SECOND AMENDMENT AND WAIVER, dated as of February 1, 2001 (this
“Amendment”), to the Credit Agreement, dated as of November 23, 1999 (as
heretofore amended, the “Credit Agreement”), among MERRILL CORPORATION, a
Minnesota corporation, as a guarantor (“Holdco”), MERRILL COMMUNICATIONS LLC, a
Delaware limited liability company, as the borrower (the “Company”), the various
financial institutions from time to time parties to the Credit Agreement
(collectively, the “Lenders”), WELLS FARGO BANK, N.A., as documentation agent
for the Lenders (the “Documentation Agent”), and U.S. BANK NATIONAL ASSOCIATION,
as administrative agent for the Lenders (the “Administrative Agent”).

W I T N E S S E T H:

          WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to
make, and have made, certain loans and other extensions of credit to the Company
and its Subsidiaries;

          WHEREAS, the Company is not in compliance with the covenants contained
in Sections 7.2.4 (a), (b), (c), (d) and (f) of the Credit Agreement as of
January 31, 2001 and a Default has resulted from such non-compliance
(collectively, the “January 31, 2001 Non-Compliance and Defaults”).

          WHEREAS, the Company has requested, and the Required Lenders have
agreed, to amend certain provisions of the Credit Agreement and to forbear from
the exercise of certain rights and remedies under the Credit Agreement in the
manner provided for in this Amendment.

          NOW, THEREFORE, in consideration of the premises contained herein, the
parties hereto hereby agree as follows:

          1.       Defined Terms.  Terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.

          2.       Limited Waiver of Clauses (a), (b), (c), (d) and (f) of
Section 7.2.4 of the Credit Agreement.  For the period from January 31, 2001 up
to and including April 15, 2001 (the "Waiver Period"), the Administrative Agent
and the Lenders hereby agree to waive the January 31, 2001 Non-Compliance and
Defaults; provided, however, that notwithstanding the foregoing, in the event of
any Default, other than the January 31, 2001 Non-Compliance and Defaults, during
the Waiver Period, the Administrative Agent and the Lenders reserve the right to
exercise any of their rights and remedies under the Credit Agreement or this
Amendment and, in such event, Section 2 of this Amendment shall be deemed null
and void.

          3.       Waiver of Section 7.1.13(b) of the Credit Agreement.  The
Lenders hereby waive the provisions of Section 7.1.13(b) of the Credit Agreement
through February 23, 2001.

          4.       Amendment to Section 7.2.7 of the Credit Agreement.  Section
7.2.7 of the Credit Agreement is hereby amended by adding, at the end thereof, a
new subsection (c) to read, in its entirety, as follows:

(c)  Notwithstanding anything contained in this Section 7.2.7 to the contrary,
during the Waiver Period, Holdco and the Company will not, and will not permit
any other Restricted Subsidiaries to, make or commit to make Capital
Expenditures that exceed, on a cumulative basis at any time, the cumulative
amount at such time set forth in the Weekly Cashflow Analysis delivered to the
Administrative Agent and the Lenders on February 27, 2001.

          5.       Amendment to Section 7.2.16 of the Credit Agreement.  Section
7.2.16 of the Credit Agreement is hereby amended by deleting such Section in its
entirety and restated as follows:

SECTION 7.2.16. Limitations on Cash Balances.  From and after March 1, 2001,
each of Holdco and the Company will not, and will not permit any other
Restricted Subsidiary to:

(i)       at any time at which any Revolving Loans are outstanding, maintain
cash balances, bank deposits and Cash Equivalent Investments (other than cash
balances, bank deposits and Cash Equivalent Investments in an aggregate amount
not exceeding $5,700,000 held by Merrill Corporation, Canada and 793473 Ontario
Ltd.) in an aggregate amount greater than $12,000,000 for three (3) consecutive
days; and

(ii)      at any time, except with respect to cash balances, bank deposits and
Cash Equivalent Investments in (a) an aggregate amount not exceeding $5,700,000
and held by Merrill Corporation, Canada and 793473 Ontario Ltd. and (b) an
aggregate amount not exceeding $1,200,000 and held by non-Canadian Non-U.S.
Subsidiaries, maintain cash balances, Cash Equivalent Investments or bank
deposits other than with a Lender.

