Document:

QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.14    
    

FY06 Management Incentive Plan  

  

FY06 Management Incentive Plan  

 Plan Summary  

	Introduction	 	The Management Incentive Plan (MIP) provides an annual reward opportunity for eligible employees of Merrill Communications, LLC. The plan is designed to provide competitive total cash compensation opportunity that is
closely tied to overall company and business unit performance.
	

 	
 	

Under the plan, participants can earn an incentive payout based on company financial performance and accomplishment of individual objectives. The payout is structured to have unlimited upside potential for exceeding consolidated quantitative targets
as well as downside if targets are not met.
	

Performance Period	
 	

The performance period runs on a fiscal year basis from February 1 through January 31.
	

Plan Eligibility	
 	

Eligibility for the plan is determined annually based on grade level and position. The CEO, President and VP of Human Resources of Merrill Communications have the final authority to approve all participants. Each participant will receive
documentation confirming their participation in MIP, which will include details on plan structure and financial targets.
	

Payout Eligibility	
 	

Participants will be eligible for an incentive payout if they are:
	

 	
 	

•	
 	

A full- or part-time regular employee; and
	 	 	•	 	Employed in an eligible position as of August 1 of the plan year. For individuals hired during the year before August 1, eligibility begins on the first day of employment and incentive awards may be pro-rated
from the date of hire; and
	 	 	•	 	Performing at a satisfactory level as determined by management; and
	 	 	•	 	An active regular employee on the date of payout. Participants who leave the company voluntarily or involuntarily before the date of payout will not be entitled to any payout under the plan.
	

 	
 	

For individuals who experience job changes during the year that would affect eligibility or incentive targets, payouts may be adjusted, either upward or downward, to reflect the associated job change.
	

 	
 	

 	
 	

 

	

Payout Timing	
 	

Incentives earned under the plan are generally paid out within 90 days of the end of the fiscal year. For the FY06 incentive, it is expected that the payout will occur in April 2006.
	

Performance Measures	
 	

 	
 	

 
	 	 	•	 	Consolidated EBITDA before MIP expense
	 	 	•	 	Business Unit/Group Threshold
	 	 	•	 	Individual goals/objectives. (Individual goals/objectives must be measurable and determined in conjunction with participant's manager or Business Unit/Group management. Emphasis should be revenue/earnings growth,
efficiency/cost effectiveness, diversification of the business and attracting/retaining the best people.)
	

Performance and Payout	
 	

The minimum possible payout is zero, with unlimited upside potential for the consolidated quantitative component. The individual component payout, if applicable, may not exceed 100%. Specific provisions for FY06 are:
	

 	
 	
CONSOLIDATED QUANTITATIVE COMPONENT
	

 	
 	
Consolidated Threshold
	 	 	•	 	A Consolidated EBITDA before MIP expense threshold has been established which serves as an absolute minimum level of financial performance that must be achieved before
any payout can be made.
	

 	
 	
Consolidated Target
	 	 	•	 	A Consolidated EBITDA before MIP expense target has been established. The Consolidated EBITDA target reflects the results at
which a participant may become eligible to receive 100% of their consolidated quantitative MIP component.
	 	 	•	 	The payout percentage is interpolated for results above or below target.
	

 	
 	
Business Unit/Group Threshold
	 	 	•	 	In addition, your respective Business Unit/Group has an EBITDA before MIP expense threshold (if applicable). This threshold serves as a gate (an absolute minimum level of
financial performance) that must be achieved by your Business Unit/Group before any portion of the consolidated component may be paid. The Business
Unit/Group threshold must be met to achieve payout even if the overall consolidated results exceed the consolidated threshold.
	

 	
 	

 	
 	

 

	

 	
 	
Business Unit/Group Target
	 	 	•	 	A Business Unit/Group EBITDA before MIP expense target has also been established. A Business
Unit/Group must meet or exceed their established target to be eligible to receive a consolidated quantitative payout above 100% if consolidated performance is above the
Consolidated target.
	

 	
 	
INDIVIDUAL GOALS COMPONENT
	

 	
 	

•	
 	

The Consolidated EBITDA before MIP expense threshold must be met before the individual goals component is eligible for payout. Individual goals and objectives have the opportunity to be paid, regardless
of business unit/group performance results.
	 	 	•	 	The manager or Business Unit/Group management will determine performance against goals and resulting award for the participant based on their achievement of the objectives that were established.
	 	 	•	 	The percentage earned could range from 0-100% of the individual component, but may not exceed 100%.
	

Overall Payout Calculation	
 	

Incentive payouts are calculated using eligible base salary at the end of the fiscal year multiplied by the target bonus percent. Each component is weighted and multiplied by performance results and totaled together.

