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                          STOCK OPTION DEFERRAL PROGRAM

The Merrill Corporation Stock Option Deferral Program ("Deferral Program")
allows participants to defer compensation from stock option. This means that you
can defer, pre-tax, the difference between the option price and the fair market
value of the stock on the date of exercise, times the number of shares exercised
(the "Deferred Stock Option Compensation").

It works like this:

1.    You elect to defer compensation from a specific stock option grant by
      completing a Stock Option Deferral Election Form for that grant. You must
      file a separate election form for each grant with respect to which you
      want to defer compensation. YOUR ELECTION IS IRREVOCABLE.

2.    You agree not to exercise any portion on the option grant during a
      specified waiting period, which is 6 months from the time the election is
      filed.

3.    To exercise your option, you file a Deferred Stock Option Compensation
      Exercise Notice with the Stock Option Plan Administrator. You cannot
      exercise any portion of your option grant during the waiting period (e.g.,
      six months from the time the election is filed). You must still exercise
      the option before it expires.

4.    You must use the stock-for-stock method of exercise. On the date of
      exercise, you must have enough "mature" Merrill common stock to cover the
      purchase price. "Mature" stock is stock that you have owned for more than
      six months and that has not been used in another stock-for-stock swap
      during that period. If you do not have enough "mature" Merrill common
      stock to pay the purchase price, you may not exercise the option, even if
      the option will expire.

5.    The amount of you Deferred Stock Option Compensation is determined at the
      time of exercise. You must pay FICA taxes on the compensation in cash and
      at the time of exercise. NO TAXES ARE DEDUCTED FROM THE COMPENSATION AT
      THE TIME OF EXERCISE. The Deferred Stock Option Compensation is credited
      to your Stock Option Deferral Account under the terms of the Deferral
      Program.

6.    Your Stock Option Deferral Account is allocated to the Merrill common
      stock earnings option. No other earnings options are available. The value
      of your Deferred Stock Option Compensation will increase or decrease based
      on the value of Merrill common stock.

7.    You receive the value of your account, LESS ALL APPLICABLE INCOME
      WITHHOLDING TAXES, in cash on the date(s) you specify in the election and
      in accordance with the terms of the Deferral Program.

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THE FOLLOWING IS AN EXAMPLE OF THE MECHANICS OF THE PROGRAM:

ASSUMPTIONS:
            Options: 5,000
            Strike price: $10.50
            Current price: $22.00

STEPS:

a.    Eligible participant makes election to defer gain at least six months
      prior to exercise. The deferral is irrevocable. At the time of election,
      the Participant will designate a distribution period and beneficiary(ies).

      The participant cannot exercise any portion of the option grant for at
      least six months.

b.    At the time of exercise, the exercise occurs in a stock for stock manner.
      The participant surrenders enough mature stock (mature shares that have
      been owned by the employee for at least six months) to purchase the
      shares. The employee must have enough mature shares to cover the purchase
      or the exercise cannot be completed.

            In this example, the Participant would need to surrender 2386 shares
            to exercise the option:

c.    The participant receives 2386 shares back

d.    The participant's deferral account will be credited with "share units" to
      reflect gain at the time of exercise. Share units are calculated as
      follows: Options x exercise price/current price.

            In this example, the Participant will be credited with 2614 share
            units into his/her account to defer the gain.

      The participant cannot vote these deferral units.

e.    As of the date on which dividends are paid on shares, a participant will
      be paid such dividends on shares in his/her deferral account in cash.

f.    Per the employee's deferral instructions, at some date in the future the
      employee receives the value in his/her account less applicable taxes, in
      cash. At the time of distribution, the entire value of the distribution
      (including all appreciation) will be taxed as ordinary income.

THINGS TO CONSIDER:

--    Except for FICA taxes, Deferred Stock Option Compensation is not taxable
      on the date of exercise. However, upon distribution of your Stock Option
      Deferral Account, the entire value of the distribution (including all
      appreciation) is taxed as ordinary income. By contrast, compensation from
      exercises of non-statutory stock option that is not deferred is taxed as
      ordinary income on the date or exercise, but any subsequent appreciation
      in the shares acquired may be taxed at capital gain rates when the shares
      are sold.

--    A stock option that vests incrementally is considered as one stock option
      grant. If you make a deferral election for that grant, all Deferred Stock
      Option Compensation received from that grant will be deferred.

A Stock Option Deferral Election Form is enclosed. Please read it carefully. I
suggest you consult your tax advisor and/or financial planner before making a
decision. The concept of deferring stock option 

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compensation is relatively new and therefore has not been considered in
developing many individual tax strategies and financial plans. THE ELECTION IS
IRREVOCABLE. IT CANNOT BE CHANGED EVEN IN THE EVENT OF MISTAKES,
MISUNDERSTANDINGS OR ERRONEOUS ADVICE.

THE PERIOD TO FILE A STOCK OPTION DEFERRAL ELECTION ENDS MARCH 31, 1999.
ELECTIONS FILED BY THIS DATE WILL BE EFFECTIVE OCTOBER 1, 1999. IF YOU FILE AN
ELECTION FOR THIS PERIOD YOU WILL NOT BE ALLOWED TO EXERCISE THE OPTION COVERED
BY THE ELECTION BEFORE OCTOBER 1, 1999.