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Exhibit 10.2    
    

 
 

PARTICIPATION AGREEMENT
  (ALL AWARDS)    
    

        This Participation Agreement (the "Agreement") is made and entered into as of January 28, 2000 by and
between Merrill Corporation, a Minnesota corporation ("Merrill")
and                        , an individual residing
at                        (the
"Employee"). 

W I T N E S S E T H  

        WHEREAS, on December 20, 1999, the Board of Directors and shareholders of Merrill adopted the 1999 Merrill Corporation Stock Option Plan (the
"Option Plan") authorizing the Compensation Committee of the Board of Directors of Merrill to grant stock options to employees and independent
contractors of Merrill or any subsidiary of Merrill pursuant to the terms and conditions of the Option Plan. 

        WHEREAS,
on December 20, 1999, the Board of Directors and shareholders of Merrill adopted the 1999 Merrill Corporation Direct Investment Plan (the "DI
Plan") authorizing the Compensation Committee of the Board of Directors of Merrill to sell shares of Merrill's voting class B common stock, $0.01 par value (the
"Common Stock") to employees and independent contractors of Merrill or any subsidiary of Merrill pursuant to the terms and conditions of the DI Plan. 

        WHEREAS,
on or about December 21, 1999, the Employee received an award letter (the "Eligibility Notice") from Merrill informing the
Employee that Merrill was offering the Employee (1) the opportunity to purchase Coinvestment Shares (as defined in the DI Plan) pursuant to the terms and conditions of the DI Plan,
(2) the opportunity to purchase Reinvestment Shares (as defined in the DI Plan) pursuant to the terms and conditions of the DI Plan and (3) an option to purchase shares of Common Stock. 

        WHEREAS,
the Employee must execute and deliver this Agreement as a condition to participating in the DI Plan and Option Plan and receive the awards the Employee was granted in the
Eligibility Notice. 

        WHEREAS,
all capitalized terms not otherwise defined in this Agreement or the attachments to this Agreement shall have such meanings given such terms in the Option Plan and DI Plan,
respectively. 

        NOW,
THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto hereby agree as follows: 

1.    Stock Option Grant.    

        1.1   As
of the date of this Agreement ("Date of Grant") Merrill hereby grants to the Employee the right, privilege, and option
(the "Option") to purchase                        shares (the "Option Shares") of Common Stock, according to
the terms and subject to the conditions set forth in this Agreement, the "Terms and Conditions of Non-Statutory Stock Option Awards" attached to this Agreement and the Option Plan. The
Option is not intended to be an "incentive stock option," as that term is used in Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code"). 

        1.2   The
per share price to be paid by Employee in the event of an exercise of the Option will be $22.00 per share. 

        1.3   The
Option will become exercisable with respect to fifty percent (50%) of the Option Shares in accordance with the "Time Vesting Option Schedule" attached to this
Agreement, and the remaining fifty percent (50%) of the Option Shares will become exercisable in accordance with the "Performance Vesting Option Schedule" attached to this Agreement. 

 

        1.4   The
Employee hereby acknowledges and agrees that by executing this Agreement, the Employee will be bound by the terms and conditions set forth in the "Terms and
Conditions of Non-Statutory Stock Options" attached to this Agreement. 

2.    Stock Purchase Grant.    

        2.1   The
Employee hereby subscribes to purchase                        Coinvestment Shares (the "Coinvestment
Shares") for a purchase
price of $22.00 per share and upon the terms and conditions set forth in the "Terms and Conditions of Purchase of Common Stock" attached to this Agreement. As payment for the Coinvestment Shares, the
Employee: 

        (a)   Has
delivered to Merrill along with the executed copy of this Agreement a check or other cash payment payable to "Merrill Corporation" in an amount equal to
thirty-five percent (35%) of the total purchase price for the Coinvestment Shares (or $                        ). 

        (b)   Promises
to pay to the order of Merrill, its successors and assigns, at its office at One Merrill Circle, St. Paul, Minnesota 55108, or such other place as the holder
hereof may designate in writing from time to time, an amount equal to sixty-five percent (65%) of the total purchase price for the Coinvestment Shares, or the principal sum of
$                        in lawful money of the United States (the "Purchase Loan"),
 together with interest from the date hereof on the unpaid balance of the
Purchase Loan at a fixed rate of eight percent (8%) per annum (the "Interest Rate"). Interest on the Purchase Loan shall be computed on the actual
number of days elapsed and a 365-day year. Interest will not be payable during the term of the Purchase Loan pursuant to the "Terms and Conditions of the Nonrecourse Purchase Loan"
attached to this Agreement, but will be paid on the Maturity Date (as defined in the "Terms and Conditions of the Nonrecourse Purchase Loan" attached to this Agreement). All accrued but unpaid
interest on the Purchase Loan will be in addition to the principal balance of the Purchase Loan. The Employee hereby acknowledges and agrees that by executing this Agreement, the Employee will be
bound by the terms and conditions set forth in the "Terms and Conditions of the Nonrecourse Purchase Loan" attached to this Agreement. 

        (c)   Grants
to Merrill, as collateral for the Purchase Loan, a security interest in the Coinvestment Shares pursuant to the terms and conditions set forth in the "Terms and
Conditions of the Pledge and Custody Agreement" attached to this Agreement. The Employee hereby acknowledges and agrees that by executing this Agreement, the Employee will be bound by the terms and
conditions set forth in the "Terms and Conditions of the Pledge and Custody Agreement" attached to this Agreement. 

        2.2   The
Employee hereby subscribes to purchase                        Reinvestment Shares (the "Reinvestment
Shares") for a purchase
price of $22.00 per share and upon the terms and conditions set forth in the "Terms and Conditions of Purchase of Common Stock" attached to this Agreement. A check or other cash payment payable to
"Merrill Corporation" in the amount of $                        for the Reinvestment Shares is also delivered to Merrill with an
executed copy of this Agreement. 

        2.3   All
Coinvestment Shares purchased by the Employee shall vest in accordance with the "Coinvestment Shares Vesting Schedule" attached to this Agreement. 

        2.4   The
Employee acknowledges that Merrill is relying upon the accuracy and completeness of the representations contained in this Agreement and in the "Terms and Conditions
of Purchase of Common Stock" attached to this Agreement in complying with its obligations under applicable securities laws and that the purchase of the Reinvestment Shares and Coinvestment Shares may
be rejected for any reason. 

        2.5   The
Employee represents and warrants to Merrill that the Employee is a bona fide resident of the State of                        .

2

 

        2.6   The
Reinvestment Shares and Coinvestment Shares purchased by the Employee will be held in such Employee's individual name. 

3.    Investors' Agreement.    

        3.1   In
connection with the Employee's purchase of Common Stock upon the exercise of the Option pursuant to the Option Plan or upon the purchase of Coinvestment Shares and/or
Reinvestment Shares pursuant to the DI Plan, the Employee hereby acknowledges and agrees that Employee has received and reviewed a copy of the Investors' Agreement, dated November 23, 1999, by
and among Merrill and its shareholders (the "Investors' Agreement"). By execution of this Agreement, the Employee hereby acknowledges and agrees to be
bound by the terms and conditions of the Investors' Agreement, as amended from time to time, in the same manner and to the same effect as if the Employee were an original party thereto, including,
without limitation, acknowledgment that the Employee shall be considered a "Co-invest Management Stockholder" or "Other Stockholder" as such terms are defined in the Investors' Agreement.
The other shareholders of Merrill, and the Board of Directors of Merrill, shall be entitled to rely on this Agreement in the same manner as if a counterpart of the Investors' Agreement were executed
by the Employee, and Merrill's Board of Directors may utilize this Agreement as evidence of the signature of the Employee and attach the same to a copy of the Investors' Agreement, with this Agreement
having the same validity, force and effect as if the Investor's Agreement and any amendments thereto had been executed by the Employee. 

        3.2   Upon
the exercise of the Option and pursuant to the Option Plan, unless otherwise notified by the Company, the Employee shall be deemed an "other" Stockholder within the
meaning of the Investors' Agreement as of 12:01 a.m., January 28, 2000 (the "Effective Date"), the Date of Grant of the Option to the
Employee for all purposes of the Investors' Agreement. 

        3.3   Upon
the issuance of the Reinvestment Shares and/or Coinvestment Shares and pursuant to the DI Plan, unless otherwise notified by the Company, the Employee shall be
deemed an "other" Stockholder within the meaning of the Investors' Agreement as of the Effective Date for the issuance of Reinvestment Shares and/or Coinvestment Shares to the Employee for all
purposes of the Investors' Agreement. 

        3.4   Merrill
shall notify the Employee promptly if the Employee's status for purposes of the Investors' Agreement changes for any reason pursuant to the terms and conditions
of the Option Plan and DI Plan, respectively. 

4.    Confidentiality and Noncompete Agreement.    

        4.1   Upon
the execution of this Agreement, the Employee hereby acknowledges and agrees to be bound by the terms and conditions of the "Confidentiality and Noncompete
Provisions" attached to this Agreement. 

5.    Section 83(b) Election.    

        5.1   The
Employee acknowledges and agrees that the Employee (i) has reviewed with the Employee's own tax advisors the federal, state, local and foreign tax
consequences of the purchase of the Shares and the other transactions contemplated by the DI Plan, and (ii) is relying solely on such advisors and not on any statements or representations of
Merrill or any of its agents. Merrill strongly encourages the Employee to consult with such Employee's own tax advisor with respect to the making of an election pursuant to Section 83(b) of the
Code. THE EMPLOYEE ACKNOWLEDGES THAT IT IS THE EMPLOYEE'S SOLE RESPONSIBILITY AND NOT MERRILL'S RESPONSIBILITY TO FILE SUCH ELECTION ON A TIMELY BASIS, EVEN IF THE EMPLOYEE REQUESTS
THAT MERRILL OR ITS REPRESENTATIVES MAKE SUCH FILING ON BEHALF OF THE EMPLOYEE. 

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        5.2   Merrill
has attached to this Agreement an 83(b) Election Form that may be used by the Employee in the event the Employee decides to make such an election. Any such
election, if made, must be filed with the Internal Revenue Service within thirty (30) days of the purchase of such Shares. 

6.    Truth-in-Lending Disclosure.    

        6.1   If
Employee's Purchase Loan is less than or equal to $25,000, the Employee acknowledges and agrees that by executing this Agreement, the Employee has received and
reviewed the "Truth-in-Lending Disclosure" and the related "Itemization of Amount Financed" attached to this Agreement prior to the Employee's execution of this Agreement. 

7.    Miscellaneous.    

        7.1    Employment or Service.    Nothing in this Agreement or any attachments hereto will interfere with or limit in
any way the right of Merrill or any Subsidiary to terminate the employment or other service of the Employee at any time, nor confer upon the Employee any right to continue in the employ or other
service of Merrill or any Subsidiary at any particular position or rate of pay or for any particular period of time. Furthermore, if the Employee was an at-will employee prior to executing
this Agreement, the Employee shall be an at-will employee after executing this Agreement, and if the Employee was bound by a written employment agreement prior to executing this Agreement,
the Employee will continue to be bound by such agreement after executing this Agreement; provided, however, that such written agreement shall be subject to the terms and conditions in this Agreement
and shall be deemed to be amended and superseded with respect to the subject matter contained in this Agreement. 

        7.2    Binding Effect.    This Agreement, including all the attachments hereto, will be binding upon the heirs,
executors, administrators and successors of the parties to this Agreement. 

        7.3    Governing Law.    This Agreement, including all the attachments hereto, and all rights and obligations under it
will be construed in accordance with the Option Plan and the DI Plan, respectively, and governed by the laws of the State of Minnesota, without regard to conflicts of laws provisions. Any legal
proceeding related to this Agreement, including all the attachments hereto, will be brought in an appropriate Minnesota court, and the parties to this Agreement consent to the exclusive jurisdiction
of the court for this purpose. 

        7.4    Entire Agreement.    This Agreement, including all attachments hereto, the Option Plan and the DI Plan set
forth the entire agreement and understanding of the parties to this Agreement with respect to the grant and exercise of the Option, the administration of the Option Plan, the purchase of Reinvestment
Shares and/or Coinvestment Shares, the administration of the DI Plan, and supersede all prior agreements, arrangements, plans and understandings relating to the foregoing. 

        7.5    Amendment and Waiver.    Other than as provided in this Agreement, including all attachments hereto, the Option
Plan or the DI Plan, none of the terms or provisions of this Agreement, including all attachment to this Agreement may be amended, waived, supplemented, canceled or otherwise modified only by a
written instrument executed by the parties to this Agreement or, in the case of a waiver, by the party waiving compliance. 

        7.6    Counterparts.    This Agreement may be executed in several counterparts, each of which shall constitute an
original, but all of which, when taken together, shall constitute but one agreement. 

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        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. 

	 	 	MERRILL CORPORATION:
	

 	
 	
By:	

 
	 	 	 	

	 	 	Its	 
	 	 	 	

	

 	
 	

EMPLOYEE:
	

 	
 	

 Signature
	

 	
 	

 Name Typed or Printed
	

 	
 	

 Address
	

 	
 	

 City, State and Zip Code
	

 	
 	

 Social Security Number

*
* * * * * * * 

Upon
execution of this Agreement the Employee acknowledges having been delivered and reviewed a copy of the Option Plan, DI Plan, a Summary Plan Description for each of the Option Plan and the DI
Plan, the Investors' Agreement, the Information Statement and all attachments to this Agreement. 

5

  

 
 

TIME VESTING OPTION SCHEDULE    
    

        The following table sets forth the initial dates of exercisability of each installment and the percentage of Option Shares as to which this Time Vesting Option
will become exercisable on such dates: 

	DATE OF EXERCISABILITY
 
	 	PERCENTAGE OF OPTION SHARES

AVAILABLE FOR EXERCISE

	One year from Date of Grant	 	0% of Option Shares
	

Two years from Date of Grant	
 	

0% of Option Shares
	

Three years from Date of Grant	
 	

25% of Option Shares
	

Four years from Date of Grant	
 	

50% of Option Shares
	

Five years from Date of Grant	
 	

75% of Option Shares
	

Six years from Date of Grant	
 	

100% of Option Shares

        In
no event will this Time Vesting Option be exercisable after, and this Time Vesting Option will become void and expire as to all unexercised Option Shares at, 5:00 p.m. (St.
Paul, Minnesota time) on December 20, 2009 (the "Time of Termination"). 

        If
a DLJMB Liquidation Event (as defined below) occurs, then, unless otherwise provided by the Committee in its sole discretion, all unvested Time Vesting Options will become immediately
vested in full. 

        For
purposes of this Time Vesting Option Schedule, the following terms shall have the meanings set forth below: 

	1.
	"DLJMB Entities" shall mean DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in the Investors'
Agreement.

