SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

SECOND AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT made as of the 16 th day of June, 2009 by and among THE SHERIDAN GROUP, INC., a Maryland corporation (“ Borrower ”), BANK OF AMERICA, N.A. (“ Bank ”), individually, as Administrative Agent, Issuer and a Lender, and the OTHER FINANCIAL INSTITUTIONS that may become parties to this Agreement as “Lenders” from time to time in accordance with the terms hereof.  Bank and any other financial institutions which may become parties to this Agreement from time to time, are sometimes collectively referred to as the “ Lenders ” and individually as a “ Lender .”  Bank, when acting in its capacity as agent for the Lenders and Issuer, or any successor or assign that assumes that position pursuant to the terms of this Agreement, is hereinafter sometimes referred to as the “ Agent .”

WHEREAS, Borrower, Bank (as Agent and a Lender) and Wachovia Bank, N.A., as Lender, are party to a certain Amended and Restated Revolving Credit Agreement dated as of May 25, 2004, as amended thereafter (the “ Prior Agreement ”); and

WHEREAS, immediately prior to the execution hereof, Wachovia Bank, N.A. has assigned to Bank and Bank has assumed all rights and obligations of Wachovia Bank, N.A. as lender under the Prior Agreement; and

WHEREAS, Borrower desires that the Lenders continue to extend a revolving loan facility (with a letter of credit sublimit), swing loan facility and banker’s acceptance facility to provide working capital financing for Borrower and its Subsidiaries and to provide credit for other general business purposes of Borrower and its Subsidiaries; and

WHEREAS, the Borrower desires to borrow, and the Lenders are willing to continue to extend credit from time to time on a revolving credit basis until the Revolving Credit Termination Date (as defined below), an aggregate principal amount not to exceed Twenty Million dollars ($20,000,000) outstanding at any time.  The loans and credit are to be secured by the stock and assets of the Borrower and its Subsidiaries.  Certain terms used herein are defined in Article 13 below.

NOW THEREFORE, the parties hereto, intending to be legally bound, agree that the Prior Agreement be, and it hereby is amended, restated and superseded, to read in full as follows, but the Obligations under the Prior Agreement shall not be deemed satisfied and shall constitute Obligations hereunder:

Section 1.01            Commitment to Lend .  The Lenders severally agree, upon the terms and conditions set forth below, from time to time until the Revolving Credit Termination Date, to make Revolving Credit Loans to the Borrower in such amounts as the Borrower may request, subject to the limitation that:  (a) at no time shall Revolving Credit Outstandings exceed Revolving Credit Limit; and (b) the amount and percentage of the Commitment which each Lender is obligated to lend shall not exceed at any time the amount or percentages set forth opposite the name of such Lender on Schedule A hereto (as supplemented and amended by giving effect to the assignment contemplated in this Agreement).  The amount of any single Base Rate Loan shall be fifty thousand dollars ($50,000) or an integral multiple of ten thousand dollars ($10,000) in excess thereof, and the amount of any single LIBOR Loan shall be one hundred thousand dollars ($100,000) or an integral multiple of ten thousand dollars ($10,000) in excess thereof.  Within such limitations and subject to the terms and conditions set forth below, the Borrower may borrow, prepay and reborrow, from time to time, on a revolving basis.  The Lenders shall have no obligation to make any Revolving Credit Loans at any time that a Default exists.

Section 1.02            Manner of Borrowing .

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

(b)            The Agent in turn shall give prompt written or telephonic (promptly confirmed in writing) notice to each Lender of its pro rata share of the borrowing, the interest rate option selected and the scheduled date of the funding.  After receipt of such notice, each Lender shall make such arrangements as are necessary to assure that its share of the funding shall be immediately available (in Dollars) to the Agent no later than 1:30 p.m. (Philadelphia, PA time), on the date on which the funding is to occur.

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

Section 1.04            Letters of Credit and Letter of Credit Fees .

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

(i)             Issuer shall have received a Notice of LC Credit Event and such other documentation as the Issuer shall reasonably request executed by Borrower and/or the Subsidiary for whose account the Letter of Credit being issued, at least two (2) Business Days before the relevant date of issuance; and

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

(b)             Letter of Credit Fee .  Borrower shall pay to the Agent for the account of the Lenders a letter of credit fee with respect to the Letter of Credit Liabilities for each Letter of Credit, computed for each day from the date of issuance of such Letter of Credit to the date that is the last day a drawing is available under such Letter of Credit, at a rate per annum equal to the Applicable Margin then applicable to LIBOR Loans.  Such fee shall be payable in arrears on the first Business Day of each fiscal quarter prior to the Revolving Credit Termination Date and on such date.  In addition, the Issuer shall receive a fronting fee equal to 0.125% per annum of the face amount of all outstanding Letters of Credit (“ Fronting Fee ”).  The Borrower shall also pay to the Issuer all of the Issuer’s standard fees and charges for the opening, amendment, modification, presentation or cancellation of a Letter of Credit and otherwise in respect of a Letter of Credit and shall execute all of the Issuer’s standard agreements in connection with the issuance of the Letter of Credit.

