement dated September 28, 1996 3.9 Taxes - Waivers extending applicable statute - Tax years ending September 1992 and of limitations 1993 extended through December 31, 1997 3.10 See Disclosure Letter
68
Revolving Credit Agreement Section , and Information Requested Disclosure --------------------- ---------- 3.13 ERISA - List of plans 1) Courier Profit Sharing and Savings Plan 2) Multi-employer pension plans maintained by the Graphic Communication International Union. 3) Courier Employee Short-Term Disability Plan 4) Courier Employee Long-Term Disability Plan 5) Courier Employee Group Life Insurance Plan 6) Courier Employee Group Health Insurance Plan 7) Medical/Surgical Health Insurance Plan for Employees of National Publishing Co. 8) Dental Insurance Plan for Employees of Courier Stoughton 9) Courier Travel Accident Insurance Plan -Reportable events - Until December 31, 1988, the Borrower and its Affiliates maintained four single-employer defined benefit pension plans. Effective December 31, 1988, certain assets and liabilities of one of the plans (the "Courier Plan") were transferred to another of the plans (the "Transferee Plan"); the two remaining plans were merged into the Transferee Plan; and the Courier Plan and the Transferee Plan were terminated in standard terminations within the meaning of Section 4041(b) of ERISA. The Internal Revenue Service has issued favorable determination letters as to both of the plan terminations. The Pension Benefit Guaranty Corporation has determined the assets of the plans to be sufficient to satisfy all benefit liabilities, and the assets of both terminated plans have been fully distributed to participants and beneficiaries.
69
Revolving Credit Agreement Section , and Information Requested Disclosure --------------------- ---------- 3.15 See Disclosure Letter 3.17 Contracts with Affiliates, Etc. - Refer to Borrower's Proxy - Agreements or transactions not in the Statement dated December 6, 1996 ordinary course of business with Affiliates - No indebtedness owing by any Affiliate to the Borrower or any Subsidiary - No exceptions 5.6 Guaranties - No guaranties - No exceptions 5.7 Restrictions on Liens 1) Commonwealth of Mass. Industrial - Listed encumbrances Revenue Bond with Courier Corporation payable semi-annually through December 1997. Balance at September 30, 1996 was $200,000. (Secured with various printing equipment) 2) MetLife Capital Credit Corporation's lien on one Hantscho Mark 16 Web Press in accordance with purchase contract dated October 15, 1991 3) Installment Sale Agreement between PIDC Financing Corporation ("PIDC") and Courier Properties, Inc. dated April 24, 1996 with respect to a portion of the premises located at 11311 Roosevelt Boulevard, Philadelphia PA, the indebtedness under which totalled $1,200,000. PIDC retains title to the land and a portion of the buildings until final payment, which is anticipated to be May 1, 2011.
70 EXHIBIT C EXISTING INDEBTEDNESS Refer to Courier Corporation's 12/28/96 Form 10-Q and to Exhibit C-1 -1- 71 EXHIBIT C-1 Long term debt of the Company and its consolidated subsidiaries consisted of the following:
Balance @ 12/28/96 ---------- Bank of Boston $ 3,000,000 State Street Bank & Trust Co. 5,579,000 Obligation under industrial revenue bond arrangement at 65% of prime rate (8.25% at December 28, 1996), payable in semi-annual installments of $100,000 through December 1997 200,000 Obligation under industrial development bond arrangement at 3%, payable in monthly installments through May 2011 1,173,000 9.5% secured promissory note, payable in monthly installments through October 2001 1,158,000 ----------- $11,110,000 Less - Current maturities 466,000 ----------- Total $10,644,000 ===========
-1- 72 EXHIBIT D [Form of Certificate of Chief Financial Officer of Courier] CERTIFICATE OF CHIEF FINANCIAL OFFICER OF COURIER (Pursuant to Section 5.1(v) of the Revolving Credit Agreement dated as of March __, 1997.) The undersigned chief financial officer of Courier Corporation ("Courier") HEREBY CERTIFIES THAT: This Certificate is furnished pursuant to Section 5.1(v) of the Revolving Credit Agreement, dated as of March __, 1997, among Courier and the other Borrowers named therein (collectively, the "Borrowers"), The First National Bank of Boston, and State Street Bank and Trust Company, individually and as Agent (the "Agreement"). Unless otherwise defined herein, the terms used in this Certificate and Schedule 1 annexed hereto have the meanings described in the Agreement. As required by Section 5.1(i) or (ii) of the Agreement, Consolidated financial statements of the Borrowers and their respective Subsidiaries for the (year) (quarter) ended __________, 19__ (the "Financial Statements") prepared in accordance with GAAP (subject, in the case of quarterly statements, to normal year-end audit adjustments) accompany this Certificate. The Financial Statements present fairly the Consolidated financial position of the Borrowers and their respective Subsidiaries as at the date thereof and the Consolidated results of operations of the Borrowers and their respective Subsidiaries for the period covered thereby. As required by Section 5.1(i) or (ii) of the Agreement, the Report for the (year) (quarter) ended ___________, 19__ accompanies this Certificate. The Report reasonably reflects the results of operations of each Borrower and each of its Subsidiaries (subject, in the case of quarterly statements, to normal year-end audit adjustments) on a consistent basis and, in the aggregate, agrees with the Consolidated Financial Statements for the same period. Schedule 1 attached hereto sets forth financial data and computations evidencing the Borrowers' compliance with the covenants of the Agreement set forth in Sections 5.24 through 5.26, inclusive, and 5.29, all of which data and computations, to the best of the knowledge and belief of the chief financial officer of Courier (the "Chief Financial Officer") executing and delivering this Certificate, are true, complete and correct. -1- 73 The activities of the Borrowers during the period covered by the Financial Statements have been reviewed by the Chief Financial Officer of Courier and/or by employees or agents under his or her supervision. Based on such review, to the best knowledge and belief of the Chief Financial Officer, during the period covered by the Financial Statements, and as of the date of this Certificate, (a) the Borrowers have, or have caused to have, kept, observed, performed and fulfilled each and every covenant and condition of the Agreement and the other Loan Documents, and (b) no Event of Default and no event which with notice or the passage of time, or both, would become an Event of Default, has occurred or is continuing.(1) Witness my hand this _________ day of ______________, 19___. COURIER CORPORATION By:__________________________________ Title: Chief Financial Officer ________ (1) If an Event of Default or an event which with notice or the lapse of time, or both, would become an Event of Default, has occurred or is occurring, this paragraph is to be modified by an appropriate statement as to the nature thereof, the period of existence thereof, and what action the Borrowers have taken, are taking, or propose to take with respect thereto. -2- 74 Schedule 1 to the Foregoing Certificate of Chief Financial Officer of Courier -1- 75 EXHIBIT E March __, 1997 State Street Bank and Trust Company, Individually and as Agent 225 Franklin Street Boston, MA 02110 The First National Bank of Boston 100 Federal Street Boston, MA 02110 Re: Courier Corporation and Subsidiaries Gentlemen: This legal opinion is furnished to you pursuant to Section 4.1.1(v) of the Revolving Credit Agreement, dated as of March __, 1997 (the "Credit Agreement"), among Courier Corporation and its Subsidiaries (collectively, the "Borrowers"), The First National Bank of Boston, and State Street Bank and Trust Company, individually and as Agent (collectively, the "Banks"). The words and expressions used without definition in this legal opinion which are defined in the Credit Agreement have the same respective meanings in this legal opinion as the meanings specified for them in the Credit Agreement, as it is in effect on the date hereof. We have acted as counsel to the Borrowers, and have acted in such capacity in connection with the transactions and arrangements contemplated by the Credit Agreement and the other Loan Documents. We have examined executed originals or (as the case may be) executed counterparts of each of the Loan Documents. We have examined originals or certified copies of the charter documents (including the by-laws) of each of the Borrowers and their Subsidiaries. We have also examined such certificates of the directors and officers of the Borrowers, and such other certificates, agreements, instruments and documents as we -1- 76 have deemed necessary or advisable for the purposes of this legal opinion. We have relied, as to factual matters only, upon such certificates and the representations and warranties made in such agreements, instruments, and other documents. We have assumed the genuineness of all signatures (except for the signatures of those persons signing the Loan Documents on behalf of the Borrowers), the authenticity of all documents submitted to us as originals and the conformity to originals of all documents submitted to us as copies. We have also made such examination of law as in our judgment was necessary and appropriate for the purposes of this legal opinion. Based upon and in reliance on the limitations expressed herein, it is my opinion that: (1) Each of the Borrowers and their respective Subsidiaries (a) is a corporation duly organized, validly existing and in corporate good standing under the laws of its jurisdiction of incorporation, and (b) has adequate corporate power and authority and full legal right to own or to hold under lease its properties and to carry on the business in which it is presently engaged and presently proposes to engage. [Each of the Borrowers and their respective Subsidiaries is duly qualified as a foreign corporation and is licensed, admitted, or approved to do business as a foreign corporation in each jurisdiction wherein the character of the properties, owned or held under lease by it, or the nature of the business conducted by it, makes such qualification necessary, except where the failure to be so qualified would not have a material and