	2.
	"DLJMB Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a
sale or other transfer by the DLJMB Entities of 90% or more of its shares of common equity in Merrill (including all common equity originally purchased by the DLJMB Entities and any additional common
equity purchased by the DLJMB Entities thereafter, whether voting, Class B or any other class of common equity created by Merrill) to one or more persons or entities (in one transaction or in a
series of related transactions) other than in connection with a public offering of Merrill's common equity, (ii) the sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of Merrill (in one transaction or in a series of related transactions) to a person or entity that is not controlled by Merrill, or (iii) a merger or
consolidation to which Merrill is a party if the shareholders of Merrill immediately prior to the effective date of such merger or consolidation do not have "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of more than 50% of the combined voting power of the surviving
corporation's outstanding securities ordinarily having the right to vote at elections of directors. 

 
 

PERFORMANCE VESTING OPTION SCHEDULE    
    

        This Performance Vesting Option will become vested and exercisable on the dates and in the proportions indicated in Table 1 below if Merrill attains the Target
Implied Common Equity Value (as defined below) for the relevant fiscal years as indicated in Table 1 below, but in any event will vest in full eight (8) years from the Date of Grant. If a DLJMB
Liquidation Event (as defined below) of the DLJMB Entities (as defined below) occurs prior to eight (8) years from the Date of Grant, however, 

6

 

and
such Liquidation Event causes the DLJMB Entities to realize a DLJMB IRR (as defined below) of at least 25%, the portion of the Performance Vesting Option which has not previously become vested and
exercisable at the time of the DLJMB Liquidation Event will become vested and exercisable based upon the level of the DLJMB IRR as indicated in Table 2. 

        For
purposes of this Performance Vesting Option Schedule, the following terms shall have the meanings set forth below: 

	1.
	"DLJMB Entities" shall mean DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in the Investors'
Agreement.

	2.
	"DLJMB IRR" means, as to the DLJMB Entities, the annual discount rate at which the net present value of (i) all investments and
capital contributions by the DLJMB Entities in shares of Merrill's common equity and (ii) all distributions from Merrill to the DLJMB Entities and other amounts realized (whether from Merrill
or third parties, including amounts realized upon a DLJMB Liquidation Event) by the DLJMB Entities with respect to the DLJMB Entities' shares of Merrill's common equity, equals zero. The DLJMB IRR
calculation shall be determined from and including the date upon which each investment and capital contribution is made by the DLJMB Entities to and including the date any distribution is made or
other amount is realized on account thereof, calculated on the actual number of days elapsed over a 365 or 366-day year, as the case may be. All calculations of the DLJMB IRR shall be
determined on a pro-forma basis reflecting the Option Shares that have become vested prior to a DLJMB Liquidation Event and the Option Shares becoming vested as of the DLJMB Liquidation
Event.

	3.
	"DLJMB Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a
sale or other transfer by the DLJMB Entities of 90% or more of its shares of common equity in Merrill (including all common equity originally purchased by the DLJMB Entities and any additional common
equity purchased by the DLJMB Entities thereafter, whether voting, Class B or any other class of common equity created by Merrill) to one or more persons or entities (in one transaction or in a
series of related transactions) other than in connection with a public offering of Merrill's common equity, (ii) the sale, lease, exchange or other transfer, directly or indirectly, of
substantially all of the assets of Merrill (in one transaction or in a series of related transactions) to a person or entity that is not controlled by Merrill, or (iii) a merger or
consolidation to which Merrill is a party if the shareholders of Merrill immediately prior to the effective date of such merger or consolidation do not have "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act) immediately following the effective date of such merger or consolidation of more than 50% of the combined voting power of the surviving
corporation's outstanding securities ordinarily having the right to vote at elections of directors.

	4.
	"Enterprise Value" means a value equal to six times the Pro-Forma EBITDA as shown on Merrill's consolidated statement of
operations for its most recent fiscal year end.

	5.
	"Pro-Forma EBITDA" means earnings before interest, taxes, depreciation, amortization and non-cash expense as
computed using generally accepted accounting principles on a pro-forma basis as allowed by Regulation S-X of the Securities Act.

	6.
	"Target Implied Common Equity Value" shall mean a value calculated using the following formula: Enterprise
Value - Total Debt - Total Preferred Stock + Total Cash.

	7.
	"Total Cash" means the total amount of cash and cash equivalents shown on Merrill's consolidated balance sheet as of its most recent
fiscal year end. 

7

 

	8.
	"Total Debt" means any indebtedness of Merrill in respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect thereof) or banker's acceptances, except any such balance that constitutes an accrued expense, trade payable or customer
contract advance, if and to the extent that any of the foregoing (other than letters of credit) would appear as a liability on Merrill's consolidated balance sheet as of its most recent fiscal year
end.

	9.
	"Total Preferred Stock" means the total amount of the liquidation preference on all of Merrill's issued and outstanding preferred stock
as of its most recent fiscal year end. 

 
 

TABLE 1    
    

	Fiscal Year Ended January 31,*
 
	 	Target Implied Common Equity Value
	 	Percentage of Option Shares Available for Exercise**

	 	2001	 	$150,000,000	 	20% of Option Shares
	 	

2002	
 	

$220,000,000	
 	

40% of Option Shares
	 	

2003	
 	

$330,000,000	
 	

60% of Option Shares
	 	

2004	
 	

$450,000,000	
 	

80% of Option Shares
	 	

2005	
 	

$520,000,000	
 	

100% of Option Shares

	*
	The
percentage of Option Shares available for exercise shall vest on the last day of the Fiscal Year indicated above.

	**
	All
such vesting shall be cumulative, i.e., the percentage set forth for each Fiscal Year shall be vested as of the end of such Fiscal
Year if the Target Implied Common Equity Value for such Fiscal Year is achieved as of such date, regardless of whether the Target Implied Common Equity Values have been achieved in any previous year. 

 
 

TABLE 2    
    

	DLJMB IRR
 
	 	Percentage of Unvested Cliff Vesting Shares as to which the Performance Vesting Option becomes Vested on DLJMB Liquidation Event

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

        This
Performance Vesting Option will not be exercisable after, and will become void and expire as to all unexercised Option Shares at, 5:00 p.m. (St. Paul, Minnesota time), on the
earlier of (i) December 20, 2009 or (ii) the day immediately following the completion of a DLJMB Liquidation Event (the "Time of
Termination"). 

8

  

 
 

TERMS AND CONDITIONS
  OF
  NON-STATUTORY STOCK OPTION AWARDS    
    

        Upon execution of the Participation Agreement, the Employee hereby acknowledges and agrees to be bound by the following terms and conditions relating to the
Option: 

	1.
	Duration
of Option and Time of Exercise. 

        1.1.    Termination of Employment or Other Service.    

        (a)    Termination for Cause.    In the event the Employee's employment or other service with Merrill and all
Subsidiaries is terminated by Merrill or any Subsidiary for Cause, all rights of the Employee under the Option Plan with respect to the Option and the Participation Agreement will immediately
terminate without notice of any kind, and the Option, whether exercisable or not on the date of termination, will immediately terminate without notice of any kind, and Merrill will also have the right
to repurchase (the "Repurchase Right") from the Employee all shares of Common Stock previously acquired upon exercise of the Option at a price equal to
the exercise price paid by the Employee to acquire such shares of Common Stock in the manner set forth in Section 2 below. 

        (b)    Termination for Reasons Other Than Cause.    In the event the Employee's employment or other service with
Merrill and all Subsidiaries is terminated other than for Cause by reason of voluntary resignation, death, Disability or Retirement, the Option will remain exercisable, to the extent exercisable as of
the date of such termination, for a period of one year following the date the Employee's employment or other service is terminated, and any portion of the Option which is not exercisable as of the
date of such termination will immediately terminate without notice of any kind. 

        (c)    Partial Terminations.    In the event of a Partial Termination, the Committee shall have the right in its sole
discretion to modify the terms of any unvested Options then held by the Employee at the time of the Partial Termination, including, without limitation, the right to immediately terminate without
notice
of any kind all rights the Employee has in any unvested Options then held by the Employee at the time of the Partial Termination. 

	2.
	Exercisability
of Repurchase Right. 

        If
Merrill elects to exercise its Repurchase Right, Merrill shall give the Employee written notice of its intent to exercise its Repurchase Right (the "Notice of
Repurchase") within sixty (60) days of such Employee's termination of employment or other service. The Notice of Repurchase shall specify (i) the number of shares
of Common Stock Merrill intends to repurchase, (ii) the applicable purchase price for such shares of Common Stock, and (iii) the date Merrill expects to purchase such shares of Common
Stock from the Employee which date shall be no later than thirty (30) days following the Valuation Date in the fiscal year immediately following the fiscal year in which the Employee's
employment or other service is terminated (the "Repurchase Date"). On or before the Repurchase Date, the Employee shall deliver to Merrill the stock
certificates representing the shares of Common Stock being purchased by Merrill, properly endorsed for transfer. By such delivery of such certificates, the Employee warrants that (i) the
Employee has good title to, the right to possession of, and the right to sell, the shares of Common Stock, (ii) such shares of Common Stock are free and clear of all pledges, liens,
encumbrances, charges, proxies, restrictions, options, transfers and other adverse claims, except such as have been imposed by the Option Plan or the Investors' Agreement, and except such restrictions
on transfer as may be imposed by federal or state securities laws, and (iii) the Employee shall hold harmless Merrill from all costs, expenses and fees incurred in defending title and right to
possession. On the Repurchase Date, Merrill shall pay to the Employee the total purchase price for the shares of Common Stock to be purchased by Merrill. Notwithstanding anything to the contrary in
the 

9

 

Option
Plan, however, Merrill shall only be required to pay for such shares of Common Stock as rapidly as permissible without violating any loan covenants or other contractual restrictions applicable
to, and binding upon, Merrill, and any amounts not paid to the Employee on the Repurchase Date will bear interest at a fixed rate of interest equal to eight percent (8%) per annum; provided, however,
that such interest rate shall not exceed the rate permitted by applicable law. Merrill shall only be required to repurchase shares of Common Stock pursuant to this Section 2 to the extent that
such repurchase does not violate any applicable laws. 

	3.
	Manner
of Option Exercise. 

        3.1    Notice.    The Option may be exercised by the Employee in whole or in part from time to time, subject to the
conditions contained in the Option Plan and in the Participation Agreement, by delivery, in person, by facsimile or electronic transmission (with written confirmation via the mail to follow such
electronic transmission) or through the mail, to Merrill at its principal executive office in St. Paul,
Minnesota (Attention: Secretary), of a written notice of exercise. Such notice must be in a form satisfactory to the Committee, must identify the Option, must specify the number of Option Shares with
respect to which the Option is being exercised, and must be signed by the person or persons so exercising the Option. Such notice must be accompanied by payment in full of the total purchase price of
the Option Shares purchased. In the event that the Option is being exercised, as provided by the Option Plan and the Participation Agreement, by any person or persons other than the Employee, the
notice must be accompanied by appropriate proof of right of such person or persons to exercise the Option. As soon as practicable after the effective exercise of the Option, the Employee will be
recorded on the stock transfer books of Merrill as the owner of the Option Shares purchased, and Merrill will deliver to the Employee one or more duly issued stock certificates evidencing such
ownership. 

        3.2    Payment.    At the time of exercise of the Option, the Employee must pay the total purchase price of the Option
Shares to be purchased entirely in cash (including a check, bank draft or money order, payable to the order of Merrill); provided, however, that the Committee, in its sole discretion, may allow such
payment to be made, in whole or in part, by tender of a promissory note (on terms acceptable to the Committee in its sole discretion) or a Broker Exercise Notice or Previously Acquired Shares (as such
terms are defined in the Option Plan), or by a combination of such methods. In the event the Employee is permitted to pay the total purchase price of the Option in whole or in part with Previously
Acquired Shares, the value of such shares will be equal to their Fair Market Value on the date of exercise of the Option. 

	4.
	DLJMB
Liquidation Event. 

        4.1    Acceleration of Vesting.    Without limiting the authority of the Committee under the Option Plan, if a DLJ
Liquidation Event (as defined in the Option Plan) occurs, then, unless otherwise provided by the Committee in its sole discretion all unvested Options will become immediately vested in full. 

        4.2    Limitation on Payments in Connection with a DLJMB Liquidation Event.    Notwithstanding anything in
Section 4.1 above to the contrary, if, with respect to an Employee, the acceleration of the vesting of Options as provided in Section 4.1 (which acceleration or payment could be deemed a
"payment" within the meaning of Section 280G(b)(2) of the Code), together with any other "payments" that such Employee has the right to receive from Merrill or any corporation that is a member
of an "affiliated group" (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which Merrill is a member, would constitute a "parachute payment"
(as defined in Section 280G(b)(2) of the Code), then the "payments" to such Employee pursuant to Section 4.1 will be reduced to the largest amount as will result in no portion of such
"payments" being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that if an Employee is subject to a separate agreement with Merrill or a Subsidiary that 

10

 

expressly
addresses the potential application of Sections 280G or 4999 of the Code (including, without limitation, that "payments" under such agreement or otherwise will be reduced, that the Employee
will have the discretion to determine which "payments" will be reduced, that such "payments" will not be reduced or that such "payments" will be "grossed up" for tax purposes), then this
Section 4.2 will not apply, and any "payments" to the Employee pursuant to Section 4.1 will be treated as "payments" arising under such separate agreement. 

	5.
	Rights
of Employee; Transferability. 

        5.1    Employment or Service.    Nothing in the Participation Agreement or any attachments thereto will interfere with
or limit in any way the right of Merrill or any Subsidiary to terminate the employment or other service of the Employee at any time, nor confer upon the Employee any right to continue in the employ or
other service of Merrill or any Subsidiary at any particular position or rate of pay or for any particular period of time. 

        5.2    Rights as a Shareholder.    The Employee will have no rights as a shareholder unless and until all conditions
to the effective exercise of the Option (including, without limitation, the conditions set forth in Sections 3 and 6 of this attachment to the Participation Agreement) have been satisfied and the
Employee has become the holder of record of such shares. No adjustment will be made for dividends or distributions with respect to the Option as to which there is a record date preceding the date the
Employee becomes the holder of record of such shares, except as may otherwise be provided in the Option Plan or determined by the Committee in its sole discretion. 

        5.3    Restrictions on Transfer.    Unless approved by the Committee in its sole discretion, no right or interest of
any Employee in an Option prior to the exercise of such Option will be assignable or transferable, or subjected to any lien, during the lifetime of the Employee, either voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise; provided, however, once an Employee exercises an
Option all shares of Common Stock issued upon exercise of the Option will be subject to the transfer restrictions and other provisions set forth in the Investors' Agreement. 

	6.
	Restrictions
Regarding Employment or Service. 

        6.1    Effect of Adverse Action.    Notwithstanding anything in the Option Plan, the Participation Agreement or any
attachments thereto and all attachments thereto to the contrary, in the event that an Employee takes an Adverse Action with respect to Merrill or any Subsidiary (1) prior to such Employee's
termination of employment or other service with Merrill and all its Subsidiaries or (2) during the period ending twelve (12) months following the date of the Employee's termination of
employment or other service with Merrill and all Subsidiaries without Cause, the Committee in its sole discretion will have the authority to terminate immediately all rights of the Employee under the
Option Plan and any agreement evidencing Options then held by the Employee without notice of any kind. In addition, to the extent that the Employee takes such Adverse Action during the period
beginning twelve (12) months prior to, and ending twelve (12) months following, such date of termination of employment or other service, the Committee in its sole discretion will have
the authority to rescind the exercise of any Options of the Employee that were exercised during such period and to require the Participant to pay to Merrill, within ten (10) days of receipt
from Merrill of notice of such rescission, the amount of any gain realized as a result of such rescinded exercise. Such payment will be made in cash (including check, bank draft or money order) or,
with the Committee's consent, shares of Common Stock with a Fair Market Value on the date of payment equal to the amount of such payment. Merrill will be entitled to withhold and deduct from future
wages of the Employee (or from other amounts that may be due and owing to the Employee from Merrill or a Subsidiary) or make other arrangements for the collection of all amounts necessary to satisfy
such payment obligations. 