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

(d)             Objections Absolute .  The obligations of Borrower under this Section 1.04 shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement, under all circumstances whatsoever, including the following:

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

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

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

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

(e)             Deposit Obligations of Borrower .  In the event any Letters of Credit are outstanding at the time that Borrower prepays or is required to repay the Obligations or the Commitment is terminated, Borrower shall (i) deposit with Issuer cash in an amount equal to one hundred and two percent (102%) of the aggregate outstanding Letter of Credit Liability to be available to Issuer to reimburse payments of drafts drawn under such Letters of Credit and pay any fees and expenses related thereto and (ii) prepay the fee payable under Section 1.04(b) with respect to such Letters of Credit for the full remaining terms of such Letters of Credit.  Upon termination of any such Letter of Credit, the unearned portion of such prepaid fee attributable to such Letter of Credit shall be refunded to Borrower, together with the deposit described in the preceding clause (i) to the extent not previously applied by Issuer in the manner described herein.

(f)              Participation by Lenders .

(i)             Effective immediately upon the issuance of each Letter of Credit and without further action on the part of the Issuer, the Issuer shall be deemed to have granted to each Lender, and each Lender shall be deemed to have irrevocably purchased and received from the Issuer, without recourse or warranty, an undivided interest and participation in such Letter of Credit to the extent of each Lender’s percentage of the Revolving Credit Limit.    Further, each Lender acknowledges and agrees that it shall be absolutely liable, to the extent of its percentage of the Revolving Credit Limit, to fund on demand or reimburse the Issuer on demand for the amount of each draft paid by the Issuer under each Letter of Credit to the extent that such amount is not immediately reimbursed by the Borrower.

(ii)            In furtherance of the provisions of the preceding paragraph (a), the Issuer shall notify the Agent promptly upon receipt of notice of an intended draw under a Letter of Credit.  The Agent shall give written, telecopied or telegraphic notice to each of the other Lenders of its pro rata share of such draw and the scheduled date thereof.  After receipt of such notice, and whether or not an Event of Default or Default then exists, each Lender shall make available to the Agent such Lender’s share of such draw in immediately available (in Dollars) to the Agent no later than noon (Philadelphia, PA time), on the date specified in the Agent’s notice.  The failure of the Issuer or the Agent to give timely notice pursuant to this Subsection 1.04(f) shall not affect the right of the Issuer to reimbursement from the Lenders.  Any amount paid by Agent and Lenders pursuant to a draw made under a Letter of Credit shall constitute a Revolving Credit Loan and shall be repaid pursuant to the provisions respecting Revolving Credit Loans, provided that if an Event of Default or Default exists at the time of a draw, the Borrower shall immediately reimburse the amount of such draw to the Agent for the benefit of the Lenders.

(g)             Standard of Conduct .   The Issuer shall be entitled to administer each Letter of Credit in the ordinary course of business and in accordance with its usual practices, modified from time to time as it deems appropriate under the circumstances, and shall be entitled to use its discretion in taking or refraining from taking any action in connection herewith as if it were the sole party involved.  Any action taken or omitted to be taken by the Issuer under or in connection with any Letter of Credit shall not create for the Issuer any resulting liability to any other Lender.  The Issuer shall be entitled to rely, and shall be fully protected in relying upon, any Letter of Credit, draft, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document believed by it to be genuine and correct and believed by it to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel, independent accountants and other experts selected by the Issuer and the Agent.

(h)             Letter of Credit Currencies.

(i)             Standby Letters of Credit may be issued from time to time in any Offshore Currency .   The Borrower shall notify the Issuer as to the Offshore Currency in which each Offshore Letter of Credit is to be issued, simultaneously with Borrower’s initial application therefor in accordance with Issuer’s standard procedures.

(ii)            Each request for an Offshore Letter of Credit shall constitute the Borrower’s request for an Offshore Letter of Credit in the amount of the Offshore Currency specified in the request. The stated amount available for drawing under any Offshore Letter of Credit shall be recorded in the Agent’s records in US Dollars as if the Offshore Letter of Credit had been issued in US Dollars in the US Dollar Equivalent Amount of such Offshore Letter of Credit, as such amount may be adjusted as provided in subsections (iii), (iv) or (v).  For the purposes of determining the maximum amount of Letter of Credit Liabilities hereunder, it is intended by the parties that all Offshore Letters of Credit shall be the functional equivalent of US Letters of Credit made and repaid in US Dollars and shall be included in such determination based on their US Dollar Equivalent Amount as determined from time to time as set forth herein. The Agent shall maintain records (based upon information furnished by  Issuer) sufficient to identify at any time the Spot Rate of Exchange with respect to each Offshore Letter of Credit.

