Exhibit 10.4
THIRD AMENDMENT TO CREDIT AGREEMENT
THIS THIRD AMENDMENT, dated as of March 24, 1999, amends and modifies a
certain Credit Agreement, dated as of November 25, 1996, as amended by
Amendments dated as of May 23, 1997 and August 17, 1998 (as so amended, the
"Credit Agreement"), among MERRILL CORPORATION (the "Borrower"), U.S. BANK
NATIONAL ASSOCIATION, formerly known as First Bank National Association, as
Agent (the "Agent"), and the banks or financial institutions party thereto,
which currently consist of U.S. BANK NATIONAL ASSOCIATION and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION (the "Banks"). Terms not otherwise expressly
defined herein shall have the meanings set forth in the Credit Agreement.
For VALUE RECEIVED, the Borrower, the Agent and the Banks agree that the
Credit Agreement is amended as follows.
ARTICLE I - AMENDMENTS TO THE CREDIT AGREEMENT
1.1 DEFINITIONS.
(a) The definition of "Commitment" in Section 1.1 is amended to read as
follows:
"COMMITMENT": (i) The maximum unpaid principal amount of the Loans of
all Banks which may from time to time be outstanding hereunder, being
$70,000,000 from and after the effectiveness of the Third Amendment
hereof, as the same may be reduced from time to time pursuant to SECTION
4.3, or (ii) if so indicated for an individual Bank, the maximum unpaid
principal amount of the Loans of such Bank which may from time to time be
outstanding hereunder, being initially the amounts set forth on the
signature pages of the Third Amendment hereof or in the relevant
Assignment and Assumption Agreement for such Bank, as the same may be
reduced from time to time pursuant to SECTION 4.3, or (iii) as the context
may require, the agreement of each Bank to make Loans to the Borrower
subject to the terms and conditions of this Agreement up to its
Commitment.
(b) The definition of "Interest Period" in Section 1.1 is amended by
adding the following sentence at the end of such definition:
"The Borrower shall not select any Interest Period in an amount and
duration that would require early termination of such Interest Period
in order to make payments of the Loans required under SECTION 4.1,
including without limitation payments due on mandatory reduction of
the Commitments."
(c) The following new definition is added to Section 1.1 in alphabetical
order:
"DANIELS ACQUISITION": The acquisition by the Borrower or a
Subsidiary of greater than 50% of the voting stock of Daniels Printing
Limited Partnership or of a substantial portion of the assets of Daniels
Printing Company. Total consideration, including cash, assumed
indebtedness, and contingent obligations, paid in connection with the
Daniels Acquisition shall not exceed $58,000,000.
1.2 PURPOSE OF LOANS. New Section 2.8 is added after Section 2.7, and
shall read as follows:
"Section 2.8 PURPOSE OF THE LOANS. Amounts of the Loans in excess of
$40,000,000 shall be used by the Borrower solely to fund the Daniels
Acquisition."
1.3 REPAYMENT. Section 4.1 is amended to read as follows:
Section 4.1 REPAYMENT. Principal of the Loans in excess of the
Commitments at any time, giving effect to all reductions of the
Commitment under SECTION 4.3, shall be immediately due and payable. All
principal of the Loans, together with all accrued and unpaid interest
thereon, shall be due and payable on the Termination Date."
1.4 REDUCTION OF COMMITMENTS. The title of Section 4.3 is changed to
"REDUCTION OR TERMINATION OF COMMITMENT", the first paragraph is lettered and
titled "(a) OPTIONAL REDUCTION OR TERMINATION OF COMMITMENT", and a second
paragraph is added and shall read as follows:
"(b) MANDATORY REDUCTION OF COMMITMENT. The Commitments shall be reduced
to an amount equal to the remainder of (i) $40,000,000 less (ii) the
amount of any prior voluntary reductions of the Commitments under Section
4.3(a), upon the first to occur of: (A) September 1, 1999, or (B) the
date of receipt by the Borrower of proceeds of issuance of Indebtedness or
equities intended to finance the Daniels Acquisition."
1.5 INVESTMENTS. Section 9.4 is amended by adding a new subsection (h)
to read as follows:
"(h) the Daniels Acquisition, provided that it complies with the terms
of the definition thereof."
1.6 CONSOLIDATED AND MERGER; ACQUISITION OF ASSETS AND STOCK. Section
9.6 is amended by adding the following sentences at the end of such Section:
"Notwithstanding the foregoing, the Borrower may make the Daniels
Acquisition in accordance with the terms of the definition thereof,
PROVIDED, that the New Guarantor shall hold the assets acquired in the
Daniels Acquisition. Consideration paid in connection with the Daniels
Acquisition shall not be counted for purposes of ascertaining compliance
with the $15,000,000 test set forth in this Section."
1.7 CONSOLIDATED TANGIBLE NET WORTH. Section 8.11 is amended by adding
the following sentence at the end of such Section:
"Notwithstanding the foregoing, if the Daniels Acquisition shall be
consummated: (a) the Borrower will maintain, at the end of each fiscal
quarter, its Consolidated Tangible Net Worth at an amount not less than
$67,000,000 in lieu of the amount calculated as provided above, and (b)
Consolidated Tangible Net Worth of the Borrower will be adjusted for
purposes of this Section by adding (to the extent subtracted in
calculating Consolidated Tangible Net Worth) goodwill associated with
the contingent earn-out
2
provisions related to acquisition of FMC Resource Management Corporation
and Merrill/Executech, Inc."
1.18 NOTES. The Notes shall be replaced by Notes in the form of Exhibit
AA hereto, which shall constitute the "Notes" for purposes of all references
in the Credit Agreement.