11

 

        6.2    Definition of Adverse Action.    An "Adverse Action" will mean
any action by an Employee that the Committee, in its sole discretion, determines to be adverse to the interests of Merrill or any Subsidiary, including, without limitation, (i) disclosing
confidential information of Merrill or any Subsidiary to any person not authorized by Merrill or Subsidiary to receive it, (ii) engaging, directly or indirectly, in any commercial activity that
in the judgment of the Committee competes with the business of Merrill or any Subsidiary or (iii) interfering with the relationships of Merrill or any Subsidiary and their respective employees
and customers. 

	7.
	Securities
Law and Other Restrictions. 

        Notwithstanding
any other provision of the Option Plan, the Participation Agreement or any attachments thereto and all attachments thereto, Merrill will not be required to issue, and the
Employee may not sell, assign, transfer or otherwise dispose of, any Option Shares, unless (i) there is in effect with respect to the Option Shares a registration statement under the Securities
Act of 1933, as amended, and any applicable state or foreign securities laws or an exemption from such registration, and (ii) there has been obtained any other consent, approval or permit from
any other regulatory body which the Committee, in its sole discretion, deems necessary or advisable. Merrill may condition such issuance, sale or transfer upon the receipt of any representations or
agreements from the parties involved, and the placement of any legends on certificates representing Option Shares, as may be deemed necessary or advisable by Merrill in order to comply with such
securities law or other restrictions. 

	8.
	Withholding
Taxes. 

        8.1    General Rules.    Merrill is entitled to (i) withhold and deduct from future wages of the Employee (or
from other amounts that may be due and owing to the Employee from Merrill or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and
all foreign, federal, state and local withholding and employment-related tax requirements attributable to the Option, including, without limitation, the grant or exercise of the Option or a
disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (ii) require the Employee promptly to remit the amount of such withholding to Merrill before taking
any action, including issuing any shares of Common Stock, with respect to the Option. 

        8.2    Special Rules.    The Committee may, in its sole discretion and upon terms and conditions established by the
Committee, permit or require an Employee to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 8.1 of the Option Plan by electing to tender
Previously Acquired Shares, a Broker Exercise Notice or a promissory note (on terms acceptable to the Committee in its sole discretion), or by a combination of such methods. 

	9.
	Adjustments.

        In
the event that the Committee determines that any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, divestiture or extraordinary dividend (including a spin-off) or any other similar change in the corporate structure or shares of Merrill, affects the Option such
that an adjustment is determined by the Committee, in its sole discretion, to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available under the Option Plan, the Committee (or, if Merrill is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) shall, in such manner as
it deems equitable, adjust any or all of (i) the number of shares of Common Stock of Merrill (or number and kind of other securities or property) available for issuance or payment under the
Option Plan, (ii) the number of shares of Common Stock or other securities of Merrill (or number and kind of other securities or property) subject to outstanding 

12

 

Options,
and (iii) the grant or exercise price with respect to any Options, or, if deemed appropriate, make provisions for a cash payment to the holder of an outstanding Option. 

	10.
	Subject
to Option Plan. 

        The
Option and the Option Shares granted and issued pursuant to the Participation Agreement and the attachments thereto have been granted and issued under, and are subject to the terms
of, the Option Plan. The terms of the Option Plan are incorporated by reference in the Participation Agreement and the attachments thereto in their entirety, and the Employee, by execution of the
Participation Agreement, acknowledges having received a copy of the Option Plan. The provisions of the Participation Agreement and attachments thereto will be interpreted as to be consistent with the
Option Plan, and any ambiguities in the Participation Agreement or the attachments thereto will be interpreted by reference to the Option Plan. In the event that any provision of the Participation
Agreement or the attachments thereto are inconsistent with the terms of the Option Plan, the terms of the Option Plan will prevail. 

13

  

 
 

TERMS AND CONDITIONS
  OF PURCHASE OF COMMON STOCK    
    

        Upon execution of the Participation Agreement, the Employee acknowledges and represents as follows: 

	1.
	The
Employee has received copies of all documents and any other information requested from Merrill and has had an opportunity to ask questions of and receive answers from the
management of Merrill concerning the terms and conditions of the employee offering and to obtain any additional information desired or has elected to waive such opportunity. The Employee confirms that
the Employee is fully informed regarding the financial condition of Merrill, the administration of its business affairs and its prospects for the future, and that Merrill makes no assurance whatsoever
concerning the present and prospective value of the Reinvestment Shares or Coinvestment Shares to be acquired.

	2.
	The
Employee realizes that the Reinvestment Shares and Coinvestment Shares, as an investment, are speculative and involve a high degree of risk. The Employee believes that an
investment in the Reinvestment Shares and/or Coinvestment Shares is suitable for the Employee based upon the Employee's investment objectives and financial needs, and the Employee has the financial
means to undertake the risks of an investment in the Reinvestment Shares and/or Coinvestment Shares, to hold the Reinvestment Shares and/or Coinvestment Shares for an indefinite period of time, and to
withstand a complete loss of the Employee's investment in the Reinvestment Shares and/or Coinvestment Shares.

	3.
	The
Employee, either alone or with the assistance of a professional advisor, has such knowledge and experience in financial and business matters that the Employee is capable of
evaluating the merits and risks of an investment in the Reinvestment Shares and/or Coinvestment Shares. The Employee has obtained, to the extent deemed necessary, personal professional advice with
respect to the risks inherent in, and the suitability of, an investment in the Reinvestment Shares and/or Coinvestment Shares in light of the Employee's financial condition and investment needs.

	4.
	The
Reinvestment Shares and/or Coinvestment Shares are being purchased by the Employee for investment purposes in the Employee's name solely for the Employee's own beneficial interest
and not as nominee for, or for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization.

	5.
	The
Employee acknowledges that (i) the Employee must bear the economic risk of an investment in the Reinvestment Shares and/or Coinvestment Shares for an indefinite period of
time because neither the Reinvestment Shares or Coinvestment Shares have been registered under the Securities Act of 1933, as amended, or any applicable state securities laws and therefore may not be
sold, transferred, assigned or otherwise disposed of unless such disposition is subsequently registered under such laws or exemptions from such registrations are available, and (ii) a legend
will be placed on the certificate evidencing the Reinvestment Shares and/or Coinvestment Shares stating that the Reinvestment Shares and/or Coinvestment Shares have not been registered under the
Securities Act of 1933, as amended, and referencing the restrictions on the transferability of the Reinvestment Shares and/or Coinvestment Shares. 

14

 

 
 

TERMS AND CONDITIONS
  OF
  NONRECOURSE PURCHASE LOAN    
    

        This Purchase Loan is made under the terms and provisions of the DI Plan and in connection with the Employee's purchase of Coinvestment Shares. To the extent the
provisions of the DI Plan and this attachment to the Participation Agreement are inconsistent, the terms of the DI Plan shall govern. 

        Upon
execution of the Participation Agreement, the Employee and Merrill hereby acknowledge and agree to be bound by the following terms and conditions relating to the Purchase Loan: 

        The
entire outstanding principal amount of the Purchase Loan, together with all accrued and unpaid interest thereon from the date of the Purchase Loan, shall be due and payable by the
Employee in a single payment on the earliest of the following dates (the "Maturity Date") and in the following manner; provided, however, that Merrill
in its sole discretion may extend the Maturity Date of the Purchase Loan pursuant to the DI Plan: 

	(i)
	All
outstanding principal and accrued interest shall be due and payable upon the Repurchase Date in the fiscal year immediately following the fiscal year in which the Employee's
employment or other service with Merrill and all its Subsidiaries is terminated, regardless of the reason for such termination;

	(ii)
	All
outstanding principal and accrued interest shall be due and payable upon a DLJMB Liquidation Event;

	(iii)
	All
outstanding principal and accrued interest shall be due and payable upon a sale or transfer of the Coinvestment Shares in accordance with the terms and conditions of the
Investors' Agreement, other than transfers to Permitted Transferees (as defined in the Investors' Agreement) or hardship repurchases under the DI Plan;

	(iv)
	Within
120 days following an initial public offering of Merrill's equity securities in which case the outstanding principal amount of the Purchase Loan and all accrued and
unpaid interest thereon must be paid in cash or the Committee in its sole discretion may allow Merrill to repurchase the Employee's Reinvestment Shares and vested Coinvestment Shares at Fair Market
Value, and the Employee's unvested Coinvestment Shares at a purchase price determined by the Committee in its sole discretion, and apply the proceeds Merrill owes the Employee against the outstanding
balance of the Purchase Loan and all accrued and unpaid interest thereon; provided, however, that if the Employee elects to repay the Purchase Loan and all accrued and unpaid interest with the
Employee's Shares, the Employee will not be required to repay the Purchase Loan and all accrued interest if the total purchase price paid for such Shares does not exceed the outstanding balance of the
Purchase Loan, all accrued and unpaid interest thereon and any tax liability of the Employee associated with the sale of the Shares; or

	(v)
	All
outstanding principal and accrued interest shall be due and payable on the eighth anniversary of the date of the Participation Agreement. 

        The
principal of the Purchase Loan may be prepaid in full or in part at any time, without premium or penalty. Each such prepayment shall be accompanied by the interest accrued on the
amount prepaid to the date of the prepayment. Merrill shall be entitled to apply any payments Merrill owes the Employee for the repurchase of the Coinvestment Shares pursuant to the DI Plan, and all
dividends paid with respect to Coinvestment Shares (net of any tax withholdings) to the outstanding principal balance and interest under the Purchase Loan. All such payments shall be applied first to
the payment of accrued interest and the remainder to the outstanding principal of the Purchase Loan. 

15

 

        The
Employee represents and warrants that the proceeds of the Purchase Loan will be used solely for the purpose of purchasing Coinvestment Shares pursuant to the DI Plan. 

        As
security for the timely payment of all amounts due or to become due under the Purchase Loan, the Employee pledges and grants to Merrill a security interest, pursuant to the
Participation Agreement and the attachments thereto, in (i) the Coinvestment Shares to be acquired by the Employee pursuant to the DI Plan, (ii) all securities, instruments and other
property, rights or interests of any kind at any time issued or issuable as an addition to, in substitution or exchange for, or with respect to, the Coinvestment Shares, and (iii) all cash,
dividends, proceeds or other income or property accrued and hereafter accruing, received, receivable or otherwise distributed in respect of, in exchange for, or upon the sale or other disposition of
the Coinvestment Shares. Merrill further represents, and the Employee acknowledges, that the Purchase Loan is nonrecourse against the Employee and that if the value of the Coinvestment Shares,
dividends, distributions and proceeds thereof pledged as security for repayment of the Purchase Loan and all accrued interest on the Purchase Loan is insufficient to repay the outstanding principal
and interest thereunder, Merrill may not proceed against the Employee to collect any remaining amount due hereunder. 

        If
an Event of Default, as defined below, shall occur, or if the Employee's employment or other service with Merrill and all its Subsidiaries is terminated or terminates for any reason,
whether voluntary or involuntary, and whether caused by death, Disability, Retirement or otherwise, Merrill may, without notice, demand, presentment for payment and notice of nonpayment, all of which
the Employee hereby expressly waives, declare the indebtedness represented by the Purchase Loan immediately due and payable and Merrill or other holder hereof may, without notice, immediately exercise
any and all rights and remedies available at law or in equity for the collection of the Purchase Loan, including, without limitation, enforcement of the security interest granted herein. The term
"Event of Default" shall mean any of the following events: 

	(i)
	the
Employee shall default in the payment when due of any principal or interest on the Purchase Loan;

	(ii)
	the
actual or attempted sale, conveyance, alienation, lease, succession, assignment or other transfer of all or any part of the Coinvestment Shares in violation of the DI Plan or the
Investors' Agreement;

	(iii)
	the
insolvency, bankruptcy, receivership, or occurrence of any other adverse change in the financial condition of the Employee; or

	(iv)
	the
Employee shall default in any of its obligations under the Participation Agreement, including any attachments thereto. 

        If
the Purchase Loan is placed with any attorney(s) for collection upon any default, the Employee agrees to pay to Merrill or other holder its reasonable attorneys' fees and all lawful
costs and expenses of collection, whether or not a suit is commenced. 

        Time
is of the essence. No delay or omission on the part of Merrill or other holder hereof in exercising any right or remedy hereunder shall operate as a waiver of such right or of any
other right or remedy under the Purchase Loan or any other document or agreement executed in connection herewith. All waivers by Merrill must be in writing to be effective and a waiver on any occasion
shall not be construed as a bar to or a waiver of any similar right or remedy on a future occasion. 

        The
Employee hereby consents to any extension or alteration of the time or terms of payment hereon, any renewal, any release of all or any part of any security given for the payment
hereof, any acceptance of additional security of any kind, and any release of, or resort to any party liable for payment hereof. Any extension of time to pay of all or any part of the amount owing on
the Purchase Loan or any variation, modification or waiver of any term or condition of the Purchase Loan shall not 

16

 

affect
the liability of the Employee, and the Employee shall be absolutely and primarily liable at all times for the payment of the indebtedness evidenced by the Purchase Loan and all accrued interest
thereon until such amounts are actually paid in full, subject to the non-recourse provisions set forth above. Merrill shall be entitled to offset against any amounts owed to it under the
Purchase Loan against any amounts owed by Merrill to the Employee with respect to the Pledged Securities, including, without limitation, any amounts owed by Merrill to the Employee in connection with
the repurchase by Merrill of the Coinvestment Shares pursuant to the DI Plan, and any dividends or distributions owed by Merrill to the Employee on the Coinvestment Shares. 

        No
provision of the Participation Agreement or any attachment thereto shall require the payment or permit the collection of interest in excess of the rate permitted by applicable law. 

        Any
payment due on any non-business day of Merrill shall be due upon the next business day. 

        The
Purchase Loan represents a loan negotiated, executed and to be performed in the State of Minnesota and shall be construed, interpreted and governed by the laws of said State. 

        The
Employee hereby consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to the Purchase
Loan, and waives any argument that venue in such forums is not convenient. 

17

 
 
 

TERMS AND CONDITIONS
  OF
  PLEDGE AND CUSTODY AGREEMENT    
    

        1.    Defined Terms.    Unless otherwise defined herein, terms which are defined in the DI Plan, the Participation
Agreement or the attachments thereto and used herein are used as so defined, and the following terms shall have the following meanings: 

        "Collateral" means the Pledged Securities and all Proceeds. 