(iii)           In the event an Offshore Letter of Credit is for a term exceeding one (1) month, the US Dollar Equivalent Amount of the corresponding Letter of Credit Liabilities shall be recalculated by Borrower as of the last Business Day of each calendar month and the Agent shall review and validate or adjust such calculation, and notify the Borrower and the Lenders, based upon the new Spot Rate of Exchange as of such Business Day for such Offshore Letter of Credit. The Agent shall apply such new Spot Rate of Exchange to determine the new US Dollar Equivalent Amount of such Offshore Letter of Credit as of such Business Day and shall adjust its record of the Letter of Credit Liabilities.  In the event that such adjustment with respect to any Offshore Letter of Credit causes the Revolving Credit Outstandings to exceed the Revolving Credit Commitment, the Borrower shall immediately repay the portion of Revolving Credit Loans necessary to ensure that, giving effect to the new Spot Rate of Exchange for such Offshore Letters of Credit, the sum of Revolving Credit Outstandings does not exceed the Revolving Credit Commitment. In the event that such adjustment with respect to an Offshore Letter of Credit causes the total US Dollar Equivalent Amount of Letter of Credit Liabilities to exceed $5,000,000, the Borrower shall immediately deposit US Dollars in cash (or other immediately available funds acceptable to the Agent) with the Agent, in the amount of the Letter of Credit Liabilities which cause such violation, as collateral security for the repayment of any future drawings or repayments under such Letters of Credit and such amounts shall be held by the Agent pursuant to the terms of a cash collateral account agreement satisfactory to it.

(iv)           In the event that an Offshore Letter of Credit is drawn upon, the Spot Rate of Exchange applicable to any remaining undrawn amount of such Offshore Letter of Credit shall be adjusted to be the Spot Rate of Exchange for the date of such drawing and the amount of the corresponding Letter of Credit Liabilities shall be recalculated as of the date of such drawing for the purposes of determining the US Dollar Equivalent Amount of the remaining undrawn amount of such Offshore Letter of Credit.

(v)           Without limiting the foregoing provisions of this subsection (h), the Agent may from time to time further modify the terms of, and practices contemplated by this subsection (h) to the extent the Agent determines, in its reasonable discretion, that such modifications are necessary or convenient to reflect new laws, regulations, customs or practices developed in connection with any Offshore Currency.

Section 2.01            Swing Loan Availability .  Upon the terms and subject to the conditions of this Agreement, the Swing Lender agrees to make, from time to time, until the Revolving Credit Termination Date, one or more loans (“ Swing Loans ”) to the Borrower, in an aggregate principal amount not exceeding at any time $5,000,000 (the “ Swing Loan Limit ”), provided that the Revolving Credit Outstandings shall at no time exceed the Revolving Credit Limit (the “ Swing Loan Facility ”).

Section 2.02            Terms of Swing Loan Borrowings .  To request a Swing Loan, the Borrower shall, prior to 12:00 noon on the desired date of a Swing Loan, (a) deliver to the Swing Lender a Request for Swing Loan Advance or (b) give the Swing Lender telephonic notice of the information specified in a Request for Swing Loan Advance followed immediately by delivery of such a Request for Swing Loan Advance, provided , however , that the Borrower’s failure to confirm any telephonic notice with a Request for Swing Loan Advance shall not invalidate any notice so given if acted upon by the Swing Lender.  Any notice given to the Swing Lender pursuant to this Section shall be irrevocable once given.

Section 2.03            Repayment of Swing Loans .

(a)            Repayment of Swing Loans and interest thereon due under this Article shall be made to the Swing Lender at Bank of America, N.A., P.O. Box 660576, Dallas, TX 75266-0576.

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

Section 2.04            Participation by Lenders .

(a)            The Swing Lender may, at any time, in its sole discretion, by written notice to the Borrower and the Agent, demand repayment of its Swing Loans by way of a Revolving Credit Loan borrowing, in which case the Borrower shall be deemed to have requested a Revolving Credit Loan borrowing comprised entirely of Base Rate Loans in the amount of such Swing Loans; provided , however , that, in either of the following circumstances, any such demand shall also be deemed to have been given one Business Day prior to the occurrence of (i) the Revolving Credit Termination Date and (ii) the exercise of remedies in accordance with the provisions of Section 12.02 hereof (each such Revolving Credit Loan borrowing made on account of any such deemed request therefor as provided herein being hereinafter referred to as “ Mandatory Borrowing ”).