	Payout Example	 	 	 	 	 	 
	 	 	

	 	 	Goals—	 	Consolidated Quantitative	 	Individual Goals
	 	 	

	 	 	Weighting	 	80%	 	20%
	 	 	

	 	 	% Goal Achievement	 	90% (below target by 10%	 	100% (met target performance)
	 	 	

	 	 	Result (weight × % achievement)	 	72%	 	20%
	 	 	

	

 	
 	

The resulting payout percentage would be 92% (72% consolidated and 20% individual).
	

 	
 	

If we assume a salary of $50,000 and a target MIP percentage of 10%, the dollar payout would be $4,600. ($50,000 × 10%) × 92%.
	

 	
 	

 	
 	

 

	

Plan Modifications	
 	

Merrill Executive Management and the Board of Directors reserve the right to modify, amend, or cancel this plan at anytime in response to changing business issues or unforeseen circumstances. They also retain the right to make adjustments for the
impact of any unusual item that has an unplanned impact on the incentive payout. Adjustments, if any, may have either a negative or positive effect on the incentive payout earned by a participant.
	

Right to Continued Employment	
 	

Nothing contained in the Management Incentive Plan shall be construed to confer upon any employee the right to continued employment, or alter the company's right to terminate his/her employment at any time.

QuickLinks

Exhibit 10.14QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.19    
    

EXECUTIVE EMPLOYMENT AGREEMENT  

        This Executive Employment Agreement (this "Agreement") is made and entered into as of July 14, 1999, by and among Viking Merger Sub, Inc., a
Minnesota corporation (which, together with its Subsidiaries (as herein defined) is called the "Company"), and John Castro ("Employee"). 

WITNESSETH:  

        WHEREAS, Employee is currently employed by the Company; 

        WHEREAS,
the Company desires to continue to employ Employee upon the terms set forth herein; 

        WHEREAS,
Employee desires to continue to be employed by the Company and to memorialize the terms and conditions of such employment; 

        WHEREAS,
the Company is entering into this Agreement by and on behalf of itself and each trade or business in which the Company's direct or indirect ownership of value or voting power is
at least 50% (the "Subsidiaries"); 

        NOW
THEREFORE, Employee and the Company, in consideration of the agreements, covenants and conditions herein, hereby agree as follows: 

        SECTION
1.    Basic Employment Provisions.    

        (a)    Employment.    Effective upon the consummation of the merger of the Company with Merrill Corporation pursuant
to the Merger Agreement (the "Merger Agreement") dated as of July 14, 1999 between the Company and Merrill Corporation (the "Effective Time"), the Company shall continue to employ Employee in
the position in which Employee is currently employed (hereinafter referred to as the "Employment") and Employee agrees to be so employed by the Company, all on the terms and conditions set forth
herein. The Employment shall continue from the date hereof until the Termination Date (as hereinafter defined). 

        (b)    Duties.    Employee shall be subject to the direction of the Board of Directors of the Company (the "Board")
and shall have those duties and responsibilities which are assigned to Employee by the Board consistent with Employee's position. The parties expressly acknowledge that Employee shall devote
Employee's business time and attention to the Company's businesses as is reasonably necessary to discharge Employee's supervisory management responsibilities hereunder. Employee agrees to perform
faithfully the duties assigned to Employee to the best of Employee's ability. 

        (c)    Certain Definitions.    

        (i)    Fiscal Year.    Each reference in this Agreement to "Fiscal Year" means a fiscal year of the Company, and each
reference to "Fiscal" followed by a calendar year means the Fiscal Year ending in that calendar year (e.g., "Fiscal 2000" means the Company's Fiscal Year ending January 31, 2000). 

        (ii)    Termination Date.    With regard to any termination of the Employment, "Termination Date" means the last day
on which Employee was employed by the Company. 

        (iii)    Person.    "Person" shall have the meaning provided in Sections 3(a)(9) and 13(d)(3) of the Securities
Exchange Act of 1934, as amended, or any successor thereto (the "Exchange Act"). 

        (iv)    Code.    "Code" means the Internal Revenue Code of 1986, as amended, or any successor thereto. 

 

        SECTION
2.    Compensation.    

        (a)    Salary.    At all times while Employee is employed by the Company, the Company shall pay to Employee a salary
as base compensation for the services to be rendered by Employee hereunder. The initial amount of such salary shall be equal to the annual base salary paid by the Company to Employee as of the date
hereof. Such salary shall be reviewed no less frequently than annually by the Board and may be increased upon the approval of the Board in its sole discretion. Such salary shall accrue and be payable
in accordance with the payroll practices of the Company in effect from time to time. All such payments shall be subject to deduction and withholding as required by applicable law. 