        "Common Stock" means the voting class B common stock, $0.01 par value per share, of Merrill Corporation. 

        "Event of Default" means any event defined as such in the "Terms and Conditions of the Nonrecourse Purchase Loan" attached to the
Participation Agreement. 

        "Obligations" means the unpaid principal of and interest on the Purchase Loan and any other obligations of the Employee under the
Participation Agreement, including all attachments to the Participation Agreement, and the DI Plan. 

        "Pledged Securities" means any Coinvestment Shares purchased by the Employee pursuant to the DI Plan which are required to be pledged by
the Employee under the DI Plan and the Participation Agreement, and designated as such on the books of Merrill. 

        "Proceeds" means all "proceeds" as such term is defined in the Uniform Commercial Code and, in any event, shall include, without
limitation, all dividends or other income from or distributions with respect to the Pledged Securities or proceeds from the sale, disposition or other liquidation thereof. 

        2.    Pledge; Grant of Security Interest.    The Employee grants to Merrill a first priority security interest in the
Collateral, as collateral security for the prompt and complete payment and performance when due of the Obligations. The Employee agrees and acknowledges that the pledge and security interest granted
hereby is a continuing security interest and shall continue in full force and effect until the Purchase Loan, and all accrued and unpaid interest on the Purchase Loan, is paid in full. 

        3.    Custody; Perfection.    Promptly after the issuance of any Pledged Securities in certificated form under the
terms of the DI Plan, the Employee shall deliver to Merrill the stock certificates representing the Pledged Securities, together with stock transfer powers therefor executed in blank granting Merrill
the power to endorse and transfer the Pledged Securities. If at any time the Pledged Securities are in uncertificated form, Merrill as issuer thereof may register itself as the owner thereof and
comply with its own instructions with respect thereto without further consent from the Employee. 

        4.    Covenants.    The Employee covenants and agrees with Merrill that, from and after the date of the Participation
Agreement until the Obligations are paid in full, unless permitted by the terms of the DI Plan or the Investors' Agreement: 

        4.1   Without
the prior written consent of Merrill, the Employee will not (i) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect
to, the Collateral, or (ii) create, incur or permit to exist any lien or option in favor of, or claim of any person or entity with respect to, any of the Collateral, or any interest therein. 

        4.2   At
any time and from time to time, upon the written request of Merrill, and at the sole expense of the Employee, the Employee will promptly and duly execute and deliver
such further instruments and documents and take such further actions as Merrill may reasonably request for the purposes of obtaining or preserving the full benefits of the Participation Agreement,
including any attachments thereto and of the rights and powers herein granted. 

18

 

        5.    Adjustments to Pledged Securities.    In the event that the aggregate market value of the Pledged Securities
increases, due to market appreciation, to more than the Employee's Obligations, Merrill may in its sole discretion pursuant to the terms of the DI Plan, upon request of the Employee, release to the
Employee such number of Pledged Securities representing any such excess. 

        6.    Rights of Merrill.    

        6.1   Immediately
and without further notice, Merrill shall have the right to require any and all Proceeds be held as Collateral or to receive any and all Proceeds paid in
respect of the Pledged Securities and make application thereof to the Obligations in such order as it may determine in its sole discretion, including, without limitation, the right to apply such
Proceeds against the balance of the Purchase Loan and any accrued interest thereon and, subject to Section 7 hereof, to exercise all rights pertaining to the Pledged Securities as if Merrill
were the absolute owner thereof, including, without limitation, the right to exercise all conversion, exchange, subscription or other rights, privileges or options, pertaining to any of the Pledged
Securities and, in connection therewith, to deliver any of the Pledged Securities to any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as
may be determined, all without liability except to account for property actually received by it. Merrill, however, shall not have any duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so doing. 

        6.2   The
rights of Merrill hereunder shall not be conditioned or contingent upon the pursuit by Merrill of any right or remedy against the Employee or against any other
person or entity which may be or become liable in respect of all or any part of the Obligations or against any other collateral security therefor, guarantee thereof or right of offset with respect
thereto. Merrill shall not be liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor shall it be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Employee or any other person or entity or to take any other action whatsoever with regard to the Collateral or any part thereof. 

        7.    Rights of the Employee.    The Employee shall be entitled to exercise any and all voting and/or consensual
rights and powers relating to or pertaining to the Pledged Securities for any purpose not inconsistent with the terms of the Participation Agreement or any attachment thereto or the DI Plan;
provided, however, that no vote shall be cast, and no consent shall be given or action taken which would have the effect of impairing the position or interest of Merrill in the Collateral. 

        8.    Remedies.    If an Event of Default shall occur and be continuing, Merrill may exercise, in addition to all
other rights and remedies granted in the Participation Agreement or any attachment thereto, the DI Plan or the Investors' Agreement, all rights and remedies of a secured party under the Minnesota
Uniform Commercial Code. Without limiting the generality of the foregoing, Merrill, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon the Employee (all and each of which demands, defenses, advertisements and notices are hereby expressly waived), may in such circumstances upon at
least ten (10) days prior written notice to the Employee, forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, or interest therein, and/or may deliver
the Collateral or any part thereof (or contract to do any of the foregoing) at public or private sale or sales, upon such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of any credit risk. Merrill shall have the right upon any such public sale, and, to the extent permitted by law, upon any
such private sale, to purchase the whole or any part of the Collateral so sold, free of any right or equity or redemption in the Employee, which right or equity is hereby expressly waived and
released. Any disposition made in accordance with the provisions of this Section 8 shall be deemed to have been commercially reasonable. Merrill shall apply any Proceeds from time to time held
by it and the net 

19

 

proceeds
of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every kind incurred therein, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations. The Employee agrees that if any Collateral is sold at any public or private sale, Merrill may elect
to sell only to a buyer who will give further assurances, satisfactory in form and substance to Merrill, respecting compliance with the requirements of the Securities Act of 1933, as amended, and
applicable state laws and regulations ("Blue Sky Laws"), and a sale subject to such condition shall be deemed commercially reasonable. If at any time when Merrill shall determine to exercise its right
to sell all or any part of the Collateral pursuant to this Section 8, such Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the
Securities Act or registered or qualified under applicable Blue Sky Laws, as then in effect. The Employee further agrees that in any sale of any of the Collateral, Merrill is hereby authorized to
comply with any limitation or restriction in connection with such sale as it may be advised by counsel is necessary in order to avoid any violation of applicable law (including, without limitation,
compliance with such procedures as may restrict the number of prospective bidders and purchasers and/or further restrict such prospective bidders or purchasers to persons who will represent and agree
that they are purchasing for their own account for investment and not with a view to the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and the Employee further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall Merrill be liable or accountable to the Employee for any discount allowed by reason of the fact that such Collateral is sold in compliance with any such
limitation or restriction. 

        9.    Limitation on Duties Regarding Collateral.    Merrill's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession shall be to deal with it in the same manner
as Merrill deals with similar securities, instruments and property for its own account. Neither Merrill nor any of its affiliates, directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of any of the Collateral upon the request of the
Employee or otherwise. 

        10.    Powers Coupled with an Interest.    All authorizations and agencies herein contained with respect to the
Collateral or any part thereof are irrevocable and powers coupled with an interest. 

        11.    Severability.    Any provision of the Participation Agreement, including any attachment thereto, 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 provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

        12.    No Waiver: Cumulative Remedies.    Merrill shall not by any act (except by a written instrument pursuant to
paragraph 12 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or Event of Default or in any breach
of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Merrill, any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Merrill
of any right or remedy hereunder on any one occasion shall not be construed as a bar to any right or remedy which Merrill would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 

20

  

 
 

COINVESTMENT SHARES VESTING SCHEDULE    
    

        On the Closing Date thirty-five percent (35%) of the Coinvestment Shares purchased by the Employee shall immediately vest, and the vesting schedule
for the Coinvestment shall be as follows: 

	Vesting Date
 
	 	Percentage of Coinvestment Shares

Vested as of the Vesting Date*

	One Year from Closing Date	 	35% of the Coinvestment Shares purchased by the Employee
	Two Years from Closing Date	 	35% of the Coinvestment Shares purchased by the Employee
	Three Years from Closing Date	 	57% of the Coinvestment Shares purchased by the Employee
	Four Years from Closing Date	 	79% of the Coinvestment Shares purchased by the Employee
	Five Years from Closing Date	 	100% of Coinvestment Shares purchased by the Employee

	*
	In
the event that the vesting of any Coinvestment Shares results in a fractional Coinvestment Share, such fractional Coinvestment Share shall be rounded up to the nearest whole
Coinvestment Share. 

21

 
 
 

CONFIDENTIALITY AND NONCOMPETE PROVISIONS    
    

        You are being offered equity participation benefits (see accompanying documents). In consideration of these benefits, you agree to be bound by the restrictions
described below. In addition, if you have a written employment agreement, you also agree to the compensation modifications of that employment agreement as described below. If any provision of this
Confidentiality Agreement conflicts with any provision of your underlying employment agreement, the provisions of this Confidentiality Agreement will control and govern the interpretation of both
documents. Minnesota law governs the interpretation of this Confidentiality Agreement. 

        If
you are working under a term employment agreement that covers all or part of FY 01 (2/1/00-1/31/01), your FY 01 salary will be as stated in your agreement. However, for
any subsequent fiscal years covered by the term of your agreement, your salary will be the lesser of either your salary as stated in your agreement or 120% of what your total compensation (salary and
bonus) would have otherwise been under the Merrill compensation plan in effect during the previous year. 

        For
example, if your salary is $100,000 per year and during FY 01 your revenues/margins do not cover your $100,000 salary but instead cover only a $60,000 salary, your salary for FY 02
would be $72,000 (120% of $60,000, which is less than $100,000). Then, if during FY 02 your revenues/margins cover a total compensation of $120,000 (in other words, you would receive a total bonus for
FY 02 of $48,000), your salary for FY 03 would return to $100,000 (which is less than $144,000 [120% of $120,000]). 

        Should
your salary be reduced as described above, your bonus during a reduced salary year will be calculated and paid out on a quarterly basis, instead of the normal annual basis. In
most situations, the maximum quarterly bonus will be the difference between your quarterly salary and your original quarterly guarantee. In other words, under the example above during FY 02, you would
be entitled to a quarterly bonus if your revenues/margins are on pace to cover $100,000. For example, if your revenues/margins coverage stream for the quarters were: 

	•
	1st
qtr: $45,000

	•
	2nd
qtr: $5,000

	•
	3rd
qtr: $15,000

	•
	4th
qtr: $55,000 

you
would receive: 

	•
	a
$7,000 bonus for the first quarter ($7,000 makes up the difference between your quarterly salary of $18,000 and your original quarterly guarantee of $25,000);

	•
	another
$7,000 bonus for the second quarter (since you remain on pace to cover $100,000, you still receive a bonus);

	•
	no
bonus for the third quarter (you are now not on pace to cover $100,000); and

	•
	a
$34,000 bonus for the fourth quarter (for the entire year, you would be entitled to a $48,000 bonus, but since you have already received $14,000 from earlier quarters, you
get the balance at year-end). 

        Similarly,
using this same example, if you covered nothing for your first quarter, but covered $50,000 in the second quarter, you would get no bonus for the first quarter, but would get
a $14,000 bonus for the second quarter (since you are on pace to cover $100,000, you will now in effect receive two quarterly bonuses for your second quarter efforts). 

22

 

        These
compensation modifications are not intended to alter the length of the term of your agreement. 

        Merrill
invests a significant amount of time and money on technology and research in order to develop and maintain its goodwill and success. During your employment, you will have access
to Merrill's confidential information, which is information that belongs to Merrill and is not generally known by third parties. Confidential information includes, by way of example only, trade
secrets, financial information, customer lists, business plans and strategies, and research and development work. You acknowledge that during your employment with Merrill and for an indefinite period
of time following the termination of your employment, Merrill is entitled to protection from the use of such information by you or a third party, or disclosure of such information to a third party.
You therefore agree that you will never disclose such information to any third party, or use such information for your own benefit or for the benefit of another. 

        One
way Merrill invests in its business is to support your efforts to develop and maintain close working relationships with Merrill's clients. You acknowledge that for one year following
the termination of your employment, Merrill is entitled to protection from the use or disclosure of the client relationships for the benefit of a third party or for your own benefit. You therefore
agree that for one year following the termination of your employment, you will not directly or indirectly call upon, solicit, or provide any service or product to any existing or potential Merrill
client serviced by, assigned to, or solicited by you working alone or in conjunction with another Merrill employee. These restrictions apply only where the client is solicited to purchase a service or
product that competes with a service or product of Merrill. You further agree that for one year after your employment with Merrill, you will not solicit or cause to be solicited any employee of
Merrill for the purpose of employment with any competitor of Merrill. 

        If
you violate these restrictions, you will cause irreparable harm to Merrill and you agree that Merrill will be entitled to injunctive relief, in addition to any other remedies allowed
by law, and the costs incurred in enforcing the restrictions, including reasonable attorney fees. Should a court rule that a restriction is unreasonable or otherwise unenforceable, the court shall
modify the restriction to the extent necessary to make the provision enforceable. 

        You
also acknowledge that while performing services for Merrill, any "Work Product" (inventions, improvements, ideas, discoveries, works of authorship, trademarks, trade secrets,
processes, know-how, whether or not such are patentable or copyrightable, and whether or not in writing or reduced to practice) conceived or created by you alone or with others, belongs
only to Merrill. You will promptly disclose to Merrill all Work Product developed by you. Such Work Product is considered a "work for hire" and is the sole and exclusive property of Merrill and
Merrill is the exclusive owner of all such patents, copyrights and related rights. You will transfer and assign to Merrill all rights to such Work Product and provide Merrill with all of the
assistance it reasonably requires in order for Merrill to perfect, protect, and use its rights to such Work Product. This section does not apply to Work Product for which no equipment, supplies,
facility or trade secret information of Merrill's was used and which was developed entirely on your own time and (1) which does not relate (a) directly to Merrill's business or
(b) to Merrill's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by you for Merrill. 

23

 
 
 

83(B) ELECTION FORM    
    

        NOTE TO IRS: Please time stamp one copy with endorsement of receipt and return in the enclosed stamped, addressed
envelope.  

  
 

    ELECTION UNDER SECTION 83(B)
  OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED    
    

        The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in the taxpayer's gross
income for the current taxable year, the amount of compensation, if any, taxable to the taxpayer in connection with the receipt of the property described below: 

	1.
	The
name, address, taxpayer identification number, and taxable year of the taxpayer and spouse, if applicable, are as follows: 

	Name:	Taxpayer:	  
	 	Spouse:	 	  

	Address:	  
	 	 	 	 
	Tax ID#:	  
	 	 	 	 
	Taxable Year:	  
	 	 	 	 	 

	2.
	The
property with respect to which the election is made is described as follows:              shares of the Class B Common Stock of
Merrill Corporation, a Minnesota corporation (the "Company").

