THIRD AMENDMENT AND FORBEARANCE, dated as of October 19, 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, as of the date hereof, the Company is not in compliance with the
covenants contained in Sections 7.2.4 and 7.1.1 of the Credit Agreement and a
Default has resulted from such non-compliance (collectively, the “Non-Compliance
and Defaults”); and

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.     Amendment to Section 1.1 of the Credit Agreement. Section 1.1 of the
Credit Agreement is hereby amended by adding the following definition in its
proper alphabetical order:

“Third Amendment” means the Third Amendment and Forbearance, dated as of October
19, 2001, to this Agreement, among Holdco, the Lenders, the Documentation Agent
and the Administrative Agent.

3.     Limited Forbearance.  For the period from October 19, 2001 up to and
including November 18, 2001 (the "Forbearance Period"), the Administrative Agent
and the Lenders hereby agree to forebear from their right to exercise their
rights and remedies pursuant to Sections 4.9 and 8.3 of the Credit Agreement;
provided, however, that, notwithstanding the foregoing, in the event (i) of the
occurrence of any Default, other than the Non-Compliance and Defaults, during
the Forbearance Period, (ii) that the Company gives notice to the Lenders of its
intention to make any payment to the trustee named under the Senior Subordinated
Note Indenture (the “Trustee”), or directly to a holder for and on behalf of the
Senior Subordinated Notes, as provided for in Section 4 of this Amendment, or
(iii) the Company’s projected EBITDA for the Fiscal Year ending January 31, 2002
is below $40,000,000, 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 3 of this Amendment shall immediately be
deemed null and void.

4.     Notice of Intent to Make Interest Payment.  In the event that, during the
Forbearance Period, the Company determines to make any payments to the Trustee,
or directly to a holder for and on behalf of the Senior Subordinated Notes, the
Company shall provide the Administrative Agent and Weil, Gotshal & Manges LLP,
counsel to the Lenders (hereinafter referred to as “Lenders’ Counsel”), with
three (3) Business Days written notice of such intent prior to making any such
payment.

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 Use of Cash.  From and after October 19, 2001,
each of Holdco and the Company will not, and will not permit any other
Restricted Subsidiary to,

(i)            make any payment using any amounts from (a) the operating account
that is maintained by the Company at U.S. Bank National Association, Acct.
#170225026310 (the “Operating Account”) or (b) the investment account that is
maintained by the Company at U.S. Bancorp, Inc., Acct. #13073796 (the
“Investment Account”), in an amount greater than one million dollars
($1,000,000), unless the Company has provided the Administrative Agent and
Lender’s Counsel with three (3) Business Days prior written notice of the
Company’s intention to make such payment; provided, however, that this Section
7.2.16 shall not be applicable with respect to transfers from the Operating
Account to (x) the payroll disbursement account maintained by the Company at
U.S. Bank, Acct. #170225139287, in an amount not to exceed $7,000,000, and (y)
any governmental authority to satisfy tax obligations; and

(ii)           upon compliance with Section 7(b)(i) of the Third Amendment,
maintain cash balances, bank deposits or Cash Equivalent Investments other than
with a Lender, except with respect to cash balances, bank deposits and Cash
Equivalent Investments in (a) an aggregate amount not exceeding $1,000,000 and
held by Merrill Corporation, Canada and 793473 Ontario Ltd. and (b) an aggregate
amount not exceeding $1,000,000 and held by non-Canadian Non-U.S. Subsidiaries.

6.     Amendment to Section 8.1.3 of the Credit Agreement.  Section 8.1.3 of the
Credit Agreement is hereby amended by inserting the phrase “or Section 4 of the
Third Amendment” immediately following the parenthetical “(other than Section
7.2.1)” at the end thereof.

7.     Conditions to Effectiveness.

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

(i)            notwithstanding any provisions of the Credit Agreement, a
prepayment of the outstanding amount of the Term Loans, as provided for in
Section 3.1.1(a) of the Credit Agreement, in an amount equal to twenty million
dollars ($20,000,000) and, notwithstanding the provisions of Section 3.1.2(b) of
the Credit Agreement, such monies shall be applied, pro rata among the Term
Loans, in the inverse order of maturity; and

(ii)           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.