          6.       Limitation on Investments.  During the Waiver Period, unless
otherwise agreed to in writing by the Required Lenders, Holdco will not, nor
permit any of its Restricted Subsidiaries to, make any Investments otherwise
permitted under clause (m) of Section 7.2.5 of the Credit Agreement.

          7.       Conditions to Effectiveness.

                    (a)      This Amendment shall become effective on the date
first written above upon the Administrative Agent having received:

(i)       counterparts of this Amendment duly executed and delivered by Holdco,
the Company and the Required Lenders, together with a consent to this Amendment,
duly executed and delivered by the Subsidiary Guarantors; and

(ii)      an amendment fee for the account of each Lender in the amount equal to
0.125% of the sum of such Lender’s aggregate outstanding extensions of credit
and its unutilized Commitments as of such date.

                    (b)      The provisions of Section 2 hereof shall terminate
if, no later than ten (10) days after a request by the Administrative Agent, the
Company has not delivered to the Administrative Agent, in form and substance
satisfactory to the Administrative Agent:

(i)       such duly executed additional collateral agreements as the
Administrative Agent or any Lender may require from the Company and its
Restricted Subsidiaries, including, without limitation, (x) certain irrevocable
letters of direction to depository institutions with which the Company or any
Restricted Subsidiary maintains accounts providing for remittance of funds to
the Administrative Agent and (y) collateral agreements with respect to assets of
the Company or any of its Restricted Subsidiaries located in jurisdictions other
than the United States; and

(ii)      duly executed control agreements and amendments to the Security
Agreement and the related financing statements, to include expressly as
Collateral investment property and securities accounts of the Company, Holdco
and any of the Restricted Subsidiaries.

                    8.       Continuing Effect.  Except as expressly amended and
modified hereby, the Credit Agreement, including, without limitation, Articles
VII and VIII thereof, shall continue to be and shall remain in full force and
effect in accordance with its terms.

                    9.       Interest Rate.  Notwithstanding any provisions
contained in the Credit Agreement to the contrary, the parties hereto hereby
agree that, commencing on February 1, 2001, the applicable interest rate for
each Loan shall be the rate that would otherwise be applicable to such Loan
(without regard to Section 3.2.2 of the Credit Agreement) plus 2%.

                    10.     Revolving Loan Availability.  Notwithstanding any
provisions contained in the Credit Agreement or in this Amendment to the
contrary, the parties hereto hereby agree that, during the Waiver Period, unless
the requisite amount of Lenders otherwise agree, the Company may not borrow
under the Revolving Loans.

                    11.     Representation and Warranties.  On and as of the
date hereof, after giving effect to this Amendment, each of Holdco and the
Company hereby represents and warrants to the Lenders that (i) each of its
representations and warranties contained in Article VI of the Credit Agreement
and in each other Loan Document are true and correct in all material respects on
and as of such date as if made on and as of such date, except to the extent that
(A) such representations and warranties specifically relate to an earlier date,
in which case such representations and warranties shall be true and correct in
all material respects as of such earlier date or (B) such representations and
warranties are untrue or incorrect solely by virtue of the existence of the
January 31, 2001 Non-Compliance and Defaults and (ii) no Default, other than the
January 31, 2001 Non-Compliance and Defaults, has occurred and is continuing. 

                    12.     General.  (a)  Payment of Expenses .  The Company
agrees to pay or reimburse the Administrative Agent and the Lenders for all of
its respective out-of-pocket costs and reasonable expenses incurred in
connection with this Amendment, any other documents prepared in connection
herewith, including, without limitation, the reasonable fees and disbursements
of (x) counsel to the Administrative Agent and (y) counsel to the Lenders.

                    (b)      No Other Amendments; Confirmation.  Except as
expressly amended, modified and supplemented hereby, the provisions of the
Credit Agreement are and shall remain in full force and effect.

                    (c)      GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                    (d)      Counterparts.  This Amendment may be executed by
one or more of the parties to this Amendment in any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Amendment
signed by all the parties shall be lodged with the Company and the
Administrative Agent.

                    (e)      Successors.  The execution and delivery of this
Amendment by any Lender shall be binding upon each of its successors and assigns
(including transferees of its commitments and Loans in whole or in part prior to
effectiveness hereof) and binding in respect of all of its Commitment and Loans.