        (b)    Bonus.    At all times while Employee is employed by the Company, Employee shall participate in an annual bonus
program (the "Annual Bonus Plan") substantially similar to the bonus program in which Employee is participating with respect to Fiscal 2000 and shall be entitled to a target bonus under such Annual
Bonus Plan not less than the bonus that would be paid for Fiscal 2000 under the annual bonus plan of the Company currently in effect for Employee, assuming the transactions contemplated in the Merger
Agreement did not occur and Company earnings for Fiscal 2000 were $1.82 per share. Performance objectives under such Annual Bonus Plan shall be established by the Board, based on achievement of
projected financial results heretofore provided by management to the DLJ Entities (as defined in the Shareholders Agreement). 

        (c)    Benefits.    At all times while Employee is employed by the Company, Employee shall be entitled to participate
in all such employee benefit plans, programs and arrangements as are customarily accorded the executives of the Company, including without limitation tax qualified profit sharing and retirement plans,
group life, hospitalization and other insurance and vacations, in each case on a basis no less favorable to Employee than as of the date hereof (but excluding stock-option and other equity-based
compensation plans which the parties acknowledge are being provided to Employee under separate agreements). 

        SECTION
3.    Termination.    

        (a)    Death or Disability.    The Employment shall terminate automatically upon the death or total disability of
Employee. For purposes of this Agreement, "total disability" shall be deemed to have occurred if Employee shall have been unable to perform Employee's duties due to mental or physical incapacity for a
period of six (6) consecutive months. 

        (b)    Cause.    By action of the Board, the Company may terminate the Employment for Cause. For purposes of this
Agreement, "Cause" shall be deemed to be (i) the Employee's willful refusal substantially to perform his duties (other than as a result of total or partial incapacity due to physical or mental
illness); (ii) the Employee's conviction of a felony arising from any act of fraud, embezzlement, or willful dishonesty by the Employee in relation to the business or affairs of the Company;
(iii) any other felonious conduct on the part of the Employee that is materially detrimental to the best interests of the Company; (iv) the Employee's being repeatedly under the
influence of illegal
drugs or alcohol while performing his duties; or (v) any other willful act which is materially injurious to the financial condition or business reputation of the Company;  provided that no conduct
described in clauses (i), (iii) or (v) hereof shall constitute Cause unless such conduct was undertaken in bad
faith. 

        (c)    Without Cause.    By action of the Board, the Company may terminate the Employment without Cause. 

        (d)    Involuntary Termination.    "Involuntary Termination" shall mean (i) any termination by the Company that
is not for Cause and (ii) any resignation by Employee if such resignation occurs within 60 days following the occurrence of any Change in Employment Terms (as hereinafter defined). 

2

 

        (e)    Change in Employment Terms.    "Change in Employment Terms" shall mean (i) the assignment to Employee of
duties that are materially inconsistent with the Employees's position or with his authority, duties or responsibilities as of the date hereof, or any other action by the Company which results in a
material diminution or material adverse change in such position, authority, duties or responsibilities; (ii) any reduction of Employee's base salary; (iii) any reduction of Employee's
target bonus under the Annual Bonus Plan; (iv) any relocation of employee's principal workplace to a location more than 30 miles from the current site of such workplace (it being recognized
that Employee currently divides his time between his workplace in Florida and his workplace in Minnesota, and it is the intent of the parties to continue that arrangement); (v) any substantial
reduction in the benefits and perquisites provided, in the aggregate, to Employee; and (vi) failure by the Company to carry out its obligation under Section 18;  provided, however, that none of
the foregoing shall constitute a Change in Employment Terms unless Employee objects thereto by giving notice to the
Company within 30 days after Employee becomes aware of such change and the Company fails to correct the same within 30 days following receipt of such notice, in which case a Change in
Employment Terms shall be deemed to have occurred on the 31st day following the Company's receipt of such notice. 

        SECTION
4.    Compensation Following Termination.    

        (a)    Death or Disability.    If the Employment is terminated pursuant to Section 3(a) above (relating to
death or disability), this Agreement shall terminate, and no further compensation shall be payable to Employee, except that the Company shall pay to Employee or Employee's estate, as applicable, (in
addition to any other benefits to which Employee is or may become entitled under the terms of any benefit plan) an amount equal to the sum of 

        (i)    any
unpaid salary accrued through the Termination Date, plus 

        (ii)   an
amount equal to the Average Previous Bonus (as hereinafter defined) multiplied by a fraction, the numerator of which is the number of days of the
then-current Fiscal Year that have elapsed prior to the Termination Date and the denominator of which is 365. 