	3.
	The
date on which the property was transferred is:                         ,
            .

	4.
	The
property is subject to the following restrictions: The right of Merrill to repurchase the shares, or a portion thereof, at a price per share as calculated pursuant to the 1999
Merrill Corporation Direct Investment Plan, in the event of the taxpayer's termination of service with Merrill.

	5.
	The
fair market value at the time of transfer (determined without regard to the restrictions) of such property is: $22.00 per share.

	6.
	The
amount (if any) paid for the property is: $22.00 per share. 

        The
taxpayer has submitted a copy of this statement to the person for whom the services were performed in connection with the taxpayer's receipt of the property. The taxpayer is the
person performing the services in connection with the transfer of such property. 

        The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

	Dated:	    
	 	    
 (Signature of the Taxpayer)
	

The undersigned spouse of the taxpayer joins in this election.
	

Dated:	

    
	
 	

    
 (Signature of the Spouse)

24

 
 
 

Truth-in-Lending Disclosure
  for
  Credit Sale of Capital Stock
  Issued by
  Merrill Corporation    
    

<<First Name>> <<Last Name>>  

 Creditor: Merrill Corporation  

	ANNUAL PERCENTAGE RATE
	 	FINANCE CHARGE
	 	Amount Financed
	 	Total of Payments
	 	Total Sale Price

	The Cost of your credit as a yearly rate.	 	The dollar amount the credit will cost you.	 	The amount of credit provided to you or on your behalf.	 	The amount you will have paid after you have made all payments as scheduled.	 	The total cost of your purchase on credit, including your down-payment of $ <<Cash Down>>
	

6.3789%	
 	

$ <<Finance Charge>>	
 	

$ <<Amt Financed>>	
 	

$ <<Total Payments>>	
 	

$ <<Total Sale Price>>

        You
have the right to receive at this time an itemization of the Amount Financed. 

ý
I want an itemization.                             oI do not want an
itemization. 

        Your payment schedule will be: 

	Number of Payments
 
	 	Amount of Payments
	 	When Payments Are Due

	1	 	$	<<Total Payments>>	 	January 28, 2008

        Security:    You are giving a security interest in: 

        ý
the Coinvestment Shares you purchased pursuant to the Participation Agreement, dated January 28, 2000, by and between you and
Merrill Corporation. 

        Late Charge:    If a payment is late, you will be charged
$            /            % of the payment. 

        Prepayment:    If you pay off early, you 

        o may          ý will
not          have to pay a penalty. 

        See your contract documents for any additional information about nonpayment, default, any required repayment in full before the schedule date, and prepayment
refunds and penalties. 

25

 
 
 

Itemization of Amount Financed
  for
  Credit Sale of Merrill Corporation Capital Stock    
    

<<First Name>> <<Last Name>>  

        Itemization of the Amount Financed of $<<Amt Financed>> 

$<<Amt
Financed>> Amount credited to your account 

26

QuickLinks

Exhibit 10.2

PARTICIPATION AGREEMENT (ALL AWARDS)

TIME VESTING OPTION SCHEDULE

PERFORMANCE VESTING OPTION SCHEDULE

TABLE 1

TABLE 2

TERMS AND CONDITIONS OF NON-STATUTORY STOCK OPTION AWARDS

TERMS AND CONDITIONS OF PURCHASE OF COMMON STOCK

TERMS AND CONDITIONS OF NONRECOURSE PURCHASE LOAN

TERMS AND CONDITIONS OF PLEDGE AND CUSTODY AGREEMENT

COINVESTMENT SHARES VESTING SCHEDULE

CONFIDENTIALITY AND NONCOMPETE PROVISIONS

83(B)  ELECTION FORM

ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED

Truth-in-Lending Disclosure for Credit Sale of Capital Stock Issued by Merrill Corporation

Itemization of Amount Financed for Credit Sale of Merrill Corporation Capital StockQuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 10.3    
    

 
 

PARTICIPATION AGREEMENT    
    
    (EXECUTIVES)    
    

        This Participation Agreement (the "Agreement") is made and entered into as of [DATE] by
and between Merrill Corporation, a Minnesota corporation ("Merrill") and [EXECUTIVE NAME], an individual residing at
[EXECUTIVE ADDRESS] (the "Employee"). 

W I T N E S S E T H  

        WHEREAS, on December 20, 1999, the Board of Directors and shareholders of Merrill adopted the 1999 Merrill Corporation Stock Option Plan (the
"Option Plan") authorizing the Compensation Committee of the Board of Directors of Merrill to grant stock options to employees and independent
contractors of Merrill or any subsidiary of Merrill pursuant to the terms and conditions of the Option Plan. 

        WHEREAS,
on December 20, 1999, the Board of Directors and shareholders of Merrill adopted the 1999 Merrill Corporation Direct Investment Plan (the "DI
Plan") authorizing the Compensation Committee of the Board of Directors of Merrill to sell shares of Merrill's voting class B common stock, $0.01 par value (the
"Common Stock") to employees and independent contractors of Merrill or any subsidiary of Merrill pursuant to the terms and conditions of the DI Plan. 

        WHEREAS,
the Employee received notice (the "Eligibility Notice") from Merrill informing the Employee that Merrill was offering the
Employee (1) the opportunity to purchase Coinvestment Shares (as defined in the DI Plan) pursuant to the terms and conditions of the DI Plan, (2) the opportunity to purchase Reinvestment
Shares (as defined in the DI Plan) pursuant to the terms and conditions of the DI Plan and (3) an option to purchase shares of Common Stock. 

        WHEREAS,
the Employee must execute and deliver this Agreement as a condition to participating in the DI Plan and Option Plan and receive the awards the Employee was granted in the
Eligibility Notice. 

        WHEREAS,
all capitalized terms not otherwise defined in this Agreement or the attachments to this Agreement shall have such meanings given such terms in the Option Plan and DI Plan,
respectively. 

        NOW,
THEREFORE, in consideration of the covenants and agreements herein contained, the parties hereto hereby agree as follows: 

	1.
	Stock Option Grant.

	1.1
	As
of the date of this Agreement ("Date of Grant") Merrill hereby grants to the Employee the right, privilege, and option (the
"Option") to purchase [NO. OF OPTION SHARES] shares (the "Option Shares") of
Common Stock, according to the terms and subject to the conditions set forth in this Agreement, the "Terms and Conditions of Non-Statutory Stock Option Awards" attached to this Agreement
and the Option Plan. The Option is not intended to be an "incentive stock option," as that term is used in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").

	1.2
	The
per share price to be paid by Employee in the event of an exercise of the Option will be [EXERCISE PRICE] per share.

	1.3
	The
Option will become exercisable in accordance with the "Super Performance Vesting Option Schedule" attached to this Agreement.

	1.4
	The
Employee hereby acknowledges and agrees that by executing this Agreement, the Employee will be bound by the terms and conditions set forth in the "Terms and Conditions of
Non-Statutory Stock Options" attached to this Agreement. 

 

	2.
	Stock Purchase Grant.

	2.1
	The
Employee hereby subscribes to purchase [NO. OF COINVESTMENT SHARES] Coinvestment Shares (the "Coinvestment
Shares") for a purchase price of [PRICE PER SHARE] per share and upon the terms and conditions set forth in the "Terms and Conditions of Purchase of
Common Stock" attached to this Agreement. As payment for the Coinvestment Shares, the Employee:

	(a)
	Has
delivered to Merrill along with the executed copy of this Agreement a check or other cash payment payable to "Merrill Corporation" in an amount equal to thirty-five
percent (35%) of the total purchase price for the Coinvestment Shares (or [35% PURCHASE PRICE]).

	(b)
	Promises
to pay to the order of Merrill, its successors and assigns, at its office at One Merrill Circle, St. Paul, Minnesota 55108, or such other place as the holder hereof may
designate in writing from time to time, an amount equal to sixty-five percent (65%) of the total purchase price for the Coinvestment Shares, or the principal sum of [LOAN
AMOUNT] in lawful money of the United States (the "Purchase Loan"), together with interest from the date hereof on the unpaid balance of the
Purchase Loan at a fixed rate of eight percent (8%) per annum (the "Interest Rate"). Interest on the Purchase Loan shall be computed on the actual
number of days elapsed and a 365-day year. Interest will not be payable during the term of the Purchase Loan pursuant to the "Terms and Conditions of the Nonrecourse Purchase Loan"
attached to this Agreement, but will be paid on the Maturity Date (as defined in the "Terms and Conditions of the Nonrecourse Purchase Loan" attached to this Agreement). All accrued but unpaid
interest on the Purchase Loan will be in addition to the principal balance of the Purchase Loan. The Employee hereby acknowledges and agrees that by executing this Agreement, the Employee will be
bound by the terms and conditions set forth in the "Terms and Conditions of the Nonrecourse Purchase Loan" attached to this Agreement.

	(c)
	Grants
to Merrill, as collateral for the Purchase Loan, a security interest in the Coinvestment Shares pursuant to the terms and conditions set forth in the "Terms and Conditions of
the Pledge and Custody Agreement" attached to this Agreement. The Employee hereby acknowledges and agrees that by executing this Agreement, the Employee will be bound by the terms and conditions set
forth in the "Terms and Conditions of the Pledge and Custody Agreement" attached to this Agreement.

	2.2
	The
Employee hereby subscribes to purchase [NO. OF REINVESTMENT SHARES] Reinvestment Shares (the "Reinvestment
Shares") for a purchase price of [PRICE PER SHARE] per share and upon the terms and conditions set forth in the "Terms and Conditions of Purchase of
Common Stock" attached to this Agreement. A check or other cash payment payable to "Merrill Corporation" in the amount of [REINVESTMENT PURCHASE PRICE] for the Reinvestment
Shares is also delivered to Merrill with an executed copy of this Agreement.

	2.3
	All
Coinvestment Shares purchased by the Employee shall vest in accordance with the "Coinvestment Shares Vesting Schedule" attached to this Agreement.

	2.4
	The
Employee acknowledges that Merrill is relying upon the accuracy and completeness of the representations contained in this Agreement and in the "Terms and Conditions of Purchase of
Common Stock" attached to this Agreement in complying with its obligations under applicable securities laws and that the purchase of the Reinvestment Shares and Coinvestment Shares may be rejected for
any reason. 

2

 

	2.5
	The
Employee represents and warrants to Merrill that the Employee is a bona fide resident of the State listed as Employee's residence in the introductory paragraph herein.

	2.6
	The
Reinvestment Shares and Coinvestment Shares purchased by the Employee will be held in such Employee's individual name.

	3.
	Investors' Agreement.

	3.1
	In
connection with the Employee's purchase of Common Stock upon the exercise of the Option pursuant to the Option Plan or upon the purchase of Coinvestment Shares and/or Reinvestment
Shares pursuant to the DI Plan, the Employee hereby acknowledges and agrees that Employee has received and reviewed a copy of the Investors' Agreement, dated November 23, 1999, by and among
Merrill and its shareholders (the "Investors' Agreement"). By execution of this Agreement, the Employee hereby acknowledges and agrees to be bound by
the terms and conditions of the Investors' Agreement, as amended from time to time, in the same manner and to the same effect as if the Employee were an original party thereto, including, without
limitation, acknowledgment that the Employee shall be considered a "Co-invest Management Stockholder" as such term is defined in the Investors' Agreement. The other shareholders of
Merrill, and the Board of Directors of Merrill, shall be entitled to rely on this Agreement in the same manner as if a counterpart of the Investors' Agreement were executed by the Employee, and
Merrill's Board of Directors may utilize this Agreement as evidence of the signature of the Employee and attach the same to a copy of the Investors' Agreement, with this Agreement having the same
validity, force and effect as if the Investor's Agreement and any amendments thereto had been executed by the Employee.

	3.2
	Upon
the exercise of the Option and pursuant to the Option Plan, unless otherwise notified by the Company, the Employee shall be deemed a "Co-invest Management"
Stockholder within the meaning of the Investors' Agreement as of 12:01 a.m., [DATE OF AGREEMENT] (the "Effective Date"),
the Date of Grant of the Option to the Employee for all purposes of the Investors' Agreement.

	3.3
	Upon
the issuance of the Reinvestment Shares and/or Coinvestment Shares and pursuant to the DI Plan, unless otherwise notified by the Company, the Employee shall be deemed a "Coinvest
Management" Stockholder within the meaning of the Investors' Agreement as of the Effective Date for the issuance of Reinvestment Shares and/or Coinvestment Shares to the Employee for all purposes of
the Investors' Agreement.

	3.4
	Merrill
shall notify the Employee promptly if the Employee's status for purposes of the Investors' Agreement changes for any reason pursuant to the terms and conditions of the Option
Plan and DI Plan, respectively.

	4.
	Confidentiality and Noncompete Agreement.

	4.1
	Upon
the execution of this Agreement, the Employee hereby acknowledges and agrees to be bound by the terms and conditions of the "Confidentiality and Noncompete Provisions" attached
to this Agreement.

	5.
	Section 83(b) Election.

	5.1
	The
Employee acknowledges and agrees that the Employee (i) has reviewed with the Employee's own tax advisors the federal, state, local and foreign tax consequences of the
purchase of the Shares and the other transactions contemplated by the DI Plan, and (ii) is relying solely on such advisors and not on any statements or representations of Merrill or any of its
agents. Merrill strongly encourages the Employee to consult with such Employee's own tax advisor with respect to the making of an election pursuant to Section 83(b) of the Code. THE EMPLOYEE
ACKNOWLEDGES THAT IT IS THE EMPLOYEE'S SOLE 

3

 

RESPONSIBILITY
AND NOT MERRILL'S RESPONSIBILITY TO FILE SUCH ELECTION ON A TIMELY BASIS, EVEN IF THE EMPLOYEE REQUESTS THAT MERRILL OR ITS REPRESENTATIVES MAKE SUCH FILING ON BEHALF OF
THE EMPLOYEE. 

	5.2
	Merrill
has attached to this Agreement an 83(b) Election Form that may be used by the Employee in the event the Employee decides to make such an election. Any such election, if made,
must be filed with the Internal Revenue Service within thirty (30) days of the purchase of such Shares.

	6.
	Truth-in-Lending Disclosure.

	6.1
	If
Employee's Purchase Loan is less than or equal to $25,000, the Employee acknowledges and agrees that by executing this Agreement, the Employee has received and reviewed the
"Truth-in-Lending Disclosure" and the related "Itemization of Amount Financed" attached to this Agreement prior to the Employee's execution of this Agreement.

	7.
	Miscellaneous.

	7.1
	Employment or Service.    Nothing in this Agreement or any attachments hereto will interfere with or limit in any way the
right of Merrill or any Subsidiary to terminate the employment or other service of the Employee at any time, nor confer upon the Employee any right to continue in the employ or other service of
Merrill or any Subsidiary at any particular position or rate of pay or for any particular period of time. Furthermore, if the Employee was an at-will employee prior to executing this
Agreement, the Employee shall be an at-will employee after executing this Agreement, and if the Employee was bound by a written employment agreement prior to executing this Agreement, the
Employee will continue to be bound by such agreement after executing this Agreement; provided, however, that such written agreement shall be subject to the terms and conditions in this Agreement and
shall be deemed to be amended and superseded with respect to the subject matter contained in this Agreement.