 [Remainder of page intentionally left blank]

 

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

  MERRILL CORPORATION           By: /s/ Steven J. Machov

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    Name: Steven J. Machov     Title: Vice President, General Counsel &
Secretary           MERRILL COMMUNICATIONS LLC           By: /s/ Steven J.
Machov

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    Name: Steven J. Machov     Title: Vice President, General Counsel &
Secretary           DLJ CAPITAL FUNDING, INC.,     as the Syndication Agent and
as a Lender           By:

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    Name:     Title:           U.S. BANK NATIONAL ASSOCIATION,     as the
Administrative Agent and as a Lender           By: /s/ Joshua R. Pirozzolo

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    Name: Joshua R. Pirozzolo     Title: Assistant Vice President          
WELLS FARGO BANK, N.A.,     as the Documentation Agent and as a Lender          
By: /s/ Calvin R. Emerson

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      Name: Calvin R. Emerson     Title: Vice President  

 

 

      LENDERS             CREDIT LYONNAIS NEW YORK BRANCH, as a Lender          
By:

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    Name:     Title:           HARRIS TRUST & SAVINGS BANK,     as a Lender    
      By: /s/ Andrew T. Claar

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    Name: Andrew T. Claar     Title: Vice President           TRANSAMERICA
BUSINESS CREDIT CORP., as a Lender           By:

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    Name:     Title:           BANK ONE, N.A., as a Lender           By: /s/
Kevin Christensen

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    Name: Kevin Christensen     Title: First Vice President           COMERICA
BANK, as a Lender           By:

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    Name:     Title:           THE FUJI BANK, LIMITED, as a Lender           By:
/s/ Peter L. Chinnici

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    Name: Peter L. Chinnici     Title: Senior Vice President & Group Head  

 

 

        GE CAPITAL CORPORATION-SFG, as a Lender           By:

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    Name:     Title:           GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender           By: /s/ Robert M. Kadlick

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    Name: Robert M. Kadlick     Title: Duly Authorized Signatory           FIRST
UNION NATIONAL BANK,
as a Lender           By:

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    Name:     Title:           APEX (IDM) CDO I, LTD., as a Lender           By:
/s/ John Stelwagon

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    Name: John Stelwagon     Title: Director           ELC (CAYMAN) LTD.
1999-II, as a Lender           By: /s/ John Stelwagon

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    Name: John Stelwagon     Title: Director           ELC (CAYMAN) LTD.
1999-III, as a Lender           By: /s/ John Stelwagon

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    Name: John Stelwagon     Title: Director  

 

        ELC (CAYMAN) LTD. 2000-I           By: /s/ John Stelwagon

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    Name: John Stelwagon     Title: Director           THE DAI-ICHI KANGYO BANK,
LTD.,     as a Lender           By: /s/ Takayuki Kumagai

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    Name: Takayuki Kumagai     Title: Vice President           BALANCED
HIGH-YIELD FUND I LTD., as a Lender     By: BHF (USA) Capital Corporation Acting
As Attorney-In-Fact           By: /s/ Dave Scheiber

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    Name: Dave Scheiber     Title: Vice President           BALANCED HIGH-YIELD
FUND II LTD., as a Lender     By: BHF (USA) Capital Corporation Acting As
Attorney-In-Fact           By: /s/ Dave Scheiber

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    Name: Dave Scheiber     Title: Vice President           ARCHIMEDES FUNDING,
LLC, as a Lender     By: ING Capital Advisors LLC, as Collateral Manager        
  By: /s/ Dave Scheiber

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    Name: Dave Scheiber     Title: Vice President  

 

        ARCHIMEDES FUNDING III, LTD.,     as a Lender     By ING Capital
Advisors LLC, as Collateral Manager           By: /s/ Dave Scheiber

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    Name: Dave Scheiber     Title: Vice President           KZH ING-2 LLC, as a
Lender     By: /s/ Kimberly Rowe

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    Name: Kimberly Rowe     Title: Authorized Agent           SEQUILS-ING I
(HBDGM), LTD., as a Lender     By ING Capital Advisors LLC, as Collateral
Manager           By: /s/ Dave Scheiber