(b)            Each Lender hereby irrevocably agrees to make such Revolving Credit Loans promptly upon any such request or deemed request on account of each Mandatory Borrowing in the amount and in the manner specified in the preceding sentence and on the same such date notwithstanding (i) the amount of the Mandatory Borrowing may not comply with the minimum amount for borrowings of Revolving Credit Loans otherwise required hereunder, (ii) whether any conditions specified in Section 7.03 are then satisfied, (iii) whether a Default or an Event of Default then exists, (iv) failure of any such request or deemed request for Revolving Credit Loans to be made by the time otherwise required in Section 1.02, (v) the date of such Mandatory Borrowing or (vi) any reduction in the Revolving Credit Limit or termination of the Commitment immediately prior to such Mandatory Borrowing or contemporaneously therewith.

(c)            In the event that any Mandatory Borrowing cannot for any reason be made on the date otherwise required above (including, without limitation, as a result of the commencement of a proceeding under the Bankruptcy Code), then each Lender hereby agrees that it shall forthwith purchase (as of the date the Mandatory Borrowing would otherwise have occurred, but adjusted for any payments received from the Borrower on or after such date and prior to such purchase) from the Swing Lender such participations in the outstanding Swing Loans as shall be necessary to cause each such Lender to share in such Swing Loans ratably based upon its respective percentage of the Commitment as set forth on Schedule A hereto (determined before giving effect to any termination of the Commitments pursuant to Section 12.02); provided that (i) all interest payable on the Swing Loans shall be for the account of the Swing Lender until the date as of which the respective participation is purchased and (ii) if  any purchase of participations pursuant to this sentence is made later than the date required under this subsection, the purchasing Lender shall be required to pay to the Swing Lender interest on the principal amount of such participation purchased for each day from and including the day upon which the participation should have been purchased to but excluding the date of actual payment for such participation, at the rate equal to, if paid within three (3) Business Days of the date of the Mandatory Borrowing, the Federal Funds Rate, and thereafter at a rate equal to the Base Rate (less any interest received from the Borrower for such period).

(d)            No Lender shall be obligated to make Revolving Credit Loans or purchase a participation in any Swing Loan pursuant to this Section, if such Lender proves that (i) the conditions set forth in Subsection 7.03 were not satisfied at the time such Swing Loan was made (unless such condition was waived in accordance with the terms of this Agreement) and (ii) such Lender had notified the Swing Lender in a writing received by the Swing Lender at least one Business Day prior to the time that it made such Swing Loan that the Swing Lender was not authorized to make such Swing Loan because such conditions were not satisfied and stating with specificity the reason therefor.

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

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

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

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

Section 3.05            Compliance with Laws .  The Borrower will promptly procure any necessary documentation, permits or licenses for the import, export or shipment of the Goods, will comply with all foreign and domestic governmental requirements and regulations relating to the shipment or financing of the Goods, and will furnish to the BA Lender such evidence that the above requirements have been fulfilled as the BA Lender may require.  The Borrower hereby certifies that transactions involving the Goods are not prohibited under the Foreign Assets Control Regulations of the United States Treasury Department or the Anti-Boycott Regulations of the United States Department of Commerce.

Section 3.06            Power of Attorney .

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

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

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

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

Section 3.07            Participation by Lenders .

(a)            Each Lender hereby irrevocably and unconditionally purchases from the BA Lender, without recourse or warranty, an undivided interest and participation in the Acceptances, pro rata to its Commitment.

(b)           (i)             Each Lender shall pay on demand to the BA Lender in immediately available funds, without reduction or deduction of any kind, including reductions or deductions for set-off, recoupment or counterclaim, an amount equal to such Lender’s pro rata share of the principal amount of all Acceptances then outstanding.  Each Lender’s pro rata share of the Acceptances shall be based on the amount of such Lender’s pro rata share of the total Commitment.  Thereafter, the Lenders’ respective interests in such Acceptances, and the remaining interest of the BA Lender in such Acceptances, shall in all respects be treated as Revolving Credit Loans under this Agreement, except that such Acceptances shall be due and payable by the Borrower on the dates referred to in Section 3.02.

(ii)            All payments on the Acceptances shall be solely for the account of the BA Lender except that, to the extent that a Lender shall have made the payment required by subsection (i), thereafter such Lender's pro rata share of all payments on the Acceptances shall be paid to such Lender by the BA Lender in proportion to such Lender's risk participation in the Acceptances.

(c)            If any Lender does not pay any amount which it is required to pay pursuant to this Section 3.07 promptly upon the BA Lender’s demand therefor, (i) the BA Lender shall be entitled to recover such amount on demand from such Lender, together with interest thereon, at the Federal Funds Rate for the first three Business Days, and thereafter at the Base Rate, for each day from the date of such demand, if made prior to 2:00 p.m. (Philadelphia, Pennsylvania time) on any Business Day, or, if made at any later time, from the next Business Day following the date of such demand, until the date such amount is paid in full to the BA Lender by such Lender and (ii) the BA Lender shall be entitled to all interest payable by the Borrower on such amount until the date on which such amount is received by the BA Lender from such Lender.  Moreover, any Lender that shall fail to make available the required amount shall not be entitled to vote on or consent to or approve any matter under this Agreement and the other Loan Documents until such amount with interest is paid in full to the BA Lender by such Lender.  Without limiting any obligations of any Lender pursuant to this Section, if any Lender does not pay such corresponding amount promptly upon the BA Lender’s demand therefor, the BA Lender shall notify the Borrower and the Borrower shall promptly repay such corresponding amount to the BA Lender together with accrued interest thereon at the applicable rate on such Acceptances.