	7.2
	Binding Effect.    This Agreement, including all the attachments hereto, will be binding upon the heirs, executors,
administrators and successors of the parties to this Agreement.

	7.3
	Governing Law.    This Agreement, including all the attachments hereto, and all rights and obligations under it will be
construed in accordance with the Option Plan and the DI Plan, respectively, and governed by the laws of the State of Minnesota, without regard to conflicts of laws provisions. Any legal proceeding
related to this Agreement, including all the attachments hereto, will be brought in an appropriate Minnesota court, and the parties to this Agreement consent to the exclusive jurisdiction of the court
for this purpose.

	7.4
	Entire Agreement.    This Agreement, including all attachments hereto, the Option Plan and the DI Plan set forth the entire
agreement and understanding of the parties to this Agreement with respect to the grant and exercise of the Option, the administration of the Option Plan, the purchase of Reinvestment Shares and/or
Coinvestment Shares, the administration of the DI Plan, and supersede all prior agreements, arrangements, plans and understandings relating to the foregoing.

	7.5
	Amendment and Waiver.    Other than as provided in this Agreement, including all attachments hereto, the Option Plan or the
DI Plan, none of the terms or provisions of this Agreement, including all attachment to this Agreement may be amended, waived, supplemented, canceled or otherwise modified only by a written instrument
executed by the parties to this Agreement or, in the case of a waiver, by the party waiving compliance.

	7.6
	Counterparts.    This Agreement may be executed in several counterparts, each of which shall constitute an original, but all
of which, when taken together, shall constitute but one agreement. 

4

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. 

	 	 	MERRILL CORPORATION
	

 	
 	

By:	

 
	 	 	 	

	

 	
 	

Its:	

 
	 	 	 	

	

 	
 	
EMPLOYEE
	

 	
 	

 Signature
	

 	
 	

 Name Typed or Printed
	

 	
 	

 Address
	

 	
 	

 City, State and Zip Code
	

 	
 	

 Social Security Number

*
* * * * * * * 

Upon
execution of this Agreement the Employee acknowledges having been delivered and reviewed a copy of the Option Plan, DI Plan, a Summary Plan Description for each of the Option Plan and the DI
Plan, the Investors' Agreement, the Information Statement and all attachments to this Agreement. 

5

  

 
 

SUPER PERFORMANCE VESTING SCHEDULE    
    

        All Option Shares subject to this Super Performance Vesting Schedule shall become immediately available for exercise if a DLJMB Liquidation Event (as defined
below) occurs and such DLJMB Liquidation Event realizes a DLJMB IRR (as defined below) in excess of 50%; provided, however, that to the extent the
vesting of all Options (as defined in the Option Plan) causes the DLJMB IRR to be 50% or less, only that portion of the Option Shares that would result in a DLJMB IRR of 50% will become immediately
available for exercise. 

        For
purposes of the Participation Agreement, and the attachments thereto, the following terms shall have the meanings set forth below: 

	1.
	"DLJMB
Entities" shall mean DLJ Merchant Banking Partners II, L.P. and all its affiliated entities as described in Investors' Agreement.

	2.
	"DLJMB
IRR" means, as to the DLJMB Entities, the annual discount rate at which the net present value of (i) all investments and capital contributions by the DLJMB Entities in
shares of the Company's common equity and (ii) all distributions from the Company to the DLJMB Entities and other amounts realized (whether from the Company or third parties, including amounts
realized upon a DLJMB Liquidation Event) by the DLJMB Entities with respect to the DLJMB Entities' shares of the Company's common equity, equals zero. The DLJMB IRR calculation shall be determined
from and including the date upon which each investment and capital contribution is made by the DLJMB Entities to and including the date any distribution is made or other amount is realized on account
thereof, calculated on the actual number of days elapsed over a 365 or 366-day year, as the case may be. All calculations of the DLJMB IRR shall be determined on a pro-forma
basis reflecting the Option Shares that have become vested prior to a DLJMB Liquidation Event and the Option Shares becoming vested as of the DLJMB Liquidation Event.

	3.
	"DLJMB
Liquidation Event" means, except for transfers to Permitted Transferees (as defined in the Investors' Agreement), (i) a sale or other transfer by the DLJMB Entities of
90% or more of its shares of common equity in the Company (including all common equity originally purchased by the DLJMB Entities and any additional common equity purchased by the DLJMB Entities
thereafter, whether voting, Class B or any other class of common equity created by the Company) to one or more persons or entities (in one transaction or in a series of related transactions)
other than in connection with a public offering of the Company's common equity, (ii) the sale, lease, exchange or other transfer, directly or indirectly, of substantially all of the assets of
the Company (in one transaction or in a series of related transactions) to a person or entity that is not controlled by the Company, or (iii) a merger or consolidation to which the Company is a
party if the shareholders of the Company immediately prior to the effective date of such merger or consolidation do not have "beneficial ownership" (as defined in Rule 13d-3 under
the Exchange Act) immediately following the effective date of such merger or consolidation of more than 50% of the combined voting power of the surviving corporation's outstanding securities
ordinarily having the right to vote at elections of directors. 

This
Super Performance Vesting Option will not be exercisable after, and will become void and expire as to all unexercised Option Shares at, 5:00 p.m. (St. Paul, Minnesota time), on the earlier
of (i) December 20, 2009 or (ii) the day immediately following the completion of a DLJMB Liquidation Event (the "Time of Termination"). 

6

 
 
 

TERMS AND CONDITIONS
  OF
  NON-STATUTORY STOCK OPTION AWARDS    
    

        Upon execution of the Participation Agreement, the Employee hereby acknowledges and agrees to be bound by the following terms and conditions relating to the
Option: 

        1.    Duration of Option and Time of Exercise.    

        1.1    Termination of Employment or Other Service.    

        (a)    Termination for Cause.    In the event the Employee's employment or other service with Merrill and all
Subsidiaries is terminated by Merrill or any Subsidiary for Cause, all rights of the Employee under the
Option Plan with respect to the Option and the Participation Agreement will immediately terminate without notice of any kind, and the Option, whether exercisable or not on the date of termination,
will immediately terminate without notice of any kind, and Merrill will also have the right to repurchase (the "Repurchase Right") from the Employee all
shares of Common Stock previously acquired upon exercise of the Option at a price equal to the exercise price paid by the Employee to acquire such shares of Common Stock in the manner set forth in
Section 2 below. 

        (b)    Termination for Reasons Other Than Cause.    In the event the Employee's employment or other service with
Merrill and all Subsidiaries is terminated other than for Cause by reason of voluntary resignation, death, Disability or Retirement, the Option will remain exercisable, to the extent exercisable as of
the date of such termination, for a period of one year following the date the Employee's employment or other service is terminated, and any portion of the Option which is not exercisable as of the
date of such termination will immediately terminate without notice of any kind. 

        (c)    Partial Terminations.    In the event of a Partial Termination, the Committee shall have the right in its sole
discretion to modify the terms of any unvested Options then held by the Employee at the time of the Partial Termination, including, without limitation, the right to immediately terminate without
notice of any kind all rights the Employee has in any unvested Options then held by the Employee at the time of the Partial Termination. 

        2.    Exercisability of Repurchase Right.    

        If
Merrill elects to exercise its Repurchase Right, Merrill shall give the Employee written notice of its intent to exercise its Repurchase Right (the "Notice of
Repurchase") within sixty (60) days of such Employee's termination of employment or other service. The Notice of Repurchase shall specify (i) the number of shares
of Common Stock Merrill intends to repurchase, (ii) the applicable purchase price for such shares of Common Stock, and (iii) the date Merrill expects to purchase such shares of Common
Stock from the Employee which date shall be no later than thirty (30) days following the Valuation Date in the fiscal year immediately following the fiscal year in which the Employee's
employment or other service is terminated (the "Repurchase Date"). On or before the Repurchase Date, the Employee shall deliver to Merrill the stock
certificates representing the shares of Common Stock being purchased by Merrill, properly endorsed for transfer. By such delivery of such certificates, the Employee warrants that (i) the
Employee has good title to, the right to possession of, and the right to sell, the shares of Common Stock, (ii) such shares of Common Stock are free and clear of all pledges, liens,
encumbrances, charges, proxies, restrictions, options, transfers and other adverse claims, except such as have been imposed by the Option Plan or the Investors' Agreement, and except such restrictions
on transfer as may be imposed by federal or state securities laws, and (iii) the Employee shall hold harmless Merrill from all costs, expenses and fees incurred in defending title and right to
possession. On the Repurchase Date, Merrill shall pay to the Employee the total purchase price for the shares of Common Stock to be purchased by Merrill. Notwithstanding anything to the contrary in
the Option Plan, however, Merrill shall only be required to pay for such shares of Common Stock as 

7

 

rapidly
as permissible without violating any loan covenants or other contractual restrictions applicable to, and binding upon, Merrill, and any amounts not paid to the Employee on the Repurchase Date
will bear interest at a fixed rate of interest equal to eight percent (8%) per annum; provided, however, that such interest rate shall not exceed the rate permitted by applicable law. Merrill shall
only be required to repurchase shares of Common Stock pursuant to this Section 2 to the extent that such repurchase does not violate any applicable laws. 

        3.    Manner of Option Exercise.    

        3.1    Notice.    The Option may be exercised by the Employee in whole or in part from time to time, subject to the
conditions contained in the Option Plan and in the Participation Agreement, by delivery, in person, by facsimile or electronic transmission (with written confirmation via the mail to follow such
electronic transmission) or through the mail, to Merrill at its principal executive office in St. Paul, Minnesota (Attention: Secretary), of a written notice of exercise. Such notice must be in a form
satisfactory to the Committee, must identify the Option, must specify the number of Option Shares with respect to which the Option is being exercised, and must be signed by the person or persons so
exercising the Option. Such notice must be accompanied by payment in full of the total purchase price of the Option Shares purchased. In the event that the Option is being exercised, as provided by
the Option Plan and the Participation Agreement, by any person or persons other than the Employee, the notice must be accompanied by appropriate proof of right of such person or persons to exercise
the Option. As soon as practicable after the effective exercise of the Option, the Employee will be recorded on the stock transfer books of Merrill as the owner of the Option Shares purchased, and
Merrill will deliver to the Employee one or more duly issued stock certificates evidencing such ownership. 

        3.2    Payment.    At the time of exercise of the Option, the Employee must pay the total purchase price of the Option
Shares to be purchased entirely in cash (including a check, bank draft or money order, payable to the order of Merrill); provided, however, that the Committee, in its sole discretion, may allow such
payment to be made, in whole or in part, by tender of a promissory note (on terms acceptable to the Committee in its sole discretion) or a Broker Exercise Notice or Previously Acquired Shares (as such
terms are defined in the Option Plan), or by a combination of such methods. In the event the Employee is permitted to pay the total purchase price of the Option in whole or in part with Previously
Acquired Shares, the value of such shares will be equal to their Fair Market Value on the date of exercise of the Option. 

        4.    DLJMB Liquidation Event.    

        4.1    Acceleration of Vesting.    Without limiting the authority of the Committee under the Option Plan, if a DLJ
Liquidation Event (as defined in the Option Plan) occurs, then, unless otherwise provided by the Committee in its sole discretion all unvested Options will become immediately vested in full. 

        4.2    Limitation on Payments in Connection with a DLJMB Liquidation Event.    Notwithstanding anything in
Section 4.1 above to the contrary, if, with respect to an Employee, the acceleration of the vesting of Options as provided in Section 4.1 (which acceleration or payment could be deemed a
"payment" within the meaning of Section 280G(b)(2) of the Code), together with any other "payments" that such Employee has the right to receive from Merrill or any corporation that is a member
of an "affiliated group" (as defined in Section 1504(a) of the Code without regard to Section 1504(b) of the Code) of which Merrill is a member, would constitute a "parachute payment"
(as defined in Section 280G(b)(2) of the Code), then the "payments" to such Employee pursuant to Section 4.1 will be reduced to the largest amount as will result in no portion of such
"payments" being subject to the excise tax imposed by Section 4999 of the Code; provided, however, that if an Employee is subject to a separate agreement with Merrill or a Subsidiary that
expressly addresses the potential application of Sections 280G or 4999 of the Code (including, without limitation, that "payments" under such agreement or otherwise will be reduced, that the Employee
will have the discretion to determine which "payments" will be reduced, that such 

8

 

"payments"
will not be reduced or that such "payments" will be "grossed up" for tax purposes), then this Section 4.2 will not apply, and any "payments" to the Employee pursuant to
Section 4.1 will be treated as "payments" arising under such separate agreement. 

        5.    Rights of Employee; Transferability.    

        5.1    Employment or Service.    Nothing in the Participation Agreement or any attachments thereto will interfere with
or limit in any way the right of Merrill or any Subsidiary to terminate the employment or other service of the Employee at any time, nor confer upon the Employee any right to continue in the
employ or other service of Merrill or any Subsidiary at any particular position or rate of pay or for any particular period of time. 

        5.2    Rights as a Shareholder.    The Employee will have no rights as a shareholder unless and until all conditions
to the effective exercise of the Option (including, without limitation, the conditions set forth in Sections 3 and 6 of this attachment to the Participation Agreement) have been satisfied and the
Employee has become the holder of record of such shares. No adjustment will be made for dividends or distributions with respect to the Option as to which there is a record date preceding the date the
Employee becomes the holder of record of such shares, except as may otherwise be provided in the Option Plan or determined by the Committee in its sole discretion. 

        5.3    Restrictions on Transfer.    Unless approved by the Committee in its sole discretion, no right or interest of
any Employee in an Option prior to the exercise of such Option will be assignable or transferable, or subjected to any lien, during the lifetime of the Employee, either voluntarily or involuntarily,
directly or indirectly, by operation of law or otherwise; provided, however, once an Employee exercises an Option all shares of Common Stock issued upon exercise of the Option will be subject to the
transfer restrictions and other provisions set forth in the Investors' Agreement. 

        6.    Restrictions Regarding Employment or Service.    

        6.1    Effect of Adverse Action.    Notwithstanding anything in the Option Plan, the Participation Agreement or any
attachments thereto and all attachments thereto to the contrary, in the event that an Employee takes an Adverse Action with respect to Merrill or any Subsidiary (1) prior to such Employee's
termination of employment or other service with Merrill and all its Subsidiaries or (2) during the period ending twelve (12) months following the date of the Employee's termination of
employment or other service with Merrill and all Subsidiaries without Cause, the Committee in its sole discretion will have the authority to terminate immediately all rights of the Employee under the
Option Plan and any agreement evidencing Options then held by the Employee without notice of any kind. In addition, to the extent that the Employee takes such Adverse Action during the period
beginning twelve (12) months prior to, and ending twelve (12) months following, such date of termination of employment or other service, the Committee in its sole discretion will have
the authority to rescind the exercise of any Options of the Employee that were exercised during such period and to require the Participant to pay to Merrill, within ten (10) days of receipt
from Merrill of notice of such rescission, the amount of any gain realized as a result of such rescinded exercise. Such payment will be made in cash (including check, bank draft or money order) or,
with the Committee's consent, shares of Common Stock with a Fair Market Value on the date of payment equal to the amount of such payment. Merrill will be entitled to withhold and deduct from future
wages of the Employee (or from other amounts that may be due and owing to the Employee from Merrill or a Subsidiary) or make other arrangements for the collection of all amounts necessary to satisfy
such payment obligations. 

