Document:

Prepared by MerrillDirect

          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

  

  	 

  
	 

  	

Name: Steven J. Machov

  	 

  
	 

  	

Title: Vice President, General Counsel & Secretary

  	 

  
	 

  	 

  	 

  
	 

  	

MERRILL COMMUNICATIONS LLC

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Steven J. Machov

  

  	 

  
	 

  	

Name: Steven J. Machov

  	 

  
	 

  	

Title: Vice President, General Counsel & Secretary

  	 

  
	 

  	 

  	 

  
	 

  	

DLJ CAPITAL FUNDING, INC.,

  	 

  
	 

  	

as the Syndication Agent and as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By:

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

U.S. BANK NATIONAL ASSOCIATION,

  	 

  
	 

  	

as the Administrative Agent and as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Joshua R. Pirozzolo

  

  	 

  
	 

  	

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

  

 

  	 

  
	 

  	

Name: Calvin R. Emerson

  	 

  
	 

  	

Title: Vice President

  	 

  

 

 

	 
  	 
  	 
  
	
  LENDERS
  	 
  	 
  
	 
  	 
  	 
  
	 

  	

CREDIT LYONNAIS NEW YORK BRANCH, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

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: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

BANK ONE, N.A., as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Kevin Christensen

  

  	 

  
	 

  	

Name: Kevin Christensen

  	 

  
	 

  	

Title: First Vice President

  	 

  
	 

  	 

  	 

  
	 

  	

COMERICA BANK, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

THE FUJI BANK, LIMITED, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Peter L. Chinnici

  

  	 

  
	 

  	

Name: Peter L. Chinnici

  	 

  
	 

  	

Title: Senior Vice President & Group Head

  	 

  

 

 

	 

  	 

  	 

  
	 

  	

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: /s/ John Stelwagon

  

  	 

  
	 

  	

Name: John Stelwagon

  	 

  
	 

  	

Title: Director

  	 

  
	 

  	 

  	 

  
	 

  	

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

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ John Stelwagon

  

  	 

  
	 

  	

Name: John Stelwagon

  	 

  
	 

  	

Title: Director

  	 

  
	 

  	 

  	 

  
	 

  	

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

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ John Stelwagon

  

  	 

  
	 

  	

Name: John Stelwagon

  	 

  
	 

  	

Title: Director

  	 

  

 

	 

  	 

  	 

  
	 

  	

ELC (CAYMAN) LTD. 2000-I

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ John Stelwagon

  

  	 

  
	 

  	

Name: John Stelwagon

  	 

  
	 

  	

Title: Director

  	 

  
	 

  	 

  	 

  
	 

  	

THE DAI-ICHI KANGYO BANK, LTD.,

  	 

  
	 

  	

as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Takayuki Kumagai

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

Name: Dave Scheiber

  	 

  
	 

  	

Title: Vice President

  	 

  
	 

  	 

  	 

  
	 

  	

ARCHIMEDES FUNDING, LLC, as a Lender

  	 

  
	 

  	

By: ING Capital Advisors LLC, as Collateral Manager

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Dave Scheiber

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

Name: Dave Scheiber

  	 

  
	 

  	

Title: Vice President

  	 

  
	 

  	 

  	 

  
	 

  	

KZH ING-2 LLC, as a Lender

  	 

  
	 

  	

By: /s/ Kimberly Rowe

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

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

  
 

  	 

  
	 

  	

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

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

Name:Jeffrey W. Heuer

  	 

  
	 

  	

Title: Principal

  	 

  
	 

  	 

  	 

  
	 

  	

KZH CYPRESSTREE –1 LLC, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Kimberly Rowe

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

Name: Jeffrey W. Heuer

  	 

  
	 

  	

Title: Principal

  	 

  

 

	 

  	 

  	 

  
	 

  	

MORGAN STANLEY DEAN WITTER PRIME INCOME TRUST, as a Lender

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

PPM SPYGLASS FUNDING TRUST, as a Lender

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

HELLER FINANCIAL, INC., as a Lender

  	 