(d)            Subject only to the limitations set forth in the following subsection (e), the obligations of each Lender to make available to the BA Lender the amounts set forth in this Section shall be absolute, unconditional and irrevocable under any and all circumstances, shall be without reduction for any set-off or counterclaim of any nature whatsoever, may not be terminated, suspended or delayed for any reason whatsoever, shall not be subject to qualification or exception and shall be made in accordance with the terms of this Agreement.

(e)            No Lender shall be obligated to purchase a participation in any Acceptance pursuant to this Section, if such Lender proves that (i) the conditions set forth in Subsections 7.03 were not satisfied at the time such Acceptance was issued (unless such condition was waived in accordance with the terms of this Agreement) and (ii) such Lender had notified the BA Lender in a writing received by the BA Lender at least one Business Day prior to the time that it issued such Acceptance that the BA Lender was not authorized to issue such Acceptance because such conditions were not satisfied and stating with specificity the reason therefor.

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

Section 4.02            Optional Prepayments of Loans .

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

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

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

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

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

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

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

(c)             Applicable Margin .  With respect to any Base Rate Loan or Swing Loan, the Applicable Margin shall be zero percent (0.0%).  With respect to any LIBOR Loan, the Applicable Margin shall be three and three-quarters percent (3.75%).

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

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

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

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

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

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

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

Section 5.03            Interest Upon Default .  Anything in this Agreement to the contrary notwithstanding, upon the occurrence of an Event of Default (whether or not the Lenders have accelerated payment of the Notes), or after maturity or judgment has been rendered on the Notes, the Borrower’s right to select interest rate options shall cease and the unpaid principal of the Loans shall, at the option of the Agent, bear interest at the Base Rate plus two percent (2%) (the “ Default Rate ”).  Such interest shall be payable on the earlier of (i) demand or (ii) the next Payment Date.  Interest at the Default Rate shall continue to accrue (both before and after judgment) until the earlier of (i) the waiver or cure of the applicable Event of Default or (ii) the payment in full of the Obligations.  Furthermore, at the election of Agent or Majority Lenders during any period in which any Event of Default is continuing (x) as the Interest Periods for LIBOR Loans then in effect expire, such Loans shall be converted into Base Rate Loans and (y) the LIBOR election will not be available to Borrower.

Section 5.04             Fees .

(a)             Commitment Fee .  On each Payment Date and on the Revolving Credit Termination Date, the Borrower shall pay to the Agent for the account of the Lenders a commitment fee equal to the product of 0.50% per annum times the average daily unused portion of the Commitment during the period commencing on the date following the preceding commitment fee payment date (or, if none, on the date hereof) and ending on such commitment fee payment date.

(b)             Other Fees .  The Borrower shall pay the Agent, the Issuer, the Swing Lender, the BA Lender and/or the Lenders such other fees as the Borrower has otherwise agreed to pay.

(c)             Letter of Credit and Fronting Fees .  The Borrower shall pay to the Agent for the account of the Issuer and/or the Lenders, as applicable, such letter of credit fees as are described in Section 1.04.

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

Section 6.01            Manner of Tendering Payments by Borrower .

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

(b)             Location of Payments .  All payments shall be made by the Borrower to the Agent at Bank of America, N.A., P.O Box 660576 Dallas, TX 75266-0576 or such other place as the Agent may from time to time specify in writing, except that all payments with respect to Letters of Credit, Acceptances and Swing Loans shall be made by the Borrower to such other place as the Agent and, respectively, the Issuer, BA Lender or Swing Lender may from time to time specify in writing.  Any such payment shall be made in United States dollars in immediately available funds, without counterclaim or setoff and free and clear of, and without any deduction or withholding for, any taxes or other payments.

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

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

(e)             Presumptions .  Except as expressly set forth to the contrary in this Agreement or by the Borrower with respect to any payment, all payments shall be applied first to the payment of all fees, expenses and other amounts due to the Agent or the Lenders (excluding principal and interest), then to accrued interest, and the balance on account of outstanding principal of Base Rate Loans and Swing Loans, and then to principal of LIBOR Loans (and among such LIBOR Loans, first to those with the earliest expiring Interest Periods); provided , however , that after an Event of Default which is continuing, payments will be applied to the Obligations of Borrower as Agent determines in its sole discretion.