        6.2    Definition of Adverse Action.    An "Adverse Action" will mean
any action by an Employee that the Committee, in its sole discretion, determines to be adverse to the interests of Merrill or any Subsidiary, including, without limitation, (i) disclosing
confidential information of Merrill or any Subsidiary to any person not authorized by Merrill or Subsidiary to receive it, (ii) engaging, directly or indirectly, in any commercial activity that
in the judgment of the Committee competes 

9

 

with
the business of Merrill or any Subsidiary or (iii) interfering with the relationships of Merrill or any Subsidiary and their respective employees and customers. 

        7.    Securities Law and Other Restrictions.    

        Notwithstanding
any other provision of the Option Plan, the Participation Agreement or any attachments thereto and all attachments thereto, Merrill will not be required to issue, and the
Employee may not sell, assign, transfer or otherwise dispose of, any Option Shares, unless (i) there is in effect with respect to the Option Shares a registration statement under the Securities
Act of 1933, as amended, and any applicable state or foreign securities laws or an exemption from such registration, and (ii) there has been obtained any other consent, approval or permit from
any other regulatory body which the Committee, in its sole discretion, deems necessary or advisable. Merrill may condition such issuance, sale or transfer upon the receipt of any representations or
agreements from the parties involved, and the placement of any legends on certificates representing Option Shares, as may be deemed necessary or advisable by Merrill in order to comply with such
securities law or other restrictions. 

        8.    Withholding Taxes.    

        8.1    General Rules.    Merrill is entitled to (i) withhold and deduct from future wages of the Employee (or
from other amounts that may be due and owing to the Employee from Merrill or a Subsidiary), or make other arrangements for the collection of, all legally required amounts necessary to satisfy any and
all foreign, federal, state and local withholding and employment-related tax requirements attributable to the Option, including, without limitation, the grant or exercise of the Option or a
disqualifying disposition of stock received upon exercise of an Incentive Stock Option, or (ii) require the Employee promptly to remit the amount of such withholding to Merrill before taking
any action, including issuing any shares of Common Stock, with respect to the Option. 

        8.2    Special Rules.    The Committee may, in its sole discretion and upon terms and conditions established by the
Committee, permit or require an Employee to satisfy, in whole or in part, any withholding or employment-related tax obligation described in Section 8.1 of the Option Plan by electing to tender
Previously Acquired Shares, a Broker Exercise Notice or a promissory note (on terms acceptable to the Committee in its sole discretion), or by a combination of such methods. 

        9.    Adjustments.    

        In
the event that the Committee determines that any reorganization, merger, consolidation, recapitalization, liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, divestiture or extraordinary dividend (including a spin-oft) or any other similar change in the corporate structure or shares of Merrill, affects the Option such
that an adjustment is determined by the Committee, in its sole discretion, to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made
available under the Option Plan, the Committee (or, if Merrill is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) shall, in such manner as
it deems equitable, adjust any or all of (i) the number of shares of Common Stock of Merrill (or number and kind of other securities or property) available for issuance or payment under the
Option Plan, (ii) the number of shares of Common Stock or other securities of Merrill (or number and kind of other securities or property) subject to outstanding Options, and (iii) the
grant or exercise price with respect to any Options, or, if deemed appropriate, make provisions for a cash payment to the holder of an outstanding Option. 

        10.    Subject to Option Plan.    

        The
Option and the Option Shares granted and issued pursuant to the Participation Agreement and the attachments thereto have been granted and issued under, and are subject to the terms
of, the Option Plan. The terms of the Option Plan are incorporated by reference in the Participation Agreement and the attachments thereto in their entirety, and the Employee, by execution of the
Participation Agreement, acknowledges having received a copy of the Option Plan. The provisions of the Participation Agreement and attachments thereto will be interpreted as to be consistent with the
Option Plan, and any ambiguities in the Participation Agreement or the attachments thereto will be interpreted by reference to the Option Plan. In the event that any provision of the Participation
Agreement or the attachments thereto are inconsistent with the terms of the Option Plan, the terms of the Option Plan will prevail. 

10

  

 
 

TERMS AND CONDITIONS
  OF PURCHASE OF COMMON STOCK    
    

        Upon execution of the Participation Agreement, the Employee acknowledges and represents as follows: 

	1.
	The
Employee has received copies of all documents and any other information requested from Merrill and has had an opportunity to ask questions of and receive answers from the
management of Merrill concerning the terms and conditions of the employee offering and to obtain any additional information desired or has elected to waive such opportunity. The Employee confirms that
the Employee is fully informed regarding the financial condition of Merrill, the administration of its business affairs and its prospects for the future, and that Merrill makes no assurance whatsoever
concerning the present and prospective value of the Reinvestment Shares or Coinvestment Shares to be acquired.

	2.
	The
Employee realizes that the Reinvestment Shares and Coinvestment Shares, as an investment, are speculative and involve a high degree of risk. The Employee believes that an
investment in the Reinvestment Shares and/or Coinvestment Shares is suitable for the Employee based upon the Employee's investment objectives and financial needs, and the Employee has the financial
means to undertake the risks of an investment in the Reinvestment Shares and/or Coinvestment Shares, to hold the Reinvestment Shares and/or Coinvestment Shares for an indefinite period of time, and to
withstand a complete loss of the Employee's investment in the Reinvestment Shares and/or Coinvestment Shares.

	3.
	The
Employee, either alone or with the assistance of a professional advisor, has such knowledge and experience in financial and business matters that the Employee is capable of
evaluating the merits and risks of an investment in the Reinvestment Shares and/or Coinvestment Shares. The Employee has obtained, to the extent deemed necessary, personal professional advice with
respect to the risks inherent in, and the suitability of, an investment in the Reinvestment Shares and/or Coinvestment Shares in light of the Employee's financial condition and investment needs.

	4.
	The
Reinvestment Shares and/or Coinvestment Shares are being purchased by the Employee for investment purposes in the Employee's name solely for the Employee's own beneficial interest
and not as nominee for, or for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization.

	5.
	The
Employee acknowledges that (i) the Employee must bear the economic risk of an investment in the Reinvestment Shares and/or Coinvestment Shares for an indefinite period of
time because neither the Reinvestment Shares or Coinvestment Shares have been registered under the Securities Act of 1933, as amended, or any applicable state securities laws and therefore may not be
sold, transferred, assigned or otherwise disposed of unless such disposition is subsequently registered under such laws or exemptions from such registrations are available, and (ii) a legend
will be placed on the certificate evidencing the Reinvestment Shares and/or Coinvestment Shares stating that the Reinvestment Shares and/or Coinvestment Shares have not been registered under the
Securities Act of 1933, as amended, and referencing the restrictions on the transferability of the Reinvestment Shares and/or Coinvestment Shares. 

11

 
 
 

TERMS AND CONDITIONS
  OF NONRECOURSE PURCHASE LOAN    
    

        This Purchase Loan is made under the terms and provisions of the DI Plan and in connection with the Employee's purchase of Coinvestment Shares. To the extent the
provisions of the DI Plan and this attachment to the Participation Agreement are inconsistent, the terms of the DI Plan shall govern. 

        Upon
execution of the Participation Agreement, the Employee and Merrill hereby acknowledge and agree to be bound by the following terms and conditions relating to the Purchase Loan: 

        The
entire outstanding principal amount of the Purchase Loan, together with all accrued and unpaid interest thereon from the date of the Purchase Loan, shall be due and payable by the
Employee in a single payment on the earliest of the following dates (the "Maturity Date") and in the following manner; provided, however, that Merrill
in its sole discretion may extend the Maturity Date of the Purchase Loan pursuant to the DI Plan: 

	(i)
	All
outstanding principal and accrued interest shall be due and payable upon the Repurchase Date in the fiscal year immediately following the fiscal year in which the
Employee's employment or other service with Merrill and all its Subsidiaries is terminated, regardless of the reason for such termination;

	(ii)
	All
outstanding principal and accrued interest shall be due and payable upon a DLJMB Liquidation Event;

	(iii)
	All
outstanding principal and accrued interest shall be due and payable upon a sale or transfer of the Coinvestment Shares in accordance with the terms and conditions
of the Investors' Agreement, other than transfers to Permitted Transferees (as defined in the Investors' Agreement) or hardship repurchases under the DI Plan;

	(iv)
	Within
120 days following an initial public offering of Merrill's equity securities in which case the outstanding principal amount of the Purchase Loan and all
accrued and unpaid interest thereon must be paid in cash or the Committee in its sole discretion may allow Merrill to repurchase the Employee's Reinvestment Shares and vested Coinvestment Shares at
Fair Market Value, and the Employee's unvested Coinvestment Shares at a purchase price determined by the Committee in its sole discretion, and apply the proceeds Merrill owes the Employee against the
outstanding balance of the Purchase Loan and all accrued and unpaid interest thereon; provided, however, that if the Employee elects to repay the Purchase Loan and all accrued and unpaid interest with
the Employee's Shares, the Employee will not be required to repay the Purchase Loan and all accrued interest if the total purchase price paid for such Shares does not exceed the outstanding balance of
the Purchase Loan, all accrued and unpaid interest thereon and any tax liability of the Employee associated with the sale of the Shares; or

	(v)
	All
outstanding principal and accrued interest shall be due and payable on the eighth anniversary of the date of the Participation Agreement. 

        The
principal of the Purchase Loan may be prepaid in full or in part at any time, without premium or penalty. Each such prepayment shall be accompanied by the interest accrued on the
amount prepaid to the date of the prepayment. Merrill shall be entitled to apply any payments Merrill owes the Employee for the repurchase of the Coinvestment Shares pursuant to the DI Plan, and all
dividends paid with respect to Coinvestment Shares (net of any tax withholdings) to the outstanding principal balance and interest under the Purchase Loan. All such payments shall be applied first to
the payment of accrued interest and the remainder to the outstanding principal of the Purchase Loan. 

        The
Employee represents and warrants that the proceeds of the Purchase Loan will be used solely for the purpose of purchasing Coinvestment Shares pursuant to the DI Plan. 

12

 

        As
security for the timely payment of all amounts due or to become due under the Purchase Loan, the Employee pledges and grants to Merrill a security interest, pursuant to the
Participation Agreement and the attachments thereto, in (i) the Coinvestment Shares to be acquired by the Employee pursuant to the DI Plan, (ii) all securities, instruments and other
property, rights or interests of any kind at any time issued or issuable as an addition to, in substitution or exchange for, or with respect to, the Coinvestment Shares, and (iii) all cash,
dividends, proceeds or other income or property accrued and hereafter accruing, received, receivable or otherwise distributed in respect of, in exchange for, or upon the sale or other disposition of
the Coinvestment Shares. Merrill further represents, and the Employee acknowledges, that the Purchase Loan is nonrecourse against the Employee and that if the value of the Coinvestment Shares,
dividends, distributions and proceeds thereof pledged as security for repayment of the Purchase Loan and all accrued interest on the Purchase Loan is insufficient to repay the outstanding principal
and interest thereunder, Merrill may not proceed against the Employee to collect any remaining amount due hereunder. 

        If
an Event of Default, as defined below, shall occur, or if the Employee's employment or other service with Merrill and all its Subsidiaries is terminated or terminates for any reason,
whether voluntary or involuntary, and whether caused by death, Disability, Retirement or otherwise, Merrill may, without notice, demand, presentment for payment and notice of nonpayment, all of which
the Employee hereby expressly waives, declare the indebtedness represented by the Purchase Loan immediately due and payable and Merrill or other holder hereof may, without notice, immediately exercise
any and all rights and remedies available at law or in equity for the collection of the Purchase Loan, including, without limitation, enforcement of the security interest granted herein. The term
"Event of Default" shall mean any of the following events: 

	(i)
	the
Employee shall default in the payment when due of any principal or interest on the Purchase Loan;

	(ii)
	the
actual or attempted sale, conveyance, alienation, lease, succession, assignment or other transfer of all or any part of the Coinvestment Shares in violation of the
DI Plan or the Investors' Agreement;

	(iii)
	the
insolvency, bankruptcy, receivership, or occurrence of any other adverse change in the financial condition of the Employee; or

	(iv)
	the
Employee shall default in any of its obligations under the Participation Agreement, including any attachments thereto. 

        If
the Purchase Loan is placed with any attorney(s) for collection upon any default, the Employee agrees to pay to Merrill or other holder its reasonable attorneys' fees and all lawful
costs and expenses of collection, whether or not a suit is commenced. 

        Time
is of the essence. No delay or omission on the part of Merrill or other holder hereof in exercising any right or remedy hereunder shall operate as a waiver of such right or of any
other right or remedy under the Purchase Loan or any other document or agreement executed in connection herewith. All waivers by Merrill must be in writing to be effective and a waiver on any occasion
shall not be construed as a bar to or a waiver of any similar right or remedy on a future occasion. 

        The
Employee hereby consents to any extension or alteration of the time or terms of payment hereon, any renewal, any release of all or any part of any security given for the payment
hereof, any acceptance of additional security of any kind, and any release of, or resort to any party liable for payment hereof. Any extension of time to pay of all or any part of the amount owing on
the Purchase Loan or any variation, modification or waiver of any term or condition of the Purchase Loan shall not affect the liability of the Employee, and the Employee shall be absolutely and
primarily liable at all times for the payment of the indebtedness evidenced by the Purchase Loan and all accrued interest thereon until such amounts are actually paid in full, subject to the
non-recourse provisions set forth 

13

 

above.
Merrill shall be entitled to offset against any amounts owed to it under the Purchase Loan against any amounts owed by Merrill to the Employee with respect to the Pledged Securities, including,
without limitation, any amounts owed by Merrill to the Employee in connection with the repurchase by Merrill of the Coinvestment Shares pursuant to the DI Plan, and any dividends or distributions owed
by Merrill to the Employee on the Coinvestment Shares. 

        No
provision of the Participation Agreement or any attachment thereto shall require the payment or permit the collection of interest in excess of the rate permitted by applicable law. 

        Any
payment due on any non-business day of Merrill shall be due upon the next business day. 

        The
Purchase Loan represents a loan negotiated, executed and to be performed in the State of Minnesota and shall be construed, interpreted and governed by the laws of said State. 

        The
Employee hereby consents to the personal jurisdiction of the state and federal courts located in the State of Minnesota in connection with any controversy related to the Purchase
Loan, and waives any argument that venue in such forums is not convenient. 

14

  

 
 

TERMS AND CONDITIONS OF
  PLEDGE AND CUSTODY AGREEMENT    
    

1.    Defined Terms.    Unless otherwise defined herein, terms which are defined in the DI Plan, the Participation Agreement or the
attachments thereto and used herein are used as so defined, and the following terms shall have the following meanings: 

        "Collateral" means the Pledged Securities and all Proceeds. 

        "Common Stock" means the voting class B common stock, $0.01 par value per share, of Merrill Corporation. 