(b)   The provisions of Section 3 hereof shall terminate if any of the following
shall not have been satisfied,

(i)            no later than five (5) Business Days after the execution of this
Amendment, the cash balances, bank deposits and Cash Equivalent Investments (a)
held by Merrill Corporation, Canada and 793473 Ontario Ltd. shall have been
reduced to an aggregate amount not exceeding $1,000,000 and (b) held by
non-Canadian Non-U.S. Subsidiaries shall have been reduced to an aggregate
amount not exceeding $1,000,000, and the excess balances thereof shall have been
transferred to the Operating Account or the Investment Account; and

(ii)           no later than three (3) Business Days after the Administrative
Agent shall have delivered to the Company final drafts of all additional
agreements as the Administrative Agent may reasonably request, including without
limitation, certain irrevocable letters of direction to depository institutions
and control agreements, in each case in form and substance satisfactory to the
Administrative Agent (collectively, the “Additional Documents”), the Company
shall deliver duly executed copies of the Additional Documents to the
Administrative Agent;

(iii)          no later than five (5) Business Days after the Administrative
Agent shall reasonably request any additional information and materials, the
Company shall deliver such information and materials to the Administrative
Agent; and

(iv)          by October 26, 2001, the Administrative Agent shall have received
from the Company the following:

a.             the Company’s financial results for the month of September, 2001;
and

b.             the Company’s EBITDA projections for the balance of Fiscal Year
2002.

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

9.     No Waiver.  Notwithstanding any provisions contained in the Credit
Agreement or in this Amendment to the contrary, nothing contained in this
agreement should be deemed or construed as a waiver of the Non-Compliance and
Defaults.

10.   Limitations on Liability.  The Company agrees that the Administrative
Agent, each Lender and each Issuer and each of their respective Affiliates, and
each of the directors, officers, employees, agents, representatives, attorneys,
consultants and advisors of or to any of the foregoing (each such Person being a
“Lender Party”) shall not have any liability (whether direct or indirect, in
contract, tort or otherwise) to Holdco, the Company or any of its respective
Subsidiaries or any of their equity holders or creditors for or in connection
with the transactions contemplated hereby or in the Loan Documents or the Senior
Subordinated Notes with respect to any acts of any Lender Party prior to the
effectiveness of this Amendment, except to the extent such liability is found in
a final judgment by a court of competent jurisdiction to have resulted primarily
from such Lender Party’s gross negligence or willful misconduct.  In no event,
however, shall any Lender Party be liable with respect to the acts of any Lender
Party prior to the effectiveness of this Amendment, on any theory of liability
for any special, indirect, consequential or punitive damages and each of Holdco
and the Company hereby waives, releases and agrees (for itself and on behalf of
its Subsidiaries) not to sue upon any such claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in its favor.

11.   Press Releases and Public Disclosure.  Each of Holdco and the Company
agrees that neither it nor its Affiliates will issue any press releases or other
public disclosure (each, a “Disclosure Document”) using the name of the
Administrative Agent, any Lender or any of their respective Affiliates or
referring to the Credit Agreement, the other Loan Documents or the Senior
Subordinated Notes without the prior written notice to the Administrative Agent
and without the prior written consent of the Administrative Agent unless (and
only to the extent that) Holdco, the Company or its respective Affiliate is
required to do so under law and then, in any event, Holdco, the Company or its
respective Affiliate will provide a copy of such Disclosure Document to the
Administrative Agent before issuing such Disclosure Document.

12.   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 Non-Compliance and
Defaults and (ii) no Default, other than the Non-Compliance and Defaults, has
occurred and is continuing. 

13.   General.  (a)  Payment of Expenses.  The Company agrees to pay or
reimburse the Administrative Agent and the Lenders for all of their 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) Lenders’ Counsel.

(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/ John W. Castro

 

 

Name: John W. Castro

 

 

Title: Chief Executive Officer

 

 

 

 

MERRILL COMMUNICATIONS LLC

 

 

 

By:

 /s/ John W. Castro

 

 

Name: John W. Castro

 

 

Title: Chief Executive Officer

 

 

 

 

U.S. BANK NATIONAL ASSOCIATION, as the Administrative Agent and as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

WELLS FARGO BANK, N.A., as the Documentation Agent and as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

LENDERS

 

 

 

 

 

 

CREDIT LYONNAIS NEW YORK BRANCH, as a Lender

 

 

 

By:

/s/ James B. Wallock

 

 

Name: James B. Wallock

 

 

Title: Vice President

 

 

 

 

HARRIS TRUST & SAVINGS BANK, as a Lender

 

 

 

By:

/s/ Andrew T. Claar

 

 

Name: Andrew T. Claar

 

 

Title: Vice President

 

 

 

 

TRANSAMERICA BUSINESS CREDIT CORP., as a Lender

 

 

 

By:

/s/ Stephen K. Goetschius

 

 

Name: Stephen K. Goetschius

 

 

Title: Senior Vice President

 

 

 

 

BANK ONE, N.A., as a Lender

 

 

 

By:

/s/ Kevin Christensen

 

 

Name: Kevin Christensen

 

 

Title: 1st Vice President

 

 

 

 

COMERICA BANK, as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

THE FUJI BANK, LIMITED, as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

GE CAPITAL CORPORATION-SFG, as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

GENERAL ELECTRIC CAPITAL CORPORATION, as a Lender

 

 

 

By:

/s/ Robert M. Kadlick

 

 