        (b)    Termination for Cause or Voluntary Termination.    If the Employment is terminated by the Company for Cause or
voluntarily by Employee (without any Involuntary Termination), then no further compensation or benefits shall be paid to Employee after the Termination Date, but Employee shall be entitled to receive
benefits to which Employee is or may become entitled pursuant to any benefit plan plus any unpaid salary accrued through the Termination Date. 

        (c)    Involuntary Termination.    If the Employment is terminated by any Involuntary Termination, then the Company
shall 

        (i)    pay
to Employee, within five business days after the Termination Date, a lump sum equal to 2.99 multiplied by Employee's annual base salary in effect on the Termination
Date (or, if higher, multiplied by the highest annual base salary in effect during the one-year period ending on the Termination Date); 

        (ii)   pay
to Employee, within five business days after the Termination Date, a lump sum equal to 2.99 multiplied by the Average Previous Bonus; 

        (iii)  continue
to provide to Employee all insurance and other benefits that Employee would have received had Employee remained employed during three-year period
ending on the third anniversary of the Termination Date; and 

        (iv)  cause
Employee's entire account balance and all accrued benefits under the Company's Supplemental Executive Retirement Plan and those under each other plan or
arrangement providing similar benefits (collectively, the "SERP") to become fully vested and nonforfeitable effective as of the Termination Date (and at all times thereafter), and the Company will
cause each distribution under the SERP to be made without regard to any provision of the SERP that permits 

3

 

a
distribution to be deferred to ensure that no part thereof is nondeductible under Code Section 162(m). 

        (d)    Average Previous Bonus.    With respect to any Termination Date, the "Average Previous Bonus" shall be the
average of the bonuses received by Employee for the three consecutive Fiscal Years of the Company ended immediately prior to the Termination Date (e.g., if the Termination Date were June 30,
2000, and Employee had received a bonus of $60,000 for Fiscal 1997, $70,000 for Fiscal 1998 and $80,000 for Fiscal 1999, then the Average Previous Bonus would be $70,000). 

        (e)    Gross-Up Amount.    

        (i)    Following
any payment required under this Section 4 in connection with an event that could be treated as described in Code Section 280G(b)(2)(A)(i), the
Company will cause its independent auditor promptly to review, at the Company's sole expense, the applicability of Code Section 4999 to all payments and distributions to (or for the benefit of)
Employee, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement, any benefit plan or otherwise (the "Total Payments"). If such auditor determines that the
Total Payments result in an excise tax imposed by Code Section 4999 or any comparable federal, state or local law or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, being the "Excise Tax"), then the Company will pay to Employee, in cash, the Gross-Up Amount within 10 days after such determination. 

        (ii)   The
Gross-Up Amount shall be that dollar amount such that, after payment by Employee of all Excise Tax plus all other taxes, interest and penalties imposed
on the Gross-Up Amount, Employee would retain an amount of the Gross-Up Amount equal to the Excise Tax imposed upon the Total Payments. For purposes of the foregoing
determination, Employee's tax rate will be deemed to be the highest statutory marginal state and federal tax rate (on a combined basis) then in effect. If no determination by the Company's auditors is
made prior to the time when Employee is required to file a tax return reflecting the Total Payments (without any extension), then the Company shall pay to Employee a Gross-Up Amount
calculated on the basis of the Excise Tax reported in such tax return, within 10 days after the later of the date on which such tax return is filed or the date on which a copy thereof is
provided to the Company. In all events, if any tax authority determines that a greater Excise Tax should be imposed upon the Total Payments than so paid to Employee by the Company, then the Company
shall pay to Employee the full Gross-Up Amount calculated on the basis of the amount of Excise Tax determined to be payable by such tax authority, within 10 days after Employee
notifies the Company of such determination. If any tax authority finally determines that a lesser Excise Tax should be imposed upon the Total Payments than that which previously served as the basis
for Gross-Up Amounts paid to Employee, then Employee shall repay to the Company such difference, together with any other amounts previously included in the Gross-Up amounts
with respect to such difference. If any other benefit plan or other plan, policy or practice of the Company or any other agreement (an "Other Arrangement") specifically provides that benefits
thereunder will be reduced or limited so that such benefits or the Total Payments will not result in the imposition of an Excise Tax pursuant to Code Section 4999, the reduction or limitation
will apply, to the extent provided in the Other Arrangement, solely to the benefits provided pursuant to the Other Arrangement as if the benefits under the Other Arrangement constituted the entire
Total Payments, and such reduction or limitation will not otherwise reduce or limit the actual Total Payments. 

        SECTION
5.    Expense Reimbursement and Indemnification.    Upon the submission of properly documented expense account
reports, the Company shall reimburse Employee for all reasonable business-related travel and entertainment expenses incurred by Employee in the course of Employment. At all times while Employee is
employed by the Company, and at all times following the Termination Date, the Company shall continue to provide to Employee indemnification, elimination of liability, 

4

 

director's
and officer's liability insurance and other protection from personal liability, each of which shall not be, at any time, less than (a) that in effect for Employee as of
May 31, 1999 or (b) if greater, that in effect at such time for the member of the Board then having the most protection. 