(f)              Disbursements from Agent to Lenders .  The Agent shall promptly remit to each Lender its pro rata share of payments received pursuant to Section 6.01 in immediately available funds, except that all reimbursement payments in respect of losses, out-of-pocket expenses, funding losses or like matters shall be retained by the Agent or remitted to the Lenders according to their respective appropriate entitlement to such reimbursement.

Section 6.02            The Notes .  The aggregate principal amount of each Lender’s share of the Commitment and Loans shall be evidenced by a note to be issued by the Borrower to each Lender in substantially the form attached hereto as Exhibit A (with appropriate completion of the name of the applicable Lender).

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

Section 6.04            Additional Provisions Concerning Certain Loans .

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

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

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

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

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

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

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

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

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

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

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

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

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

Section 6.05            Taxes .

(a)             Payments Free and Clear .

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

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

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

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

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

(e)             Non-U.S. Lender .  On or prior to the date on which any Participant or Assignee that is not a United States person as defined in Section 7701(a)(30) of the Code (each a “ Non-U.S. Lender ”) receives its interest in the Loans, each Non-U.S. Lender that is entitled at such time to an exemption from United States of America withholding tax, or that is subject to such tax at a reduced rate under an applicable tax treaty, shall provide Agent and the Borrower with two duly completed copies of the appropriate United States Internal Revenue Service Form W-8, or other applicable successor form prescribed by the Internal Revenue Service of the United States, certifying that such Non-U.S. Lender is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes.   The Borrower shall have no obligation to pay any taxes with respect to Loans made to a Non-U.S. Lender pursuant to 6.05(a) or indemnify any Non-U.S. Lender under Section 6.05(c) if such Non-U.S. Lender is eligible to comply with the provisions of this Section 6.05(e) and has not done so.  Notwithstanding any other provision of this Section 6.05(e), no Non-U.S. Lender shall be required to deliver any form pursuant to this Section 6.05(e) that such Non-U.S. Lender is not legally able or obligated to deliver and, for purposes of this Section 6.05, such non-delivery of a form shall not be decreed to be non-compliant with this Section 6.05(e).

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

Section 6.06            Lenders’ Obligations Several .  Each Lender is severally bound by this Agreement, but there shall be no joint obligation of the Lenders under this Agreement.  The failure of any Lender to make any share of the Loans or obligations respecting Letters of Credit or Acceptances to be made by it on the date specified for the Loans or such obligations shall not relieve any other Lender of its obligation to make its share of the Loans or other obligations on such date, but neither any Lender nor the Agent shall be responsible for the failure of any other Lender to make a share of the Loans or other obligations to be made by such other Lender.

Section 6.07            Permitted Assumptions by Agent as to Lender Payments .   Unless the Agent shall have been notified by a Lender prior to noon on the date on which it is scheduled to fund to the Agent any amount payable by a Lender under this Agreement (such payment being the “ Lender Required Payment ”) that it does not intend to make the Lender Required Payment to the Agent, the Agent may assume that the Lender Required Payment has been made and may, in reliance upon such assumption (but shall not be required to), make the amount thereof available to the Borrower (or other appropriate party) on such date.  If such Lender has not in fact made the Lender Required Payment to the Agent, the Borrower (or other recipient) shall, on demand, repay to the Agent the amount so made available together with interest thereon in respect of each day during the period commencing on the date such amount was so made available by the Agent until the date the Agent recovers such amount at a rate equal to the Base Rate.  The foregoing does not limit the obligation of any Lender to make a Lender Required Payment.  Any Lender Required Payment made by the Agent in reliance on the assumption that the applicable Lender was funding the same, if not returned by the Borrower (or other recipient), shall be paid, on demand, to the Agent by the applicable Lender, together with interest thereon accruing at the Base Rate.  In addition, any Lender that fails to make a Lender Required Payment upon receipt of notice therefor, shall not be entitled to vote on any matters that it otherwise would be entitled to vote on under this Agreement until it makes such payment.

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

7.01.1        Loan Documents .

(a)            a duly executed Second Amended and Restated Revolving Credit Note; and

(b)            a Guaranty Agreement and confirmation of the same, duly executed by each Subsidiary of Borrower.

(a)           (i)             a Security Agreement (also constituting a pledge agreement) and confirmation of the same, duly executed by Borrower and its Subsidiaries, together with such Uniform Commercial Code financing statements as are necessary or, in the opinion of the Agent, desirable to perfect the security interests created by such Security Agreement, the stock certificates representing all shares pledged thereunder and duly executed, undated stock powers respecting such shares, and (ii) such landlord waivers as Agent shall request;

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

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

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

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

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

(g)            the Intercreditor Agreement.