  
	 

  	

By: /s/ Robert M Reag

  

  	 

  
	 

  	

Name: Robert M Reag

  	 

  
	 

  	

Title: Assistant Vice President

  	 

  
	 

  	 

  	 

  
	 

  	

SENIOR DEBT PORTFOLIO, as a Lender

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

EATON VANCE SENIOR INCOME TRUST, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

OXFORD STRATEGIC INCOME FUND,

  	 

  
	 

  	

as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By:

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  

 

	 

  	 

  	 

  
	 

  	

EATON VANCE INSTITUTIONAL SENIOR LOAN FUND, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By:

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

AVALON CAPITAL LTD., as a Lender

  	 

  
	 

  	

By: INVESCO Senior Secured Management Ins. as Portfolio Manager

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

AMARA-1 FINANCE, LTD., as a Lender

  	 

  
	 

  	

By: INVESCO Senior Secured Management, Inc. as Subadviser

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

CARLYLE HIGH YIELD PARTNER II, LTD., as a Lender

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

STEIN ROE FLOATING RATE LIMITED LIABILITY COMPANY, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Kathleen A. Zarn

  

  	 

  
	 

  	

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

  

  	 

  
	 

  	

Name: Kathleen A. Zarn

  	 

  
	 

  	

Title: Vice President

  	 

  
	 

  	 

  	 

  
	 

  	

MAGNETITE ASSET INVESTORS, LLC, as a Lender

  	 

  
	 

  	 

  	 

  
	 

  	

By: 

  

  	 

  
	 

  	

Name:

  	 

  
	 

  	

Title:

  	 

  
	 

  	 

  	 

  
	 

  	

STANFIELD CLO, LTD., as a Lender,

  	 

  
	 

  	

By: Stanfield Capital Partners LLC as its Collateral Manager

  	 

  
	 

  	 

  	 

  
	 

  	

By: /s/ Christopher E. Jansen

  

  	 

  
	 

  	

Name: Christopher E. Jansen

  	 

  
	 

  	

Title: Managing PartnerFORD MOTOR COMPANY

                       Executive Separation Allowance Plan

                      (As amended through December 18, 2000
                  for Separations on or after January 1, 1981)

     Section 1. Introductory.  This Plan has been established for the purpose of
providing  Leadership  Level One or Two Employees  with an Executive  Separation
Allowance  in the event of their  separation  from  employment  with the Company
under certain circumstances.  The Plan is an expression of the Company's present
policy with respect to separation  allowances  for  Leadership  Level One or Two
Employees who meet the  eligibility  requirements  set forth below;  it is not a
part of any  contract of  employment  and no employee or other person shall have
any legal or other  right to any  Executive  Separation  Allowance.  The Company
reserves the right to terminate,  amend or modify the Plan, in whole or in part,
at any time without notice.

     Section 2.  Eligibility.  Each Leadership  Level One or Two Employee who is
being separated from employment with the approval of the Company and who

     (1)  has at least five years'  service at the  Leadership  Level One or Two
          level, or its equivalent;

     (2)  has at least ten years of  contributory  membership  under the General
          Retirement Plan;

     (3)  is at least 55 years of age; and

     (4)  has applied for early retirement at the employee's option

shall be  eligible  to receive an  Executive  Separation  Allowance  as provided
herein.  The Eligible Surviving Spouse of a Leadership Level One or Two Employee
who (i) has not  separated  from  employment  with the  Company,  (ii) meets the
eligibility  conditions set forth in subsections (1) through (3) of this Section
2, and (iii) dies on or after  January 1, 1981 shall be  eligible to receive the
Executive  Separation Allowance that the Eligible Surviving Spouse of a deceased
employee would have been eligible to receive if such employee had separated from
employment  with the  approval  of the  Company  and  retired on the date of the
employee's death.