        SECTION
6.    Assignability; Binding Nature.    This Agreement shall be binding and inure to the benefit of the
parties, and their respective successors, heirs (in the case of Employee) and assigns. No obligations of the Company under this Agreement may be assigned or transferred by the Company, except that
such obligations shall be assigned or transferred (as described below) pursuant to a merger or consolidation of the Company in which the Company is not the continuing entity, or the sale or
liquidation of all or substantially all of the assets of the Company, if the assignee or transferee is the surviving entity or successor to all or substantially all of the assets of the Company and
such assignee or transferee assumes by written contract, and agrees to perform, all liabilities, obligations and duties of the Company under this Agreement (an "Assuming Entity"). As used in this
Section 6, "Company" shall mean the Company as hereinbefore defined and any Assuming Entity which assumes and agrees to perform this Agreement. 

        SECTION
7.    Confidential Information.    

        (a)    Non-Disclosure.    While employed hereunder or at any time thereafter, irrespective of the time,
manner or cause of termination of Employment, Employee will not directly or indirectly reveal, divulge, disclose or communicate to any person or entity, other than authorized officers, directors and
employees of the Company, in any manner whatsoever, any Confidential Information (as hereinafter defined) of the Company without the prior written consent of the Board;  provided, however, that this
provision shall not prohibit a disclosure of Confidential Information made in good faith in the ordinary course of the
Company's business. 

        (b)    Definition.    As used herein, "Confidential Information" means information disclosed to or known by Employee
as a direct or indirect consequence of the Employment about the Company or its businesses, products and practices which information is not generally known in the business in which the Company is or
may be engaged. However, Confidential Information shall not include under any circumstances any information which is (i) available to the public from an originating source other than Employee,
(ii) released in writing by the Company to the public, (iii) required to be disclosed by Employee or the Company pursuant to any court process or any government or agency or department
of any government, or (iv) the subject of a written waiver executed by the Company for the benefit of Employee. 

        (c)    Return of Property.    Upon termination of the Employment, Employee will surrender to the Company all materials
in Employee's possession containing Confidential Information, including without limitation, all lists, charts, schedules, reports, financial statements, books and records of the Company, and all
copies thereof, and all other property belonging to the Company, provided Employee shall be accorded reasonable access to such Confidential Information subsequent to the Termination Date for any
proper purpose as determined in the reasonable judgment of the Company. 

        SECTION
8.    Agreement Not to Compete.    Employee hereby agrees that, while Employee is employed by the Company and
following the Termination Date, throughout the Non-Compete Period, Employee shall not, either in Employee's own behalf or as a partner, member, officer, director, employee, consultant,
advisor, agent or shareholder (other than as the holder of less than 5% of the outstanding capital stock of any corporation with a class of equity security registered under Section 12(b) or
Section 12(g) of the Exchange Act) engage in, invest in or render services to any person or entity engaged in any business in which the Company is then engaged within any country. For any
Termination Date, the "Non-Compete Period" shall commence on such Termination Date and shall end on the first anniversary of such Termination Date (unless the Company has made the payments
referred to in Section 4(c), in which case the Non-Compete Period shall end on the third anniversary of the Termination Date). 

5

 

        SECTION
9.    Agreement Not to Solicit Employees.    Employee agrees that, while Employee is employed hereunder and
following the Termination Date, throughout the Non-Compete Period, neither Employee nor any affiliate shall, on behalf of any business engaged in a business competitive with the Company,
solicit or induce, or in any manner attempt to solicit or induce, any person employed by the Company to terminate his or her employment with the Company (but the foregoing shall not be construed to
prohibit Employee, any affiliate or any other person from hiring any person who applies for or otherwise seeks employment in response to a general "help wanted" advertisement or other similar
non-individual solicitation). 

        SECTION
10.    Enforcement of Restrictions.    

        (a)   Employee
acknowledges that the restrictions imposed under Sections 8 and 9, in view of the nature of the businesses in which the Company is engaged and Employee's
position with the Company, are reasonable and necessary to protect the legitimate interests of the Company. However, Employee agrees that if any of these restrictions is construed to be invalid or
unenforceable, the remainder of the restrictions shall not be affected, and if any restriction is held to be unenforceable because of the area covered, the duration or the scope, Employee agrees that
the court making such determination shall have the power to reduce the area and/or the duration, and/or limit the scope, and the restriction shall then be enforceable in its reduced form. 