Name: Robert M. Kadlick

 

 

Title: Duly Authorized Signatory

 

 

 

 

FIRST UNION NATIONAL BANK, as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

APEX (IDM) CDO I, LTD., as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

ELC (CAYMAN) LTD. 1999-II, as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

ELC (CAYMAN) LTD. 1999-III, as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

ELC (CAYMAN) LTD. 2000-I

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

THE DAI-ICHI KANGYO BANK, LTD., as a Lender

 

 

 

By:

/s/ Naoki Yamamori

 

 

Name: Naoki Yamaori

 

 

Title: Sr. Vice President & Dept. Head

 

 

 

 

BALANCED HIGH-YIELD FUND I LTD., as a Lender

 

By:

BHF (USA) Capital Corporation Acting As Attorney-In-Fact

 

 

 

 

By:

/s/ David Scheiber

 

 

Name: David 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/ David Scheiber

 

 

Name: David Scheiber

 

 

Title: Vice President

 

 

 

 

ARCHIMEDES FUNDING, LLC, as a Lender

 

By:

ING Capital Advisors LLC, as Collateral Manager

 

 

 

 

By:

/s/ David Scheiber

 

 

Name: David Scheiber

 

 

Title: Vice President

 

 

 

 

ARCHIMEDES FUNDING III, LTD., as a Lender

 

By

ING Capital Advisors LLC, as Collateral Manager

 

 

 

 

By:

/s/ David Scheiber

 

 

Name: David Scheiber

 

 

Title: Vice President

 

 

 

 

KZH ING-2 LLC, as a Lender

 

 

 

By:

/s/ Susan Lee

 

 

Name: Susan Lee

 

 

Title: Authorized Agent

 

 

 

 

SEQUILS-ING I (HBDGM), LTD., as a Lender

 

By

ING Capital Advisors LLC, as Collateral Manager

 

 

 

 

By:

/s/ David Scheiber

 

 

Name: David Scheiber

 

 

Title: Vice President

 

 

 

 

SWISS LIFE US RAINBOW LIMITED, as a Lender

 

By:

ING Capital Advisors LLC, as Investment Manager

 

 

 

 

By:

/s/ David Scheiber

 

 

Name: David Scheiber

 

 

Title: Vice President

 

 

 

 

CYPRESSTREE INVESTMENT PARTNERS I, LTD., as a Lender

 

 

 

By:

/s/ Jeffrey Megar

 

 

Name: Jeffrey Megar

 

 

Title: Principal

 

 

 

 

CYPRESSTREE INVESTMENT PARTNERS II, LTD., as a Lender

 

 

 

By:

/s/ Jeffrey Megar

 

 

Name: Jeffrey Megar

 

 

Title: Principal

 

 

 

 

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 Megar

 

 

Name: Jeffrey Megar

 

 

Title: Principal

 

 

 

 

MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST, as a Lender

 

 

 

By:

 /s/ Sheila Pinnerty

 

 

Name: Sheila Pinnerty

 

 

Title: Executive Director

 

 

 

 

HELLER FINANCIAL, INC., as a Lender

 

 

 

By:

 

 

 

Name:

 

 

Title:

 

 

 

 

SENIOR DEBT PORTFOLIO, as a Lender

 

 

 

By:

/s/ illegible

 

 

Name: Boston Management and Research

 

 

Title: As Investment Advisor

 

 

 

 

EATON VANCE SENIOR INCOME TRUST, as a Lender

 

By:

/s/ illegible

 

 

Name: Eaton Vance Management

 

 

Title: As Investment Advisor

 

OXFORD STRATEGIC INCOME FUND, as a Lender

 

 

 

By:

/s/ illegible

 

 

Name: Eaton Vance Management

 

 

Title: As Investment Advisor

 

 

 

 

EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender

 

 

 

By:

/s/ illegible

 

 

Name: Eaton Vance Management

 

 

Title: As Investment Advisor

 

 

 

 

STANFIELD CLO, LTD., as a Lender,

 

By:

Stanfield Capital Partners LLC as its Collateral Manager

 

 

 

 

By:

/s/ Christopher A. Bondy

 

 

Name: Christopher A. Bondy

 

 

Title: Partner

 

 

 

 

EATON VANCE CDO III, LTD., as a Lender

 

 

 

By:

/s/ illegible

 

 

Name: Eaton Vance Management

 

 

Title: As Investment Advisor

 

 

 

 

WAYLAND INVESTMENT FUND II, LLC, as a Lender

 

 

 

By:

/s/ Christopher Pears

 

 

Name: Christopher Pears

 

 

Title: Assistant Vice President

 

 

 

 

WAYLAND INVESTMENT FUND, LLC, as a Lender

 

 

 

By:

/s/ Christopher Pears

 

 

Name: Christopher Pears

 

 

Title: Assistant Vice President