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    Name: Dave Scheiber     Title: Vice President           SWISS LIFE US
RAINBOW LIMITED, as a Lender     By: ING Capital Advisors LLC, as Investment
Manage r         By: /s/ Dave Scheiber

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      Name: Dave Scheiber     Title: Vice President           CYPRESSTREE
INVESTMENT FUND, LLC, as a Lender     By CypressTree Investment Management
Company, Inc. its Managing Member           By: /s/ Jeffrey W. Heuer

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    Name: Jeffrey W. Heuer     Title: Principal  

 

        CYPRESSTREE SENIOR FLOATING RATE FUND, as a Lender     By: CypressTree
Investment Management Company, Inc. as Portfolio Manager     By:  /s/ Jeffrey W.
Heuer

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    Name: Jeffrey W. Heuer     Title: Principal           CYPRESSTREE INVESTMENT
PARTNERS I, LTD., as a Lender     By: CypressTree Investment Management Company,
Inc. as Portfolio Manager     By: /s/ Jeffrey W. Heuer

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    Name:Jeffrey W. Heuer     Title: Principal           CYPRESSTREE INVESTMENT
PARTNERS II, LTD., as a Lender     By: CypressTree Investment Management
Company, Inc. as Portfolio Manager     By: /s/ Jeffrey W. Heuer

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    Name:Jeffrey W. Heuer     Title: Principal           KZH CYPRESSTREE –1 LLC,
as a Lender           By: /s/ Kimberly Rowe

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    Name: Kimberly Rowe     Title: Authorized Agent           CYPRESSTREE
INVESTMENT MANAGEMENT COMPANY INC.     As: Attorney-in-Fact and on behalf of
First Allmerica Financial Life Insurance Company as Portfolio Manager          
By: /s/ Jeffrey W. Heuer

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    Name: Jeffrey W. Heuer     Title Principal           CYPRESSTREE SENIOR.
FLOATING RATE FUND, as a Lender     By: CypressTree Investment Management
Company, Inc. as Portfolio Manager     By: /s/ Jeffrey W. Heuer

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    Name: Jeffrey W. Heuer     Title: Principal  

 

        MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST, as a Lender     By:

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    Name:     Title:           PPM SPYGLASS FUNDING TRUST, as a Lender     By:

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    Name:     Title:           HELLER FINANCIAL, INC., as a Lender     By: /s/
Robert M Reag

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    Name: Robert M Reag     Title: Assistant Vice President           SENIOR
DEBT PORTFOLIO, as a Lender     By:

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    Name:     Title:           EATON VANCE SENIOR INCOME TRUST, as a Lender    
      By:

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    Name:     Title:           OXFORD STRATEGIC INCOME FUND,     as a Lender    
      By:

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    Name:     Title:  

 

        EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender           By:

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    Name:     Title:           AVALON CAPITAL LTD., as a Lender     By: INVESCO
Senior Secured Management Ins. as Portfolio Manager     By:

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    Name:     Title:           AMARA-1 FINANCE, LTD., as a Lender     By:
INVESCO Senior Secured Management, Inc. as Subadviser     By:

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    Name:     Title:           CARLYLE HIGH YIELD PARTNER II, LTD., as a Lender
    By:

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    Name:     Title:           STEIN ROE FLOATING RATE LIMITED LIABILITY
COMPANY, as a Lender           By: /s/ Kathleen A. Zarn

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    Name: Kathleen A. Zarn     Title: Vice President
Stein Rowe & Farnham Incorporated, as Advisor to the Stein Rowe Floating Rate
Limited Liability Company  

 

        LIBERTY-STEIN ROE ADVISOR FLOATING RATE ADVANTAGE FUND, as a Lender, by
Stein Roe & Farnham Incorporated As Advisor           By: /s/ Kathleen A. Zarn

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    Name: Kathleen A. Zarn     Title: Vice President           MAGNETITE ASSET
INVESTORS, LLC, as a Lender           By:

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    Name:     Title:           STANFIELD CLO, LTD., as a Lender,     By:
Stanfield Capital Partners LLC as its Collateral Manager           By: /s/
Christopher E. Jansen

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    Name: Christopher E. Jansen     Title: Managing Partner