        (b)   The
Company and Employee intend that the restrictions set forth in Sections 8 and 9 be observed and enforced for the full duration of the applicable period described in
those Sections, and the Company and Employee agree that, if Employee violates these restrictions during such period, then the Company shall be entitled to an injunction restraining such violation (in
addition to all other remedies the Company may have at law or in equity). 

        (c)   Employee
acknowledges and accepts that the restrictions and remedies in Sections 8 and 9 will apply without regard to the reason for termination of the Employment and
without regard to whether the Employment is terminated by Employee or by the Company. 

        SECTION
11.    No Mitigation or Offset; Interes.    Employee shall have no obligation to mitigate the amount of any
payment or benefit t hat the Company becomes obligated to provide under this Agreement by seeking other employment or otherwise, and no such payment or benefit may be reduced, offset or subject to
recovery by the Company (whether by reference to any payment or benefit that Employee may receive from other employment or otherwise). The Company has no right to offset any payment or benefit under
this Agreement against any amount owed or claimed to be owed to the Company (whether under this Agreement or otherwise). Any amount owed hereunder that is not paid when due shall bear interest until
paid at a rate equal to 2.0 percentage points in excess of the prime rate in effect from time to time in Minneapolis at Norwest Bank Minnesota (or any successor thereto). 

        SECTION
12.    No Violation.    Each party hereby represents and warrants to the other that such party's execution,
delivery and performance of this Agreement does not, with or without the giving of notice or the passage of time, or both, conflict with, or result in a default, right to accelerate or loss of rights
under, any provision of any agreement or understanding to which such party (or, to the best knowledge of such party or any of such party's affiliates) is or may be bound. 

        SECTION
13.    Captions.    The captions, headings and arrangements used in this Agreement are for convenience only
and do not in any way affect, limit or amplify the provisions hereof. 

        SECTION
14.    Notices.    All notices required or permitted to be given hereunder shall be in writing and shall be
deemed delivered by hand, by facsimile (with confirming paper copy), by nationally recognized overnight courier service or by United States mail, postage prepaid, registered or certified, 

6

 

return
receipt requested, in any case addressed to the party to whom notice is being given at the specified address below (or at such other address as such party may designate by notice): 

	If to the Company:	 	Viking Merger Sub, Inc.

c/o DLJ Merchant Bank Partners II, L.P.

277 Park Avenue

New York, New York 10172

Attention: William F. Dawson, Jr.

Fax: (612) 892-7272
	

 	
 	

and, after the Effective Time
	

 	
 	

Merrill Corporation

One Merrill Circle

St. Paul, MN 55708

Attention: General Counsel

Fax: (651) 649-1348
	

 	
 	

with a copy to:
	

 	
 	

Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Attention: George R. Bason, Jr.

Fax: (212) 450-4800
	

If to Employee:	
 	

Merrill Corporation

One Merrill Circle

St. Paul, MN 55708
	

 	
 	

with a copy to:

Faegre & Benson LLP

2200 Norwest Center

90 South Seventh Street

Minneapolis, Minnesota 55402-3901

Attention: William R. Busch, Jr.

Fax: (612) 336-3026

        SECTION
15.    Invalid Provisions.    If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws, such provisions shall be fully severable, and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had
never comprised a part of this Agreement; the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision
or by its severance for this Agreement. In lieu of each such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in terms
to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable. 

        SECTION
16.    Amendments.    This Agreement may be amended in whole or in part only by an instrument in writing
setting forth the particulars of such amendment and duly executed by an officer of the Company and by Employee. 

        SECTION
17.    Waiver; Third Party Beneficiaries.    No delay or omission by any party hereto to exercise any right or
power hereunder shall impair such right or power to be construed as a waiver thereof. A waiver by any of the parties hereto of any of the covenants to be performed by any other party or any breach
thereof shall not be construed to be a waiver of any succeeding breach thereof or 

7

 

of
any other covenant herein contained. Except as otherwise expressly set forth herein, all remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other
remedies available to any party at law, in equity or otherwise. No provision of this Agreement is intended to confer any rights or remedies on any person other than the Employee. 

        SECTION
18.    Certain Arrangements for Employees and Officers following after the Effective Time.    The Company
agrees with the Employee, that as soon as reasonably practicable after the Effective Time, it will put in place the Direct Investment Plan and the Management Incentive Plan described in Annexes I and
II for certain employees and officers of the Company and its subsidiaries. 

        SECTION
19.    Counterparts.    This Agreement may be executed in multiple counterparts, each of which shall
constitute an original, and all of which together shall constitute one and the same Agreement. 

        SECTION
20.    Governing Law.    This Agreement shall be construed and enforced according to the laws of the State of
Minnesota. 