adverse effect on the condition (financial or other), properties, business, or results of operations of the Borrowers and their respective Subsidiaries taken as a whole.] (2) Each Borrower has adequate corporate power and authority and full legal right to enter into each of the Loan Documents which has been executed and delivered by it, and to perform, observe, and comply with all of its agreements and obligations under each of such Loan Documents. (3) The execution and delivery by each Borrower of each of the Loan Documents which has been executed and delivered by it, the performance by such Borrower of all of its agreements and obligations under each of such documents, and the making by such Borrower of all of the borrowings contemplated by the Credit Agreement, have been duly and properly authorized by all necessary corporate action on the part of such Borrower, and do not and will not (a) contravene any provision of the charter or by-laws of such Borrower (each as in effect on the date hereof), (b) to the best of our knowledge (after due inquiry of the chief financial officer of Courier), conflict with, or result in a breach of, the terms, conditions or provisions of, or constitute a default under, or (except as otherwise contemplated and required or permitted by any of the Loan Documents) result in the creation of any mortgage, lien, pledge, charge, security interest, or other encumbrance upon any of the property of such Borrower under, any material agreement, trust deed, indenture, mortgage, or other instrument known to us to which such Borrower is a party or by which such Borrower is bound or affected on the date hereof, (c) violate or contravene any provision of any law or regulation (including, -2- 77 without limitation, Regulations G, U, or X of the Board of Governors of the Federal Reserve System) or any order, ruling, or interpretation thereunder except where any such violation or contravention would not have a material and adverse effect on the condition (financial or other), properties, business, or results of operation of the Borrowers and their respective Subsidiaries taken as a whole, or, to the best of our knowledge (after due inquiry of the chief financial officer of Courier), any decree, order, or judgment of any court or governmental or regulatory authority, bureau, or agency or official (all as in effect on the date hereof and applicable to such Borrower), (d) to the best of our knowledge (after due inquiry of the chief financial officer of Courier), require any waivers, consents, or approvals by any of the creditors or trustees for creditors of record of such Borrower, or (e) require any consents or approvals by any shareholders of such Borrower. (4) No approval, consent, order, authorization, or license by, or giving of notice to, or taking of any other action with respect to, any governmental or regulatory authority or agency is required for the execution and delivery or performance by any Borrower of any of the Loan Documents which have been executed and delivered by it or for the performance by such Borrower of any of its agreements or obligations thereunder. (5) Each of the Loan Documents to which each Borrower was to have become a party (as contemplated and required by the Credit Agreement) has been duly and properly executed and delivered by such Borrower. (6) The agreements and obligations of each Borrower contained in each of the Loan Documents executed and delivered by it constitute the legal, valid, and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms. (7) To the best of our knowledge (after the review and examination described in qualification no. 2 below and due inquiry of the chief financial officer of Courier), and except as disclosed in Exhibit B to the Credit Agreement, there is no pending or threatened action, suit, proceeding, or investigation before any court, governmental or regulatory authority, agency, commission or official, board of arbitration or arbitrator against any Borrower or any Subsidiary of any Borrower, the outcome of which could reasonably be expected (a) to materially adversely affect the transactions contemplated by the Loan Documents, or (b) to materially adversely affect the financial position, business, properties, or operations of the Borrowers and their respective Subsidiaries taken as a whole. Each of the foregoing legal opinions is subject to the following qualifications: 1. (a) the enforceability of any rights and remedies provided in any Loan Document against any particular party thereto is subject to any applicable bankruptcy, -3- 78 reorganization, moratorium, or other similar laws affecting generally the enforcement of creditors' rights; and (b) the availability of any equitable remedies for the enforcement of any provision of any of the Loan Documents may be subject to the discretion of the court before which any proceeding for the enforcement of any such provision may be brought. 2. The opinion expressed in paragraph 7 above is based solely on (i) our review of the Form 10-K of Courier Corporation for the fiscal year ended September 28, 1996 and (ii) an examination of the dockets of the Massachusetts Superior Court of Middlesex County and the United States District Court for the District of Massachusetts all as of the close of business on February __, 1997. We express no opinion relating to matters as to which notice was filed after the date on which the aforesaid dockets were examined. 