(a)            Mortgage(s) and amendments thereto reasonably requested by and satisfactory to the Agent duly executed by Borrower covering all real property owned by Borrower;

(b)            Mortgage(s) and amendments thereto reasonably requested by and satisfactory to the Agent duly executed by each Subsidiary of Borrower covering all real property owned by each such Subsidiary; and

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

(a)            audited financial statements of Borrower and its Subsidiaries on a Consolidated basis for the fiscal year ended December 31, 2008, together with projections of financial statements respecting each fiscal year through the fiscal year 2011, which projections shall be approved by the chief financial officer of Borrower and based on reasonable assumptions;

(b)            unaudited financial statements of Borrower and its Subsidiaries on a Consolidated basis for the fiscal quarter ended March 31, 2009;

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

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

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

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

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

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

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

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

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

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

(e)            a certificate of the chief financial officer or Treasurer of the Borrower with respect to the solvency and adequacy of capital of Borrower and its Subsidiaries after giving effect to the execution of this Agreement and the Loan Documents.

(f)             an officer’s certificate of the Borrower certifying that:

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

(ii)            No Default or Event of Default has occurred and is continuing; and

(iii)           The Borrower has satisfied all of those conditions precedent identified in Section 7.01 of this Agreement.

(a)            a Subordination Agreement and confirmation thereof in form and substance satisfactory to the Agent as to any management, consulting or similar agreement binding upon the Borrower or any Subsidiary.

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

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

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

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

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

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

Section 7.04            Method of Satisfying Certain Conditions .  The request for, and acceptance of, each Loan by the Borrower shall be deemed a representation and warranty by the Borrower that the conditions specified in subparts (a), (b) and (c) of Section 7.03 (Conditions Precedent to Each Loan) have been satisfied.

In order to induce the Lenders to enter into this Agreement, the Borrower makes the following representations, covenants and warranties:

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

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

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

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

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

Section 8.06            Security Interests in Collateral .

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

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

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

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

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

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

Section 8.11            Use of Proceeds .  The proceeds of the Loans will be used for working capital and general corporate purposes of the Borrower permitted hereunder.  No proceeds of any Loan shall be used for any illegal purposes.

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

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

Section 8.14            Financial Statements .

(a)            The audited financial statements for Borrower and its Subsidiaries on a Consolidated basis for the fiscal year ended December 31, 2008, the unaudited financial statements for Borrower and Subsidiaries on a consolidating basis for such fiscal year, and the unaudited financial statements of Borrower and Subsidiaries for the month ending April 30, 2009, together with any other financial statements furnished to the Lenders, are complete and correct in all material respects and present fairly in accordance with GAAP the financial position of Borrower and its Subsidiaries on a Consolidated basis on and as at such dates and the results of operations for the periods then ended (subject, in the case of unaudited financial statements, to normal year-end adjustments).  Neither Borrower nor any of its Subsidiaries has any material liabilities, contingent or otherwise, other than as disclosed in the financial statements referred to in the preceding sentence and there are not now and not anticipated any material unrealized losses of Borrower or any of its Subsidiaries.

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

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

(d)            Since December 31, 2008, there has been no Material Adverse Change.

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

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

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

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

Section 8.19            Compliance with ERISA .

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

(ii)            Each Plan, which is intended to be qualified within the meaning of Section 401(a) of the Code, is the subject of a favorable determination by the Internal Revenue Service with respect to its qualification under Section 401(a) of the Code.  Borrower has furnished to the Agent a copy of the most recent actuarial report for each Plan which is a defined benefit plan as defined in Section 3(35) of ERISA or is a funded employee welfare benefit plan, and each such report is accurate in all material respects.

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

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

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

Section 8.20            Compliance with Regulations U and X .  Neither Borrower nor any of Borrower’s Subsidiaries is engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying, any “margin security” or “margin stock” as defined in Regulations U and X of the Board of Governors of the Federal Reserve System.  No portion of the proceeds of the loan shall be used, in whole or in part, for the purpose of purchasing or carrying any “margin stock” as such term is defined in Regulation U of the Board of Governors of the Federal Reserve System.  If requested by the Agent or any Lender, the Borrower shall complete and sign Part I of a copy of the Federal Reserve Form U-1 referred to in Regulation U of the Board of Governors of the Federal Reserve System and deliver such copy to the Agent or such Lender.  Neither the Borrower nor any of its Subsidiaries, nor any bank acting on any of their behalf, has taken or will take any action which might cause this Agreement or the Note to violate Regulation U or X or any other regulation of the Board of Governors of the Federal Reserve System, as now or hereafter in effect.

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

Section 8.22            Reserved .

Section 8.23            Absence of Default, Etc.   No event has occurred and is continuing which constitutes a Default or an Event of Default under this Agreement or the Prior Agreement.