        SECTION
21.    Prior Employment Agreement.    Upon the occurrence of the Effective Time, this Agreement supersedes any
and all other employment, change-in-control, severance or similar agreements between Employee and the Company or the Employee and Merrill Corporation. 

8

        IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the date first above written. 

	 	 	THE COMPANY:
	

 	
 	

VIKING MERGER SUB, INC.
	

 	
 	

By	

/s/  WILLIAM F. DAWSON, JR.      

	 	 	Title	President

	

 	
 	

EMPLOYEE:
	

 	
 	

/s/  JOHN CASTRO      
 Name: John Castro

ANNEX I  

 TERM SHEET

DIRECT INVESTMENT PLAN  

	Share Price:	 	Same price as that paid by the DLJMB entities under the Merger Agreement.
	

Reinvestment and Coinvestment Shares:	
 	

The employee will purchase Shares with his or her available funds (each a "Reinvestment Share") and the Company will make a non-recourse loan (the "Loan") to the employee to purchase additional Shares (each a "Coinvestment Share"). (See
Schedule A attached for the number of Reinvestment and Coinvestment Shares for each employee.) All Reinvestment Shares and Coinvestment Shares purchased by an employee will be posted as collateral for the Loan to the employee. The value of the
collateral must be adequate to assure that the Loan will not be treated as income for tax purposes. The employee may make a Section 83(b) election so that any future gain on the Reinvestment and Coinvestment Shares will be treated as capital
gain. All Reinvestment and Coinvestment Shares will be subject to the transfer restrictions and other provisions of the Shareholders Agreement, which will apply to the DLJMB entities and all management investors.
	

Loan Terms:	
 	

The Loan will bear interest at the greater of the Company's credit facility rate or the federal applicable rate. All principal and interest will be repayable in a single payment as of the earlier of (i) the employee's termination of employment
or (ii) eight years after the purchase of the Reinvestment and Coinvestment Shares. In the case of the sale of all or part of the Shares, Loan repayment will be immediately due to the extent of the lesser of (i) the pro rata portion of
unpaid principal and interest on the Loan attributable to such Shares and (ii) the net after tax proceeds realized upon such sale; provided that the total amount due will not exceed the total amount
of the principal and interest outstanding on the Loan.
	

Termination of Employment/Company Repurchase Right:	
 	

In the event an employee's termination of employment prior to a DLJMB liquidation event the Reinvestment Shares and Coinvestment Shares will be subject to a Company repurchase right. The repurchase price will depend on the circumstances of the
termination and, in the case of the Coinvestment Shares, the extent to which the Coinvestment Shares have become vested, as follows:
	

 	
 	

(a)  Vesting Schedule for Coinvestment Shares

	Year
 
	 	% of Coinvestment Shares Vested as of the End of the Year
	 
	1	 	0	%
	2	 	0	%
	3	 	33	%
	4	 	66	%
	5	 	100	%

 

	 	 	(a)  Company Repurchase Price

	 
	 	Reinvestment

Shares and Vested

Coinvestment Shares
	 	Unvested Conivestment Shares

	Voluntary Resignation, Disability, Death or Termination by Company without Cause	 	FMV	 	Lesser of (i) FMV or (ii) purchase price plus Loan interest

	 
	 	 
	 	All Shares

	Termination for Cause	 	 	 	Lesser of (i) FMV or (ii) purchase price

	Termination of Employment without Cause/Employee Put Right	 	Upon termination of employment without Cause, employee will have the right to put all Reinvestment Shares and all vested Coinvestment Shares to the Company at fair market value; provided that payment for such Shares shall be required to be made only as rapidly as permissible without violating Loan covenants or other contractual restrictions applicable to the Company (and any amounts not paid
upon exercise of the put will bear interest at the rate applicable to the Company's bank debt.)
	

Change in Control	
 	

Upon a sale by the DLJMB entities of 60% of their Shares in the Company or substantially all of the assets of the Company, all Coinvestment Shares that have not yet vested shall immediately become vested (unless the Company is publicly traded
immediately following such sale).

2

 
Schedule A

Reinvestment and Coinvestment Summary  

	 
	 	 
	 	 
	 	 
	 	 
	 	Totals
	 
	 
	 	Reinvestment Program
	 	Coinvestment Program
	 
	 
	 	$ Amt.
	 	 
	 	 
	 
	 
	 	$ Amt.
	 	Shares
	 	$ Amt.
	 	Shares
	 	Shares
	 	Loans
	 
	[TOTAL	 	$	10 million	 	 	 	$	18.6 million	*	 	 	 	 	 	 	$	18.6 million	]

	*
	This
commitment is required by DLJMB only to the extent the $10 million reinvestment target is met. 