        "Event of Default" means any event defined as such in the "Terms and Conditions of the Nonrecourse Purchase Loan" attached to the
Participation Agreement. 

        "Obligations" means the unpaid principal of and interest on the Purchase Loan and any other obligations of the Employee under the
Participation Agreement, including all attachments to the Participation Agreement, and the DI Plan. 

        "Pledged Securities" means any Coinvestment Shares purchased by the Employee pursuant to the DI Plan which are required to be pledged by
the Employee under the DI Plan and the Participation Agreement, and designated as such on the books of Merrill. 

        "Proceeds" means all "proceeds" as such term is defined in the Uniform Commercial Code and, in any event, shall include, without
limitation, all dividends or other income from or distributions with respect to the Pledged Securities or proceeds from the sale, disposition or other liquidation thereof. 

2.    Pledge; Grant of Security Interest.    The Employee grants to Merrill a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance when due of the Obligations. The Employee agrees and acknowledges that the pledge and security interest granted hereby is a
continuing security interest and shall continue in full force and effect until the Purchase Loan, and all accrued and unpaid interest on the Purchase Loan, is paid in full. 

3.    Custody; Perfection.    Promptly after the issuance of any Pledged Securities in certificated form under the terms of the DI
Plan, the Employee shall deliver to Merrill the stock certificates representing the Pledged Securities, together with stock transfer powers therefor executed in blank granting Merrill the power to
endorse and transfer the Pledged Securities. If at any time the Pledged Securities are in uncertificated form, Merrill as issuer thereof may register itself as the owner thereof and comply with its
own instructions with respect thereto without further consent from the Employee. 

4.    Covenants.    The Employee covenants and agrees with Merrill that, from and after the date of the Participation Agreement
until tile Obligations are paid in full, unless permitted by the terms of the DI Plan or the Investors' Agreement: 

	4.1
	Without
the prior written consent of Merrill, the Employee will not (i) sell, assign, transfer, exchange or otherwise dispose of, or grant any option with respect to, the
Collateral, or (ii) create, incur or permit to exist any lien or option in favor of, or claim of any person or entity with respect to, any of the Collateral, or any interest therein.

	4.2
	At
any time and from time to time, upon the written request of Merrill, and at the sole expense of the Employee, the Employee will promptly and duly execute and deliver such further
instruments and documents and take such further actions as Merrill may reasonably request for the purposes of obtaining or preserving the full benefits of the Participation Agreement, including any
attachments thereto and of the rights and powers herein granted. 

5.    Adjustments to Pledged Securities.    In the event that the aggregate market value of the Pledged Securities increases, due to
market appreciation, to more than the Employee's Obligations, Merrill may 

15

 

in
its sole discretion pursuant to the terms of the DI Plan, upon request of the Employee, release to the Employee such number of Pledged Securities representing any such excess. 

6.    Rights of Merrill.    

	6.1
	Immediately
and without further notice, Merrill shall have the right to require any and all Proceeds be held as Collateral or to receive any and all Proceeds paid in respect of the
Pledged Securities and make application thereof to the Obligations in such order as it may determine in its sole discretion, including, without limitation, the right to apply such Proceeds against the
balance of the Purchase Loan and any accrued interest thereon and, subject to Section 7 hereof, to exercise all rights pertaining to the Pledged Securities as if Merrill were the absolute owner
thereof, including, without limitation, the right to exercise all conversion, exchange, subscription or other rights, privileges or options, pertaining to any of the Pledged Securities and, in
connection therewith, to deliver any of the Pledged Securities to any committee, depository, transfer agent, registrar or other designated agency upon such terms and conditions as may be determined,
all without liability except to account for property actually received by it. Merrill, however, shall not have any duty to exercise any of the aforesaid rights, privileges or options and shall not be
responsible for any failure to do so or delay in so doing.

	6.2
	The
rights of Merrill hereunder shall not be conditioned or contingent upon the pursuit by Merrill of any right or remedy against the Employee or against any other person or entity
which may be or become liable in respect of all or any part of the Obligations or against any other collateral security therefor, guarantee thereof or right of offset with respect thereto. Merrill
shall not be liable for any failure to demand, collect or realize upon all or any part of the Collateral or for any delay in doing so, nor shall it be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Employee or any other person or entity or to take any other action whatsoever with regard to the Collateral or any part thereof. 

7.    Rights of the Employee.    The Employee shall be entitled to exercise any and all voting and/or consensual rights and powers
relating to or pertaining to the Pledged Securities for any purpose not inconsistent with the terms of the Participation Agreement or any attachment thereto or the DI Plan; provided, however, that no
vote shall be cast, and no consent shall be given or action taken which would have the effect of impairing the position or interest of Merrill in the Collateral. 

8.    Remedies.    If an Event of Default shall occur and be continuing, Merrill may exercise, in addition to all other rights and
remedies granted in the Participation Agreement or any attachment thereto, the DI Plan or the Investors' Agreement, all rights and remedies of a secured party under the Minnesota Uniform Commercial
Code. Without limiting the generality of the foregoing, Merrill, without demand of performance or other demand, presentment, protest, advertisement or notice of any kind (except any notice required by
law referred to below) to or upon the Employee (all and each of which demands, defenses, advertisements and notices are hereby expressly waived), may in such circumstances upon at least ten
(10) days prior written notice to the Employee, forthwith collect, receive, appropriate and realize upon the Collateral, or any part thereof, or interest therein, and/or may deliver the
Collateral or any part thereof (or contract to do any of the foregoing) at public or private sale or sales, upon such terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any credit risk. Merrill shall have the right upon any such public sale, and, to the extent permitted by law, upon any such
private sale, to purchase the whole or any part of the Collateral so sold, free of any right or equity or redemption in the Employee, which right or equity is hereby expressly waived and released. Any
disposition made in accordance with the provisions of this Section 8 shall be deemed to have been commercially reasonable. Merrill shall apply any Proceeds from time to time held by it and the
net proceeds of any such collection, recovery, receipt, appropriation, realization or sale, after deducting all reasonable costs and expenses of every 

16

 

kind
incurred therein, including, without limitation, reasonable attorneys' fees and disbursements, to the payment in whole or in part of the Obligations. The Employee agrees that if any Collateral is
sold at any public or private sale, Merrill may elect to sell only to a buyer who will give further assurances, satisfactory in form and substance to Merrill, respecting compliance with the
requirements of the Securities Act of 1933, as amended, and applicable state laws and regulations ("Blue Sky Laws"), and a sale subject to such
condition shall be deemed commercially reasonable. If at any time when Merrill shall determine to exercise its right to sell all or any part of the Collateral pursuant to this Section 8, such
Collateral or the part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act or registered or qualified under applicable Blue Sky Laws, as then in
effect. The Employee further agrees that in any sale of any of the Collateral, Merrill is hereby authorized to comply with any limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of applicable law (including, without limitation, compliance with such procedures as may restrict the number of prospective bidders and
purchasers and/or further restrict such prospective bidders or purchasers to persons who will represent and agree that they are purchasing for their own account for investment and not with a view to
the distribution or resale of such Collateral), or in order to obtain any required approval of the sale or of the purchaser by any governmental regulatory authority or official, and the Employee
further agrees that such compliance shall not result in such sale being considered or deemed not to have been made in a commercially reasonable manner, nor shall Merrill be liable or accountable to
the Employee for any discount allowed by reason of the fact that such Collateral is sold in compliance with any such limitation or restriction. 

9.    Limitation on Duties Regarding Collateral.    Merrill's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession shall be to deal with it in the same manner as Merrill deals with similar securities, instruments and property for its own account. Neither Merrill nor
any of its affiliates, directors, officers, employees or agents shall be liable for failure to demand, collect or realize upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any of the Collateral upon the request of the Employee or otherwise. 

10.    Powers Coupled with an Interest.    All authorizations and agencies herein contained with respect to the Collateral or any
part thereof are irrevocable and powers coupled with an interest. 

11.    Severability.    Any provision of the Participation Agreement, including any attachment thereto, 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 provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 

12.    No Waiver: Cumulative Remedies.    Merrill shall not by any act (except by a written instrument pursuant to
paragraph 12 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default or Event of Default or in any breach
of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of Merrill, any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. A waiver by Merrill
of any right or remedy hereunder on anyone occasion shall not be construed as a bar to any right or remedy which Merrill would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not exclusive of any rights or remedies provided by law. 

17

  

 
 

COINVESTMENT SHARES VESTING SCHEDULE    
    

        On the Effective Date thirty-five percent (35%) of the Coinvestment Shares purchased by the Employee shall immediately vest, and the vesting schedule
for the Coinvestment shall be as follows: 

	Vesting Date
 
	 	Percentage of Coinvestment Shares Vested as of the Vesting Date*

	One Year from Closing Date	 	35% of the Coinvestment Shares purchased by the Employee
	Two Years From Closing Date	 	35% of the Coinvestment Shares purchased by the Employee
	Three Years from Closing Date	 	57% of the Coinvestment Shares purchased by the Employee
	Four Years from Closing Date	 	79% of the Coinvestment Shares purchased by the Employee
	Five Years from Closing Date	 	100% of the Coinvestment Shares purchased by the Employee

	*
	In
the event that the vesting of any Coinvestment Shares results in a fractional Coinvestment Share, such fractional Coinvestment Share shall be rounded up to the nearest whole
Coinvestment Share.

	*
	For
purposes of this vesting schedule, the "Closing Date" shall mean January 28, 2000. 

18

 
 
 

CONFIDENTIALITY AND NONCOMPETE PROVISIONS    
    

        You are being offered equity participation benefits (see the accompanying documents). In consideration of these benefits, you agree to be bound by the
restrictions described below. If any provision of this Confidentiality Agreement conflicts with any provision of your employment agreement, if you have one, the provisions of this Confidentiality
Agreement will control and govern the interpretation of both documents. Minnesota law governs the interpretation of this Confidentiality Agreement. 

        Merrill
invests a significant amount of time and money on technology and research in order to develop and maintain its goodwill and success. During your employment, you will have access
to Merrill's confidential information, which is information that belongs to Merrill and is not generally known by third parties. Confidential information includes, by way of example only, trade
secrets, financial information, customer lists, business plans and strategies, and research and development work. You acknowledge that during your employment with Merrill and for an indefinite period
of time following the termination of your employment, Merrill is entitled to protection from the use of such information by you or a third party, or disclosure of such information to a third party.
You therefore agree that you will never disclose such information to any third party, or use such information for your own benefit or for the benefit of another. 

        In
addition, during your employment and for a period of one year following the termination of your employment, you will not, directly or indirectly, render services to any third party or
for your own benefit, in connection with the design, development, manufacture, marketing, or sale of products, processes, or services that compete, or are intended to compete, with Merrill products,
processes or services on which you worked or had access to while employed by Merrill. You further acknowledge that the market for Merrill's products and services is worldwide in scope and that it is
therefore reasonable that this restriction pertain to all states in the United States and all countries in which Merrill develops, manufactures, markets or distributes its products and services. You
further agree that for one year after your employment with Merrill, you will not solicit or cause to be solicited any employee of Merrill for the purpose of employment with any competitor of Merrill
or any customer of Merrill. 

        If
you violate these restrictions, you will cause irreparable harm to Merrill and you agree that Merrill will be entitled to injunctive relief, in addition to any other remedies allowed
by law, and the costs
incurred in enforcing the restrictions, including reasonable attorney fees. Should a court rule that a restriction is unreasonable or otherwise unenforceable, the court shall modify the restriction to
the extent necessary to make the provision enforceable. 

        You
also acknowledge that while performing services for Merrill, any "Work Product" (inventions, improvements, ideas, discoveries, works of authorship, trademarks, trade secrets,
processes, know-how, whether or not such are patentable or copyrightable, and whether or not in writing or reduced to practice) conceived or created by you alone or with others, belongs
only to Merrill. You will promptly disclose to Merrill all Work Product developed by you. Such Work Product is considered a "work for hire" and is the sole and exclusive property of Merrill and
Merrill is the exclusive owner of all such patents, copyrights and related rights. You will transfer and assign to Merrill all rights to such Work Product and provide Merrill with all of the
assistance it reasonably requires in order for Merrill to perfect, protect, and use its rights to such Work Product. This section does not apply to Work Product for which no equipment, supplies,
facility or trade secret information of Merrill's was used and which was developed entirely on your own time and (1) which does not relate (a) directly to Merrill's business or
(b) to Merrill's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by you for Merrill. 

19

 
 
 

83(B) ELECTION FORM    
    

        NOTE TO IRS: Please time stamp one copy with endorsement of receipt and return in the enclosed stamped, addressed
envelope.

ELECTION
UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED 

        The
undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in the taxpayer's gross income for the current
taxable year, the amount of compensation, if any, taxable to the taxpayer in connection with the receipt of the property described below: 

	1.
	The
name, address, taxpayer identification number, and taxable year of the taxpayer and spouse, if applicable, are as follows: 

	 	 	Name:	 	 	Taxpayer:	 	 	Spouse:	 
	 	 	 	 	 	 	
	 	 	

	 	 	Address:	 	 
	 	 	 	
	 

	 	 	Tax ID#:	 	 
	 	 	 	
	 

	 	 	Taxable Year:	 	 
	 	 	 	
	 

	2.
	The
property with respect to which the election is made is described as follows:              shares of the Class B Common Stock of Merrill
Corporation, a Minnesota corporation (the "Company").

	3.
	The
date on which the property was transferred
is:                                        

	4.
	The
property is subject to the following restrictions: The right of Merrill to repurchase the shares, or a portion thereof, at a price per share as calculated pursuant to the 1999
Merrill Corporation Direct Investment Plan, in the event of the taxpayer's termination of service with Merrill.

	5.
	The
fair market value at the time of transfer (determined without regard to the restrictions) of such property is: [PRICE PER SHARE] per share.

	6.
	The
amount (if any) paid for the property is: [PRICE PER SHARE] per share. 

        The
taxpayer has submitted a copy of this statement to the person for whom the services were performed in connection with the taxpayer's receipt of the property. The taxpayer is the
person performing the services in connection with the transfer of such property. 

        The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner. 

	Dated:	 	 	 	 
	 	 	
	 	

	 	 	 	 	(Signature of the Taxpayer)
	

The undersigned spouse of the taxpayer joins in this election.
	

Dated:	
 	

 	
 	

 
	 	 	
	 	

	 	 	 	 	(Signature of the Spouse)

20

QuickLinks

Exhibit 10.3

PARTICIPATION AGREEMENT (EXECUTIVES)

SUPER PERFORMANCE VESTING SCHEDULE

TERMS AND CONDITIONS OF NON-STATUTORY STOCK OPTION AWARDS

TERMS AND CONDITIONS OF PURCHASE OF COMMON STOCK

TERMS AND CONDITIONS OF NONRECOURSE PURCHASE LOAN

TERMS AND CONDITIONS OF PLEDGE AND CUSTODY AGREEMENT

COINVESTMENT SHARES VESTING SCHEDULE

CONFIDENTIALITY AND NONCOMPETE PROVISIONS

83(B)  ELECTION FORM

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