1.19 CONSTRUCTION. All references in the Credit Agreement to "this
Agreement", "herein" and similar references shall be deemed to refer to the
Credit Agreement as amended by this Amendment.
ARTICLE II - REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into this Amendment and to
make and maintain the Loans under the Credit Agreement as amended hereby, the
Borrower hereby warrants and represents to the Agent and the Banks that it is
duly authorized to execute and deliver this Amendment, and to perform its
obligations under the Credit Agreement as amended hereby, and that this
Amendment constitutes the legal, valid and binding obligation of the
Borrower, enforceable in accordance with its terms.
ARTICLE III - CONDITIONS PRECEDENT
This Amendment shall become effective on the date first set forth above,
provided, however, that the effectiveness of this Amendment is subject to the
satisfaction of each of the following conditions precedent:
3.1 WARRANTIES. Before and after giving effect to this Amendment, the
representations and warranties in ARTICLE VII of the Credit Agreement shall
be true and correct as though made on the date hereof, except for changes
that are permitted by the terms of the Credit Agreement. The execution by the
Borrower of this Agreement shall be deemed a representation that the Borrower
has complied with the foregoing condition.
3.2 DEFAULTS. Before and after giving effect to this Amendment, no
Default and no Event of Default shall have occurred and be continuing under
the Credit Agreement. The execution by the Borrower of this Amendment shall
be deemed a representation that the Borrower has complied with the foregoing
condition.
3.3 DOCUMENTS. The Borrower, the Agent and the Banks shall have executed
and delivered this Amendment, and the Borrower and Guarantors, as applicable,
shall have executed and delivered the following:
(a) NOTES. The Notes in the form of Exhibit AA hereto, payable to the
respective Banks.
(b) RESOLUTIONS; INCUMBENCY. Certified copies of resolutions of the
Board of Directors of the Borrower authorizing or ratifying the
execution, delivery and performance, respectively, of this Amendment and
the Notes, and a certificate of the Secretary or an Assistant Secretary
of the Borrower certifying the names of the officer or officers of the
Borrower authorized to sign this Amendment and the Note and other
3
documents provided for in this Amendment, together with a sample of the
true signature of each such officer.
(c) CERTIFICATE OF INCORPORATION AND BY-LAWS. A certified copy of any
amendment or restatement of the Certificate or Articles of Incorporation
or the By-laws of the Borrower made or entered following date of the
most recent certified copies furnished to the Bank (or a certificate
stating that no changes have been made).
(d) GUARANTORS' ACKNOWLEDGMENTS. Guarantors' Acknowledgments in the form
of those attached hereto.
(e) AMENDMENT FEES. The Borrower shall pay an amendment fee in the
amount of $40,000 to the Agent for the account of the Banks, to be paid
by the Agent in the amount of $20,000 to each of the Banks.
(f) NEW SUBSIDIARY. The Borrower's new Subsidiary, Merrill Acquisition
Corp., a Minnesota corporation, or such other new Subsidiary as will
hold substantially all of the assets acquired in the Daniels
Acquisition, shall issue a Guaranty as provided in SECTION 8.14, and
shall deliver certified copies of its approval resolution for such
guaranty and its incumbency certificate.
(g) OPINION OF COUNSEL TO THE BORROWER. An opinion of counsel to the
Borrower and Guarantors, addressed to the Banks, in substantially the
form of EXHIBIT BB to this Amendment.
ARTICLE IV - GENERAL
4.1 EXPENSES. The Borrower agrees to reimburse the Agent upon demand for
all reasonable expenses (including reasonable attorneys' fees and legal
expenses) incurred by this Agent in the preparation, negotiation and
execution of this Amendment and any other document required to be furnished
herewith, and in enforcing the obligations of the Borrower hereunder, and to
pay and save the Agent and the Banks harmless from all liability for, any
stamp or other taxes which may be payable with respect to the execution or
delivery of this Amendment and the Notes, which obligations of the Borrower
shall survive any termination of the Credit Agreement.
4.2 COUNTERPARTS. This Amendment may be executed in as many counterparts
as may be deemed necessary or convenient, and by the different parties hereto
on separate counterparts, each of which, when so executed, shall be deemed an
original but all such counterparts shall constitute but one and the same
instrument.
4.3 SEVERABILITY. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining portions hereof or affecting the validity or
enforceability of such provisions in any other jurisdiction.
4
4.4 LAW. This Amendment shall be a contract made under the laws of the
State of Minnesota, which laws shall govern all the rights and duties
hereunder.
4.5 SUCCESSORS; ENFORCEABILITY. This Amendment shall be binding upon the
Borrower, the Agent and the Banks and their respective successors and
assigns, and shall accrue to the benefit of the Borrower, the Agent and the
Banks and the successors and assigns of the Agent and the Banks. Except as
hereby amended, the Credit Agreement shall remain in full force and effect
and is hereby ratified and confirmed in all respects.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed at Minneapolis, Minnesota by their respective officers thereunto
duly authorized as of the date first written above.
MERRILL CORPORATION
By /s/ Kay A. Barber
-----------------------------------
Kay A. Barber
Vice President - Finance, Chief
Financial Officer and Treasurer
By /s/ Steven J. Machov
-----------------------------------
Steven J. Machov
Vice President, General Counsel
and Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Agent and as a Bank
By /s/ William J. Umscheid
-----------------------------------
William J. Umscheid
Vice President
Commitment: $35,000,000
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
By /s/ Lynn S. Hultstrand
-----------------------------------
Lynn S. Hultstrand
Vice President
Commitment: $35,000,000
5