3

ANNEX II  

 TERM SHEET

MANAGEMENT INCENTIVE PLAN  

	Recipients/ Number of Shares Covered by Options:	 	See Schedule A attached.
	

Grant Date:	
 	

Closing Date
	

Option Exercise Price:	
 	

Same as DLJMB entities' buying price under the Merger Agreement.
	

Time Vesting Option:	
 	

Each Time Vesting Option will become vested and exercisable as follows:

	End of Year:
 
	 	1
	 	2
	 	3
	 	4
	 	5
	 	6
	 
	 	 	0	%	0	%	25	%	50	%	75	%	100	%

	Performance Vesting Option:	 	Performance Vesting Options will become vested and exercisable according to the schedule set forth in Exhibit 1, based on whether the Target Implied Common Equity Values set forth in such Exhibit are attained as of
the end of the relevant years. Such vesting shall be cumulative; i.e., the percentage of Performance Vesting Options set forth for each year shall be vested as of the end of such year if the Target
Implied Common Equity Value for such year is achieved as of such date, regardless of whether the Target Implied Common Equity Values have been achieved in previous years.
	

 	
 	

In the event that the DLJMB entities sell 90% or more of their Shares in the Company or substantially all of the assets of the Company and realize an internal rate of return ("DLJMB IRR") of at least 25%, the portion of the Performance Vesting Option
which has not previously become vested and exercisable will become vested and exercisable based upon the level of the DLJMB IRR, as set forth in Exhibit 2 attached.
	

Super Performance Vesting Options:	
 	

Each Super Performance Vesting Option will become exercisable if the DLJMB entities sell 90% or more of their Shares in the Company or substantially all the assets of the Company and realize a DLJMB IRR in excess of 50%. To the extent that the
vesting of all the Super Performance Vesting Options granted under the Plan would cause the DLJMB IRR to be 50% or less, only that portion of the Super Performance Vesting Options that would result in a DLJMB IRR of 50% will become
vested.
	

Transferability/ Shareholders Agreement:	
 	

All Options will be non-transferable. All Shares acquired upon the exercise of the Options will be subject to the transfer restrictions and other provisions set forth in the Shareholders' Agreement which will apply to the DLJMB entities and all
management investors.
	 	 	 

 

	

Termination of Employment:	
 	
Resignation, Termination without Cause, Death or Disability—Unvested Options terminate immediately, but vested Options will be retained by the employee.
	

 	
 	
Termination for Cause—All vested and unvested Options terminate immediately and all Shares previously acquired upon exercise of Options will be subject to a right of repurchase by the
Company at a price equal to the Exercise Price.

2

 
SCHEDULE A  

Options  

	Name
 
	 	Time Vesting

Options
	 	Performance

Vesting Options
	 	Super Performance

Vesting Options
	 	Total Options
	 	Exercise Price
	 
	[TOTAL	 	5	%*	5	%*	5	%*	15	%*	$	22.00	]

	*
	The
percentages are expressed as percentages of outstanding Shares, without taking into account the Shares issuable pursuant to the Options. 

3

 
EXHIBIT 1  

(For calculating vesting under Section 4(b))  

	Fiscal Year:
	 	2000
	 	2001
	 	2002
	 	2003
	 	2004
	 
	Target Implied Common Equity Value of the Company (in millions):	 	[To be based on 85% of management projections]	 
	
Target Vested Percentage:	
 	
20	
%	

40	
%	

60	
%	

80	
%	

100	
%

For
this purpose, the "Implied Common Equity Value of the Company" is defined as 

EV - TD + Cash,  

where

EV (Enterprise Value) is pro forma EBITDA times 6.0 

TD is Total Debt 

Cash is cash on balance sheet(1) 

	(1)
	As
of fiscal year end. 

4

 
EXHIBIT 2  

(For purposes of calculating vesting under Section 4(c))  

	DLJMB IRR
 
	 	Percentage of Unvested

Cliff Vesting Shares as to which

Option becomes vested

on Liquidation Event
	 	 

	40% or greater	 	100%	 	 
	35.0 - 39.9%	 	75%	 	 
	30.0 - 34.9%	 	50%	 	 
	25.0 - 29.9%	 	25%	 	 
	Less than 20%	 	0%	 	 

For
this purpose, "DLJMB IRR" is defined as that annual discount rate which, when applied to (i) all investments by the DLJMB entities in Shares
of Common Stock of the Company and (ii) all amounts realized by the DLJMB entities with respect to such Shares causes the net present value of such investments and amounts realized to equal
zero, as determined on a pro forma basis reflecting the Shares issuable pursuant to Options that have become vested prior to the Liquidation Event and the Shares issuable pursuant to Options becoming
vested as of the Liquidation Event. 

5

QuickLinks

Exhibit 10.19

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00097-of-00352.parquet"}]]