     The eligibility  conditions set forth in subsections (1) and (2) of Section
2 may be waived by the Chairman of the Board or the President except in the case
of a Leadership  Level One or Two Employee who has not separated from employment
with the Company.

<PAGE>

                                       2

     Section 3. Calculation of Amount.

     A. Base Monthly Salary. For purposes of the Plan, the "Base Monthly Salary"
of a  Leadership  Level One or Two  Employee  shall be the highest  monthly base
salary  rate of such  employee  during  the  employee's  12  months  of  service
immediately  preceding  separation from  employment  with the Company,  prior to
giving effect to any salary reduction  agreement pursuant to an employee benefit
plan,  as defined in Section  3(3) of the  Employee  Retirement  Security Act of
1974, as amended,  (i) to which Section 125 or Section 402(e)(3) of the Internal
Revenue  Code of 1986,  as  amended,  applies  or (ii)  which  provides  for the
elective   deferral  of   compensation.   It  shall  not  include   supplemental
compensation or any other kind of extra or additional compensation.

     B. Amount of Executive Separation  Allowance.  Subject to any limitation in
other  provisions  of the  Plan,  the  gross  monthly  amount  of the  Executive
Separation  Allowance of an Eligible  Leadership Level One or Two Employee under
Section 2 above shall be such  employee's  Base Monthly  Salary  multiplied by a
percentage,  not to exceed 60%, equal to the sum of (i) 15%, (ii) five tenths of
one percent (.5%) for each month (or fraction  thereof) that such employee's age
at separation  exceeds 55, not to exceed  thirty  percent  (30%),  and (iii) one
percent (1%) for each year of such employee's  service in excess of 15, prorated
for fractions of a year.

     The gross  amount for any month  shall be reduced by any  payments  paid or
payable for such month to the Eligible Leadership Level One or Two Employee, the
employee's surviving spouse,  contingent  annuitant,  or other beneficiary under
the General Retirement Plan or any other private retirement plan, other than the
Supplemental Executive Retirement Plan, to which the Company or its subsidiaries
shall have contributed.

     Section 4. Payments.  Executive Separation  Allowance payments,  in the net
amount  determined in accordance  with Section 3B above,  shall be made monthly.
Payments to an Eligible  Leadership Level One or Two Employee shall cease at the
end of the month in which such employee attains age 65 or dies, whichever occurs
first. In the event of death of an Eligible Leadership Level One or Two Employee
prior to such  employee  attaining  age 65, or in the event of death on or after
January  1,  1981 of a  Leadership  Level  One or Two  Employee  whose  Eligible
Surviving  Spouse meets the  eligibility  conditions  set forth in Section 2 for
payments hereunder, payments shall be made to such employee's Eligible Surviving
Spouse, if any, until the death of such spouse or, if earlier,  until the end of
the month in which the Leadership  Level One or Two Employee would have attained
age 65.

     Anything herein contained to the contrary notwithstanding, the right of any
Eligible  Leadership  Level One or Two  Employee  to receive an  installment  of
Executive  Separation  Allowance  hereunder  for any month shall accrue only if,
during the entire period from the date of such employee's  separation to the end
of such  month,  such  employee  shall  have  earned  out  such  installment  by
refraining  from  engaging in any  activity  that is directly or

<PAGE>

                                       3

indirectly in  competition  with any activity of the Company or any Subsidiary
or Affiliate thereof.