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

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

Section 8.26            Solvency .  After giving effect to the transactions contemplated by the Loan Document:  (i) the property of Borrower, at a fair valuation, will exceed its debt; (ii) the capital of Borrower will not be unreasonably small to conduct its business; (iii) Borrower will not have incurred debts, or have intended to incur debts, beyond its ability to pay such debts as they mature; and (iv) the present fair salable value of the assets of Borrower will be materially greater than the amount that will be required to pay its probable liabilities (including debts) as they become absolute and matured.  The representations set forth in the preceding sentence are equally true of Borrower and its Subsidiaries on a Consolidated basis and of each Subsidiary in a Consolidating basis.  For purposes of this Section, “debt” means any liability on a claim, and “claim” means (i) the right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, undisputed, legal, equitable, secured or unsecured, or (ii) the right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, undisputed, secured or unsecured.

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

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

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

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

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

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

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

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

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

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

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

(a)             Minimum EBITDA .  The Borrower and its Subsidiaries, on a Consolidated basis, shall have EBITDA for each period of four consecutive fiscal quarters measured on the last day of each fiscal quarter beginning June 30, 2004, of no less than $33,000,000.

(b)             Interest Coverage Ratio .  As of the last day of each fiscal quarter, the Borrower and its Subsidiaries on a Consolidated basis shall maintain a ratio of EBITDA to Interest Expense, for the period of four preceding consecutive fiscal quarters ending on such day, of at least 1.80 to 1.00.

Section 9.02            Calculations .   Calculations made pursuant to this Article 9 shall give effect, on a pro forma basis, to all Acquisitions and dispositions made during the period to which the required compliance relates (the “ applicable period ”), as if such Acquisition or disposition had been consummated on the first day of the applicable period such that (a) the results of operations of the assets or entities acquired or disposed of are included or excluded, as applicable, and (b) any Indebtedness assumed or incurred or paid off in connection with such Acquisition or disposition is included or excluded, as applicable, on a pro forma basis from the first day of the applicable period.

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

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

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

(c)             Subsidiary Financial Statements .  At the same time as the financial statements delivered under subsections (a) and (b) above, financial information for each Subsidiary of Borrower in form and content reasonably satisfactory to the Agent.

(d)             Borrowing Base Certificate and Agings .  As soon as available and in any event within twenty (20) days after the end of each calendar month, agings of accounts receivable and accounts payable and inventory listings in form reasonably satisfactory to the Agent.  At such time as it is required to deliver financial statements under Section 10.01(a) or 10.01(b), Borrower shall deliver to Agent a completed Borrowing Base Certificate in the form attached hereto as Exhibit E.

(e)             Business Plan .  As soon as available and in any event within ninety (90) days after the end of each fiscal year of the Borrower, the Borrower shall deliver to the Lenders the annual budget for the Borrower and its Subsidiaries, including forecasts of the income statement, the balance sheet, cash flow report and an EBITDA statement for such year on a quarter by quarter basis.  Such Business Plan shall be accompanied by a certification of the President or Chief Financial Officer of the Borrower that such Business Plan is reasonable, made in good faith, consistent with the Loan Documents, and represent the Borrower’s best judgment as to such matters.

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

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

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

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

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

Section 10.05          Notice Concerning Representations and Warranties .  The Borrower shall give the Agent notice of any changes in facts or circumstances on which the representations and warranties set forth in this Agreement are made which makes such representations and warranties false or misleading in any material respect.  Such notice shall be given promptly, but in any event not later than ten (10) days after any officer of the Borrower becomes aware of its occurrence.  Except as set forth in the proviso to Section 7.03 (Conditions Precedent to Each Loan), the delivery of such a notice shall not imply any waiver by the Lenders.

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

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

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

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

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

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

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

Section 11.01          Indebtedness .

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

(i)             Indebtedness in favor of the Lenders;

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

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

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

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

(vi)           Guaranties by the Borrower or one of its Subsidiaries of obligations of the Borrower or one of its Subsidiaries that would not constitute Indebtedness in the absence of said Guaranty; and

(vii)          Other Indebtedness not described in clauses (i)-(vi) above in an amount not to exceed $5 million.

(b)            In addition to the limitations on the incurrence or existence of Indebtedness referred to above, no Indebtedness may be incurred by Borrower or any of its Subsidiaries unless immediately before and after giving effect to the incurrence of such Indebtedness, no Default or Event of Default shall have occurred and be continuing.

(c)            Borrower will not, and will not permit any Subsidiary to, directly or indirectly, amend or otherwise modify the terms of any Senior Secured Note Documents (other than to provide for additional collateral and guarantors from time to time, as required by the Senior Secured Note Documents).  Borrower will not, and will not permit any Subsidiary to, directly or indirectly, declare, pay, make or set aside any amount for redemption, repurchase or other payment in respect of Senior Secured Notes, except that Borrower and any of its Subsidiaries may:

(i)             make regularly scheduled payments required by the provisions of the Senior Secured Notes, to the extent permitted pursuant to the Intercreditor Agreement or other applicable agreement with the Agent and the Lenders; and

(ii)            repurchase Senior Secured Notes, in each instance, to the extent that each of the following conditions shall have been satisfied: