8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 5, 2005

COURIER CORPORATION

(Exact name of registrant as specified in its charter)

Massachusetts

(State or other jurisdiction of incorporation or organization)

Commission File Number: 0-7597

IRS Employer Identification Number: 04-2502514

15 Wellman Avenue, North Chelmsford, MA	01863
(Address of principal executive offices)	(Zip Code)
(978) 251-6000
(Registrant’s telephone number, including area code)
No Change
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01Entry into a Material Definitive Agreement

On December 5, 2005, the Compensation Committee of the Board of Directors of Courier Corporation (the “Company”) recommended, and the Board of Directors approved, that effective January 1, 2006, each non-employee director of the Company will receive an annual cash retainer fee of $25,000 per year.  Previously, each non-employee director received an annual cash retainer fee of $20,000.

On December 5, 2005, the Compensation Committee also recommended, and the Board of Directors approved, certain amendments to the Courier Corporation Deferred Compensation Program (the “Deferred Compensation Program”), the Courier Corporation Executive Compensation Program (the “Executive Compensation Program”) and the Courier Corporation Senior Executive Severance Program (the “Executive Severance Program”).

The amendments to the Deferred Compensation Program were made in order to comply with certain requirements of Section 409A of the Internal Revenue Code of 1986, as amended, enacted as part of the American Jobs Creation Act of 2004 (the “2004 Deferred Compensation Rules”). The amendments continue all terms and conditions of the program currently in effect, except that the amendments provide that payment of deferred compensation on account of termination of employment for reasons other than death must be delayed a minimum of six months after termination of employment.  In addition, in the event of any termination of an executive, then, in the case of death, such payment shall be made within 60 days after the executive’s termination of employment, and in all other instances such payment shall be made in the seventh month after the executive’s termination of employment.  The foregoing description of the amendments to the Deferred Compensation Program does not purport to be complete and is qualified in its entirety by reference to the Fourth Amendment to Terms and Conditions of Courier Corporation Deferred Compensation Program, dated as of December 5, 2005, that is filed as Exhibit 10.1 hereto and incorporated herein by reference.

The amendments to the Executive Compensation Program continue all terms and conditions of the program currently in effect, except that the amendments provide that in the event of a change in control of the Company, each executive shall be entitled to receive a pro-rated (over the one-year performance period) portion of his or her targeted cash bonus for the year in which such change in control occurs and a pro-rated (over the three-year performance period) portion of his or her targeted long term performance incentive award in cash.  In addition, the amendments provide that upon a change in control of the Company, each executive’s unexercised and unvested stock options, restricted stock grants and restricted stock units shall become fully vested and exercisable and that each executive shall receive a pro-rated (over the three-year performance period) amount in cash equal to his or her unearned target long term stock incentive cash award.  The amendments effected other definitional and grammatical changes that are ministerial in nature, as well as changes to conform the program’s other provisions to the changes noted above.  The foregoing description of the amendments to the Executive Compensation Program does not purport to be complete and is qualified in its entirety by reference to the Courier Corporation Executive Compensation Program, as amended and restated as of December 5, 2005, that is filed as Exhibit 10.2 hereto and incorporated herein by reference.

The amendments to the Executive Severance Program continue all terms and conditions of the program currently in effect, except that the amendments (1) eliminate retirement as a circumstance under which an Eligible Executive would not be entitled to the change in control benefits provided under the program, (2) provide that termination by an Eligible Executive for any reason during a 30-day period commencing one year after the date of a change in control of the Company shall constitute a “good reason” termination under the program, (3) clarify that any deferred compensation shall be included in the calculation of

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average five year salary and bonus (“Average Five Year Compensation”) for purposes of determining the amount of severance to which an Eligible Executive is entitled, (4) change the multiple to be applied to an Eligible Executive’s Average Five Year Compensation from (x) a graduated scale beginning with a factor of 1 times Average Five Year Compensation for Eligible Executives having up to 2 years of service with the Company up to a factor of 2.5 times Average Five Year Compensation for Eligible Executives having at least 20 years of service with the Company, to (y) a factor of 3 times Average Five Year Compensation for James Conway, Robert Story, George Nichols and Peter Folger, and 2 times Average Five Year Compensation for any Vice President of the Company having at least 10 years of service with the Company, (5) change the period of time following a termination by an Eligible Executive during which such executive shall be entitled to continued Group Health Program benefits from 36 months to December 31 of the second calendar year following the calendar year containing the date of such executive’s termination of employment and eliminate such extended coverage under the Company’s Basic Life Insurance Plan, Supplemental Life Insurance Plan, Accidental Death and Dismemberment Insurance Plan and Long Term Disability Plan, (6) change the geographical scope of the Eligible Executive’s right to terminate for “good reason” as a result of relocation of the company’s principal offices from Lowell, Massachusetts to North Chelmsford, Massachusetts, (7) permit the Board of Directors, in its sole discretion, to establish a rabbi trust with an independent trustee and make a contribution to such trust to satisfy the Company’s obligations under the Executive Severance Program, and (8) effect certain other changes to the Executive Severance Program similar to those made to the Deferred Compensation Program in order to comply with the 2004 Deferred Compensation Rules.  “Eligible Executives” for purposes of the Executive Severance Program are Messrs. Conway, Story, Nichols and Folger and any Vice President of the Company having at least 10 years of service with the Company.  The amendments effected other definitional and grammatical changes that are ministerial in nature, as well as changes to conform the program’s other provisions to the changes noted above.  The foregoing description of the amendments to the Executive Compensation Program does not purport to be complete and is qualified in its entirety by reference to the Courier Corporation Senior Executive Severance Program, as amended and restated as of December 5, 2005, that is filed as Exhibit 10.3 hereto and incorporated herein by reference.

Item 9.01Financial Statements and Exhibits.

(a)Financial statements of business acquired.

Not applicable.

(b)Pro forma financial information.

Not applicable.

(c)Exhibits.

Exhibit No.	Exhibit
10.1	Fourth Amendment to Terms and Conditions of Courier Corporation Deferred Compensation Program dated as of December 5, 2005*
10.2	Courier Corporation Executive Compensation Program, as amended and restated as of December 5, 2005*

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10.3 Courier Corporation Senior Executive Severance Program, as amended and restated as of December 5, 2005*

* Filed herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	COURIER CORPORATION
	By:	/s/ Robert P. Story, Jr.
	Robert P. Story, Jr.
	Senior Vice President and
	Chief Financial Officer
Date:  December 7, 2005

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EXHIBIT INDEX

Exhibit No.	Exhibit
10.1	Fourth Amendment to Terms and Conditions of Courier Corporation Deferred Compensation Program dated as of December 5, 2005
10.2	Courier Corporation Executive Compensation Program, as amended and restated as of December 5, 2005
10.3	Courier Corporation Senior Executive Severance Program, as amended and restated as of December 5, 2005

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EX-10.1

Exhibit 10.1

FOURTH AMENDMENT TO TERMS AND CONDITIONS OF
COURIER CORPORATION DEFERRED COMPENSATION PROGRAM

A.The Terms and Conditions of the Courier Corporation Deferred Compensation Program, as established on November 6, 1997, as subsequently amended, are hereby amended as follows:

1.Paragraph 6 is hereby amended by deleting the last sentence thereof and substituting the following in lieu thereof:

“Such payment shall be made within 90 days after the beginning of the calendar year following the calendar year in which such Participant’s termination of employment occurs, or in the seventh month after the Participant’s termination of employment, if later.  Such payment shall completely discharge the Company’s obligation under the Program.”

2.Paragraph 7 is hereby amended by deleting the last sentence thereof and substituting the following in lieu thereof:

“In the case of death, such payment shall be made within 60 days after the Participant’s termination of employment.  In all other instances, such payment shall be made in the seventh month after the Participant’s termination of employment.  Such payment shall completely discharge the Company’s obligation under the Program.”

B.The effective date of this Fourth Amendment shall be as of January 1, 2005.

IN WITNESS WHEREOF, this Fourth Amendment has been signed and sealed for and on behalf of the Company by its duly authorized officer this 5th day of December, 2005.

COURIER CORPORATION
By:	/s/ Robert P. Story, Jr.
	Title:	Senior Vice President and
		Chief Financial Officer

EX-10.2

Exhibit 10.2

THE COURIER CORPORATION EXECUTIVE COMPENSATION PROGRAM

As amended and restated on December 5, 2005

THE COURIER CORPORATION EXECUTIVE COMPENSATION PROGRAM

Introduction

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

Objectives

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

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

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

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

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

Overview of the Program

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

•Base Salary

•Annual Cash Incentive

•Long-Term Performance Incentive

•Long-Term Stock Incentive

Base Salary

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

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Annual Cash Incentive

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

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

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

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

Company Performance	Business Unit Performance
Earnings Per Share	Pre-Tax Profits; Total Sales

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

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

Long Term Performance Incentive

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

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

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

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

Long Term Stock Incentive

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

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

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

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

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

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

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

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

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

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

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

Important Information

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

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

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2.  Definitions

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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EX-10.3

Exhibit 10.3

COURIER CORPORATION

SENIOR EXECUTIVE SEVERANCE PROGRAM

As Amended and Restated December 5, 2005

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

6.Severance Pay.

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

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Name	Factor
J. Conway	3.0
R. Story	3.0
G. Nichols	3.0
P. Folger	3.0

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

(b)Additional Limitation.

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

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

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

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

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

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

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

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

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

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

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

If to the Corporation:	Courier Corporation
	15 Wellman Avenue
	N. Chelmsford, MA  01863
If to the Executive:	To his address indicated on the Corporation’s records

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

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

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

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