3. Although the Borrowers have ordered the same, they have not yet received from the Massachusetts State Tax Commissioner certificates attesting to the tax good standing of the Borrowers in Massachusetts; thus, we are unable at this time to render any opinion as to the good standing of the Borrowers as tax-paying corporations in Massachusetts. We are members of the Bar of The Commonwealth of Massachusetts, and we therefore express no opinion herein with respect to any law other than the laws of The Commonwealth of Massachusetts and the United States of America. [Please assume laws of other jurisdictions are identical to Massachusetts law.] In addition, we express no opinion as to the need for any consent or approval of, the giving of notice to, or the registration with, or the taking of any other action with respect to any governmental authority or agency which may be required by reason of the business activities of any of the parties to the Loan Documents other than the Borrowers. The opinions given herein are as of the date hereof. We assume no obligation to update or supplement this opinion to reflect any facts or circumstances which may hereafter come to our attention or changes in laws which may hereafter occur. The opinions contained herein are being rendered to each of you in connection with the execution and delivery by the Borrowers of the Credit Agreement and the transactions contemplated thereby and may not be relied upon by any other party or for any other purpose. Very truly yours, GOODWIN, PROCTER & HOAR LLP -4- 79 EXHIBIT F LIST OF SUBSIDIARIES
PLACE OF NAME INCORPORATION ADDRESS JURISDICTIONS - ---- ------------- ------- ------------- Courier-Citizen Company Massachusetts 15 Wellman Ave. MA, PA* North Chelmsford, MA 01863 Courier Companies, Inc. Massachusetts 15 Wellman Ave. CA, FL, IL, IN North Chelmsford, MA MA, NY 01863 Courier Delaware Delaware 1105 North Market St. DE Holding Corp. Suite 1300 Wilmington, DE 19801 Courier Foreign Sales Jamaica 21 East St. Jamaica Corporation Ltd. Kingston, Jamaica Courier Investment Massachusetts 15 Wellman Ave. MA Corporation North Chelmsford, MA 01863 Courier Indiana 2500 Marion Drive IN Kendallville, Inc. Kendallville, IN 46755 Courier Properties, Inc. Massachusetts 15 Wellman Ave. MA, IN*, NH*, PA* North Chelmsford, MA 01863 Courier Stoughton, Inc. Massachusetts 100 Alpine Circle MA Stoughton, MA 02072 Courier Westford, Inc. Massachusetts Pleasant Street MA Westford, MA 01886 National Publishing Pennsylvania 11311 Roosevelt Blvd. PA Company Philadelphia, PA 19154 Courier New Media, Inc. Massachusetts 15 Wellman Ave. MA North Chelmsford, MA 01863
* Not presently qualified to do business. An application for qualification is being prepared. 80 EXHIBIT G FORM OF FLASH REPORT COURIER CORPORATION CONSOLIDATED SUMMARY OF OPERATIONS DATE (000'S OMITTED)
MONTH YEAR TO DATE YEAR -------------------------- --------------------------- ------------------------------- Actual/ 19xx 19xx Actual Budget Prior Actual Budget Prior Budget Budget Actual ------ ------ ----- ------ ------ ----- ------ ------ ------ SALES Manufacturing Sales Westford $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Stoughton 0 0 0 0 0 0 0 0 0 Kendallville 0 0 0 0 0 0 0 0 0 Chelmsford 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- Total Manufacturing Sales 0 0 0 0 0 0 0 0 0 Non-Manufacturing Sales 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- BOOK GROUP SALES 0 0 0 0 0 0 0 0 0 NATIONAL 0 0 0 0 0 0 0 0 0 COPYRIGHT MANAGEMENT 0 0 0 0 0 0 0 0 0 Eliminations 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- TOTAL SALES $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ===== ===== ===== ===== ===== ===== ===== ===== ===== PRETAX INCOME Westford $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 Stoughton 0 0 0 0 0 0 0 0 0 Kendallville 0 0 0 0 0 0 0 0 0 Chelmsford 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- BOOK GROUP 0 0 0 0 0 0 0 0 0 NATIONAL 0 0 0 0 0 0 0 0 0 Copyright Mgmt 0 0 0 0 0 0 0 0 0 Other CNM 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- COURIER NEW MEDIA 0 0 0 0 0 0 0 0 0 NON-RECURRING GAINS/(LOSSES) 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- Pretax Income 0 0 0 0 0 0 0 0 0 Taxes 0 0 0 0 0 0 0 0 0 ----- ----- ----- ----- ----- ----- ----- ----- ----- NET INCOME $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 ===== ===== ===== ===== ===== ===== ===== ===== ===== EARNINGS/SHARE $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 Return on Assets 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Wtd. Avg. Shares O/S 0 0 0 0 0 0 0 0 0
EX-27 3 FINANCIAL DATA SCHEDULE
5 0000025212 COURIER CORP 1,000 3-MOS SEP-27-1997 DEC-29-1996 MAR-29-1997 43 0 21,949 934 10,349 34,679 96,296 61,323 74,156 20,730 0 0 0 4,500 34,824 74,156 32,011 32,011 25,242 25,242 5,348 41 202 1,178 350 828 0 0 0 828 .41 .41 RECEIVABLES ARE NET OF ALLOWANCES FOR UNCOLLECTIBLE ACCOUNTS OTHER SE INCLUDES TREASURY STOCK
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