     In the  event  of an  Eligible  Leadership  Level  One  or  Two  Employee's
nonfulfillment  of  the  condition  set  forth  in  the  immediately   preceding
paragraph,  no further  installment  shall be paid to such  employee;  provided,
however,  that the  nonfulfillment  of such  condition  may at any time (whether
before,  at  the  time  of  or  subsequent  to  termination  of  the  employee's
employment) be waived in the following manner:

     (1) with  respect  to any such  employee  who at any time shall have been a
member  of  the  Board  of  Directors,  a Vice  President,  the  Treasurer,  the
Controller  or the  Secretary of the Company,  such waiver may be granted by the
Compensation  and  Option  Committee  upon  its  determination  that in its sole
judgment  there  shall  have not been  and will not be any  substantial  adverse
effect upon the Company or any Subsidiary or Affiliate  thereof by reason of the
nonfulfillment of such condition; and

     (2) with respect to any other such employee,  such waiver may be granted by
the Annual Incentive  Compensation  Committee (or any committee  appointed by it
for the purpose) upon its  determination  that in its sole judgment  there shall
not have been and will not be any such substantial adverse effect.

     Anything  herein  contained  to  the  contrary  notwithstanding,  Executive
Separation Allowance payments shall not be paid to or with respect to any person
as to whom it has been  determined  that such person at any time (whether before
or subsequent to  termination of the  employee's  employment)  acted in a manner
inimical to the best interests of the Company.  Any such determination  shall be
made by (i) the Compensation and Option Committee with respect to any Leadership
Level  One  Employee  who at any time  shall  have been a member of the Board of
Directors,  an Executive Vice President,  a Vice President,  the Treasurer,  the
Controller  or the  Secretary  of the  Company,  and (ii) the  Annual  Incentive
Compensation  Committee  with respect to any other  Leadership  Level One or Two
Employee,  and  shall  apply  to any  amounts  payable  after  the  date  of the
applicable  Committee's  action hereunder,  regardless of whether the person has
commenced receiving Executive  Separation  Allowance.  Conduct which constitutes
engaging in an activity that is directly or indirectly in  competition  with any
activity of the Company or any Subsidiary or Affiliate thereof shall be governed
by the four immediately  preceding paragraphs of this Section 4 and shall not be
subject to any determination under this paragraph.

     Any Executive Separation Allowance payments resumed after reemployment with
the Company  under  Section 6A or  employment  with a Subsidiary  of the Company
under  Section 6B shall be paid on the basis of the  percentage  of Base Monthly
Salary applicable at the time of the initial determination under Section 3B.

     Section 5. Deductions. The Company may deduct from any payment of Executive
Separation  Allowance  to an Eligible  Leadership  Level 1 or 2 Employee or such
employee's

<PAGE>

                                       4

Eligible  Surviving  Spouse all  amounts  owing to it by such  employee  for any
reason, and all taxes required by law or government regulation to be deducted or
withheld.

     Section 6A. Person Reemployed by the Company.  In the event an employee who
shall have been separated from employment  with the Company under  circumstances
that would  make the  employee  eligible  to  receive  an  Executive  Separation
Allowance  shall be  reemployed  by the Company  before the employee  shall have
received  payment  of the full  amount of the  employee's  Executive  Separation
Allowance,   no  further   allowance   shall  be  paid  during  such  period  of
reemployment.

     Section 6B. Person  Employed by a Subsidiary.  In the event an employee who
shall have been separated from employment  with the Company under  circumstances
that would  make the  employee  eligible  to  receive  an  Executive  Separation
Allowance  shall be employed by a Subsidiary of the Company  before the employee
shall have  received  payment  of the full  amount of the  employee's  Executive
Separation  Allowance,  no further allowance shall be paid during such period of
employment.

     Section 7. Definitions. As used in the Plan, the following terms shall have
the following meanings, respectively:

     "Affiliate"  shall  mean,  as applied  with  respect to any person or legal
     entity  specified,  a person or legal entity that  directly or  indirectly,
     through one or more  intermediaries,  controls or is  controlled  by, or is
     under common control with, the person or legal entity specified.

     "Company"  shall mean Ford Motor  Company and such of the  subsidiaries  of
     Ford Motor Company as, with the consent of Ford Motor  Company,  shall have
     adopted this Plan.

     "Eligible  Leadership  Level One or Two  Employee"  shall mean a Leadership
     Level One or Two Employee who meets the  eligibility  criteria set forth in
     Section 2, or for periods prior to January 1, 2000, shall mean an Executive
     Roll Employee who meets the eligibility criteria set forth in Section 2.

     "Eligible  Surviving Spouse" shall mean a spouse to whom a Leadership Level
     One or Two  Employee  has been married at least one year at the date of the
     employee's death.

     "Leadership  Level  One or Two  Employee"  shall  mean an  employee  of the
     Company  (but  for  periods  prior to July 1,  1996,  excluding  a  Company
     employee  who is an employee of Jaguar Cars, a division of the Company) who
     is assigned to the Leadership Level One or Two, or its equivalent,  as such
     term is defined in the  Employee  Relations  Administration  Manual as from
     time to time constituted.

<PAGE>

                                       5

     "Service"  shall mean an eligible  employee's  years of service  (including
     fractions of years) used in determining eligibility for an early retirement
     benefit under the Ford Motor Company General Retirement Plan.

     "Subsidiary"  shall mean,  as applied  with  respect to any person or legal
     entity  specified,  (i) a person or legal  entity a majority  of the voting
     stock  of which is owned or  controlled,  directly  or  indirectly,  by the
     person  or legal  entity  specified  or (ii)  any  other  type of  business
     organization  in  which  the  person  or  legal  entity  specified  owns or
     controls, directly or indirectly, a majority interest.

     Section 8.  Administration  and  Interpretation.  Except as the  committees
specified  in  Section 4 and the  Chairman  of the Board and the  President  are
authorized to administer  the Plan in certain  respects,  the  Vice-President  -
Human  Resources shall have full power and authority on behalf of the Company to
administer  and  interpret  the Plan.  In the event of a change in a  designated
officer's  title,  the officer or officers with  functional  responsibility  for
executive  separation  allowance  plans  shall have the power and  authority  to
administer   and  interpret  the  Plan.   All  decisions  with  respect  to  the
administration  and  interpretation  of the Plan  shall be  final  and  shall be
binding upon all persons.

     Section 9.  Visteon  Corporation.  The  following  shall be  applicable  to
employees of Ford who were  transferred  to Visteon  Corporaton on April 1, 2000
("U.S. Visteon Employees") and who ceased active participation in the Plan as of
June 30, 2000 after Visteon Corporation was spun-off from Ford, June 28, 2000.

     (a) Group I and Group II Employees.

     For  purposes of this  paragraph,  a "Group I  Employee"  shall mean a U.S.
     Visteon  Employee who as of July 1, 2000 was eligible for immediate  normal
     or regular early retirement under the provisions of the GRP as in effect on
     July 1, 2000. A "Group II Employee" shall mean a U.S.  Visteon Employee who
     (i) was not a Group I Employee;  (ii) had as of July 1, 2000 a  combination
     of age and  continuous  service  that  equals or exceeds  sixty (60) points
     (partial months disregarded); and (iii) could become eligible for normal or
     regular early  retirement  under the  provisions of the GRP as in effect on
     July 1, 2000 within the period  after July 1, 2000 equal to the  employee's
     Ford sevice as of July 1, 2000. A Group I or Group II Employee shall retain
     eligibility to receive an Executive  Separation Allowance and shall receive
     such  benefits as are  applicable  under the terms of the Plan in effect on
     the retirement date, based on meeting the minimum Leadership Level required
     for eligibility for such benefits as of July 1, 2000, service as of July 1,
     2000, and the Base Monthly Salary as of the retirement date.

<PAGE>

                                       6

     (b) Group III Employees.

     For purposes of this  paragraph,  a "Group III Employee"  shall mean a U.S.
     Visteon  Employee who  participated  in the GRP prior to July 1, 2000 other
     than a Group I or Group II Employee.  The Plan shall have no liability  for
     any Executive  Separation Allowance payable to Group III Employees who were
     otherwise  eligible hereunder with respect to service prior to July 1, 2000
     on or after July 1, 2000.

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